Various Incapacitated Persons, Re (Appointment of Trust Corporations As Deputies)

This judgment concerns applications in respect of 36 different persons, listed in schedule 1 attached. Each application seeks the appointment as property and affairs deputy of a trust corporation. The applications have been made by eleven different trust corporations, as identified in schedule 1. The Court’s concern has been to identify what information is required for the Court to be satisfied that a trust corporation is a fit and proper legal person to hold such appointment.

The eleven trust corporations are jointly represented by a single legal team. The Public Guardian is not a party to proceedings but has been asked (and has consented) to attend by representation to assist the Court. The trust corporations and the Public Guardian have all confirmed that they will bear their own costs, and they do not seek to recover costs from any protected person. The Court wishes to record its appreciation for that approach.

Aspects of the Court’s enquiries relate to matters of commercial confidentiality. Therefore each trust corporation has prepared its own statement for its applications; Counsel for the trust corporations and for the Public Guardian have seen all statements; but each trust corporation has seen only its own. The hearing was conducted as far as possible in general terms with personnel from all eleven trust corporations present. Where specific questions arose in relation to a particular trust corporation, the hearing was conducted – with the agreement of all - in the absence of personnel from any other trust corporation.

In advance of the oral hearing, I considered all of the documents filed within each separate application and a bundle of three lever arch files including:

Since the hearing, I have additionally considered:

The Court’s powers in respect of the appointment of deputies are set out in section 16 of the Mental Capacity Act 2005:

In respect of the appointment of deputies, section 19(1) of the Act provides that:

“Trust Corporation” is a technical expression. Its definition must be traced through a number of different statutes and secondary legislation, which Mr Rees and Mr Drapkin have helpfully set out:

The appointment of a deputy is, as spelled out in section 16(3) of the Mental Capacity Act 2005, a ‘best interests’ decision, and therefore to be made by reference to the facts of a particular case. In each of the applications before the Court, as with any other application for appointment of a deputy, the Court must be satisfied that the person or body whose appointment as deputy is under consideration is capable of discharging the responsibility properly. As it is put at paragraph 8.32 of the Code:

“The court will decide whether the proposed deputy is reliable and trustworthy and has an appropriate level of skill and competence to carry out the necessary tasks.”

Over the first ten years that the Mental Capacity Act 2005 has been in effect there have been significant developments in the legal and commercial landscape which are reflected in the range of applications for appointment as property and affairs deputy which the Court receives. Whereas the Code of Practice to the Mental Capacity Act 2005 at paragraph 8.40 explains trust corporations in parentheses as “(often parts of banks or other financial institutions)” in fact none of the eleven trust corporations in these proceedings is part of a bank or financial institution. They are all associated with solicitors’ legal practices (Footnote: ⁴). It is to be expected that use of the trust corporation structure will continue to develop further. As the Public Guardian notes [tab 2, paragraph 4], “newly established businesses within the legal sector are now combining TCs with consumer brands…”

The Law Society has published a Practice Note, dated 20^th June 2016, which “summarises what a trust corporation is, the requirements for its creation and a number of other matters.” The last paragraph of section 2 states:

“Such a corporation can be a wholly owned subsidiary of another company, or its shares may be held by an LLP. It may be part of a group structure but it is a separate legal entity (emphasis added)and may hold assets in England, Wales and overseas.”

The importance of the separate legal identity of the trust corporation is underlined by further reference at paragraph 3 of the Note:

“Trust corporations are separate legal entities to their parent partnership or LLP, and so carry a separate risk.”

Paragraph 2.1 of the Practice Note outlines “Differences between bank and solicitor-owned trust corporations:

The Note offers some explanations as to why a law firm might chose to create a trust corporation:

These identified benefits are all procedural or financial. Whilst such are important, they are not the only considerations. Each case will be different but deputyship generally also requires an appropriate person-to-person interaction with the protected person and often their family. Considered from that perspective, it can be seen that the benefit of continuity accrues also to the law firm – a client is retained for the long term, even if the individuals familiar with the case change firms.

The modern Court of Protection has no day to day supervisory function. The Court appoints a deputy but supervision of the deputy after appointment is the responsibility of the Public Guardian, whose Office operates as an Executive Agency of the Ministry of Justice, entirely separate from the Court.

Whenever an application is made to the Court, a balance needs to be struck between the requirement to provide information necessary for the Court to determine the application, and the burden of providing such information (the cost of which in property and affairs cases will generally fall on the incapacitated person.)

The standard vehicle for providing to the Court the information necessary to reach a view as to suitability for appointment is the COP4 declaration. As it is put at paragraph 8.37 of the Code:

“Anybody considered for appointment as a property and affairs deputy will need to sign a declaration giving details of their circumstances and ability to manage financial affairs. The declaration will include details of the tasks and duties the deputy must carry out. The deputy must assure the court that they have the skills, knowledge and commitment to carry them out.”

Section 2 of the COP4 declaration form asks six questions in respect of a potential deputy’s personal circumstances. Section 3 asks nine questions about their financial circumstances. Section 4 sets out a series of undertakings which a potential deputy is required to give.

It is to be noted that the COP4 declaration is a ‘self-reporting’ requirement, and carries the element of trust implicit in all such systems. The Court relies on the probity of the person completing the form (Footnote: ⁵). Where the applicant is a professional (such as a solicitor), the Court generally does not require the filing of detailed evidence of compliance with professional standards; it relies on the self-declaration of professional status as implying such compliance.

Many of the questions in the COP4 declaration do not sensibly apply to a trust corporation; and equivalent questions which would apply to a trust corporation are not presently included.

In order to safeguard the interests of those for whom a deputy is appointed, the Court usually requires a deputy on taking up appointment to provide “security” through a form of insurance bond. Periodically the Ministry of Justice contracts with a bond provider to supply such bonds. The Public Guardian is responsible for the management of the contract for the provision of bonds. With effect from 1^st October 2016, following a tender process, Howden Group (UK) Limited became the Ministry of Justice’s approved bond supplier. (Neither the Court nor the Public Guardian mandates the use of the approved supplier but neither can they provide to prospective deputies the details of any other supplier.)

The Court assesses the level of the security requirement based on a number of factors, including the size and nature of the estate and the availability of professional indemnity insurance. Ultimately, in those cases where a deputy breaches his powers and obligations, a sum not exceeding the amount of the endorsement and representing the loss to the protected person may be claimed by enforcing the bond.

In each of the applications presently before the Court, an order has been made that includes a recital in the following terms (or substantially in those terms):

“It appears to the Court that, to be satisfied that a trust corporation is a fit and proper legal person to be appointed as a property and affairs deputy and to set the level of security bond if it makes the appointment sought, the Court needs to address the following issues:

a.

That the trust corporation can lawfully act as such;

b.

Whether its internal management, supervision and controls are appropriate (particularly in respect of its identification and formal appointment of authorised persons to act on behalf of the trust corporation, its day to day decision making process, the way in which it holds a protected person’s assets and funds, the ways in which it pays out such assets and funds, and its quality of performance controls);

c.

The total amount of protected persons’ assets and funds which it currently holds and will be holding from time to time; and in whose name(s) and in what account(s) such assets and funds are held;

d.

What external regulation (apart from supervision of the Public Guardian) the trust corporation is and will be subject to;

e.

The level of insurance cover which the trust corporation has and will maintain in respect of loss to the assets and funds of protected persons’ funds which it holds, through dishonesty, breach of duty, negligence or any other cause;

f.

If the Court appoints a trust corporation as a deputy, what steps will be taken by the Public Guardian throughout the duration of the appointment to check that, having regard to issues (a) to (e) above, the trust corporation continues to warrant fit and proper appointment as property and affairs deputy for the protected person; and that the level of security bond set by the Court remains appropriate.”

In each matter, a direction was made for an authorised officer of the trust corporation to file a statement addressing matters set out in (a) – (e); and for the Public Guardian (or a person nominated by him) to file a statement addressing (f), together with information as to

“b.

whether the trust corporation has been registered with/assessed by…the bond provider;

c.

Whether the aggregate value of the estates for which the trust corporation acts (if any) falls within the upper limit set by its professional indemnity insurers;

d.

Any other matter which the Public Guardian considers should be brought to the attention of the Court concerning the suitability of the trust corporation to act as deputy;

e.

If so advised, the level of the bond he invites the Court to set.”

The Public Guardian’s responsibilities for supporting and supervising deputies have led to the development by his Office of a series of written “standards” which set out what is expected of a deputy and provide a checklist of actions and behaviours every deputy is expected to follow. The standards applicable to professional and public authority deputies are set out in a document numbered SD5 and entitled “Deputy standards Professional deputies.”

In respect of trust corporations, the Public Guardian’s general approach is set out in his position statement [tab 2]:

“26.

…. A TC will be treated the same as any other professional deputy and will be required to meet any standards set by PG.

27.

Once a deputy is appointed, the PG will contact the new deputy. The PG operates two supervision levels: general and minimal. New deputies get a “general” level of supervision for the first year. After the first year, a property and affairs deputy managing an estate of less than £12 000 will move to a minimum level of supervision. The different levels have different supervision costs and different reporting requirements with deputies on a general level of supervision required to provide a more detailed report than those on a minimum level of supervision.

28.

The professional deputy team will contact new deputies who have not had any deputyship cases before to conduct a settling in call to discuss the case including the setting up of deputyship accounts.

29.

The professional team review annual reports for all cases, this details income and expenditure and also decisions made on behalf of the client. Along with the annual report all professional deputies must submit an OPG105 detailing the costs taken and estimated costs for the next reporting year. Where costs taken exceed fixed costs, and where the court order allows, the professional team requests copies of the Senior Courts Costs Office cost certificates and reconcile these against the costs charged.

30.

The professional team review the bonds and professional indemnity insurance upon review of the annual reports to ensure the client’s assets are protected. The professional team monitor the compliance with PG’s requests for information including annual reports and costs certificates taking action as necessary including discharge.

31.

The professional team also review COP visitors’ reports following client and assurance visits. They will address any issues or concerns with the deputy and monitor their compliance with requests, and monitor the deputy’s adherence to the professional deputy standards, practice directions and practice notes.”

The Public Guardian’s position statement gives (at paragraph 23) an unequivocal statement of his position in respect of trust corporation deputies: he “wishes to note that there are clear benefits to the appointment of a TC, most notably that of continuity, ie there are no personal appointments and therefore, no costly applications where a deputy retires.”

There is no suggestion in any of the statements or submissions made by the Public Guardian that his Office either does or could conduct any checks as to the suitability of a trust corporation prior to appointment as a deputy.

There has also been filed at Court information from two bond providers.

When Deputy Bond Services was the MOJ contracted supplier of bonds, it provided to the court confirmation of trust corporations in respect of which it had conducted its checks with no concern arising. The Court informally referred to this list of “checked” trust corporations as an indication of appropriateness for appointment. With the different approach of the current approved supplier, no similar reference is now available to the Court.

There is presently no system in place as between the Court, the Office of the Public Guardian and the Ministry of Justice’s approved bond supplier on which the Court can rely as to the suitability of a trust corporation for appointment as deputy prior to making such appointment. A trust corporation can apply to be on the PG’s panel of deputies, but there is no ‘panel’ of trust corporations which have demonstrated compliance with legal requirements to act. Information necessary to satisfy the Court as to suitability must therefore be ’built into’ the application process itself.

The Court needs to be satisfied that the applicant trust corporation meets the four conditions of Rule 30 of the Public Trustee Rules 1912 as set out above.

The Public Guardian’s position is that “the PG’s Professional Deputyship Team are not legal experts on the constitution of TCs and it is submitted that the PG would be in danger of overstepping his statutory remit in carrying out such assessments, especially if a wrong conclusion is reached with potential claims for loss of work.” [tab 2 paragraph 10]

In each of the applications currently before the Court the trust corporation has been required to submit a copy of its Articles of Association. It is said on behalf of the eleven trust corporations that to do so each and every time they make an application for appointment would be unduly burdensome and costly. In any event, it is neither appropriate nor feasible for the Court of Protection to decide matters of constitution of a trust corporation.

How then is the Court to be satisfied that a trust corporation can lawfully act as such? In my judgment, the only feasible and proportionate way for the Court to satisfy itself of this basic requirement is to require self-reporting, with a declaration of truth, in the same way that other kinds of deputy are required to self-report their own appropriateness to act as deputy.

A trust corporation applying to be appointed as property and affairs deputy should firstly make a declaration, with a declaration of truth, that it can lawfully act as such; and secondly, give an undertaking to notify the Public Guardian forthwith if that state of affairs changes at any time throughout the duration of the appointment.

In the event that anything in the application papers leads the Court to require further confirmation of a trust corporation’s compliance with legal requirements to act as such, the appropriate approach of the Court would be to direct a report on that issue from the Public Guardian, pursuant to section 49 of the Mental Capacity Act 2005.

The trust corporations submit that

“provided that they are able to manage and administer P’s funds properly, and in accordance with their statutory and fiduciary obligations, trust corporations should be free to adopt their own internal management procedures (just as individual professional deputies and public authorities are). It is not for the court to seek to impose a standard set of practices on trust corporations….. Parliament simply provided that any trust corporation could be appointed as a property and affairs deputy if the court considered it to be in P’s best interests to do so.”

It is of course not the role of the Court to impose a set of internal practices. It is both undesirable and unfeasible for the Court to attempt to assess the working systems of a trust corporation but how is the Court to know if a trust corporation “is able to manage and administer P’s funds properly and in accordance with their statutory and fiduciary obligations”?

Once a trust corporation is established, and has been through a cycle of assurance visits, the Public Guardian could potentially be asked to provide information to the Court but this would be an onerous, expensive and time-consuming approach on a case by case basis. Moreover, the Public Guardian’s assurance visits cannot offer the Court any information in respect of a newly created trust corporation which has as yet no track record of handling deputyships.

In my judgment, the appropriate and proportionate response, in line with the existing COP4 procedure, is for the Court to require an undertaking from an appropriate officer of a trust corporation applicant to comply with the Public Guardian’s published standards for professional deputies. (Standard 3 sets out an expectation to “Maintain effective internal office processes and organisation”. Standard 4 requires possession of “the skills and knowledge to carry out the duties of a deputy.”)

No arguments against this approach were raised on behalf of the trust corporations.

The Public Guardian accepts the suitability of this approach for trust corporations of the type involved in these proceedings (ie linked to legal practices) but raises concerns about other types of trust corporation – specifically, charities and banks.

Mr Rees considered it essential that trust corporations not associated with solicitors firms should not be subjected to a lower standard, and I agree with him. The Public Guardian’s standards do not prescribe processes; they set out end-result competencies. The purpose of them is to secure the interests of the person whose funds are being managed. In my view an undertaking to comply with the Public Guardian’s standards for professional deputies may properly be expected of any type of trust corporation applicant. If trust corporations other than of the type in these proceedings (ie linked to legal practices) considered themselves in difficulty in giving such an undertaking, it would be appropriate for the Court to ask for further explanation, and a decision as to appropriateness for appointment taken on a case by case basis in the light of any responses.

Why should the Court consider external regulation relevant to suitability for appointment as a deputy? The Court’s concern is to protect the interests of the incapacitated person. The most likely risk to an incapacitated party from the actions of a property and affairs deputy is misappropriation/loss of that person’s assets. Any person or body appointed as deputy is subject to the Court’s power to terminate the appointment and to supervision by the Public Guardian, and the Court routinely appoints as deputy lay people who will be subject to no other regulation. If misappropriation/loss occurs, the prospects of recovering the misused funds are independent of regulation. Regulation is reactive – if a problem arises, a regulated person or body may be subject to sanctions but they are likely to come after the event. What assurance then does external regulation provide?

Where a lay, and therefore unregulated, deputy is appointed, the deputy is most commonly a family member or acquaintance of the protected person. Such a deputy is not usually authorised to charge for providing the functions of deputyship: he or she performs their duties for free, entitled only to claim reasonable expenses. In contrast, a trust corporation deputy is unlikely to have been previously involved with the protected person and generally anticipates authorisation for the charging of fees. Whereas a lay deputy is likely to be appointed only for a small number of protected persons, a trust corporation is likely to seek appointment for many protected persons, thereby aggregating a large risk.

Adherence to a regulatory framework provides a marker of standards; and the possibility (threat?) of sanctions for failure to meet prescribed standards will commonly operate proactively as an incentive to compliance. Regulation is not a guarantee of anything but it is, as Mr Rees describes, “a further check on what the deputy does….[because there is] someone else sitting on their shoulder.” The court must of course consider every case on its facts but where there is a requirement to comply with appropriate external regulation, the Court can derive assurance of the likelihood that a potential deputy will behave in an appropriate fashion to meet the best interests of P; and if he does not, that other agencies are likely to step in.

In respect of the applications currently before the Court, the relevant regulatory body is the Solicitors Regulatory Authority. Under chapter 12 of the SRA Code of Conduct a trust corporation owned by a solicitors practice may apply for SRA authorisation but is not required to be authorised as long as:

In the context of optional SRA regulation of a trust corporation, Mr. Rees introduces (at paragraph 28 of his position statement) the term ‘separate’: “a trust corporation owned by a solicitors practice does not require separate SRA authorisation if…” The implication seems to be that, where the individuals involved in the trust corporation and the underlying law firm are themselves subject to SRA regulation, then ‘separate’ SRA regulation of the trust corporation offers no additional benefit or assurance to the Court. Given the separate legal identity of the trust corporation, that did not seem to me an obvious conclusion:

Mr Rees points to “SRA requirements for the supervision of employees and non-solicitors working in an SRA regulated institution” to the effect that, where a solicitors’ firm employs non-solicitors, they are indirectly SRA regulated because they must be supervised by a solicitor. If a non-solicitor employee acts in a way which is inappropriate for an SRA regulated body, the SRA can bar their employment (by the particular and any other SRA regulated body.) (Footnote: ⁶) It seems to me however that this still does not provide a complete answer because one of the trust corporations does not require a solicitor who retires from the LLP to retire as Director of the trust corporation.

These considerations led to the identification in the hearing of three categories of trust corporation amongst the applicants:

The questions directed to the SRA after the hearing were intended to clarify to the Court the implications of regulation for each of these categories.

The first question related to Category 1 trust corporations. It was prefaced with a brief introduction:

“The parties understand that where a trust corporation is itself a recognised or licensed body, the SRA have both a supervisory responsibility over the body and various powers to take regulatory action against it to protect the public as may be necessary.”

The SRA was then asked to

“briefly outline the responsibilities and powers of the SRA in this regard.”

The second question related to Category 2 trust corporations, and was set out as follows:

“It is the case that many trust corporations associated with solicitors’ firms are not recognised or licensed but do only have directors who are solicitors. The Court is trying to understand what effect that situation has on the SRA’s supervisory jurisdiction and powers:

(1)

Would the decisions of the solicitor directors as directors of the trust corporation be subject to the SRA Code of Conduct or to any specific parts of it? We understand that at least some of the Code of Conduct applies to solicitors in every capacity.

(2)

Assuming the Code of Conduct is relevant to these actions, how would the SRA respond to breaches of that Code of Conduct by the directors in that capacity, for example if serious irregularities in trust accounts held by the trust corporation were brought to the SRA’s attention? Specifically, could the individual solicitors be subject to regulatory action by the SRA in respect of improper decisions as directors of the trust corporation?”

The third question put to the SRA was a generalised invitation to distinguish the regulatory regimes applicable to Category 1 and Category 2 trust corporations:

“Does the SRA have any general comment to make on the benefits to the public of a trust corporation being itself regulated or licenced or the risks of one not being?”

The SRA response (in its letter dated 30^th October 2017) uses different terminology to the questions, referring to “where a trust corporation is an authorised body.” Mr. Rees and Mr, Drapkin address this as follows:

“… trust corporations that are directly regulated by the SRA can themselves be either alternative business structures or have a structure that is regulated in the same way as a traditional legal practice would be. If the former then when regulated they are regulated as ‘licensed’ bodies and if the latter they are ‘recognised’ bodies. The SRA refers to both types of regulated body as ‘authorised’ bodies and therefore the word can be used to mean any trust corporation that is directly regulated by the SRA.”

From the SRA response, it is possible to extract the following propositions:

In respect of Category 1 trust corporations: the SRA will “regulate the entity as well as the solicitors working in it” and so its powers include the ability to “impose conditions on … at any time to restrict or stop the firm from carrying out an area of work, limit the activities of a manager or employee to allow us to comply with … regulatory objectives (Rule 9 of the SRA Authorisation Rules 2011).”

In respect of Category 2 trust corporations, the SRA letter states that “Where a solicitor is involved in a non-authorised business they are not able to participate as a practising solicitor but are practising as a non-solicitor. Although we do not regulate the business we regulate the individual solicitor. As they are not practising as a solicitor but are outside of practice only certain parts of the [SRA Code of Conduct] will apply.” The regulatory position in such circumstances is as follows:

The SRA response also addresses various other protective aspects of regulation:

So, in terms of regulatory obligation, a comparison of category 1 and category 2 trust corporations seems to be as follows:

To what extent do these equivalencies and differences translate into material difference for the position of the protected person (which is the Court’s concern)?

Conclusion: I am satisfied that the Court can be satisfied that there is adequate external regulation of a trust corporation for it to be suitable for appointment as a deputy if an authorised person undertakes on behalf of the trust corporation

That leaves still to be considered Category 3 trust corporations, including those which are not linked to legal practice at all. The Public Guardian points out (at paragraph 17 of his position statement) that where a trust corporation is run by a charity, the Charity Commission is the relevant regulatory body. Where a trust corporation is linked to a bank, there will be financial regulatory authorities. Within these proceedings, the scope of regulation of any such bodies has not been considered. If the protective effect of regulation by bodies other than the SRA is broadly comparable, it is likely that the Court will be similarly satisfied as to the appropriateness of the appointment, although to establish such satisfaction there may need to be on the next occasion when such appointment is sought a direction to the Public Guardian to provide a report pursuant to section 49 of the Mental Capacity Act 2005.

The Public Guardian further points out the possibility that there may be trust corporations created in relation to whom there is no supervisory body at all, ie with no one “sitting on their shoulder.” The Court must consider every application on its merits but I agree with the Public Guardian’s submission that “the Court should treat non-regulated [trust corporations] with caution.” Where there is no external regulation, the Court is likely to require the provision of further information (such as is “built in” to the standard application process) before the application can be determined.

The Public Guardian suggests that (by analogy to the matters identified as relevant to setting the level of the security bond in the case of Re H, Baker v H & Another [2009] WTLR 1719) the Court should consider:

Whilst this list should not be considered exhaustive, and additional factors may be relevant in any particular case, I agree that these factors are all likely to be relevant. The unregulated trust corporation applicant may be required to address them in the form of a COP24 statement by an authorised director; and the Court may direct the Public Guardian to prepare a s49 report to assist the Court.

In respect of how protected persons’ assets are held, Mr. Rees summarises that “broadly speaking investments are held in the name of the trust corporation as deputy for the relevant individual. There are differences in practice as to the holding of cash, with some use being made of the underlying law firm’s client account to hold some sums.” The Public Guardian has not made any submissions on this point, which I would regard as within the ordinary remit of his supervisory functions. In terms of how the Court considers these things, the considerations and conclusions above in respect of internal management supervision and controls, and external regulation, apply.

The concerns about the total amount of assets held and the level of insurance cover maintained were set out separately in the directions order but raise overlapping issues and were considered together at the hearing.

All of the trust corporations in these proceedings are covered by insurance policies maintained by the underlying solicitors’ practice; and all of the policies comply with the SRA Minimum Terms and Conditions of Professional Indemnity Insurance. In fact, all of the trust corporations in these proceedings maintain additional insurance cover in similar terms beyond the SRA minimum but to differing levels. Mr Rees summarised the SRA Minimum Terms and Conditions as requiring “a minimum of £3m cover for each claim for incorporated solicitors’ practices and alternative business structures and £2m for sole practitioners and traditional partnerships;” and set out the provision (at paragraph 2.5) for the insurer to aggregate claims arising from related matters.

The concern of the Court may be expressed by consideration of a hypothetical situation:

The aggregate of deputyship funds held by the various trust corporations represented in these proceedings covers a very wide range, from zero (where a trust corporation is newly established and has yet to be appointed) to many millions of pounds.

How realistic is the Court’s concern about aggregation? It should be remembered that the same issue arises where the Court appoints a range of named individual solicitors within the same firm as deputies. Arguably, it is of less concern where the deputyship is held by the law firm’s associated trust corporation because of the (various) internal control structures adopted in respect of who is authorised to act on behalf of the trust corporation and in what transactions.

It is submitted on behalf of the trust corporations that paragraph 2.5 of the SRA Minimum Terms has not yet been subject to judicial consideration. Mr Rees referred to the authorities of AIG Europe Ltd v. OC320301 LLP & Others [2016] EWCA Civ 367 and Lloyds TSB General Insurance Holdings Ltd v. Lloyds Bank Group Insurance Co Ltd [2003] 4 All ER 43 (HL) as offering some reassurance that the kind of losses which the Court is concerned with could not be aggregated. He says that, where the assets of protected persons are misappropriated by a deputy, in reality it will most probably have been done by lots of separate acts, not an individual act; and where the deputy misappropriates funds belonging to person A and also to person B, it is at least arguable that those wrongful acts are not related.

Mr. Rees’ submissions may be optimistic (as is to be expected). At the very least, paragraph 2.5 of the SRA Minimum Standards leaves the risk of aggregation open. Nonetheless, it should be remembered that the provision of insurance is itself is a protective measure, and the aggregation risk should be considered in the context of the overall package of protective measures.

It may in theory be possible for the Court to address this by requiring insurance cover which expressly excludes any power to aggregate but there is no information before the Court as to whether such policies are in fact available. Moreover it seems likely that, even if they are available, the costs of such cover would be higher, and the extra burden of such costs would ultimately be borne by protected persons as clients of the insured. More practically, the aggregation risk can be reduced if the level of insurance cover is, rather than the minimum requirement, a figure more proportionate to the total assets held. In fact, this approach has already been adopted by all of the trust corporations in these proceedings.

The Court has heard no submissions as to the “adequacy” of insurance levels over and above the SRA required minimum. In my judgment it is feasible and practicable for the Court to check adequacy of insurance solely in the context of a single claim relative to the size of the estate in respect of which deputyship is being considered. It is not, however, feasible or practicable for the Court to assess adequacy of insurance cover in the context of total assets under the management of the proposed deputy and aggregation risk. Any view taken today would be out of date next week because of new appointments made and old appointments ending; and the additional burden of providing such information with every application would be disproportionate. The aggregation risk is more appropriately monitored as part of the Public Guardian’s ongoing supervision of deputies. If the Public Guardian, supervising all of the appointments held by a deputy at any given time, finds cause for concern as to adequacy of insurance levels overall, he should refer the matter to the Court which can take such further steps as may be appropriate in the circumstances, including adjusting the security requirement or ultimately terminating the appointment.

To facilitate this approach, what is required is that the trust corporation deputy deposits with the OPG upon appointment a copy of its professional indemnity cover (in line with the suggestion by HHJ Marshall QC in Baker v. HJ [2009] COPLR Con Vol 606 at paragraph 106) and undertakes to inform the Public Guardian immediately should its level of cover reduce.

In my judgment, the Court may be satisfied as to sufficiency of insurance cover if an authorised person gives undertakings on behalf of the trust corporation that it will

The information and undertakings which I have identified as required for the Court to be satisfied that a trust corporation may appropriately be appointed are set out on a single page as Schedule 2 to this judgment.

It would be most convenient if these requirements were incorporated into an amended standard COP4 Declaration. Until that can be achieved, in my view the appropriate approach would be for a trust corporation seeking appointment as a property and affairs deputy to file with the application the current standard COP4 form with an additional page attached addressing those matters at schedule 2 of this judgment. The additional page should be endorsed with the name of the case and the name, position and signature of the authorised person giving the undertakings. Section 5 of the COP4 form should be completed so as to make clear that the additional attachment is part of the declaration, to which section 6 will then apply.

In respect of each of the applications in these proceedings, the trust corporation applicant is now required to file within 14 days an up to date COP4 declaration with the additional page attached as set out in paragraph 82 above. (For the avoidance of doubt, no COP9 application form is required.) The Court will further consider each application on the papers.

If, on considering the updated COP4 with the additional page, the Court is not satisfied that it is appropriate to make the appointment as sought, the particular application will be listed by the Court for further consideration at an oral hearing, reserved to me.

Whilst the issues raised in these proceedings have been under consideration, there have been other applications before the Court where an applicant trust corporation has been appointed as property and affairs deputy for a limited period (usually twelve-months) or its application has been stayed (“The Other Matters”). In some of The Other Matters, COP9 applications have been made for reconsideration of the time-limited aspect of the appointment or the stay.

In the light of this judgment, those trust corporation applicants in The Other Matters are invited to provide to the Court:

Upon receipt of the schedule and the declarations, the Court will consider each matter further of its own motion. (No COP9 application is required.) If, on considering the updated COP4 with the additional page, the Court is not satisfied that it is appropriate to vary the order in respect of time limited appointment or to lift the stay, the particular matter will be listed by the Court for further consideration at an oral hearing.

SCHEDULE 1

The proposed deputy (the trust corporation) is a trust corporation within the meaning of section 64(1) of the Mental Capacity Act 2005 and can lawfully act as such; and the trust corporation will inform the Public Guardian immediately if that ceases to be the case.

The trust corporation will comply with the Public Guardian’s published standards for professional deputies.

EITHER (i) The trust corporation is authorised by the SRA;

The trust corporation will notify the Public Guardian immediately if there is any change to any of the matters set out in paragraph 3 above.

The trust corporation undertakes that it (or where relevant its associated authorised legal practice) will maintain insurance cover that:

The trust corporation will lodge a copy of the insurance policy referred to in paragraph 5 above with the Public Guardian on appointment and will inform the Public Guardian immediately if there is any reduction in the terms or level of the insurance cover.