WP deceased and EP, Re (Rev 1)

This is an application by two attorneys acting jointly under two separate Enduring Powers of Attorney for the retrospective approval of monthly payments of £150 each that they have made to themselves and to their sister from the donors’ funds.

Bill was born on 20 February 1921 and died on Monday 16 November 2015, three days before the hearing in this matter. He served in the Royal Air Force during the Second World War and took part in the Berlin Airlift in 1948-49. He then briefly went into accountancy before deciding to resume his flying career as a pilot with several different airlines.

His widow, Betty, was born on 22 September 1927.

She lives in a two-bedroom bungalow in Basingstoke, Hampshire.

She has two daughters and son, namely:

On 22 October 1999 Bill and Betty each signed an Enduring Power of Attorney (‘EPA’), in which they appointed all three of their children to be their attorneys.

On 12 September 2007 each of them signed another EPA, in which they revoked the earlier EPA and appointed Theresa and Stephen to be their attorneys jointly (rather than jointly and severally) with general authority to act on their behalf in relation to all their property and affairs.

I am told that the reason why they revoked Susan’s appointment as an attorney was that, at that time, she had health problems and was going through a divorce, and that she didn’t wish to be an attorney, anyway.

In 2008 Bill and Betty were both diagnosed as having Alzheimer’s dementia.

In 2009 the attorneys applied to the Office of the Public Guardian (‘OPG’) to register the two EPAs. There were no objections and the instruments were registered on 6 October 2009.

Their bungalow is said to be worth about £275,000. In addition, they have life savings of about £50,000.

Their joint income during the financial year 2014/15 was £29,077, which mainly came from their state retirement pensions and attendance allowances. Their expenditure over the same period was £21,356, and this included the sum of £5,400 paid by way of a monthly allowance of £150 to each of their children.

Each year’s accounts from 2008/09 onwards show a transfer of £6,000 to a ‘contingency care fund’. This fund consisted of two savings accounts, one of which was in Theresa’s name and the other was in Stephen’s name. £6,000 represented the annual exemption of £3,000 in respect of each of their parents’ estates under section 19 of the Inheritance Tax Act 1984, and the purpose of the fund was to top-up the care fees, if either of their parents went into residential or nursing care.

The attorneys have consistently had difficulties in dealing with their sister, Susan. In 2009, when it was no longer safe for their mother to drive, they agreed to let Susan have their mother’s car. In 2014 she asked them to buy her a new car from their parents’ funds. The attorneys refused and Susan retaliated by reporting them to the OPG for siphoning away their parents’ money into the two savings accounts.

The Public Guardian carried out an investigation, with which the attorneys fully complied, and on 9 December 2014 the attorneys transferred £42,000 back into their parents’ accounts, representing seven years’ payments of £6,000 into the contingency care fund.

On 10 January 2015 the attorneys applied for the following order:

“The OPG have requested us to seek retrospective approval for £450 (per calendar month) taken for care and expenses from the joint account of Bill and Betty, i.e. each sibling receives £150 pcm (Theresa, Susan and Stephen).

To grant the above approval and agree to the continuation of this arrangement (or some other form of calculation the court deems fit and proper). Without some form of financial support the level of care we provide to maintain our parents in their own home would be unsustainable.

This is the most economical way of supporting our parents. If we had to rely on outside agencies to do the tasks we do out of love for our parents the cost to their estate would be far greater.”

The application was accompanied by a witness statement, composed by Theresa, but signed by both of them, saying:

“We are extremely disappointed to be making this application for retrospective permission for the £150 for each of us (Bill and Betty’s three children) for travel and expenses from their joint estate. Equally we are angry that the money we have saved from their estate for third party ‘top up’ fees has been paid back into their estate. In our view the OPG have forced us to act against the best interests of our parents. We now have no flexibility in choosing future care homes.

Our parents wish to remain together in their own home for as long as possible, and all our decisions and actions have been to that end. The £450 we have taken for care and expenses is a fraction of the cost had we involved outside agencies.

You will appreciate that in 2009 we had to plan for the future. Both our parents had been diagnosed with Alzheimer’s in 2008 and we had to make decisions quickly. We had no idea what the future might hold or what care decisions might have to be made, only that we needed money for them.

We understand that our file has been passed to the judiciary. You will note that none of the above arrangements have been ‘hidden’, and we have tried to keep comprehensive records of all transactions and receipts in a perfectly open manner, and retaining all bank statements and receipts.

Despite engaging care agencies in 2013 to oversee medication and meals, this has not reduced our own weekly tasks. Indeed, now that our parents are under greater observation, our ‘emergency’ calls have increased. The carers have informed us of various problems which necessitate extra journeys in order to solve them.

We registered the EPA in October 2009 and in October 2010 we arranged for ourselves and my sister Susan to receive £150 per calendar month to offset travel and care expenses from the joint account of my mother and father. Prior to the above date and for the previous eight years, the three of us had undertaken all tasks relating to our parents’ care without recompense from their funds. However with the degeneration of their condition, care became more intensive, petrol prices increased considerably and, as my parents lost the capacity to drive, this was not economically sustainable.”

In the second section of her witness statement, Theresa addressed the question of travel expenses and said:

“We based our calculations on a mileage of 45p (this appears to be the AA choice), on an average two visits per week for my brother and myself and four to five visits for my sister, who is much closer. These visits are for basic care issues, gardening, house cleaning, taking meals etc.

The round trip for myself is 26 miles and for my brother is 57 miles and for my sister 6 miles. In addition we incur extra petrol expenditure by taking our parents to:

(1)

Hospital, doctors, and dental appointments.

(2)

Visits to friends and relatives. I have taken my parents to Devon (Honiton), Bournemouth, London, Farnborough and Thame in Oxfordshire. My brother has done numerous trips to London as has my sister to London and Farnborough. These visits are becoming less frequent as our parents’ condition has worsened, particularly my father’s.

(3)

We all three incur double journeys when inviting our parents to meals at our houses: i.e. picking them up and returning them to their home.

(4)

My brother and myself have to liaise and consult over form filling, which is a round trip of approximately 50-55 miles.

(5)

We have ‘emergency spikes’. For example, last December our father had a slight stroke and was sent to hospital. We had an emergency visit in the morning and then again in the afternoon to take our mother to Winchester Hospital and then return to Basingstoke. This was in the middle of a huge storm. Our car hit a huge pool of water and we sustained damage that cost £120, which we paid out of our own funds. Similarly, my brother, responding to an emergency call from our mother, had his parked car damaged by a reversing motorist while outside their bungalow in June 2013. Again no money was taken from our parents’ account.

(6)

We arranged to have a wet room installed as neither of my parents could manage to get into a bath, even for a shower. It took nine days to complete, and my mother stayed at my house, and we put father into respite, as he could not manage the stairs. In that time we had three return visits to Basingstoke and two return journeys to the care home each day to allow my mother to stay with my father throughout the day.

My brother is currently at a financial disadvantage under the current system, living so far away. Would you be agreeable to a system which was based on mileage rather than the set amount we have at the moment? We made the current arrangement in order to comply with our parents’ wishes that “we are all treated the same”.”

In the final section of her witness statement, Theresa went on to itemise additional costs that she and her brother had incurred in connection with the actual management of their parents’ financial affairs.

“My husband and myself conduct the administration with regard to our parents’ estate. This involves dealing with:-

(1)

Care agencies.

(2)

Utilities.

(3)

Insurance companies. We have dealt with four household claims.

(4)

Department for Work and Pensions.

(5)

Project managing and acquiring tradesmen. We have to date supervised installing a wet room, repairing walls, and a boiler installation.

(6)

We incur postal, telephone, photocopying and printing costs, but we have no idea what this amounts to, only that it is very time consuming. We are responsible for record keeping and receipts. We have nine lever-arch files and the OPG can provide you with evidence of our efforts.

(7)

My husband and myself do all the bed linen once a fortnight, and do all the gardening in a large garden, and arrange for contractors to visit twice a year, as well as other household tasks. We also arrange meals from Wiltshire Foods, so that the carers can feed them in the allotted time.

(8)

My brother and his wife do all the general DIY tasks around the house, and the majority of housework and shopping. His wife, as a qualified beautician, does both my father’s and mother’s hair.

(9)

My sister does local shopping occasionally, has decorated the hallway (with my help) and does local GP visits. She also collects and delivers their medication on a weekly basis.

In a recent letter, the OPG states: “Decisions should always benefit the donor.” If we had employed outside agencies to cover the tasks we have done throughout the years, out of duty and love for our parents, a great deal more of their finances would have been spent.

The OPG now requires us, and I quote: “to make an application to the Court of Protection seeking retrospective approval for this expenditure, i.e. £150 per calendar month for each of the three children.”

We had no idea we had to apply to the Court of Protection for such decisions. We assumed such decisions were within our provenance. If EPA’s have to make such applications at a cost of £400 each time, is this not unfair to the donors of the EPA?”

Gerald John Bishop, BSc, FCA, is a chartered accountant based in Abbots Langley, Hertfordshire. When the OPG began its investigation into their conduct, Theresa and Stephen contacted him immediately.

On 4 September 2015 Mr Bishop made a witness statement, in which he said as follows:

“I refer to the financial statements for the years 2009/2010 to 2013/2014.

I wish to draw attention to the distributions made each month in the sum of £150 to each of the attorneys and the third sibling Susan.

The original complaint that the attorneys were helping themselves to the donor’s funds clearly came from Susan. Since the decision by the Office of the Public Guardian that sums of money in the amount of £42,000 be returned to the donors (I have verified that this took place on the 9 December 2014 four days after the request from the Public Guardian) there has been further deterioration in the family relationships between the three siblings as a result of this instruction.

I am informed that at least two major family disputes have occurred in front of the donors this year. This is most unsatisfactory in relation to the care and wellbeing of the elderly donors.

It is likely there has been an irretrievable breakdown within the family regarding the care and well being of the donors. As a consequence I have advised the petitioners to seek the court’s direction to prevent the siblings visiting their parents at the same time until their differences have been amicably resolved.

Both attorneys have informed me that Susan has repeatedly asked for financial help from the estate with a clear preference for cash payments throughout the period. If this is the case it may well partially explain the breakdown in normal relations between the brother and two sisters.

In conclusion I do not consider that the two attorneys have profited from their duties in administrating the affairs of their parents. I am unable to determine if the same can be said of the third sibling Susan given that I have had no explanations in relation to her funding.

Both attorneys devote considerable time and effort to the care and administration of the donors’ affairs. They have refunded £1,350 each to the estate following my letter dated 22 August 2015. They seek the court’s direction both in relation to these funds already expended on the donors’ behalf since December 2014 and going forward into the future.”

The sum of £1,350 to which Mr Bishop referred was the monthly payment of £150 that each of the attorneys had taken during the nine months from December 2014 to August 2015. They had stopped making these payments in August 2015, not only to themselves but also to their sister, Susan.

On 19 October 2015 I made an order inviting the applicants to submit any further evidence by 13 November and listed the application for hearing on 19 November.

The hearing took place on Thursday 19 November and was attended by Theresa and Stephen.

I explained to them that what we are seeking to achieve is a neutral position whereby they are not financially at a disadvantage through acting as their parents’ attorneys, but they are not actually making a profit from their role.

I read to them paragraph 7.60 of the Mental Capacity Act Code of Practice, which says that:

“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 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.”

This application is a composite claim for the payment of an allowance of £150 per month to each attorney in respect of three distinct heads of claim, and I shall deal with these heads of claim in the following order:

I would prefer not to be cornered into approving any particular mileage rate. If the Public Guardian wishes to give guidance on such matters, that’s up to him. What I shall say is simply by way of general observation.

Theresa and Stephen based their calculations on a mileage rate of 45p, which was suggested to them by the AA. The AA, in turn, bases its mileage rates on those issued annually by HM Revenue and Customs (‘HMRC’). In the current financial year (2015/16) the mileage allowance payments paid by an employer to employees who use their own cars or vans for business journeys are 45 pence for every business mile for the first 10,000 miles and 25 pence for every business mile thereafter.

It will be noted that these rates apply to ‘every business mile’. In the context of the journeys made by an attorney acting under an EPA, the person paying the mileage allowance payment (the donor) is almost invariably a close relative who lacks mental capacity, rather than a multi-national corporation or other business employer.

In my judgment, the business mileage rates quoted by HMRC should be substantially discounted to reflect the fact that these are not ‘business’ rates but domestic rates. When dealing with the affairs of an elderly and incapacitated relative, attorneys are generally expected to act out of common decency and not to profit from their position.

I turn now to the expenses incurred by the attorneys for specifically acting as their parents’ attorneys. Some of these functions were described under the heading ‘other costs’ in the final section of Theresa’s witness statement, which is set out in paragraph 19 above.

The front page of the EPAs that Bill and Betty signed on 12 September 2007 contained some prescribed explanatory information, paragraph 6 of which stated:

“Your attorney(s) can recover the out-of-pocket expenses of acting as your attorney(s). If your attorney(s) are professional people, for example solicitors or accountants, they may be able to charge for their professional services as well. You may wish to provide expressly for remuneration of your attorney(s) (although if they are trustees they may not be allowed to accept it.”

Bill and Betty did not provide expressly for their attorneys to be remunerated. I expect, like most parents of their generation, they assumed that Theresa and Stephen would carry out these duties gladly and gratuitously, without complaint or expectation.

Paragraph 16(2)(b)(iii) of Schedule 4 to the Mental Capacity Act 2005, which applies exclusively to EPAs, provides that:

“(2)

The court may –

(b)

give directions with respect to –

(iii)

the remuneration or expenses of the attorney whether or not in default of or in accordance with any provision made by the instrument, including directions for the repayment of excessive or the payment of additional remuneration.”

The origin of this provision can be found on page 46 of the Law Commission’s report, The Incapacitated Principal (Cmnd. 8977), which was published in July 1983. The report stated that:

“We recommend that the court should have jurisdiction … to give direction as to the attorney’s remuneration and payment of his expenses as attorney. We propose that an EPA should be able to contain whatever terms as to remuneration and expenses the parties wished. Indeed we would regard it as desirable that the EPA should state whether or not the attorney was to be remunerated and, if so, on what basis. [There was a footnote, numbered 193, which is set out in the following paragraph]. Even if the EPA did not make specific provision, however, it is clear that problems could still arise. For example, the awarding of a fixed annual fee might prove unsatisfactory in the light of inflation or, indeed, if it assumed a large volume of work which never materialised. But even providing for ‘reasonable remuneration’ would leave open the question of what was reasonable in any given case. We therefore recommend that the court should be able to give directions generally as to the attorney’s remuneration and expenses (whether or not the EPA made specific provision) to cover such matters as the repayment by him of excessive remuneration and the payment to him of additional remuneration. Thus the attorney would have to apply to the court for directions if he wanted to claim remuneration in excess of that (if any) to which he was entitled under the power. This might happen as a result of a substantial and unforeseen increase in his duties. We would expect the court to be circumspect in considering such requests. One relevant factor would be the likelihood and relative desirability of the attorney disclaiming the power (in favour, perhaps, of [deputyship]) if his request was rejected.”

The footnote signposted in the middle of that passage stated that:

“We do not feel that the absence of such statements should automatically disentitle the attorney from a claim to remuneration or payment of expenses. It seems, for example, that an attorney under an ordinary power (containing no such statement) may be entitled to remuneration on an implied contract or on a quantum meruit basis. That is to say he may charge a reasonable fee for work done by him if there is an understanding that he would be remunerated; and an attorney (like a trustee) would always be entitled to reimbursement of costs and expenses reasonably incurred by him in the execution of his office.”

Theresa and Stephen have applied to the court for directions with respect to their remuneration in default of any provision made by their parents. I do not propose to allow them any specific remuneration for the actual management of their parents’ property and financial affairs.

From the evidence they have produced, there is nothing to suggest that there was an understanding that they would be rewarded on a quantum meruit (‘how much it is worth’) basis, and there is nothing exceptional about the paperwork they have completed and are continuing to deal with that warrants remuneration.

I turn finally to the remuneration the attorneys have claimed for care and, what is sometimes described as case management. I considered these functions in some detail in Re HLN [2015] EWCOP 77, which was published on 19 November 2015. Although that was a case in which damages had been awarded to HNL for clinical negligence and her brother had given up his job to become her primary carer and case manager, I can see no reason why similar principles should not apply to individuals who devote a substantial amount of their time towards caring for an elderly relative.

I am prepared to allow Theresa and Stephen to be remunerated for the tasks they have performed as care support workers in making it achievable for their parents to remain in their own home for as long as possible and, in Bill’s case, until his death.

There is a commercial value for many of the tasks they perform, though I would be reluctant to place a specific value on their services in the absence of a professional valuation, such as the report produced in Re HLN. The expert in Re HLN quoted an hourly rate of £13.50, which the court would normally discount by at least 20% to reflect the fact that no income tax and national insurance contributions are payable in respect of the amounts paid.

Suffice it to say that I am satisfied in Theresa’s case that the care support she provides and the travelling expenses she incurs merit the payment of a sum of £150 a month from her parents’ funds. Stephen does slightly less than his sister Theresa in terms of care support, but has to travel a greater distance to perform these functions and, on balance, I am satisfied that he too should continue to pay himself a composite allowance of £150 a month in respect of travelling expenses and care support.

Accordingly, I retrospectively approve the payment of these allowances and I also approve the continued payment of an allowance of £150 a month to Theresa and Stephen until further order. I leave it to them to exercise their discretion to reimburse Susan for any reasonable out-of-pocket expenditure she incurs and to pay her a reasonable allowance for any care support services she provides to their mother.

Having regard to the views of other people as to what is in the donors’ best interests, I have attached weight to the observations made by the chartered accountant, Gerald Bishop, who said that “both attorneys devote considerable time and effort to the care and administration of the donors’ affairs.”

Mr Bishop added that:

“In conclusion I do not consider that the two attorneys have profited from their duties in administrating the affairs of their parents.”

I have come to the same conclusion as Mr Bishop. Having regard to all the circumstances, I am satisfied that the payments of £150 a month each to Theresa and Stephen were in their parents’ best interests and continue to be in their mother’s best interests, because: