EG, Re [2015] EWCOP 6 (11 February 2015)

Neutral Citation Number: [2015] EWCOP 6 Case No: 12550029 COURT OF PROTECTION MENTAL CAPACITY ACT 2005 First Avenue House 42-49 High Holborn, London WC1V 6NP 11 February 2015 B e f o r e : Senior Judge Lush Re EG ____________________ Between: THE PUBLIC GUARDIAN Applicant - and - (1) GB (2) SG (3) LONDON BOROUGH OF BROMLEY Respondents ____________________ Gemma Hopper for the Public Guardian The first and second respondents in person Jim Kilgallen for the third respondent Hearing date: 3 February 2015 ____________________ HTML VERSION OF JUDGMENT ____________________ Crown Copyright © Senior Judge Lush: This is an application by the Public Guardian to revoke a Lasting Power of Attorney for property and financial affairs ('LPA') because the attorneys have behaved in a way that contravenes their authority and is not in the donor's best interests. The family background EG was born in 1930. She lives in her own home in Orpington, Kent, with assistance from her daughter, who lives nearby and acts as her primary carer. Her husband died in December 2009. They were both civil servants. He worked for the Ministry of Defence and she worked for the Department of Health and Social Security. She has four children: (a) a daughter, GB, who was born in 1954, and lives in Orpington; (b) a son, SG, who was born in 1955, and lives in Orpington; (c) a son who was born in 1959, and lives in Upminster, Essex; and (d) a son who was born in 1963, and lives in Forest Hill, London SE23. In 2008 EG was diagnosed as having vascular dementia. On 10 October 2012 she executed an LPA for property and financial affairs and an LPA for health and welfare, in which she: (a) appointed GB and SG jointly and severally to be her attorneys; (b) did not appoint a replacement attorney; and (c) named her two younger sons as persons to be notified when an application was made to register the LPAs. A friend in Orpington who had known EG for thirty years witnessed her signature acted as the certificate provider. An application was made to the Office of the Public Guardian ('OPG') to register the LPAs and they were registered on 3 December 2012. The Public Guardian's application On 18 August 2014 the Public Guardian applied to the Court of Protection for the following orders: "An order under section 22(4)(b) of the Mental Capacity Act 2005 for the revocation and cancellation of the registered property and financial affairs LPA made by EG. An order directing that a member of the panel of deputies be approached and invited to make an application for appointment as deputy to make decisions on behalf of EG in relation to her property and affairs with the power to take such proceedings or steps as may be necessary to restore EG's estate to the correct level." The application was accompanied by a witness statement made by Claire Bennett, an investigating officer with the OPG, who said that (a) concerns had been raised on 22 July 2014 by the London Borough of Bromley; (b) there had been gifting from EG's accounts totalling £75,000; (c) GB had made gifts of £15,000 to herself and £20,000 to each of her three brothers; (d) the reason for the difference in the amounts given to GB and her brothers was that GB had already received a gift of £5,000 from her mother; (e) EG had only £17,465.54 left; and (f) GB's response had been, "if EG doesn't mind and she is well cared for, what's the harm?" Exhibited to the witness statement was a mental capacity assessment that had been carried out on 16 July 2014 by Xavier Benedetti, the senior care manager in the safeguarding team at Bromley. He stated: "GB insisted on asking her Mum whether she was happy to have given that money to her children. She told her that she had £85,000 on her account and client didn't know she had that much money. Her daughter asked her if she would give that much money to her and her 'boys', to which client replied: "I wouldn't have anything left if I did! … I'd have to think about it!" Clearly EG is unaware of her finances and it seems she might not agree to a gift such as the moneys that have been drawn out of her account. My opinion is that the decision to pay 4 lump sums of money to her 4 children amounting to £75,000 was not in her best interests. In light of GB and her financial difficulties, and EG's dementia, I am passing this matter to the Office of the Public Guardian for full investigation." The objections On 18 September 2014 GB filed an acknowledgment of service in which she objected to the application and described her financial difficulties, which were as follows: (a) since the death of her father in December 2009 GB had visited her mother every day. Her husband often accompanied her to work on the garden and do maintenance jobs in the house; (b) it became progressively apparent that her mother needed more supervision, and in March 2013 GB gave up her job as a cook so that she could become her mother's carer; (c) in June 2013 her husband was given a custodial sentence for his involvement in a fatal car accident; (d) by August 2013 GB could no longer afford to pay petrol, car and parking expenses and she and her brother, as attorneys, set up a standing order so that her expenses could be paid from her mother's funds; and (e) GB had also been trying to help her son, who has bipolar disorder and was hospitalised in January and March 2014. GB described the circumstances in which the gifts were made in the following terms: "On 9th April (I remember this date because it was the Wednesday before a family funeral), my brothers and myself discussed with my mother a letter she had received from the bank saying that her savings accounts would be frozen because there had been no activity on them, and transferred to an account for such purposes. She had to let them know by 5th May. We also discussed with her my predicament and asked if she could help me out. She was shown her bank statements which she always has access to anyway. She agreed to help me and wanted my brothers to be treated equally." On 20 September 2014 SG filed an acknowledgment of service in which he also objected to the Public Guardian's application for the following reasons: "I feel that my sister and I have always acted in our mother's best interests. She has always been adamant that she wished to continue living in her own home and my sister gave up her job and became her full time carer to accommodate this. Due to this and other personal circumstances this led to financial hardship for my sister. Because of this we asked our mother if she would consider lending some money. We showed her the bank statements and she agreed to the request but said she thought all four siblings should be treated equally. This would have been in early April 2014 and before her behaviour became considerably more erratic. In accordance with this, gifts of £20,000 were made to myself, my sister and my two brothers. I would like to reiterate that our mother's welfare and happiness have always been our primary concern and I feel that she has received and is continuing to receive an exceptionally high level of care." On 29 August 2014 the London Borough of Bromley filed an acknowledgment of service stating that it supported the Public Guardian's application and that it wished to be joined as a party to the proceedings. On 10 December 2014 I made an order setting out a timetable for the filing of evidence and listing the application for hearing on 3 February 2014. Claire Bennett's witness statement In a witness statement dated 16 December 2014, Claire Bennett repeated the Public Guardian's submission that the LPA for property and financial affairs should be revoked but, instead of inviting a panel deputy to apply to be appointed as EG's deputy, she said: "The Public Guardian requests London Borough of Bromley be invited to make an application to become the deputy for EG for property and affairs with power to take such proceedings or steps as may be necessary to restore EG's estate to its correct level." Julie Bailey's witness statement Julie Bailey is an appointeeship and deputyship manager with the London Borough of Bromley. In a witness statement dated 7 January 2015 she explained that this matter had been brought to the attention of the local authority as a result of two alerts by the Metropolitan Police. (a) on 23 May 2014, the police had been contacted by a member of the public who was concerned that EG was walking down the middle of the road in a poorly-lit area; and (b) on 26 May 2014, because GB had not seen EG since 4.30 the previous afternoon and had reported her to the police as a 'missing person'. Following receipt of these reports, Social Services contacted GB to offer an assessment of her mother's care needs under Fair Access to Care Criteria, and GB informed the visiting officer that a sum of £75,000 had been gifted to family members in April 2014. The matter was subsequently referred to the OPG, and the London Borough of Bromley decided to treat the gifts as a deprivation of assets. Accordingly, the Council considered EG to have notional capital of £92,465.54 at the point at which services were provided. GB's witness statement In a witness statement dated 25 January 2015 GB disputed any suggestion that her mother lacked capacity to make the gifts to her and her brothers on 9 April 2014. She said: "To assume my mother's mental capacities were the same on April 9th as they were over seven weeks later on May 23rd, when her first wandering incident occurred, would be to assume that she had always been wandering since the onset of dementia, but my mother had never come to the attention of social services before this date, because she had not." GB continued: "We know that my mother did agree to the money being given, but if the court decides we must pay it back, two of my brothers have the full amount and would do so immediately. I would not be able to pay it back all at once. I would never have asked for it, if I hadn't needed it. When I reduced my work hours in January 2012 and April 2013 gave up my job completely in order to care for my mum, I was able to cope financially with my husband's support and although my husband was out of prison on December 16th 2014, gained a job starting January 6th, we still have a burdensome son to support and help towards a time when he can support himself. I would need to get a job so I can pay my mum back. This will mean I will no longer be able to care for my mum." The hearing The hearing took place on Tuesday 3 February 2015 and was attended by: (a) Gemma Hopper and Nadia Dhillon of the OPG; (b) GB and SG; and (c) Jim Kilgallen, Julie Bailey and Xavier Benedetti of the London Borough of Bromley. The law relating to gifts made by attorneys Section 12 of the Mental Capacity Act 2005 is headed "Scope of lasting powers of attorney: gifts", and states that: (1) Where a lasting power of attorney confers authority to make decisions about P's property and affairs, it does not authorise a donee (or, if more than one, any of them) to dispose of the donor's property by making gifts except to the extent permitted by subsection (2). (2) The donee may make gifts— (a) on customary occasions to persons (including himself) who are related to or connected with the donor, or (b) to any charity to whom the donor made or might have been expected to make gifts, if the value of each such gift is not unreasonable having regard to all the circumstances and, in particular, the size of the donor's estate. (3) "Customary occasion" means— (a) the occasion or anniversary of a birth, a marriage or the formation of a civil partnership, or (b) any other occasion on which presents are customarily given within families or among friends or associates. (4) Subsection (2) is subject to any conditions or restrictions in the instrument. If an attorney wishes to make a more extensive gift than is permitted by section 12, then an application may be made to the Court of Protection for an order under section 23(4), which says that "The court may authorise the making of gifts which are not within section 12(2) (permitted gifts)." The law relating to the revocation of an LPA The Public Guardian's application was for an order under section 22(4) of the Mental Capacity Act 2005 for the revocation and cancellation of the registration of the LPA. Section 22 of the Mental Capacity Act 2005 describes the circumstances in which the Court of Protection can revoke an LPA. This section refers to the donor of an LPA as 'P' and the attorney appointed by the donor as 'the donee'. Section 22(3)(b) states that: "Subsection (4) applies if the court is satisfied - (a) …. (b) that the donee (or, if more than one, any of them) of a lasting power of attorney – (i) has behaved, or is behaving, in a way that contravenes his authority or is not in P's best interests, or (ii) proposes to behave in a way that would contravene his authority or would not be in P's best interests." Section 22(4) provides that: "The court may – (a) direct that an instrument purporting to create the lasting power of attorney is not to be registered, or (b) if P lacks capacity to do so, revoke the instrument or the lasting power of attorney." Decision I find, as fact, that the cheques in favour of GB and her brothers totalling £75,000 were signed by GB, in her capacity as EG's attorney. These gifts far exceeded the limited authority to make gifts which is conferred on an attorney by section 12(2) of the Mental Capacity Act 2005 and in this respect GB contravened her authority as attorney. SG was a party to the transaction and he also contravened his authority as attorney. The reason why attorneys have only a limited authority to make gifts was discussed by the Law Commission in its report The Incapacitated Principal , [1983] EWLC 122 , which was published in 1983 and led to the enactment of the Enduring Powers of Attorney Act 1985. At paragraph 4.24 , the Law Commission stated: "An unlimited authority to make gifts might tempt the attorney to abuse his position especially if he himself fell on hard times and persuaded himself that the donor, if capable, would have wanted him to benefit in this way. And the unscrupulous attorney might persuade a semi-capable donor that such an authority was standard practice and perfectly safe." At paragraph 4.83(vii) of the same report, the Law Commission stated: "We have already recommended restrictions on the attorney's authority to use his EPA to benefit persons other than the donor himself. Such restriction would operate even if the EPA purported to give the donor greater authority in this respect. These restrictions were designed to protect the donor's interests but we see no reason why the Court should not be able to relax them and give the attorney greater authority to benefit others (including himself) provided that such greater authority was not prohibited by the instrument." In this case the attorneys should have applied to the Court of Protection for an order under section 23(3)(c) or 23(4) of the Mental Capacity Act. It is likely that the court would have been sympathetic towards GB in view of the fact that she had given up her job to care for her mother, and it would probably have awarded an allowance to her from the donor's funds. Because this allowance would have been made by order of the Court of Protection, it would have been treated for tax purposes as a voluntary payment and not as income in the hands of the recipient: HM Revenue & Customs Employment Status Manual, ESM4016 . The question of making equal provision for EG's sons would not have arisen because it is a non sequitur . Her sons have not suffered economic loss by giving up their employment in order to care for her. Even if EG did have capacity to make gifts totalling £75,000 on 9 April 2014, undue influence would be presumed because: (a) the gift is so substantial that it cannot be accounted for by ordinary motives; (b) there is a relationship of trust between the donor and the attorneys such as to place them in a position to exercise undue influence over her in making the gift; and (c) the attorneys failed to ensure that independent advice was made available to the donor. GB and SG were also in breach of their fiduciary duty, which is described in the Mental Capacity Act Code of Practice, at paragraph 7.60, as follows: "A fiduciary duty means attorneys must not take advantage of their position. Nor should they put themselves in a position where their personal interests conflict with their duties. They also must not allow any other influences to affect the way in which they act as an attorney. Decisions should always benefit the donor, and not the attorney. Attorneys must not profit or get any personal benefit from their position, apart from receiving gifts where the Act allows it, whether or not it is at the donor's expense." As far as EG's capacity to revoke the LPA is concerned, Colin Lambert, a care manager with the London Borough of Bromley, completed a "Mental Capacity Assessment and Best Interests" decision making form on 1 August 2014, in which he stated as follows: (a) Does EG have capacity to manage her own financial affairs? EG lacks capacity to manage her own financial affairs. (b) Does EG recall making or authorising a financial gift of £75,000 from her estate? If so can she confirm whom she made these gifts to? EG stated that she does not have large sums of money to give away. (c) Also in relation to gifting, can EG express her general wishes and feelings of if and when she would normally gift money, and how much she would normally gift? EG was unable to express general wishes and feelings regarding the giving of gifts or who she may give gifts to. EG did not believe she had sufficient funds to give away. (d) Can EG express an opinion as to whether she is happy with her attorney's management of her financial affairs? Are her wishes and feelings carried out? EG believed that her husband dealt with her finances and that both she and her husband went to the local Post Office to pay their bills in cash. (e) If EG is not happy with her attorney, can she express who she would like to manage her finances should she not be able to do this herself? EG was unaware that she had an attorney and did not identify anyone who she would like to manage her funds other than to say that she does not know and that she is happy with her husband taking care of things. In the circumstances, I am satisfied that: (a) the attorneys have behaved in a way that contravenes their authority and is not in EG's best interests; and (b) EG lacks capacity to revoke the LPA. Accordingly, I shall revoke the LPA for her, and appoint the authorised officer for property and affairs deputyships of the London Borough of Bromley to be her deputy for property and affairs. BAILII: Copyright Policy | Disclaimers | Privacy Policy | Feedback | Donate to BAILII