M, Re Mental Capacity Act 2005

The parties represented before me in these Court of Protection proceedings are the local authority, the parents of the person affected, E and A, the Deputy of the person affected, J, and through her, the person affected, M. There have been long running proceedings which have resulted in a conclusion concerning the welfare arrangements for M. The proceedings are ongoing and there is a further hearing, as I understand, some time later this year. E is M’s mother. A is his father.

On 23^rd April 2015 Mr Justice Baker made an order following a lengthy trial. Prior to that M had been under the protection of the Court of Protection (that remains the case) and for a while E had acted as his Deputy. In so acting E gave a bond, which materially provided as follows. The bond was given by Aviva Insurance UK Limited and the document is headed:

Thus liability under the bond is dependent upon loss occasioned to M by reason of E's failure to carry out her deputyship duties. One application before the court is for that bond to be, as it is put colloquially, "called in".

Reverting back to the order of 23^rd April 2015, para.1 of that order provided that the proceedings were to be adjourned to a hearing date to be fixed in June 2015 before Mr Justice Baker, with a time estimate of one day to consider and determine the identity of the Health and Welfare Deputy to be appointed for M. That was important because a later paragraph, to which I shall refer, refers back to that para.1, which in turn referred not to this hearing but to a hearing long since taken place at which Mr Justice Baker considered the matters which para.1 of his order required him to do.

Moving ahead to para.6, that provided as follows:

On 27^th July 2016 His Honour Judge Hodge QC gave directions which resulted, following the retirement of the then senior judge of the Court of Protection, in those issues coming on for hearing before me.

Going back to the order of 23^rd April 2015, para.9 dealt with the costs of two experts. That provided as follows:

One of the issues which has been raised before me is the status of that costs order, and whether I can review it. I can deal with that straightaway. The costs order has already been made. It is not therefore open to me to review its merits, even were I in a position to do so, which I am not. The costs subject to the order are payable 28 days after the determination of the senior judge issues referred to in para.5. Paragraph 5 is a plain and obvious mistake for what in the order as drawn up became para.6, and I shall so read it. Accordingly as I am now determining the issues transferred under para.6, the costs will be payable 28 days after today's date. That of course is subject to the prospect of any appeal, but any appeal would not operate as a stay and would now be out of time. As para.9 of the order, which I have just read, stated, E and A indicated that they might wish to appeal, and time for that purposes was extended until not this hearing, but until the hearing originally fixed for June 2015, which I think may in fact have taken place in July of that year. Accordingly there is nothing further for me to adjudicate upon in relation to that costs order. It will become enforceable within 28 days without any order on my part.

I was asked to lift the stay. But there is no stay in relation to that costs order. The costs are simply not payable for another 28 days. Accordingly there is no stay for me to lift. I simply make it clear that the effect of para.9 is that the costs will be payable in 28 days' time and that if E and A wish to appeal they will need to apply, assuming they have not hitherto done so, to the Court of Appeal for permission to appeal out of time.

As I have indicated the matter did in fact come before Mr Justice Baker again and he gave judgment on 7^th July 2015. During the course of that judgment he considered the wish of E and A to appeal the costs order, and at p.22 of the judgment under para.7, said this:

I return then to what is described in that order as the local authority's application to call in part of the bond. The position is as follows. Judicial review proceedings were, in 2009, brought for M in his name, his father A acting as litigation friend. Those proceedings came to be compromised in an order which I shall have to construe. The proceedings were instituted for judicial review of the local authority's refusal to fund M's education at a suitable establishment outside the local authority’s area, providing an appropriate three year course for M. M is severely disabled and is not suitable for mainstream education. The only suitable establishment was away from M's home, by such a distance that regular daily travel was neither feasible nor desirable in the long term. It appears that the position taken by the local authority was that the educational establishment, and any ancillary costs relating thereto, should be provided not by them but by the Learning and Skills Council (“LSC”) under the Learning and Skills Act 2000 (“LSA”). As is evident from the grounds for judicial review it was a matter of relative indifference to M through his father and litigation friend whether those costs were borne by the local authority or the LSC. I should explain that both parents of M have at all times presented a united front and have acted in what they consider to be his best interests.

The judicial review grounds filed on behalf of M recorded as follows, commenting upon the debate between the local authority and LSC:

It may perhaps be questioned whether s.21 was the appropriate or at least the only route through which to challenge the local authority. The judicial review proceedings did not stop there however and also complained as follows:

Those observations on s.29 NAA and its application under s.2 CSDPA relate primarily to the provision of education but also, and just as importantly for present purposes, to accommodation as well. M was going to be away from home and would need somewhere to stay. As the judicial review proceedings progressed, the circumstances changed somewhat. The course at the original college turned out, for a variety of reasons, not to be entirely suitable. Another college also outside the local authority’s area was discovered but exactly the same point arose as regards the need both to fund the educational element and the residential element for the time when M was away from home. The alternative was the funding of regular transport costs which the local authority appears to have accepted it had full power to do, but which was not a desirable long term solution.

The Statement of Claim attached to the grounds set out in detail s.21 NAA and then also went on to deal with the powers under s.29, which it described as embodying:

The Statement of Claim then went on to s.2, CSDPA, which made it a duty to make certain provision under s.29, NAA. The provision of welfare services was dealt with in subpara.1:

It seems to me that even if the LSC, was under a duty to provide educational facilities, M, who remained "ordinarily resident," because that is where his main home was, within the local authority’s area, was owed a duty by the local authority to assist him in taking advantage of the educational facilities in question. I mention that because the LSC at a relatively early stage came to accept their obligation to provide the educational facilities. All that remained to be determined in the judicial review proceedings was who, if anyone, as between the LSC and the local authority, was going to fund the ancillary residential requirements of attending a college many miles away in another county.

The grounds went on to emphasise:

The matter came to be compromised in an agreement in the judicial review proceedings, which in broad terms recorded the agreement of the parties, including the local authority and the LSC, to the LSC paying for the educational provisions and the local authority paying both for the accommodation aspect, ancillary to the educational provision, and travel costs. The relevant order bears the date 11^th March 2010 and is headed "By Consent." It reads as follows:

It will be seen that the terms as to the three relevant funding obligations are similar in language. I have not detected anywhere in the judicial review papers any suggestion at any time that the funding of any part of those costs should be subject to means testing. Nevertheless, as Ms Bretherton QC for the local authority has pointed out, if means testing is a mandatory requirement of the provision of any of these benefits then the local authority was not able to agree anything which was beyond its powers and that an agreement to make unconditional payments would be unlawful. What happened in fact is that the local authority, following the agreed compromise, met the accommodation and transport costs, but sought to recoup some of the accommodation costs (but not any part of the transport costs) following means testing of M, whose means appear to consist entirely of state benefits. E as M’s Deputy refused to pay any part of the means tested claims. It is this refusal which is said to amount to a failure to carry out her deputyship duties, and (inferentially) to have cause M’s estate loss.

I have no doubt that the order compromising the judicial review proceedings should be construed as an unconditional agreement to fund without means testing, amongst other things, the claimant's accommodation whilst he attended the college. It is accepted that that is the effect of the order as regards the claimant's transport. It is also accepted that that is the effect of the order as to the LSC’s funding of his day place. The LSC at no time applied means testing. I have also indicated that there were arguments, on the face of it quite strong ones, for requiring the LSC to fund the ancillary accommodation. It follows, on the approach commended by Miss Bretherton QC for the local authority, that I am being asked to conclude that what M, through his father and solicitors, did was agree to accept a form of funding which was less advantageous than the funding which he might have got at a fully contested hearing. Of course that is of the essence of compromise but it seems an odd result to achieve given that there is no explanation or hint of this, either in the order itself or in the explanatory note that was sent to the court justifying this order.

That being so, therefore, I conclude that as a matter of construction the order is one for unconditional funding. Was it therefore an agreement, which the local authority could lawfully enter into? In my judgment it was. It was unclear under what heading, if any, the local authority might be liable but it was clear that it could be liable either under s.21 NAA or under s.29 NAA or under s.2 CSDPA, as applied to s.29 NAA. Under s.21 there was a clear obligation to means test. Under s.29 and s.2 there was not, though that might arguably be the case. It seems to me that in the light of the uncertainty of the outcome it was entirely open to the local authority to compromise the matter by agreeing to fund merely the accommodation, and to agree to do so unconditionally. There was after all the possibility that their obligations could be greater than that still. Had the matter gone to trial they might have been held liable to fund the entirety of the educational provision as well, for the reasons set out in the original grounds. Even with recoupment through means testing the outlay was substantial, and might have been even more substantial.

Moreover, in terms of vires there is the general power of a local authority, to which my attention has been drawn by E and A, under s.2 of the Local Government Act 2000, under which:

In my judgment that was clearly an intra vires compromise. It follows therefore that there is no basis for the claim that the local authority now seeks to advance, justifying calling in the bond.

As I have mentioned, it is said that E failed to act in accordance with her deputyship duties by failing to pay the means tested contribution which the local authority assessed as due from M in respect of the accommodation costs covered by the consent order in the judicial review proceedings. This will in turn enable the local authority to claim the means tested amounts from M’s estate once the bond is called in. As, however, I have found that the compromise agreement precluded means testing, it follows that, on the way in which the case has been put, the application to call in the bond must be dismissed.

In addition, I am bound to say that I am puzzled as to the propriety of the procedure that has been adopted in calling in the bond in a summary way by an application made within the Court of Protection proceedings by the local authority. As Ms Bretherton QC demonstrated in relation to another claim, to which I shall come, the powers of the Court of Protection are limited. Leaving aside powers to grant focussed, declaratory best interest orders, none of which is relevant to the present case, the power is to take decisions for a person (“P”) which P by virtue of incapacity is unable to take.

The calling in of the bond requires the prior determination of whether or not E as Deputy is liable for loss caused to M by virtue of her failure properly to carry out her duties. The guarantor is only liable if E is liable. Thus it must first be established (a) that E failed properly to carry out her duties; (b) that this failure occasioned loss to M’s estate.

There was at one stage, to my mind, an ambiguity in the way in which the local authority were approaching the matter, as it appeared to focus at least in part upon the impropriety of other expenditure incurred by E, and not the failure to pay the sums due to the local authority. However, Ms Bretherton QC confirmed in her submissions that this was not the legal basis of the claim to call in the bond. The sole complaint was that E, whilst Deputy, had not in fact paid - which she did not - any of the means tested contributions that the local authority required from M. That, however, did not give the local authority any cause of action against E, nor did it cause M’s estate any loss. E, as Deputy, was answerable to M (not the local authority), the Public Guardian and the Court of Protection (acting in M’s interests) in respect of any mismanagement of M’s assets, but not to the local authority.

In my judgment where there is a disputed case of mismanagement, it is not appropriate for that dispute to be adjudicated upon in a relatively informal application, made to the Court of Protection, for the calling in of the bond. Once of course liability is admitted or established, the calling in of the bond is a routine matter. But first the liability of the person who is ultimately liable to the guarantor once the bond is called in must be established, and that can ordinarily only be established in proceedings brought by, or on behalf of, P - in this case M - against the officeholder in question, which in this case was E. M, of course, is not in a position to bring proceedings because he lacks capacity to do so. The local authority are not his representative. J is and J has not sought to make any complaint against E in this connection, nor do I see how she could do so. The Public Guardian might initiate the calling in of the bond but still the underlying liability of the Deputy must first be established because until such liability is established the guarantor is not liable under the bond. In a case therefore where the liability of the Deputy (and therefore of the guarantor) is disputed, that liability must first be established by proceedings brought by someone with standing to do so.

As far as the local authority is concerned they are a third party creditor of M, assuming for present purposes (contrary to what I have already held) that they are entitled to a means tested contribution from M. They have no cause of action against E, any more than any other creditor would be entitled to bring proceedings to enforce obligations owed not to the creditor but to that creditor’s debtor. A creditor dealing with someone of full capacity may enforce payment of a debt, which may result in bankruptcy resulting in the appointment of a trustee in bankruptcy, who can then enforce the obligations owed to the bankrupt. But what is not legitimate is to short circuit all that by enabling creditors to bring proceedings in their own name for obligations owed not to them but to someone else, even when that someone else owes the creditor money. That is simply not the way in which the law of obligations works.

Accordingly it seems to me that the local authority's application was misconceived because (a) there must first be established a liability under the Bond, which is dependent on E being liable for loss occasioned by her breaches of duty; (b) no proceedings have been brought to establish that liability; (c) only M, or his Deputy on his behalf with the approval of the Court of Protection, or possibly the Public Guardian, could bring such proceedings.

In addition, the mere failure to make the means tested payments did not cause M any loss falling within the bond. Even if the means tested amounts were due, his estate was not diminished by the failure to pay them, so that there was no recoverable loss. As mentioned earlier, there was some ambiguity in the case as originally advanced because it appeared to be suggested that there was improper expenditure in other respects. The extent and precise amount of the supposed improper expenditure was not examined in detail, however, and, as recorded earlier, Ms Bretherton QC confirmed that the sole legal basis of the claim for calling in the bond was not by reference to what E spent on other things, but on her failure to make the means tested payments to the local authority. On that basis, M’s estate has suffered no loss.

I should finally say that, following the delivery of my oral judgment, Ms Bretherton QC invited me to clarify my reasoning for apparently holding that there was no jurisdiction in the Court of Protection to deal with the calling in of the bond.

She said rightly that the local authority is not seeking to recover the monies for itself but is merely seeking the calling in of the bond, which is properly a Court of Protection matter, and will result in the monies being paid into M’s estate. I agree that once liability is established, or admitted under the bond, the calling in of the bond is a matter which the Court of Protection, or the Public Guardian, can effect. This is not however a case where liability is admitted, so it has to be established by appropriate action. I have sought to explain why, given that prior requirement, liability can only be established at the suit of M or those representing him (not the local authority) as M’s estate has on this hypothesis suffered a loss, not the local authority. Further, it seems to me vital, in a case of disputed liability, that there should be a determination of that dispute with pleadings and the procedural safeguards that proper case management provides. Further, for the Court of Protection to determine such a dispute (which is a necessary pre-requisite of the calling in of the bond) would be beyond its narrow function and power of making best interest decisions for M. The Court of Protection can decide that proceedings to enforce the disputed liability be taken for the benefit of M, as he is in no position to take that decision himself. What it should not in my judgment do is try that dispute.

There is one other matter to be mentioned in this connection. At a time before J was appointed as Deputy, when the local authority was acting in that role, the local authority may have caused part of M's money to be paid to the local authority in satisfaction of what they considered to be the obligations to make means tested payments in respect of his accommodation. The position has not been clarified but it is a matter which J as Deputy should look into after this hearing, in the light of my ruling that there were no means tested contributions due from M to the local authority. It may be, of course, that the payments - and there is only one that I recall specifically being highlighted - and any other similar payments had some other explanation, but it is certainly something which should now be considered.

That brings me on to the last head of claim which I have to consider, which relates to financial claims by A and E against the local authority, which are considerable and detailed. The first thing of note is to question why these proceedings have been brought in the Court of Protection. Just as I have criticised the local authority for seeking a short circuited procedure, so it seems to me, in this case also, there is a short circuiting of the procedure which has helped to mask - not deliberately I hasten to add - the true nature of the claims being made. From June 2010, as I have said, E was the Deputy. Her deputyship was suspended in August 2013, when the local authority effectively took over.

Complaints are made that following the local authority taking over as Deputy they withheld monies, which were due to M, and that this has caused E and A loss. Again what this masks is a cause of action which ought to be asserted, if at all, not in the Court of Protection but outside the Court of Protection in ordinary proceedings. The proceedings as thus expressed do not directly affect M because the claim is by his parents and not by him. It is said that payments (initially of £50 a week and then of £100 a week as well) were withheld and that the parents were forced to spend monies of their own in looking after M and in providing for his necessities.

Ms Bretherton QC, unambiguously and in my judgment correctly, submits that this is not a matter for the Court of Protection, however flexibly its declaratory powers might be exercised, because what is sought is a money judgment, not declaratory relief, against the local authority in favour of M's parents, for which she says there is no cause of action. I have already said that I am entirely with her that the matter is not within the jurisdiction of the Court of Protection, and I could stop there. However, I do not think I would be doing E and A a service to leave it in the air, because it might leave them under the impression that the only objection was procedural, and I do see considerable other hurdles.

The claim is one for economic loss, which presupposes that the local authority owes a duty to E and A directly. This is one of the most difficult areas of the law to make good and I have heard nothing which has persuaded me that E and A might even arguably get over that hurdle.

It is possible that there might be a cause of action that E and A have as against M in respect of the provision of necessaries. Then there is the further possibility that M, if J could be persuaded or directed to take up the gauntlet on his behalf, could in turn recover the same amounts from the local authority if the local authority had acted in breach of duty towards M. But on the face of it the withholding of payments, which I am prepared to assume for present purposes should have been made to E direct, did not result in monies being paid away for some other purpose, but resulted in M being kept out of immediate access to his money for longer than was appropriate. He has subsequently received some at any rate of those monies, and if more was due that will have been included in the monies that the local authority had when their appointment ceased and J was appointed in their place. Those monies were paid as M’s monies by the local authority to J as M’s successor Deputy.

J has considered the question of whether or not there have been misappropriations and has not discovered any. This is subject now, of course, to the query being answered in relation to monies paid to the local authority, to which I have already referred. But in general terms the misapprehension of E and A is that the withholding of monies can be equated with misappropriation of monies, which is not the case. Accordingly, it seems to me that there will be great difficulties in assembling any sustainable claim relating to late payment, or non payment to M direct, of monies which were received as M’s benefits by the local authority (for example disability benefits) but which have now been passed on, insofar as not spent, to J.

Moreover it is not at all clear (leaving aside questions of misappropriation which clearly would give rise to a claim) what heads of loss are potentially recoverable as a result of the withholding of monies. Part of the heads of loss relate to the fact, which is undoubtedly demonstrated on the material presently before the court, that E and A had to overdraw on their own account in order to fund M’s living expenses. They have been feeling the effects of that ever since in interest charges. This cannot be regarded as M's loss and, as I have said, it is not a loss which on the face of it E or A would have even an arguable basis to recover from the local authority. M might, I suppose, seek through J a best interests declaration that he should compensate his parents for expenditure that they have provided and expenses that they have incurred, such as interest charges, but it is not at all clear that the local authority would be under a similar obligation to indemnify M.

In those circumstances it seems to me that all these claims, insofar as they are brought within these proceedings, should be dismissed and that I should do nothing to encourage them to be brought in any other form elsewhere. This will no doubt be felt as a massive injustice by E and A but the law, even assuming their sense of injustice to have some foundation, is a blunt instrument and does not always reach a perfect as opposed to a workable result.

There are other claims, based upon an entirely separate proposition if I have understood them correctly. One is a claim for wasted costs arising from the fact that M was removed from his parents in March 2014, which meant that the expenditure that they had incurred to cover his future welfare was simply wasted. There is also a claim based upon the local authority impeding M or his parents from recouping travel costs at a time when M’s residential accommodation in September 2011 was curtailed because of an incident which occurred at that accommodation, the details of which do not matter. It is thought on E and A's part that the non-recoupment was as a result of interference by the local authority. That argument may or may not have some foundation, but it is quite impossible for me to reach any final conclusions under the relatively informal and imperfect procedure by which these allegations come before me. All I can say is that no recognisable cause of action was identified which would enable me to grant any relief, whether within or outside the Court of Protection proceedings. Those, I think, are all the matters upon which I need to rule.

Following the delivery of judgment, I was asked to consider whether to waive anonymity. My understanding is that previous orders made in the proceedings relating to M’s welfare arrangements have preserved his anonymity for his protection. I do not think it would be right for me, having no detailed knowledge of the course of the previous proceedings, to override that anonymity requirement if it remains in M’s best interests that such anonymity should be preserved. That, it seems to me, is a matter for the Judge dealing with the welfare issues, and not myself. Any application should accordingly be directed towards that Judge. In the meantime, anonymity is preserved in relation to this judgment as well as welfare judgments.