RP, Re [2016] EWCOP 1 (05 January 2016)

Neutral Citation Number: [2016] EWCOP 1 Case No: 12687368 First Avenue House 42-49 High Holborn London WC1V 6NP 5 January 2016 B e f o r e : SENIOR JUDGE LUSH ____________________ Re RP Z Applicant - and - SP, SP, CP, MP, and AP Respondents ____________________ Michael Paget, instructed by DH Law, for the applicant Catherine O'Donnell, instructed by Bishop & Light, for the respondents Hearing date: 7 December 2015 ____________________ HTML VERSION OF JUDGMENT ____________________ Crown Copyright © Senior Judge Lush: This is a dispute about the appointment of a deputy for property and affairs, which I am treating as an application for reconsideration of a decision I made on 21 September 2015. Although that decision was made at a hearing, only the applicant and her counsel and solicitor attended and, for reasons that will become apparent, the respondents and their legal advisers were unaware that the hearing was taking place. The background These proceedings relate to Ron, who was born on 21 March 1932. He lives in West Sussex, was formerly a tobacco trader, and has been married three times. The respondents are his children from his first marriage. They are: (a) Sven, who is 57, lives in West Sussex and is married to Sarah, who is also a respondent; (b) Claus, who is 56 and lives in North Carolina, USA; (c) Marc, who is 53 and lives in Surrey; and (d) Andrea, who is 51 and lives in Hampshire. Ron married his second wife in 1981. They divorced in 2003 and she died of cancer the following year. He has one daughter from his second marriage, Z, who is the applicant. She is 34 and lives in the same town as her father. Ron married for the third time in 2005, but the marriage was of very short duration. He suffered a stroke in 2007 and was formally diagnosed as having vascular dementia in 2014. He owns a flat, which is worth about £450,000, and has approximately £75,000 in a bank account. Ron receives an income from a tobacco company in the United States, which he set up himself and is now run by his son, Claus. He receives quarterly payments, which tend to vary in amount. On 19 May 2015, Z applied to the court for a solicitor to be appointed as Ron's deputy for property and affairs. In the papers accompanying the application she said: "Due to suffering with dementia Ron is unable to manage his property and affairs. It is feared that other members of the family may be taking advantage of Ron's lack of capacity, and recently a cheque was drawn for £80,000 which Ron apparently signed but has no recollection of. Ron's property and affairs therefore require urgent protection, and the applicant seeks the Court of Protection to appoint a professional deputy, Miss Rheian Davies, Solicitor, to act as his deputy in this respect. Ron is unable to protect his financial interests himself, and no one else has the legal authority to do so. Therefore it is necessary to urgently appoint a professional deputy." DH Law Ltd, Solicitors, of 130-132 Uxbridge Road, Hanwell, London W7 3SL acted for the applicant in connection with the application. Miss Rheian Davies is a partner in that firm. The objections On 18 June 2015 Ron's eldest son, Sven, filed an acknowledgment of service opposing the application. He said: "I oppose the application. My wife and I have managed my father's financial affairs in the UK for over 20 years. This has often involved him lending money. He has never managed his finances well. We have a better understanding of his finances than he ever has had. The application for deputyship has been made because my father's youngest child Z wishes to gain knowledge and control of my father's finances. Z has no knowledge of my father's affairs. Z has struggled with drug addiction and managing her own life in the past. I have been concerned that Z is exerting control over my father and using threats of self harm and cutting contact between my father and her child to influence his behaviour and extract money from him. This has led to my father reducing contact with his wider family. This has also led to my father giving Z money despite telling people he did not want to do so. There have been concerns expressed by social services about Z's relationship with my father. I propose the appointment of Sarah as deputy. I seek further time to file witness evidence." Sven's wife, Sarah, and his brothers and sister filed similar acknowledgments of service uniformly opposing the application. Procedural matters On 9 July 2015 I made an order setting out a timetable for filing and serving evidence and listed the matter for hearing on 21 September 2015. The applicant filed a second witness statement on 31 July 2015 and her solicitors, DH Law, instructed Michael Paget of counsel, who produced a position statement on 16 September 2015. The respondents instructed Bishop & Light, Solicitors, Cambridge House, Cambridge Grove, Hove BN3 3ED to act on their behalf and they filed witness statements, all of which were dated 21 August 2015. Sarah's witness statement was the most detailed. The respondents' solicitors filed a position statement on 16 September 2015 in which they: (a) said that "Ron's affairs are complex and involve an international element, but his assets and income are not sufficient to justify the appointment of a professional deputy"; (b) proposed the appointment of Sarah as a deputy; and (c) asked the court to make an order for costs against the applicant. The hearing The hearing which took place on Monday 21 September was attended only by Michael Paget of Cornerstone Barristers, Rheian Davies and Z. We were all rather surprised that the respondents neither attended nor were represented at the hearing, especially because they had filed a position statement five days earlier, as directed in my order of 9 July. I decided that it was in Ron's best interests to proceed with the hearing notwithstanding the absence of the respondents, and was informed that: (a) Rheian Davies was admitted as a solicitor in 2006, prior to which she had spent fifteen years as a psychiatric nurse; (b) Ron's affairs are complicated, and not entirely transparent. Companies seem to have been formed and then wound up; (c) there was an issue regarding Ron's beneficial interest in his flat, which had only recently been rectified as a result of these proceedings; (d) the respondents' character assassination of their half-sister Z was totally unwarranted because she wasn't seeking her own appointment as deputy, but the appointment of an independent professional who can ensure that Ron's funds are being managed in his best interests and that his needs are being met; (e) Ron could probably afford to have a small team of carers to ease the burden on his daughter Z, but no effort had been made to investigate or resolve this. Sarah actually dismissed a cleaner who had come on the recommendation of a local charity; and (f) the respondents don't actually visit Ron. I decided to appoint Rheian Davies as an interim deputy for a year, with security pitched at £50,000. Some disclosure orders were needed and I invited Michael Paget to draft them. Application for reconsideration On 2 October 2015 Sarah filed an application notice in which she sought the following order: "To urgently set aside the interim order of 21st September appointing the applicant as deputy. To relist this case for further directions at the earliest opportunity." She said that: "The respondents did not attend or have representation at the directions hearing on 21st September. Notice of the directions appointment of 21st September was communicated to the parties by inclusion in the two page directions issued on 9th July. The respondents' solicitors operate a paperless case management system. Incoming post is scanned, the original paper documents are shredded and case 'papers' are held in digital files. The directions of 9th July were received, scanned and emailed to the solicitor on 13th July. Those directions consist of one page and do not contain the second page which contained the listing notice. The first scanned copy included a marketing flyer at page 2 and the solicitor asked for the document to be scanned again. The document was scanned again but still consisted of one page of directions and a blank page. The respondents were therefore unaware of the directions appointment on 21st September and did not attend. The court office have indicated that the order would have been doubled-sided and believe the fault lies with the respondents' solicitors. The fault does not lie with the respondents. The respondents object to the interim order appointing [the solicitor for] the applicant and ask for it to be set aside with immediate effect. The respondents ask the court to relist this case at the earliest opportunity." On 13 October 2015 I made a further order relisting this matter for hearing on Friday 30 October. Three days later the listing and appeals team received an email from Sophia Withers of Bishop & Light Solicitors stating that she would be on leave on 30 October and asked for the hearing to be re-scheduled. On 21 October I made a further order relisting the application for hearing on 7 December 2015. On 3 December the respondents' solicitors filed a deputy's declaration and a witness statement made by Ron's accountant, Allan Pratt, who is based in Raynes Park. The deputy's position statement In anticipation of the hearing, Michael Paget, counsel for the applicant, filed a position statement, in which he said as follows: (1) On 21 September 2015 Ms Rheian Davies ('the deputy') was appointed as interim deputy for property and financial affairs for Ron until 20 September 2016. Ron's affairs are complex and, putting at its lowest, family members do not appear to have been acting in his best interests. This is either through incapability or worse. (2) The respondents were not represented at that hearing, albeit witness statements and a position statement had been filed, and now seek to set aside the interim order. The deputy resists that application. A professional deputy is appropriate for Ron and there are grave concerns with any of the respondents or Mr Allan Pratt being mooted as alternative deputies. (3) Ron lacks capacity and has probably done so since a stroke in 2007. He has dementia. (4) Ron was a 'tobacco king' with business assets in the USA and Europe. Those assets were held in company structures, which are complex, which the respondents have not explained, and of which the deputy does not yet have a full understanding. (5) Likewise, Ron's private life was complex. He has been married three times, including a short-term marriage to an Italian woman. The respondents are his children from his first marriage. The applicant is the child from his second marriage. There is conflict between the family members. (6) Ron's income was channelled through E Ltd. His tax returns were drafted by Mr Pratt but it appears no accounts have been completed for E Ltd. He filed accounts at Companies House. These are bare bone but he has provided no account of expenditure which has been made on the company's behalf. No bookkeeping evidence has been provided by Sarah. In February 2015 all E Ltd.'s assets were transferred to T Ltd. Ron is a shareholder of T Ltd. but is not a director. There is no clear explanation why the fresh company was set up. The respondents assert that it was to protect Ron from the applicant. It is unclear to the deputy what has been done with transferred assets. (7) By 21 September 2015 there were a number of unanswered questions about how Ron's affairs were being conducted. Following the checklist approach set out in Re M; N v O and P [2013] COPLR 91 the court appointed the deputy. This was a situation where the estate was substantial and complex; where there was friction between family members and conflicts of interest, in addition to concerns about how Ron's affairs had recently been managed. It was in his best interests to appoint the deputy as a neutral professional to undertake the role. (8) Since her appointment the deputy has taken steps to improve Ron's personal welfare including arranging home care provision. She has also begun her task, pursuant to the court order, of understanding Ron's financial affairs and reporting to the court. The deputy has provided an interim report of 27 November 2015. (9) The report identifies substantial amounts of Ron's money which are not accounted for. The deputy has been able to study the recent history of an E Ltd. bank account with Lloyds Bank; she has been able to cross-reference entries to cheques; she has not yet been able to do this with the T Ltd. account, which is held at the NatWest as the respondents and Allan Pratt have not been fully co-operating. She has not been able to do this for any other bank accounts or other financial accounts for the same reason. It is still not known where Ron's assets and bank accounts are held as those previously in charge of his affairs, including Allan Pratt, have refused to provide the deputy with details. (10) The deputy's analysis shows that almost ½ million pounds pas through the Lloyds account over the last 3 years (this is the only period the deputy has looked at so far). In that period £44,000 odd has been taken out in cash; cheques of £194,000 odd have been made to Sarah or her daughter; £86,000 odd has been used to pay off an MBNA credit in Sarah's name. (11) The history of the account is completely inconsistent with Ron's current needs. The respondents accept that. The deputy had been asking for an explanation, and a reply of sorts has been recently provided. The respondents assert that all these funds were used to pay off loans made to Ron back in 2006. No cogent evidence has been provided. (12) Allan Pratt has not assisted the deputy. No comprehensive accounts have been provided and no explanation has been given about the 2015 company transfer. Mr Pratt has told the deputy that he has no explanation on the receipts into E Ltd. and has compiled accounts filed to Companies House from the banks statements alone, apparently without knowledge of significant amounts of expenditure on behalf of E Ltd. This is despite the fact that he is the Company Secretary of E Ltd. as well as its accountant. A significant amount of expenditure has been by cheque and Mr Pratt compiled these accounts without the cheque book. (13) The deputy is now even more concerned about how Ron's affairs have been managed than she was on 21 September 2015. Her initial investigations have uncovered the removal of substantial funds from Ron without a proper explanation. (14) Since 21 September 2015 there has been no development which would warrant the court setting aside the deputy appointment. All developments have reinforced the conclusion that it is Ron's best interests to have a professional deputy who can analyse what has actually happened to his assets, regularise the situation and then properly manage his affairs. (15) It is not appropriate for Sarah to be appointed as deputy for Ron. There are substantial question marks about her conduct. She has not co-operated with the deputy. (16) It is not appropriate for Mr Pratt to be appointed as deputy. There are substantial concerns about his conduct and, likewise, he has not co-operated with the deputy. (17) It is not appropriate for the deputy to be replaced with another professional deputy. A replacement would lead to additional costs. In any event, there is no relevant criticism of the deputy's conduct or ability to perform her role and act in Ron's best interests. (18) It is appropriate for the court to emphasise to the respondents and Mr Pratt that they must comply and assist the deputy in her investigations. The respondents' position statement Catherine O'Donnell of Garden Court Chambers was instructed to act for the respondents and on Friday 4 December, in anticipation of the hearing due to take place the following Monday, she filed a position statement in which she said as follows: (1) The respondents, by their application dated 2 October 2015, apply for the order of 21 September appointing Ms Rheian Davies as Ron's deputy for property and affairs be set aside. (2) The order was made in the absence of the respondents. The reason for their absence is set out in their application. (3) The respondents seek the appointment of Sarah as deputy, alternatively Mr Allan Pratt, Ron's accountant. However, if the court does not find that appropriate they seek a local panel deputy to be appointed. (4) This is a case of clear family division and tension. The applicant has made serious allegations about the respondents' behaviour in respect of Ron's finances. The respondents in turn have serious concerns about the behaviour of the applicant towards Ron. (5) In their previous position statement dated 16 September 2015 the respondents set out their objections to the appointment of Ms Davies as deputy. In summary, those objections were that the proposed deputy did not know Ron, had no knowledge of his finances or affairs, and was based in London, while he was based in Horsham. In addition his assets and income were not sufficient to justify the expenditure. (6) There was also concern about Ms Davies' position as representative of the applicant. The concern was that Ms Davies might somehow be exploited by the applicant for her own ends. (7) A more serious concern is the appropriateness of Ms Davies's deputyship in the context of these proceedings, given that she was acting for the applicant prior to her appointment. (8) The test for determining apparent bias is whether the fair-minded and informed observer, having considered the facts, would consider that there was a real possibility that the tribunal was biased ( Porter v Magill [2002] 2 AC 357 at [103]). (9) The appearance of bias of a deputy should be avoided at all costs ( EG v RS [2010] EWCOP 3073 ). (10) The respondents appreciate that Ron's finances have been complex. He has earned, borrowed and spent large amounts of money. While as a family and as individuals the respondents had initially wanted to maintain the privacy of their and Ron's financial affairs, they now recognise their lack of information was not helpful. (11) Part of the reason is clearly the context in which Ms Davies came to be appointed. She was acting for the applicant, with whom they had a difficult relationship, about whom they have serious concerns in relation to the treatment of their father and who, in her application, made a number of serious allegations about them. Ms Davies made the same allegations about the respondents on her behalf. She painted a particularly positive picture of the applicant and her credibility and contrasted this with some of the respondents. She commented, " We see none of the same transparency from Sarah and Sven who have intermeddled with Ron's estate and not even managed to oversee a simple residential conveyance on his behalf ." Concerns raised about the applicant with social services were said by Ms Davies to be " revenge attacks ". (12) In all the circumstances, a fair minded and informed observer would conclude there was a real possibility of bias in this case, where there are contested allegations of serious financial misconduct by both the applicant and the respondents and where Ms Davies had previously firmly taken the side of, and acted on behalf of, the applicant. (13) The respondents have provided further information to the court in the form of more detailed statements. Further information has been provided to Ms Davies. It is unfortunate that Ms Davies's report was produced without it. (14) The respondents would be content for the court to appoint another professional deputy to take over from Ms Davies. While there would be further costs it would in the circumstances be justified and appropriate. The hearing The hearing duly took place on 7 December 2015 and was attended by: (a) Michael Paget and Rheian Davies; and (b) Catherine O'Donnell, Sophia Withers, Allan Pratt, and Sven, Sarah and Andrea. The law relating to the appointment of a deputy for property and affairs Sections 1 to 4 of the Mental Capacity Act 2005 provide that, if a person (referred to as 'P') lacks capacity to make a particular decision at a particular time, then any act done or any decision made by someone else on his behalf must be done or made in P's best interests. There is a checklist in section 4 of the Act which requires any substitute decision-maker, including the court, to "consider all the relevant circumstances" when deciding what is in P's best interests and, in particular, they must take the following steps: (a) to consider whether it is likely that P will have capacity in relation to the matter in question at some time in the future (s. 4(3)); (b) so far as reasonably practicable, to permit and encourage P to participate, or to improve his ability to participate, as fully as possible in any act done for him and any decision affecting him (s. 4(4)); (c) to consider, so far as is reasonably ascertainable, P's past and present wishes and feelings (and, in particular, any relevant written statement made by him when he had capacity) (s. 4(6)(a)); (d) to consider, so far as is reasonably ascertainable, the beliefs and values that would be likely to influence P's decision if he had capacity (s. 4(6)(b)); (e) to consider, so far as is reasonably ascertainable, the other factors that P would be likely to consider if he were able to do so (s. 4(6)(c)); and (f) to take into account, if it is practicable and appropriate to consult them, the views of anyone engaged in caring for P or interested in his welfare, as to what would be in his best interests and, in particular, as to the matters mentioned in section 4(6): (s. 4(7)). Section 16(2) of the Act provides that the Court of Protection may make any decision on P's behalf itself, or it may appoint a deputy to make decisions on P's behalf. The Court of Protection has a discretion as to whom it appoints and has traditionally preferred to appoint a relative or friend as deputy (as long as it is satisfied that it is in P's best interests to do so), rather than a complete stranger, out of respect for their relationship, which is now reflected in Article 8 of the European Convention on Human Rights, but there are other, more practical reasons for choosing a family member. A relative will usually be familiar with P's affairs, and aware of their wishes and feelings. Someone with a close personal knowledge of P is also likely to be in a better position to meet the obligation of a deputy to consult with P, and to permit and encourage them to participate, or to improve their ability to participate, as fully as possible in any act or decision affecting them. Naturally, there are circumstances in which the court wouldn't countenance appointing a family member as deputy; for example, where: (a) the proposed deputy has physically, emotionally or financially abused P; (b) there is a need to investigate dealings with P's assets prior to the matter being brought to the court's attention, and the proposed deputy's conduct is the subject of that investigation; (c) there is an actual conflict of interests, rather than simply a potential conflict; (d) the proposed deputy has an unsatisfactory track record in managing his or her own financial affairs; (e) there is ongoing friction between various family members, which is likely to interfere with the proper administration of P's affairs; and (f) there is a need to ensure that P is free from undue influence, particularly the influence exerted by the person seeking to be appointed as deputy. At paragraph (7) of his position statement, Michael Paget referred to my decision in Re M; N v O and P [2013] COPLR 91, in which I drew up a balance sheet between the two competing applicants (M's business associate, N, and M's estranged wife, O) and analysed their relative strengths and weaknesses under the following non-exhaustive list of headings: (a) willingness to act; (b) ability to act; (c) qualifications; (d) place of residence or business; (e) security; (f) conduct before, as well as during, the proceedings; (g) nature of the relationship with the person to whom the proceedings relate; (h) P's wishes and feelings; (i) the views of others who are interested in P's welfare; (j) the effect of hostility; (k) conflicts of interest; (l) remuneration; and (m) the factor(s) of magnetic importance (if any). I don't think that the 'balance sheet approach' would work on this occasion. Decision There was a complete volte face on the part of the respondents between June 2015 and the final hearing six months later. They consistently sought the appointment of Sarah as deputy because Ron's assets were "insufficient to justify the appointment of a professional deputy," yet their counsel concluded her position statement by acknowledging that "the respondents would be content for the court to appoint another professional deputy to take over from Ms Davies. While there would be further costs, it would in the circumstances be justified and appropriate." Sarah is unsuitable to be appointed because one of the deputy's functions is to investigate prior dealings with Ron's property and financial affairs and a deputy cannot be appointed to investigate his or her own dealings. The authority for this proposition is the unreported decision of Lord Justice Slesser in Re Dimmock (1934), which used to appear as a footnote in editions of Heywood & Massey Court of Protection Practice before it went looseleaf, but the absence of a reported judgment is not critical, because the reason for such a principle is glaringly obvious. I am also inclined to agree with Michael Paget, that it would not be appropriate for Mr Pratt to be appointed as deputy because of the concerns summarised in paragraphs (6) and (12) of his position statement. For the same reason, even though she never proposed herself as a candidate, it would be inappropriate for the court to appoint Ron's daughter Z as his deputy because there are questions to be answered about the amount of money she has received from him and the extent to which she may have exerted undue influence over him when obtaining those funds. Essentially, the choice is between Rheian Davies and a panel deputy and, on balance, I consider that it would be in Ron's best interests to appoint a panel deputy for the following reasons. First, given the history of these proceedings, it is more likely that the respondents will co-operate with a panel deputy. However, with fairness to them, their counsel, Catherine O'Donnell, gave a verbal undertaking at the hearing that they would be willing to co-operate with whoever was appointed as Ron's deputy, even Rheian Davies. Secondly, I accept the broad thrust of Miss O'Donnell's argument about possible bias. In her position statement, she referred to the judgment of His Honour Judge Cardinal in EG v RS, JS and BEN PCT [2010] EWCOP 3073 ; [2010] COPLR Con Vol 350. Judge Cardinal introduced his judgment by suggesting that it was "a cautionary tale for all those who put themselves forward as professional deputies when too closely associated with one party in a dispute before the Court of Protection," and at paragraph [27] he went on to state that: "It is just not possible to act as an honest broker on one hand and firmly on the side of one party alone on the other. It should have been clear even then to EG that she simply could not realistically pursue the application. Later on in his submissions to me Mr O'Brien posed the question what would an ordinary member of the public think? The obvious answer is that the appointee has a prejudice, a bias in favour of his/her client." Thirdly and finally, because of the nature of Rheian Davies's practice and its particular areas of expertise (for which, I must add, she received the Legal Aid Lawyer of the Year Award 2011), I believe it would be preferable for a panel deputy to be appointed from one of the more traditional private client firms, which is able to provide a more nuanced set of skills. On its website DH Law claims that its areas of proficiency are mental health, community care, family law, Court of Protection, conveyancing, employment law, professional regulation, housing, personal injury, civil litigation, and will writing. Ron's finances are complicated and involve both corporate and international elements. In my judgment, the deputy should be a member of a firm which has experience of investigating white collar crime and bringing proceedings for the recovery of misappropriated funds, and which has access in-house to international and corporate expertise, if necessary. The process of identifying a suitable panel deputy may take a week or two and, in the meantime, Rheian Davies shall continue to act as interim deputy pursuant to my order of 21 September 2015 until such time as an order is issued discharging her and appointing the panel deputy in her place. BAILII: Copyright Policy | Disclaimers | Privacy Policy | Feedback | Donate to BAILII