ACC & Ors ( property and affairs deputy ; recovering assets costs for legal proceedings)

ACC 1219069T

Niall Baker, dated 28th August 2018 [B20]

Elizabeth Perry, dated 5^th March [B60] and 2^nd September [B106] 2019

JDJ 12067238

Kelly Grieg dated 31st January [C20], 6th March [C73] and 3rd May [C91] 2019

Polly Sweeney dated 11th June [C98] and 25th July [C140] 2019

Advice by Katherine Barnes of Counsel dated 19th July 2019 [C143]

HPP 12636322

Charlotte Waite, undated [D20]

Generally, on behalf of the Public Guardian Julie Lindsay, dated 19^th September 2019

ACC is now 20 years old. At the age of 4 she was involved in a road traffic incident in which she sustained serious injury and her mother died. A claim for damages was brought on her behalf, and settled in 2012 in the sum of £3 million plus periodical payments which presently amount to £180 000 per year. She lives in her own home, with her grandparents.

Capacity is not in issue. I accept the COP3 assessment [B90] by a consultant neuropsychologist dated 11^th June 2019 that ACC lacks capacity in the domains relevant to these proceedings.

By order made on 11^th September 2013 [B44] and varied on 17^th July 2017 [B46] Irwin Mitchell Trust Corporation Limited (“IMTC”) was appointed as property and affairs deputy for ACC. The deputyship order states at paragraph 2(a) that “The court confers general authority on the deputy to take possession or control of the property and affairs of [ACC] and to exercise the same powers of management and investment, including letting property, as she has as beneficial owner, subject to the terms and conditions set out in this order.” The order does not contain any express provision either granting or excluding authority to instruct solicitors or to conduct any kind of proceedings on behalf of ACC.

In 2018 the relevant local authority decided to end the support previously provided to ACC under an Education Health and Care Plan. IMTC sought advice from the Public Law and Human Rights team at Irwin Mitchell LLP as to an appeal against this decision.

The Tribunal in which such appeal would be heard is a ‘no costs’ jurisdiction, and costs do not ‘follow the event’ so it was never likely that the local authority would bear the costs of any appeal. Accordingly, by COP1 application dated 23^rd August 2018 [B10] IMTC sought “an order authorising the Deputy to take whatever steps are necessary to ensure that [ACC] has the benefit of legal advice and assistance in relation to the Education, Health and Care Plan appeal and that costs incurred by the Deputy in retaining solicitors to act on her behalf in that matter are to be assessed on the standard basis” and authority for such costs to be paid from ACC’s funds.

It was explained in a statement supporting the application [B29] that the costs for which authorisation sought fell into a number of categories:

“26.

The initial advice from the PLHR team at a fixed fee of £750 plus VAT is now complete ….

27.

In terms of next steps…. there are approximately five hours of work to be provided in relation to actually securing instructions on this matter, considering any amended decision and Plan by the local authority and providing advice on those issues. The costs of this will be in the region of £1 000 plus VAT.

28.

…. Overall costs of an appeal if fully contested (it is too early to advise on the likelihood of it being fully contested) are likely to be in the region of £35 000 plus VAT… should it become necessary to instruct Counsel such fees would be in the region of £7 500 plus VAT….Expert fees in support of appeals to the tribunal would be in the region of £7 500…. If mediation was considered appropriate at the time then this would cost in the region of £2 000 to £3 000 plus VAT including attendance and preparation.”

Directions were given by orders made on 6^th February [B1], 23^rd April [B3], 26^th April [B5], 17^th May [B7] and 24^th June [B9] 2019.

The Local Authority finalised the amended Education Health and Care Plan in November 2018, although it was apparently only submitted to the Irwin Mitchell Public Law and Human Rights Team solicitors in January 2019 [B67]. The deadline for submitting any appeal was 21^st January 2019. An appeal was issued. As of May 2019 [B85], those proceedings have been satisfactorily concluded.

The application before the Court of Protection is therefore now limited to retrospective authorisation of costs actually incurred. In part those costs have already been assessed by the Senior Courts Costs Office: on a bill submitted as £1 201.50 + VAT [B67], costs were assessed as £906.10 + VAT. A further bill of £1 550.20 + VAT [B69] has yet to be assessed and there may be “possibly some additional work.”

There is some lack of clarity as to who actually instructed the Public Law and Human Rights team at Irwin Mitchell LLP and with what authority:

JDJ is 17 years old. He sustained brain injury due to clinical negligence at birth. He lives in his own home with his parents. Capacity is not in issue.

A damages claim brought on behalf of JDJ settled in 2013 with an award of £3 million and periodical payments which are currently £45 000 per year. JDJ’s estate has since grown [C97] but his outgoings exceed his income by approximately £30 000 per year.

An order was made on 5^th April 2013 appointing Kelly Grieg and Michael Wilson as property and affairs deputies for JDJ. Paragraph 4 (a) of that order conferred on the deputies “general authority…to take possession or control of the property and affairs of [JDJ] and to exercise the same powers of management and investment, including letting property, as he has as beneficial owner, subject to the terms and conditions of this order.” The order does not contain any express provision either granting or excluding authority to instruct solicitors or to conduct any kind of proceedings on behalf of HPP.

An order was then made on 7^th August 2013 [C71] which restricted the deputies’ authority “in accordance with undertakings given on behalf of [JDJ] by his litigation friend” in the damages proceedings. The order precludes the deputies from making any application for public funding of JDJ’s care, case management and full time residential education between the ages of 19 and 25, unless and until certain specified steps (of notification to the NHS and subsequent granting of permission by the Senior Judge) have been taken. Given JDJ’s age, this restriction does not currently apply.

By order made on 4^th April 2014 [C28] the appointment of Michael Wilson was discharged and the continuation of appointment of Kelly Grieg as sole deputy was confirmed, on the same terms as the previous orders.

In the summer of 2018 JDJ’s family identified a specialist educational placement which they considered suitable for him to attend from September that year. On 10^th December 2018 the Local Authority made a decision that JDJ’s needs could be met at a different, mainstream college.

By COP1 application dated 31^st January 2019 [C10] the deputy applied for:

“… authority for costs to be incurred by Irwin Mitchell’s Public Law & Human Rights Department on [JDJ’s] behalf to ensure he receives the correct level of legal advice and representation in relation to education and social care.

Urgent authority is sought in order to liaise with the Local Authority regarding funding for [JDJ’s] future college placement and to appeal against their decision to the Tribunal if necessary.

The last day for doing this is 10 February 2019, hence the urgency. Anticipated costs in relation to this depends upon what action is required and the experts that will need to be instructed, however we would suggest a limit of £40 000 + VAT.”

Directions were given by orders made on 12^th February [C1], 23^rd April [C3], 26^th April [C5], 17^th May [C7] and 24^th June [C9] 2019.

Meanwhile, and to comply with Tribunal deadlines, the Public Law and Human Rights team of Irwin Mitchell LLP were instructed to advise and then to appeal against the Local Authority’s decision. The deputy has confirmed that “no instructions were given to PLHR and no costs incurred by PLHR until after the application was sent to the Court” [C78]. Quite who gave the instructions is less clear:

At the request of the Official Solicitor, acting as JDJ’s litigation friend in these proceedings, Counsel’s advice was sought on the prospects of success of the contemplated appeal. A copy of that advice has been filed [C143]. Counsel considered the prospect of an appeal succeeding to be “strong (70% or over).” In fact, after a hearing on 2^nd and 3^rd September

2019, the Tribunal upheld the Local Authority’s decision. Some amendments were made to the Plan as a result of the appeal proceedings.

HPP is now 50 years old. In September 2014 he sustained severe brain injury and multiple orthopaedic injuries when his bicycle was hit by a lorry.

Capacity is not in issue. I accept the COP3 assessment [D50] by a clinical neuropsychologist dated 6^th June 2019 that HPP lacks capacity in the domains relevant to these proceedings.

By order made on 19^th May 2015 [D28] IMTC was appointed as property and affairs deputy for HPP. The deputyship order states at paragraph 2(a) that “The court confers general authority on the deputy to take possession or control of the property and affairs of [HPP] and to exercise the same powers of management and investment, including purchasing, selling and letting solely owned property, as he has as beneficial owner, subject to the terms and conditions set out in this order.” The order does not contain any express provision either granting or excluding authority to instruct solicitors or to conduct any kind of proceedings on behalf of HPP.

A claim for damages has been brought in the name and on behalf of HPP. Irwin Mitchell LLP act for HPP in that litigation. Liability has been admitted but quantum had not, at the date of the hearing before me, been resolved. HPP’s estate is currently comprised of liquid assets of approximately £170 000, a property with a value of approximately £290 000 and an annual income of approximately £20 000 (with annual outgoings of approximately £195 000.)

To date, there have been three litigation friends appointed for HPP in the civil proceedings. Initially, the litigation friend was HPP’s partner but she stepped down when their relationship came to an end. Michael Knott of Irwin Mitchell LLP was then appointed. When he left the firm, HPP’s litigation solicitors “reviewed [his] circumstances” [D25] and came to the conclusion that there was no family member suitable and willing to act. A file note [D42] records that one of his personal injury litigation solicitors explained to HPP that the litigation friend “could be Charlotte Waite of Irwin Mitchell” and states that “[HPP] has met her previously in her Deputy role and is familiar with her.” (There is no recognition in the file note that Ms. Waite is not the appointed deputy but rather a director of Irwin Mitchell Trust Corporation.)

On 22^nd June 2018 an order [D32] was made in the civil proceedings appointing Charlotte Waite as HPP’s litigation friend.

By COP1 application [D10] dated 28^th September 2018, IMTC Ltd has applied for: “1. Authority for the Senior Court Costs Office to carry out a detailed assessment of the costs of Charlotte Lorna-Leigh Waite, as Director of Irwin Mitchell Trust Corporation Ltd as Deputy for [HPP], in connection with her role as litigation friend in the proceedings relating to his personal injury claim, under claim number HQ17P02455, following her appointment as litigation friend by the High Court of Justice, Queen’s bench Division.

Within these proceedings it has been explained that the second head of the application is otiose. The applicant is not actually seeking orders in respect of any proceedings other than the current personal injury damages claim but it is asking for authority to charge for acting as litigation friend within those proceedings.

By order made on 10^th January 2019 [D1] a District Judge dismissed the application. A COP9 application [D43] was duly made for reconsideration of that order, which was set aside by order made on 24^th April 2019 [D2]. Subsequently directions have been given by orders made on 26^th April [D5], 17^th May [D8] and 20^th May [D48] 2019.

2005 (“the Act”). On behalf of persons lacking capacity to make a decision for themselves, section 16(2) provides that the court may either make the decision itself or appoint a deputy to do so.

Subsection 3 provides that the appointment of a deputy is a ‘best interests’ decision:

purchase freehold or leasehold property;

sell, lease or charge freehold or leasehold property;

appoint an investment manager;

use P’s funds to provide for others;

make gifts to charity or on customary occasions;

obtain a grant of representation; and

execute or sign deeds or documents.

The deputy is hereby authorised to conduct proceedings in the action in the name and on behalf of AB and to act therein as litigation friend.

The deputy is hereby authorised to act as litigation friend for AB in the divorce and financial remedies proceedings and to approve any financial settlement.

The deputy is authorised to conduct proceedings as litigation friend in the name and on behalf of AB under the Inheritance (Provision for Family and Dependants) Act 1975 in relation to the estate of [name] deceased.”

Duty not to delegate

A deputy may seek professional or expert advice (for example, investment advice from a financial adviser or a second medical opinion from a doctor). But they cannot give their decision-making responsibilities to someone else. In certain circumstances, the court will authorise the delegation of specific tasks (for example, appointing a discretionary investment manager for the conduct of investment business).

In certain circumstances, deputies may have limited powers to delegate (for example, through necessity or unforeseen circumstances, or for specific tasks which the court would not have expected the deputy to attend to personally). But deputies cannot usually delegate any decisions that rely on their discretion. If the deputy is the Director of Adult Social Services in England or Director of Social Services in Wales, or a solicitor, they can delegate specific tasks to other staff. But the deputy is still responsible for any actions or decisions taken, and can therefore be held accountable for any errors that are made.

A fiduciary duty means deputies must not take advantage of their position. Nor should they put themselves in a position where their personal interests conflict with their duties. For example, deputies should not buy property that they are selling for the person they have been appointed to represent. They should also not accept a third party commission in any transactions. Deputies must not allow anything else to influence their duties. They cannot use their position for any personal benefit, whether or not it is at the person’s expense.

In many cases, the deputy will be a family member. In rare situations, this could lead to potential conflicts of interests. When making decisions, deputies should follow the Act’s statutory principles and apply the best interests checklist and not allow their own personal interests to influence the decision.

Sometimes the court will consider appointing the Director of Adult Services in England or Director of Social Services in Wales of the relevant local authority as deputy. The court will need to be satisfied that the authority has arrangements to avoid possible conflicts of interest. For example where the person for whom a financial deputy is required receives care services from the local authority, the court will wish to be satisfied that decisions about the person’s finances will be made in the best interests of that person, regardless of any implications for the services provided.

Conflicts of interest are ubiquitous in any mental capacity jurisdiction and it would be unrealistic, if not impossible, to eradicate them entirely. [paragraph 31]

Notwithstanding paragraph 8.58 of the Code, in practice all professional deputies profit from their position because they act for reward. The history of Court of Protection practice over the last hundred years has been a gradual relaxation of what was once an absolute prohibition on the appointment of solicitors as deputies on account of the conflict of interests. [paragraphs 33 – 36]

One of the principal functions of the Court of Protection is to manage conflicts of interest to ensure that any act done or any decision made on behalf of a person who lacks capacity is done or made in their best interests. [paragraph 44]

The “classic way” of managing the conflict of interests when appointing solicitors as deputies is to require that their costs be assessed by the Senior Courts Costs Office to ensure that they don’t abuse their position. [paragraph 45]

The proceedings included a wider application by Irwin Mitchell Trust Corporation for an order relating to the circumstances in which it may appoint an associated company to manage the investments of clients for whom it acts as a deputy for property and affairs. [paragraph 1]

Irwin Mitchell LLP acted for MWS in a personal injury claim which settled for £2.5 million, and IMTC was appointed as his property and affairs deputy. [paragraph 4]

The deputy applied for authority to appoint Irwin Mitchell Investment Management as independent financial adviser in respect of its management of MWS’s funds, and general authority to adopt the same procedure in other matters where there was no family input into choice of financial adviser. [paragraph 5]

Evidence was filed as to how the decision to appoint Irwin Mitchell Investment Management had been reached:

“in view of the circumstances of [MWS]…it was not considered appropriate to incur the level of costs associated with going through a full beauty parade process.

Rather than undertaking a beauty parade in this case, I obtained a report from Enhance Wealth Consultancy Limited, a leading provider of investment oversight services to the fiduciary sector. The purpose of the report is to provide independent verification as to whether there is any reason why Enhance would disagree with IMTC’s choice of IMAM as an investment solution and provider. In this case Enhance were asked to compare two recommendations. There would usually be three but in this case I was able to discount one based on high costs before proceedings to external verification.

…. Enhance see no reason to object to the appointment of IMAM as financial planner and investment manager for MWS’s funds managed under the deputyship.” [paragraph 7]

The Public Guardian was joined as party and identified the likely conflict of interest. [paragraph 9(1)]

The Public Guardian identified a document which suggested that “[t]here appears to be a retainer or fee for Enhance to support Irwin Mitchell’s applications.” He noted that the Enhance report “cannot properly be said to be an independent expert report” and that “There does appear to be ‘rubber stamping.’” [paragraph 12] He made proposals for improving the verification process in the particular case, and opposed the application for any “general” authority.

Senior Judge Lush concluded that “both the Court of Protection and the OPG are prepared to allow IMTC to instruct IMAM to manage P’s investments provided they are satisfied that it is in P’s best interests and there are effective safeguards in place to prevent abuse. This means that there should be a level playing field when selecting of investment managers for persons for whom IMTC acts as a deputy.” [paragraph 23]

In the particular case of MWS, the appointment of IMAM as financial adviser was accepted to be in his best interests. The application for a general authority was dismissed.

Senior Judge Lush identified three options open to IMTC as deputy [paragraph 24]:

emphasised that the Court’s concern emerged from the general nature of the transaction, namely “that funds should be removed from the control of the Court and placed into the hands of trustees who will have powers of distribution, application and investment outside the control of the Court and will do so for reward.” [paragraph 16]

focussed his enquiry on “whether the applicant has made a free and informed decision, not whether the decision is a wise one.” [paragraph 17]

observed that “[t]he firm of solicitors who have acted in the successful litigation will have established a relationship of trust and confidence with the claimant or the litigation friend. At the successful conclusion of the litigation the person in whom trust is reposed then suggests a further transaction out of which its associate will derive a personal benefit. The adviser suggests that a private trust is the preferable arrangement, and that its associated trust corporation should be appointed trustee and should charge for acting, although there are many other trust corporations who could fulfil the role. So the client is retained for the long term.” [paragraph 28]

reflected the solicitors’ position that “this arrangement was not about an integrated business model…but was an arrangement for the convenience of clients who wanted a ‘one stop shop’ in personal injury litigation” but noted that “this is a shop that stocks only one product.” [paragraph 29]

identified “the principled approach” in such situation to be as follows:

Litigation Friend

can fairly and competently conduct proceedings on behalf of the child ro protected party;

has no interest adverse to that of the child or protected person; and

where the child or protected party is a claimant, undertakes to pay any costs which the child or protected party may be ordered to pay in relation to the proceedings, subject to any right he may have to be repaid from the assets of the child or protected party.

Civil Procedure Rules 1998

Court’s power to change a litigation friend and to prevent person acting as a litigation friend

(1) The court may –

direct that a person may not act as a litigation friend;

terminate a litigation friend’s appointment; or

appoint a new litigation friend in substitution for an existing one.

….

The effect of the Court of Protection authorising a deputy to conduct proceedings on behalf of P is two-fold:

The Applicants venture to articulate the suggestion that the standard deputyship order is drawn sufficiently widely to permit a deputy to engage in contentious litigation on P’s behalf but – very sensibly, in my judgment – recognise that this is not the view taken by the court [position statement paragraph 18]. There is therefore no argument on this point.

If the authority of a deputy is to extend to conducting litigation on behalf of P, such authority must be specifically granted. The ‘general’ authority does not encompass authority to conduct litigation on behalf of P.

When the court considers an application for authority to conduct proceedings, it will consider whether there should be limits to such authority. If there are concerns as to merits or costs or otherwise, the authority may be (and often is) granted only up to a specified stage of proceedings (when another merits assessment may be required), or with a limit on the costs which may be incurred without further application.

The Applicants submit that an exception should be made in respect of proceedings in the Court of Protection ie no prior authority to conduct litigation should be required where the proposed litigation is itself an application to the Court of Protection. The reasoning is that “otherwise the deputy would be in the absurd position of asking the Court of Protection to authorise him to incur costs in drawing up an application to the Court of Protection.” [position statement paragraph 20]

The Official Solicitor agrees. [position statement paragraph 51]

I do not fully accept their agreed position. In my judgment, a distinction has to be drawn between proceedings about property and affairs, and proceedings about welfare.

If a property and affairs deputy wishes to make an application to the Court of Protection in respect of property and affairs issues, I agree that no prior application for authority to do so is required.

However, a property and affairs deputyship does not confer any authority in respect of welfare. If a welfare issues arises, there may be a body or institution more appropriately placed than the property and affairs deputy to make that application, at less cost to P.

Of course life does not in reality divide neatly into property and affairs issues on the one hand and welfare issues on a quite separate hand. It will sometimes be the case that decisions properly made within a property and affairs authority sit alongside a need for welfare proceedings in the Court of Protection. Such a situation was considered by the then VicePresident, Charles J, in the case of Staffordshire County Council v. SRK, RK, Irwin Mitchell Trust Corporation and The Secretary of State for Justice [2016] EWCOP 27, a matter which concerned the need for authorisation of deprivation of liberty.

In the Staffordshire case, Charles J drew the following conclusions:

It is clear from the Staffordshire case that the responsibility which burdens a property and affairs deputy is to ensure that such decisions as they make in management of P’s funds result in a lawful situation. To do that, the deputy is required to alert those bodies with responsibility to take appropriate action (as the Council did in that case.) It must be within the ‘general’ authority of the property and affairs deputy to go that far.

In an ideal world of course the responsible bodies would take immediate action and the duty of the deputy would be discharged with only modest cost to P. What is the deputy’s obligation where the responsible body does not act so ideally? Charles J considered that the deputy would “have to take steps” to ensure appropriate authorisation, but he did not specify what those steps would be.

In my judgment the requirement on the deputy is to bring the need for welfare proceedings to the attention of the Court. So if, having been properly alerted by the property and affairs deputy, the appropriate body or institution drags its heels in referring a non-propertyand-affairs issue to court, the deputy may - without specific authority to do so - appropriately make an application to draw this to the attention of the court and seek further directions. Moreover, the deputy should do so.

Such application will need to include an explanation of the issue on which the need for proceedings has been identified and the importance of the issue to P. If the deputy seeks authorisation to conduct the proceedings on behalf of P, the application should also include a summary of P’s estate, an estimate of costs as far as the stage for which authority is sought, and an explanation of why it is considered that the property and affairs deputy is most appropriately placed to bring the application/conduct the proceedings on behalf of P.

It would be open to the Court considering such an application to authorise the deputy specifically to conduct the contemplated proceedings, or to make more limited directions. In particular, the Court can consider whether someone other than the deputy may be a more appropriate applicant in welfare proceedings. The Court may, for example, grant the property and affairs deputy specific authority to ‘investigate and report’ as to any welfare issues; or the Court may direct the filing of a report by a local authority, NHS body, Court of Protection Visitor or the Public Guardian pursuant to section 49 of the Mental Capacity Act.

Where a damages award to P specifically incorporates an element to compensate the costs of welfare proceedings (eg for reviews of deprivation of liberty authorisations) being brought by his property and affairs deputy, that will be a relevant consideration.

In my judgment, it is appropriate and practicable that the ‘general’ authority of a property and affairs deputy is understood to extend as far as permitting an application to the Court of Protection to draw to the attention of the Court a need for consideration of a welfare issue. However, in my judgment there is no basis for concluding that it should extend as far as permitting the conduct of welfare proceedings in the Court of Protection on behalf of P without specific authority. I find nothing in the Staffordshire judgment to suggest that Charles J intended a property and affairs deputy’s ‘general’ authority to encompass either extensive engagement on welfare issues, or the conduct of welfare proceedings on behalf of P, without further consideration by the Court of Protection of his authority to do so (and therefore the potential for costs implications to P.) A property and affairs deputy is required to obtain specific authority to conduct welfare proceedings in the Court of Protection.

The Applicants suggest that “general management” extends to “unexceptional noncontentious legal tasks even if they are carried out by other members of the deputy’s firm.” That submission is based on three observations:

I am not convinced that Practice Direction 19B provides any basis for determining the extent of ‘general’ authority. In respect of conveyancing, the wording of the relevant provision (paragraph 14) clearly links to a deputy’s authority to sell or purchase property, which nowadays is expressly included in or excluded from a deputy’s authority in a standard order, and not to the ‘general’ authority. Irrespective of whether any party to the process has or lacks the relevant capacity, conveyancing is a necessary part of purchase or sale of property. A deputy’s authority to purchase or sell property on behalf of P can therefore only be effective if it incorporates authority to complete the conveyancing process on P’s behalf. That the process is unlikely to be administered by the deputy personally is within the ordinary understanding of permitted delegation.

In the same way, dealing with leases or tenancy agreements where the property belongs to P is better seen as part of the deputy’s authority to let property, which nowadays is also explicitly addressed in the standard deputyship template.

Where P was running a business before incapacity intervened, the requirements of the deputyship will be more complex than is usual. To that extent, characterising any requirement to “draft and advise in relation to employment contracts relating to a business belonging to P” as “unexceptional” is something of a stretch. Moreover, it is the experience of the central registry that applicants for deputyship in such circumstances generally seek specific authority to deal with the business, and the authorisations granted are individually framed for the needs of the particular case. In my judgment, dealing with employment contracts relating to P’s business is better seen as part of such authorisation than as part of “general management.”

The other two pillars of the Applicants’ argument are essentially one and the same – the expectation that professional deputies will arrange for appropriate tasks to be performed at an appropriate level. This expectation is obviously motivated by the need to meet the best interests of P by ensuring that he is not charged more than is reasonable (as opposed to meeting the business interests of a professional deputy by ensuring that he can charge his client at a higher than reasonable rate.) I am not persuaded that it suggests anything about what tasks a deputy is authorised to do on behalf of P. Moreover, obtaining advice is not delegating a ministerial task; it is seeking a professional service.

The conclusion I draw is not that “general” authority encompasses unexceptional noncontentious tasks; but the rather different proposition that authority to do an act on behalf of P encompasses such ordinary legal tasks short of taking proceedings as are an ancillary part of giving effect to that authority.

How do Mr. Rees’ examples fare when measured against that proposition?

I have referred to “ordinary” legal tasks related to a deputy’s authority. I am conscious of the vagueness of the term. Seeking legal advice will be obviously an “ordinary” part of discharging some functions of deputyship but not others. This is what I understand the Official Solicitor to be saying when she takes the position that obtaining advice on behalf of P will sometimes be within the “general” authority, and will sometimes require specific authority. The effect is the same. In respect of non-contentious matters, the deputy’s approach should be to ask themselves if the subject of the advice is within their authority ie will their existing authority be sufficient to act on the advice if taken? If it is, then seeking advice is likely to be an ‘ordinary’ part of that function. If it is not, seeking advice is likely to be outside their authority.

The Official Solicitor submits that there should be a limit to the extent to which noncontentious tasks fall within the standard authorities of a property and affairs deputy, and refers to a proposal from Irwin Mitchell of £2 000+VAT in any given year. My understanding is that the Applicants make such proposal only as a way of addressing conflict of interest, where a deputy wishes to instruct his own firm to carry out contemplated legal tasks (considered below).

In respect of the current, wider question, the Applicants’ position appears to be [position statement paragraph 17] that assessment by the SCCO is sufficient protection for P.

In my judgment, the non-contentious nature of the work envisaged itself limits somewhat the scope for costs exposure. Moreover, the deputy will be required as part of the normal best interests decision making process to consider whether the cost of the advice/work is proportionate to P’s estate and the importance of the issue to P; and to evidence that decisionmaking process. Any costs will be either limited to fixed rates or subject to SCCO assessment. In my judgment, those requirements are a proportionate means of protecting P’s interests. It is not helpful for me to ‘fix’ a financial limit to the non-contentious legal tasks within a deputy’s authority (subject to conflict of interest considerations below). In any case where the deputy is in doubt, of course application to the Court can and should be made.

Involvement in contentious litigation is a much less ordinary feature of life, and costs are inherently likely to be significant. As concluded above, conduct of proceedings requires specific authorisation but there is necessarily a stage before proceedings are embarked upon, when a capacitous person or a deputy on behalf of P needs to form a view about whether it is appropriate to go down the path of litigation. When such a need arises, it is common to respond by seeking legal advice. To that extent, in my judgment there is scope for concluding that “general” authority includes authority to take some advice in respect of some contentious litigation. The difficulty lies in identifying the limits of this authority.

Helpfully, Mr. Rees again suggests examples of situations where a property and affairs deputy may need to form a view about potential proceedings:

Both of these examples are clearly in the realm of property and affairs. Where a deputy has authority to let property belonging to P, forming a view about (a) may reasonably be considered to fall within the “ordinary” discharge of that authority. Using P’s funds to settle his debts falls within the “general management” authority, and forming a view about (b) may reasonably be considered to fall within the “ordinary” discharge of that authority.

However, not all contentious litigation is to do with property and affairs. It must be borne in mind that the “general” authority in the standard terms of the deputyship order is limited by reference to possession, control, management and investment of “property and affairs.” As already observed, it is in my judgment important to distinguish between the contemplation of litigation in the realm of property and affairs, and the contemplation of other litigation. Steps towards contentious litigation of the latter type are unlikely to fall within the “ordinary” discharge of the property and affairs deputy’s authority, and so are not encompassed within the “general management” provision.

Having concluded that taking legal advice on behalf of P in respect of at least some potential contentious litigation falls within a deputy’s “general” authority, it becomes necessary to draw a line between taking advice and conducting litigation.

Fundamentally, the scope of the authority to take advice where necessary to discharge deputyship functions must be limited by the requirement that the deputy reasonably assesses the importance of the possible litigation to P, and the costs of the advice, to be such that seeking advice at all is in P’s best interests. Thereafter, the question becomes how far along the path towards conducting litigation does the authority extend?

The Applicants submit specific authority should only be required when the point of sending the letter of claim is reached. The Official Solicitor points out that this would leave the Court with limited information on which to base a decision of whether or not to authorise the deputy to conduct proceedings. She suggests a deputy should be permitted to go as far as receiving the Letter of Response before requiring specific authority, so that the Court would have information about possible defences when considering the application for such.

I am conscious that both approaches potentially allow considerable costs to be incurred before the court has opportunity to consider the situation. However, the application for specific authority will itself incur costs. After careful consideration, I am persuaded by the Official Solicitor’s approach. It stops short of formal issue of proceedings. The additional costs on top of what could be incurred under the Applicants’ approach are likely to be relatively small; the additional information made available, likely to be significant. In respect of contemplated litigation in the realm of property and affairs, the Official Solicitor’s approach is in my judgment sensible and proportionate.

When the Court considers the application for authority to conduct litigation on behalf of P, the Court will need to consider some evidence of the prospects of success of the litigation. The strength of the prospects required to satisfy the Court that its pursuit is in the best interests of P will differ according to the importance of the issue to P and the risks (including as to costs) of the litigation. The evidence of merits need not always be in the form of independent counsel’s opinion but most commonly it will be. Logically therefore, where (as concluded above) the deputy’s authorities extend to seeking advice without specific authority, they also encompass obtaining counsel’s opinion on the merits.

In contrast, where the contemplated litigation is not in the realm of property and affairs, there is simply no line to be drawn. A property and affairs deputy’s authority relates only to property and affairs; it does not encompass seeking advice on welfare issues. It extends no further than meeting the deputy’s responsibility to draw to the court’s attention that there is or may be a welfare issue for determination by seeking directions as to how such (potential) issue may be addressed. Without such application being made and granted, the deputy proceeds at risk as to costs.

I acknowledge that there is sometimes scope for argument as to whether contemplated litigation is in essence a property and affairs matter, or a welfare matter. In response to my written questions, Mr. Rees argues that it is within the authority of the property and affairs deputy “to obtain initial advice on public law decisions which will have an impact on P’s property and affairs (for example because P is being deprived of a source of funding or because P is being deprived of a service which the deputy may need to provide or supplement from P’s funds.)”

In order to consider the import of the conclusions drawn thus far, it is helpful to consider two particular types of public law decisions where the experience of the Court suggests that property and affairs deputies may find themselves having to consider closely the limits of their authority: continuing healthcare funding, and Education, Health and Social Care Plans. a. Applications for continuing healthcare funding:

The Applicants and the Official Solicitor agree that “there will be some matters that are so urgent that authority to litigate cannot reasonably be obtained prior to taking action which will protect P.” I agree.

They further agree that in such cases, the deputy proceeds initially at his own risk as to costs but may make an application to the Court for retrospective approval of the steps taken and authority therefore to recover costs from P’s funds. Again, I agree.

The Applicants and the Official Solicitor part company in respect of the approach to be taken by the Court when considering such retrospective applications. The Official Solicitor’s position is that the deputy “should be able to obtain retrospective approval…provided the Court decides the action was in P’s best interests.” This is merely a statement of the position in law. The Applicants however submit that retrospective applications “should be treated by the Court sympathetically provided that they have been promptly made and the deputy has at all times reasonably believes that he is acting in P’s best interests.” The Applicants effectively seek a general and prospective assurance that the theoretical risk as to costs is unlikely to be realised.

Mr Rees submits that this “accords with the approach in the Chancery Division in relation to Beddoe applications (see Lewin on Trusts para 27-057).”

In my judgment, the Court cannot – in this judgment or otherwise – give any general and prospective assurance of the outcome of any application. Like any decision-maker in respect of persons lacking capacity, the Court’s determination of such applications must be made in the best interests of P. It is axiomatic that the Court is unlikely to approve actions if the deputy did not reasonably believe that he was acting in P’s best interests, and that the approach of the Court should be supportive of actions which do protect and have protected P’s interests. It is not permissible to go beyond those obvious generalisations. Each application will be decided on its merits.

When making such an application, the deputy will need to explain why a matter was so urgent that authority could not be sought prospectively. The length of time between taking the urgent action and making the application for retrospective approval is likely to be a relevant consideration. I do not suggest that the robust approach of Re Nottley will always be appropriate but there is force in the observation that if a deputy has been able to take the urgent action, they should also be able to make the application for retrospective authorisation hard upon its heels.

The Official Solicitor acknowledges that a deputy can “find himself in a situation where he wants to issue a claim for an urgent injunction on P’s behalf…[and] will almost certainly need to offer a cross-undertaking in damages to be able to obtain such a remedy.” Without authority to take such proceedings the deputy “would not necessarily have recourse to P’s assets …[and] would want to act with great care.” In such circumstances, the application the Court of Protection for retrospective authority should clearly indicate the deputy’s exposure and seek urgent consideration by the Court. At the central registry, the application would then be referred for consideration by the Urgent Business Judge.

Where a deputy instructs his own firm, there is clear potential for conflict of interests, as the Applicants acknowledge. However they contend that a strict requirement for separate authorisation of every such occasion would be disproportionate, and suggest two alternative mechanisms to address the risks:

There has been no attempt to persuade me that (a) falls within the Court’s jurisdiction pursuant to section 15 of the Act. I cannot see that it does. The closest that the Court may come to the mechanism suggested at (a) is to publish this judgment. I am not persuaded that assessment of costs by the SCCO alone is sufficient protection to P against the potential for conflict of interest when a deputy instructs his own firm.

As I made clear to the parties at the attended hearing, I have concerns about (b). I acknowledge that a ‘standard’ approach has the attraction of clarity but the current concern is to address the risks of conflict of interest. Perversely, a ‘standard’ authority may act as an incentive for a deputy to find occasions to instruct his own firm to ‘use up’ this sanctioned source of business. Moreover, once the early stages of advice have been obtained, that fact in itself is likely to have an impact on any later consideration of whether it is in P’s best interests for advice/tasks to be obtained from a different source. As Ms. Clement put it, “it is almost always in P’s best interests to avoid duplication.” In my judgment, the concerns about standardised authority of a threshold for instructing a deputy’s own firm outweigh its merits.

A third approach could be that a deputy is always required to go through a tendering process before instructing his own firm. This approach offers advantages of transparency but disadvantages of itself incurring cost, and probably delay, to P. The Applicants’ suggestion of an “annual review exercise” to mitigate this seems to me unlikely to achieve the transparency needed - as in Re MWS, summarised above.

The Public Guardian’s position is that tendering is required “in almost all cases” but the nature of the tendering process should fit the nature of the issue. Generally that would require three quotes from different law firms. Sometimes it would entail no more than sending to different law firms an e-mail outlining the issue. Where particularly high fees are envisaged a “traditional, face to face, beauty parade” would be required, and an application to Court for specific authority will be “more likely.”

The Official Solicitor’s position is that the Applicants’ proposal of £2 000 “might be an appropriate level for there to be only a limited expectation that the deputy would obtain tenders…”

In my judgment, the proportionate and required approach to addressing conflict of interests is as follows:

Nothing in this approach derogates from the responsibility of the deputy to seek specific authority where such is otherwise required, or limits the ability of the deputy to make an application in any case where there is doubt as to the limits of his authority. The Court will expect that, as part of his supervisory function, the Public Guardian will refer to it any failure to make the application in (iii) as a potential breach of fiduciary duty.

The Applicants submit that the standard terms of a property and affairs deputyship order are sufficient to permit the deputy to use P’s funds to reimburse expenditure incurred by a third party provided only that the deputy is satisfied it is in P’s best interests to do so, and legal costs incurred by family members are simply an instance of this. (Footnote: ⁶) They suggest that concerns about conflict of interest are “not as acute” because “the family member will bring a degree of detachment to the decision as to whether to instruct the deputy’s firm.” They suggest that the SCCO is in practice willing to assess such costs if the Court so directs, and identify a number of “precautions” which could be adopted:

In oral submissions the Public Guardian expressed concern that, without any deliberate intention, it is “an inevitable consequence” of the deputy being known to the family that “some form” of undue influence arises. Accordingly, external safeguards are required.

The Official Solicitor considers that a deputy should obtain authority from the Court before paying another party’s legal costs from P’s funds, even if the action is for the benefit of P. She considers that such costs should be assessed before being paid, which may require the Court of Protection to grant authority to the Senior Courts Costs Office. She agrees with (a), (c) and (d) above, and considers that the notice in (b) should always be in writing.

I do not agree with the Applicants that a third party’s legal costs can be approached in the same way as any other head of expenditure, such that a standard deputyship order is sufficient to enable the deputy to use P’s funds to pay them. Such costs may well be extensive and, in the kinds of cases where this scenario may occur, family members are likely to be so closely aligned with P and the deputy that the degree of “external detachment” they bring will be minimal. The

Applicants’ approach effectively circumvents all the considerations which have preoccupied the Court in these proceedings by the relatively simple device of ‘sponsoring’ someone else to front the litigation.

I agree with the Official Solicitor that specific authority is required for a property and affairs deputy to use P’s funds to pay a third party’s costs. The ‘general’ authority of a property and affairs deputyship does not encompass such a use of P’s funds.

The Applicants contend that there is no legal reason why a trust corporation cannot act as litigation friend, and no legal reason why a litigation friend cannot be authorised to charge for acting as such (Footnote: ⁷). The question of whether a particular person should be authorised to act (and be paid for acting) as P’s litigation friend is a best interests decision, where the intention to charge fees for so acting is a relevant consideration but not necessarily determinative.

To the Official Solicitor, the prospect of P paying their litigation friend for so acting “raises significant concerns.” She points out that such costs would be additional to the costs of the solicitor instructed by the litigation friend, and likely to be payable from damages recovered. She emphasises that risk of conflict of interest is particularly acute where a conditional fee agreement is entered into, especially where it provides for P to be liable for the solicitors’ unrecoverable costs.

The Official Solicitor does not invite the Court to find that it is impossible for the Court to authorise a litigation friend to charge for so acting, but points out that “the cases in which it is in P’s best interests to have a litigation friend who charges, if P can have a litigation friend who does not charge, will be vanishingly remote.” To underline that point and quite impressively, the Official Solicitor offers to act as litigation friend without charge in any of the existing classes of cases in which she acts where her usual criteria are met (ie there is evidence that P lacks capacity to litigate, there is no other person willing to act without charging, and there is some source of funding to cover the costs of solicitors and counsel for P.) Miss Hughes confirmed that, before making this offer, there has been full consideration of the likely numbers of cases affected. Indeed, such is the level of the Official Solicitor’s engagement with this issue that she took the trouble personally to attend the hearing.

The Applicants point out that, on occasion, the Official Solicitor instructs in-house lawyers. In my view, this is not equivalent to a professional deputy instructing their own firm. As Miss Hughes spelled out, the Office of the Official Solicitor is not a profit-making organisation. Neither the Official Solicitor nor any staff member in her Office has an incentivised pay structure (meaning that they are free to discourage bad applications without concern that it will reduce work available to them).

In view of the Official Solicitor’s offer, it is not presently necessary for me to reach a reasoned conclusion as to whether a litigation friend may charge for acting as such. Conscious that any such decision may have far-reaching consequences, I decline to do so. The practical reality is that it will be extremely difficult in circumstances such as the cases currently under consideration to satisfy the Court of Protection, either prospectively or retrospectively, that granting authority to any person to charge P for acting as litigation friend (as opposed to incurring the cost of solicitors and counsel when acting as litigation friend) is in the best interests of P.

The Applicants and the Official Solicitor are agreed that, if P has capacity to give instructions for a specific piece of work, then he will also have capacity to agree the costs in question.

The ‘information relevant’ (as the term is used in section 3(1) of the Act) to a decision to give instructions for a specific piece of work includes:

On that basis, I agree that if a person has capacity to give instructions for a specific piece of work, they will also have capacity to agree the costs in question.

Protection Rules 2017, that the costs will be paid from the protected person’s estate. Pursuant to Rule 19.5, the Court may depart from that approach if the circumstances so justify. These proceedings have been much more extensive than future applications for the same authorities will need to be. Others will benefit from that but ACC, JDJ and HPP potentially face the burden of costs incurred to reach that position.

They explain that they have “stripped out” the costs incurred in respect of the “wider issues” and estimate that their costs in respect of ACC are £6 000 + VAT plus the costs of the hearing, in respect of JDJ are £16 600 + VAT plus the cost of the hearing (although they agree to consider this further, as the work of two fee earners may have covered similar ground so that the overall figure should be lower), and in respect of HPP are £2 700 + VAT plus the cost of the hearing. They ask that their costs are assessed and 50% of the assessed costs are paid from the relevant estate.

HHJ Hilder 27^th February 2020

authority to purchase or sell property includes conveyancing [paragraph 53.2]

authority to let property includes dealing with leases or tenancy agreements [paragraph 53.3]

authority to conduct P’s business includes dealing with employment contracts of that business

[paragraph 53.4]

“general” authority encompasses:

authority to let property encompasses taking steps to form a view as to whether there are grounds to evict a tenant of such property [paragraph 53.13];

“general” authority to manage P’s funds includes taking steps to form a view about whether a debt said to have been incurred by P is properly payable pursuant to section 7 of the Mental

Capacity Act 2005 [paragraph 53.13];

“general” authority to manage P’s funds includes steps up to but not including the delivery of a letter of appeal in respect of a decision that P is not eligible for continuing healthcare funding [paragraph 54.8(a)];

where authority encompasses steps in contemplation of contentious litigation, that includes obtaining Counsel’s opinion. [paragraph 54.5]

the deputy may seek prior authority [paragraph 56.7(a) – (e)];

the deputy is required to seek – in a manner which is proportionate to the magnitude of the costs involved and the importance of the issue to P - three quotations from appropriate providers (including one from his own firm), and determine where to give instructions in the best interests of P [paragraph 56.7(f)(i)];

the deputy must seek prior authority from the Court if the anticipated costs exceed £2 000 +

VAT;

the deputy must clearly set out any legal fees incurred in the account to the Public Guardian and append the notes of the decision-making process to the return. [paragraph56.7(f)(iv)]