F, Re

This is an appeal from the refusal of Master Lush, the Master of the Court of Protection, to register an enduring power of attorney dated 10^th July 2000 which was made by the donor (Mrs F) in favour of her son (Mr A). The Master upheld an objection to registration on grounds of the unsuitability of Mr A to be the donor’s attorney, which was lodged by his sister (Mrs B).

Mrs F was born in 1917. Her husband died in 1987. There were two children of the marriage (Mr A and Mrs B). Until 2002 Mrs F continued to live in a large house which she and her husband had purchased after the Second World War. The evidence before the Master was that Mrs F was extremely attached to her home and was very reluctant to leave it. She had told her friends and family that she wished to remain there for the rest of her life. But by 2002 she had become unable to cope with the maintenance and upkeep of the property and its garden and was persuaded by her children to move into a nursing home. Even then she was unwilling to sell the house and had hoped that it might be let to provide her with an income.

Mr A is a retired solicitor who was born in 1946 and continues to live close to his mother. His sister, Mrs B, who was born in 1950, lives abroad in Ireland. She has a family of her own and is obviously unable to visit her mother with the same regularity as Mr A, but between her visits she maintains frequent contact with her mother by telephone. Both children are clearly concerned to do the best for their mother, but the difficulty which has arisen in this case is that Mr A and Mrs B have been at odds with each other for some time and the disagreements and animosity between them have spilled over into the question of whether effect should be given to the power of attorney executed in Mr A’s favour.

It is clear that the donor has in the past chosen to place her affairs in the hands of Mr A. The power of attorney was executed in July 2000, and in October 2001 Mrs F executed a will under which her son was appointed to be the sole executor. He is also, I believe, the executor of his father’s will. One of the complications of this matter is that the family home was held by Mrs F and her late husband as joint tenants. On the advice of Mr A as part of what I am told was a scheme to minimise inheritance tax, his father served notice of severance on Mrs F, with the result that at his death the property was held by Mrs F as the surviving joint tenant on trust for herself and her husband as tenants in common in equal shares. Under their father’s will Mr A and Mrs B are entitled to pecuniary legacies of £45,000 each, with the residue being held upon trust for Mrs F absolutely. In order to make title to the family home on a sale, it will be necessary for Mr A to appoint an additional trustee in order to give a good receipt. It seems to be common ground that the power of appointment would vest in him as Mrs F’s attorney and that he could exercise the power on her behalf: see Trustee Act 1925 s.36(6A)-(6B). It would then be for him to arrange for the investment of his mother’s share of the proceeds of sale, including the share of residue due to her under her late husband’s will.

The difficulties which have arisen are due to Mrs F’s declining state of health. The medical evidence contained in a report by Dr X, the Lord Chancellor’s Medical Visitor, based on a visit to Mrs F in October last year, is that she is suffering from arteriosclerotic dementia, which has led to some memory loss. She has also suffered a stroke, but her residence in the nursing home seems to have stabilised her condition and she is able to hold rational conversations. She is, however, disorientated in relation to dates and other historic details, and her mental condition will deteriorate with the passage of time. It is also clear that she can become confused. At one point in the interview Mrs F asked Dr X why she had come and became distressed during the examination when she was asked to carry out a counting exercise.

The importance of the evidence from the Lord Chancellor’s Medical Visitor is that it forms the basis, and indeed the only evidence, upon which Mrs B’s objection to registration is now sought to be maintained. During the course of her interview with Dr X, Mrs F expressed concern that her son and daughter were having disagreements. She would prefer them “to live together and agree”. She also wanted Mr A to discuss things with his sister. She then went on to say that if they could not agree, it would be better for an independent receiver to be appointed.

The Master, in his judgment, interpreted Mrs F’s wishes and feelings to be that:

“…if the continued operation of the enduring power of attorney is likely to be a festering sore or a stumbling-block that prevents her children from behaving in a civil manner towards one another, then she would rather an independent receiver be appointed.

It is clear to me that the continued operation of the power is likely to be a stumbling-block that prevents any prospect of reconciliation between her son and daughter.

[Mr A] contends that his mother’s views do not reflect an informed decision on the matter, that there would be considerable cost implications in appointing a receiver, and that there would be practical day-to-day difficulties over being reimbursed for small items of expenditure, such as purchasing items of clothing, giving Christmas or birthday presents, and treats such as going out for lunch.

I agree that there are cost implications, but when [the house] is finally sold and the net proceeds are properly invested, there should be relatively little for the receiver to do, and it is unlikely that the costs would be substantial. In any even, [Mrs F] has a fairly substantial estate, and the costs should not be disproportionate, or cause any hardship or adversely impact on her standard of living. The practical day-to-day problems to which [Mr A] referred can be easily overcome.”

He therefore upheld the objection to registration on grounds of unsuitability.

Before me Mr A has repeated his submission that his mother’s expressed views are unreliable as an accurate account of her true wishes and feelings. To support this he has produced an undated letter in Mrs F’s handwriting, in which she says that she wants Mr A to act for her in all her affairs and that she does not want anybody else. She says in the letter that he has acted as she has wished and that she wants this to continue. There is no evidence as to when and in what circumstances this letter came to be written and there is therefore little weight which I can attach to it. If Mr A is right and his mother’s statement to Dr X is unreliable as an accurate statement of her wishes, it must also follow that this letter is subject to the same reservations.

The Master upheld Mrs B’s objection to the registration of the power of attorney on the ground that Mr A was unsuitable by accepting at face value Mrs F’s statement to Dr X that she would prefer an independent receiver to be appointed if her son and daughter could not agree. The likely continuation of bad relations between them due to the attorneyship was, in the Master’s judgment, the cause of her concern. She did not suggest that she regarded her son as unsuitable to be her attorney for any other reason, nor is there any evidence that he would fail to carry out his duties as attorney otherwise than in accordance with the law and in the best interests of his mother. In this connection some reference needs to be made to the history of these proceedings.

On 21^st January 2003 Mrs B applied to be appointed her mother’s receiver under s.99 of the Mental Health Act 1983. In a letter to the Court of Protection enclosing the receiver’s declaration and other documents, her solicitors referred to her concerns that Mr A would seek to use the power of attorney to sell Mrs F’s property. The letter also states that Mrs B has had grave reservations about his conduct of her mother’s affairs and that any communications between them are “confrontational”. The solicitors refer to Mr A failing to provide information about investments and complain about losses incurred on the Stock Market. However, the principal cause of concern appears to have been the family house. Any sale of this was, they said, likely to cause Mrs F considerable distress.

Mrs B’s application to be appointed her mother’s receiver led to Mr A applying for the registration of the power of attorney. In a letter of 3^rd April 2003 Mrs B’s solicitors lodged her objection to this. This was made on the grounds of Mr A’s unsuitability within the meaning of s.6(5)(e) of the Enduring Powers of Attorney Act 1985 (“the 1985 Act”) and was based on a number of matters which can be summarised as follows:

This led to discussions about a possible compromise. Mr A said that he was informed by the Public Guardianship Office (“PGO”) of the Court of Protection that his sister was willing to withdraw her objection, provided that Mr A produced an inventory of the current assets and liabilities of Mrs F’s estate; agreed to produce annual accounts; and gave her written notice in advance of any steps taken in connection with the sale of the family home. He told the PGO that the conditions were acceptable. The conditions had been set out in a letter written by Mrs B’s solicitors to the PGO on 19^th September 2003, indicating that she had decided to withdraw her objections, but inviting the Master to embody the three conditions in directions under s.8(2)(b) of the 1985 Act. A copy of the letter was then sent to Mr A.

Despite having indicated earlier his consent to the conditions, this provoked a hostile reaction. Mr A wrote to the Court of Protection stating that he objected to each of the directions sought. He told me that he was put out when he saw the terms of the letter sent to the PGO and that as an attorney he had no legal duty to keep relations informed, although it was common to do so. However, the objection seems to have been more one of form than of substance, because at the hearing on 25^th September in front of the Master, he indicated that he was willing to provide the information which his sister required. This caused events to take a new turn. Mr Sartin, who has appeared for Mrs B on this appeal and in front of the Master, raised a new query about the circumstances in which the power of attorney came to be executed. Mr A had revealed that he had drawn it up himself, and Mr Sartin expressed concern about the possibility that undue pressure or influence had been used to obtain it. The hearing was therefore adjourned to 2^nd December 2003 to allow the Lord Chancellor’s Medical Visitor to report. At the same time the Master agreed that the family home would be placed on the market for sale, to avoid further deterioration in its condition.

I have already referred to the principal finding set out in the Medical Visitor’s report, which formed the basis of the Master’s decision that Mr A was not suitable to be Mrs F’s attorney. The provision of this report put an end, however, to the suggestions of undue influence in connection with the execution of the power of attorney. On 17^th October 2003 Mrs B’s solicitors had written to the PGO indicating that, subject to the outcome of Dr X’s visit and to an order being made under which Mr A would provide a schedule of Mrs F’s estate and thereafter file accounts on a quarterly basis, Mrs B would not continue with her objections to Mr A’s application for registration of the enduring power. On 12^th November Mr A wrote to his sister’s solicitors referring to that letter and confirming that he now had no objection to the suggested conditions. The letter also invited her agreement to the sale of the family home at a price of some £365,000, as advised by the selling agents. However, in a subsequent letter of 28^th November to the PGO, Mrs B’s solicitors stated that, following receipt of the Medical Visitor’s report and in the light of Mrs F’s expressed desire for the appointment of an independent receiver, Mrs B had confirmed that she did wish to maintain her objection, on grounds of suitability, to the registration of enduring power of attorney.

It is important to bear in mind that the only question which I have to consider is whether Mr A is to be regarded as unsuitable to be his mother’s attorney, in the light of her expressed preference for an independent receiver as a possible means of avoiding future strife between her children. There was no evidence before the Master, nor is there any before me, to suggest that Mr A is unsuitable on any other grounds. Although complaints have in the past been made by Mrs B about his management of the property and his failure to communicate, none of these matters was pressed at the hearing before the Master. Although this appeal takes the form of a re-hearing, that does not entitle me to step outside the grounds of objection which have been pursued. Mrs B chose to put no evidence before the Master or before me, but instead relied on the contents of the Medical Visitor’s report. It is also relevant to re-state that, in order to refuse registration of the power under s.6(5)(e) of the 1985 Act, the Court has to be satisfied not of the chosen attorney’s suitability, but rather that he is unsuitable to be the attorney: see Re E (Enduring Power of Attorney) [2001] Ch 364 at page 376H.

The hearing on 2^nd December 2003 added nothing in terms of evidence to the Medical Visitor’s report and was largely confined to argument as to how to interpret Dr X’s conclusions and whether they supported an objection to registration on grounds of unsuitability. The Master in his decision cited two references to the meaning of the expression “unsuitable to be the donor’s attorney” in s.6(5)(e). The first was paragraph 4.49 of the Law Commission’s report, The Incapacitated Principal (Law Com No 122) published in 1983, which explains the policy behind the 1985 Act. Paragraph 4.49, so far as material, states as follows:

“This needs some explanation. It would amount in effect to a criticism of the donor’s choice of attorney. But we would not wish this ground to be sustained merely because the attorney was not the sort of person that a particular relative would have chosen. It is our wish that the donor’s choice of attorney should carry considerable weight. Thus, for example, a mother might be content to appoint her son as her EPA attorney despite being aware of a conviction for theft. We would not want her choice of attorney to be upset simply because a particular relative would not want the son to be his attorney. The question should be whether the particular attorney is suitable to act as attorney for the particular donor. In short, the Court should examine carefully all the circumstances - particularly the relationship between donor and attorney.”

The second reference is to the judgment of Mr Jules Sher QC (sitting as a Deputy Judge of this Division) in the case of Re W (Enduring Power of Attorney) [2000] Ch 343, which was also a case in which there was hostility between the donor’s children. At page 350 the Deputy Judge said this:

“ The second ground of unsuitability is the hostility between the three children. The master considered that that fact alone rendered any one of them unsuitable to be Mrs W’s attorney. In my judgment such hostility may well have such consequences but it all depends upon the circumstances. For example, had the estate of Mrs W been complex and had it required strategic decisions in relation to its administration, one would expect the attorney to have had to consult and work with her siblings in relation to the administration. In such circumstances the evident hostility between them would impact adversely on the stewardship of the attorney, no matter who was at fault in creating the hostility in the first place.

But in this case the estate is simple. I asked counsel what the position was and was told that there are the following assets: (1) a portfolio of investments of a value (as at 23 December 1998) of £211,189; (2) £20,000 in Premium Bonds; (3) a life policy (written in trust) of £30,000. As to the outgoings there is the cost of the nursing home at some £2,000 a month, and then, simply, the need for a modest amount to cover a regular hairdo, telephone bills and the like. And, of course, on the income side there is the old-age pension.

In other words there is nothing of any significance left to be done. The assets are under proper control. The income simply needs to be fed through to the nursing home. The evidence is that this has been done by Mrs X very efficiently. She has indicated more than once that she has never intended to charge for her services under the power of attorney and she does not intend to do so. Against this, if the Public Trustee were to come in, there would be an appointment fee and an annual fee of between £2,350 and £3,600 per annum. If a solicitor were appointed the total cost would be likely to be somewhat less than that.

It seems to me that it is not right to say that (irrespective of the background) hostility of the kind we have seen in this case between the children renders any one of them unsuitable to be Mrs W’s attorney. In this case the hostility will not impact adversely on the administration. It would, in my judgment, be quite wrong to frustrate Mrs W’s choice of attorney in this way. Whether it is or is not a good idea for a parent in Mrs W’s position, when such hostility exists, to appoint one child alone as attorney is another question. But Mrs W did so and, on the evidence, did so knowing of the hostility. That is her prerogative and in my judgment, when the hostility does not interfere with the smooth running of the administration, the court should not interfere on the ground of unsuitability.”

The Master did not uphold Mrs B’s objection to the registration of the power on the ground that the hostility between her and her brother would make the administration of the estate difficult, if not impossible, and there is no evidence that, in my judgment, would support that conclusion. Now that the family house is to be sold using agents and solicitors, Mr A’s duties will be confined to the investment of the proceeds in approved securities and the use of the income to pay for Mrs F’s nursing home fees and to meet her other needs. Section 3 of the 1985 Act imposes restrictions on the power of the attorney to use the donor’s estates so as to provide gifts or to meet the needs of anyone other than the donor herself: see ss.3(4) and (5). The power is also fiduciary in nature and has to be exercised in good faith for the benefit and in the interests of the donor. If there is any reason, following registration, to suppose that the attorney has or is likely to act otherwise than in accordance with this duty, the Court has power to give directions under s.8(2) and may, in appropriate cases, cancel the registration under s.8(4) and appoint an independent receiver. No evidence was presented to the Court to show that this was likely to be the consequence of registering the power of attorney in favour of Mr A.

The sole objection to registration is Mrs F’s apparent preference for the appointment of an independent receiver, if (as the Master put it) the continued operation of the enduring power of attorney was likely to be a bar to her children behaving in a civilised manner to each other and hopefully becoming reconciled. It goes without saying that one hopes that an improvement in relations between Mr A and Mrs B will occur, but from what I have seen, it seems to me unlikely that the appointment of an independent receiver will actually heal the rift. If anything, it is just as (if not more) likely to add to Mr A’s feelings that he has been unfairly criticised by his sister in relation to the management of his mother’s affairs, which he has now carried out for many years. Unlike his sister, who lives in Ireland, he remains close to where his mother lives, visits her frequently and is trusted by her. He says that he is concerned about the possible effect on her of interposing a stranger to manage her affairs and considers that there is no necessity for it. It will only add expense and diminish his mother’s assets and income unnecessarily.

I am not satisfied that the appointment of an independent receiver would be justified in this case at this time. I accept from Dr X’s report that Mrs F remains conscious of the disagreements between her children and would prefer them to cease. But she has lived with them for some time and it has not led to any apparent deterioration in her relationship with either of her children individually or in the trust she reposes in her son to manage her property and affairs. He may well have been chosen as the attorney because he lives close by and is in regular physical contact with her. There is no evidence that he has abused that trust or is likely in the future to do so. Unlike the Master, I consider that the appointment of an independent receiver will not diminish the hostility between Mr A and Mrs B, but will simply increase it. In this case it will not achieve any useful purpose, but will merely add to expense. If, as the Master found, Mrs F’s acceptance of an independent receiver is only justified on the basis that it would heal the rift, then there can be no justification for departing from her earlier expressed desire to appoint Mr A as her attorney, and his lack of suitability is not made out. I do not read Dr X’s report as indicating a preference by Mrs F for an independent receiver in any event, but rather as a reluctant acceptance of such, if no other way can be found of resolving her children’s differences. It seems to me that to remove a chosen attorney because of hostility from a sibling or other relative, in the absence of any effective challenge to his competence or integrity, should require clear evidence either that the continuing hostility will impede the proper administration of the estate or will cause significant distress to the donor which would be avoided by the appointment of a receiver. Neither of these conditions is satisfied by the evidence in this case.

I will therefore allow the appeal and order registration of the power of attorney. There will be no order as to the costs of the appeal. I will leave the Master’s order for costs undisturbed. As things stand, there are no grounds for making a s.8 direction in relation to the provision of an inventory and accounts. It is, however, very much in Mr A’s interests to provide this information and to furnish accounts to Mrs B on a regular basis. If this is done, it will, one hopes, remove much of the ill-feeling between them and restore the position to what it would have been, had Mrs B adhered to the position she had reached prior to the Medical Visitor’s report.