The Patient (“P”) is an 85 year old woman who lives in her own home in Kent. P is assisted by her daughter who lives nearby and acts as her primary carer.
P’s husband died in December 2009. In 2008 P was diagnosed as having vascular dementia.
P has four children: a daughter GB who lives in Kent; a son, SG, who also lives in Kent; and two other sons who live in Essex and London respectively.
On 10th October 2012 P executed an LPA for property and affairs, and an LPA for Health and Welfare to GB and SG, jointly and severally. P did not appoint a replacement attorney. P did name her two younger sons as the persons to be notified when an application was made to register the LPA.
An application was made to the Office of the Public Guardian ("OPG") to register the LPA: this was registered on 3rd December 2012.
On 22nd July 2014 the London Borough of Bromley raised concerns with the OPG that:
- There had been gifting from P’s account in total of £75,000 (£15,000 to GB and £20,000 each to her brothers;
- The reason for the difference is that GB had already received a gift of £15,000 from P;
- P only had £17,465.54 left;
- GB’s response had been “if EG doesn’t mind and she is well cared for, what’s the harm?”.
The senior care manager in the safeguarding team at Bromley provided a capacity assessment. After a meeting with P and GB, he concluded that P was unaware of her finances and might not agree to such gifts. He concluded that it was not in P’s best interests and passed the matter to the OPG for investigation.
GB objected to the application. GB described her own financial difficulties. GB stated that since the death of her father she has visited P every day since December 2009; her husband often accompanied her and did work on the garden and maintenance jobs. In March 2013 GB gave up her job as a cook to look after P and become P’s carer. In June 2013 GB’s husband was sent to prison for his involvement in a fatal car accident; in August 2013 GB could not afford her petrol etc and so she and SG set up a standing order from P’s funds to pay such expenses; GB has been trying to help her son who has bipolar disorder and was hospitalised in January and March 2014.
GB stated that P received a letter from the bank stating that P’s account had been frozen as there was no activity on them. GB and her brothers discussed this with P, along with GB’s difficult circumstances, and asked P if she would help out GB. P was shown her bank account and she agreed to help out GB and wanted her sons to be treated equally.
SG also objected to the application. SG stated that he and GB had always acted in P’s best interest. He basically supported GB’s statement but added that the discussion happened in early April 2014 before P’s behaviour become "considerably more erratic".
London Borough of Bromley supported the OPG and wished to be joined as a party.
The OPG changed its position slightly and requested that London Borough of Bromley be invited to make an application to become P’s deputy for her property and affairs.
Julie Bailey who is an appointeeship and deputyship manager with Bromley explained that the matter had been alerted to them by the Metropolitan Police. On 23rd May 2014 the Police were alerted by a member of the public that P had been reported to have been walking down the middle of the road in a poorly-lit area; and on 26th May 2014 GB had reported that P had not been seen since 4.30pm the previous afternoon. Social Services offered an assessment under Fair Access to Care Criteria and GB informed the officer that £75,000 had been gifted to the family. Bromley decided to treat the gifts as a deprivation of assets and assessed P as having notional capital of £92,465.54.
GB disputed that P lacked capacity at the time she made the gifts. GB stated that the first incident of wandering occurred some 7 weeks after the gift and that was the first time she had come to the attention of social services. GB stated that they knew P had capacity to make the gifts but if the court disagreed, two of her brothers could pay the money back immediately but she could not. GB stated she would not have asked for it if she didn’t need it; she gave up her job to care for P and although her husband is now out of prison and in employment she still has a burdensome son to support. GB stated that she would need to get a job which would mean she would be unable to care for P.
The Law relating to gifts made by attorneys
Section 12 of the Mental Capacity Act 2005 states that an attorney does not have power to make gifts from P’s property except on customary occasions to persons who are related to or connected with P (section 12(2)(a). Customary is defined in subsection (3)); or to any charity to whom P made or might have been expected to make gifts (section 12(2)(b)), if the value of the gifts are not unreasonable having regard to all the circumstances of the case, including the size of P’s estate. Section 12(4) states that if the attorney wishes to make more extensive gifts than allowed under section 12(2) of the Mental Capacity Act 2005 they should make an application to the Court of Protection under section 23(4).
The Law relating to the revocation of an LPA
If the court finds that the attorney has acted in a way that contravenes or would contravene their authority, or it is not, or would not, be in P’s best interest the court can direct that the instrument purporting to be a LPA is not to be registered, or if P lacks capacity to do so, can revoke the instrument or LPA (section 22(4)).
The court found GB signed the cheques in her capacity as attorney and that the gifts made far exceeded the limited authority to make gifts; therefore GB contravened her authority as attorney. The court also found that SG was a party to the transaction and also contravened his authority as attorney. The attorneys should have made an application to the Court of Protection.
The court stated that even if P had capacity to make the gifts on 9th April 2014, undue influence would be presumed because:
- The gift was so substantial and could not be accounted for by ordinary motives;
- There is a relationship of trust between GB, SG and P;
- GB and SG failed to ensure that independent advice was made available to P.
The court found that P lacked capacity to revoke the LPA relying on Bromley’s Mental Capacity Assessment on 1st August 2014.
The Court revoked the LPA and appointed the officer for property and affairs deputyships of the London Borough of Bromley as deputy for P’s property and affairs.
This case demonstrates the restraint upon attorneys under an LPA and how they are expected to act. The court referred to the Law Commission report published in 1983 on The Incapacitated Principal which led to the Enduring Powers of Attorney Act 1985 as to the reason why attorneys have limited authority to make gifts. It is to prevent the temptation by the attorney to abuse their position, especially if the attorney had fallen on hard times and persuade himself that P would have wanted the attorney to benefit. It further prevents the unscrupulous attorney persuading a semi-capable P that this was normal practice.
The court further referred to the Code of Practice that attorneys should not take advantage of their position. Attorneys should not put themselves in a position of conflict with their duties and their own personal interest. The decision of the attorney must always benefit P and not the attorney. Attorneys must not profit or obtain personal benefit from their position. They can only receive gifts where the Act allows it.
The court stated that had GB made an application to the court it may have been sympathetic to GB’s position and probably would have awarded her an allowance. As this would have been an order of the court then the allowance would have been treated for tax purposes as a voluntary payment rather than income (HM Revenue & Customs Employment Status Manual, ESM4016). Equal payment to the sons would not have arisen as they had not suffered economic loss since they had not given up their employment to care for P.
The question of repayment from GB was not an issue for determination and her position regarding future care of P is not known.
This case demonstrates the importance of the trust relationship between P and her attorneys and the necessity to seek permission from the court to make large gifts. It would appear that attorneys ought to ensure independent advice is available to P before any decision is made regarding substantial gifts.
Read the full judgment on BAILII