The court considered section 42 of The Mental Capacity Act 2005 and also chapter 7 of the Mental Capacity Act 2005 Code of Practice particularly paragraph 7.58 concerning LPA’s. The court specifically considered what the code had to say about fiduciary duty, duty to keep accounts, and the duty to keep the Donor’s money and property separate.
OL is aged 77 years and was diagnosed as having vascular dementia 2011 and in 2013 suffered a stroke. A Mini Mental State Examination undertaken on 21 August 2013 where she scored 8/30 suggested severe cognitive impairment at that time.
In October 2013 she executed a LPA for property and affairs and a LPA for health and welfare in which she appointed DA (a daughter age 51 living in Croydon) and YS (a son aged 48 living in South Norwood) jointly and severally to be her attorneys. The document was witnessed by someone who had known OL over 40 years and was a close friend of the family both in Barbados and in the UK.
In December 2013 an application was made to register the LPA’s at the OPG. However in June 2014 ES, OL’s elder son, contacted the OPG about concerns over the sale of his mother’s home in Stockwell and the purchase of a home in Croydon. His sister claimed it was none of his business.
The Public Guardian formally opened an investigation and, satisfied that there was evidence of symptomatic financial abuse, made an application to the Court of Protection for revocation and cancellation of the LPA under section 22 (f) (b) MCA 2005 and furthermore an order directing that a member of the panel deputies be invited to make an application to be appointed to make decisions on behalf of OL in relation to her property and affairs .
The extent of the financial mismanagement included the sale of OL’s property in Stockwell for £730,000 in May 2014 and the purchase of a property in which OL now resides in Croydon with her daughter DA on 14 June 2014 for £430,000, the source of the monies being entirely OL’s funds. Following the purchase OL and two attorneys executed a declaration of trust in which OL only has a 20% share the property – some £86,000 - whereas the attorneys, none of whom had contributed towards the purchase price each had a 40% share. It was asserted that this represents an outright gift of £172,000 to each of the attorneys.
Despite the OPG asking the two attorneys for a full account of their dealings none was received and it transpired £127,885 of OL’s money was used to pay DA’s mortgage on her former home in South Norwood which she still retained. This property was divided into two flats one of which was let out at a rent of £850 per month. A further £80,000 of OL’s money was spent on building work and a loft conversion at DA’s property in South Norwood. Thus over a period of six months, of the £730,000 being the proceeds of OL’s flat in Sockwell, only £7,000 was left together with her 20% share of the house in Croydon.
The Court of Protection General Visitor visited OL and concluded that she did not have capacity to revoke the LPA. When DA was spoken to about the transactions she told an officer from the OPG that she didn’t understand the role of an attorney and appeared disinterested in the Court of Protection proceedings.
ES, OL’s eldest son filed a witness statement supporting the OPG’s request and cancellation of the LPA and asked the court to consider appointing either himself as sole or joint deputy, the other deputy being selected from the panel of deputies. Amongst other matters he was concerned that as there was only £7,000 remaining after the sale of his mother’s home there would be very little left to pay for the services of a deputy and thus he wished to preserve as much as possible.
At the hearing DA did not accept that she had breached her fiduciary duty maintaining she had acted entirely in her mother’s best interest and therefore opposed the application for the revocation and cancellation of the LPA. In relation to the declaration of trust she asserted that enquiries ought to be extended and directed towards the solicitors who prepared deed of trust. She further asserted that there was no medical evidence available in order to understand how the donor‘s (OL’s) cognitive function had been affected by the stroke and how this affected her capacity to make decisions in relation to her property and affairs. She asserted that the OPG appeared to accept that the Donor, OL, had the capacity to make the LPA’s in October 2014 (after her stroke), as the validity of the instruments was not in dispute, the instruments being the declarations of trust. The representative of DA sought a specialist report on OL’s capacity. After a brief adjournment DA and YS stated that they were willing to stand down as attorneys in order to facilitate the appointment of a panel deputy but were unhappy at the prospect of ES being appointed either as a deputy alone or jointly and severally with a professional deputy.
The court determined that in relation to OL’s capacity to make lifetime gifts including whether she had been unduly influenced in parting with some £640,000 of her money and whether or not any or all of the transactions be set aside would be a matter for another day and another court - probably litigation in the Chancery division being a possibility. Senior Judge Lush was concerned that OL needed someone immediately who could manage her property and financial affairs honestly and competently and in her best interests free from any conflict of interest or undue influence.
The court was satisfied that the attorneys had behaved in a way that contravened their authority and not in the Donor’s best interests. The court found that their failure to keep accounts of the transactions carried out on the Donor’s behalf was compounded by the advantage they had taken of their position, particularly that of DA attaining personal benefits far in excess of the limited power that attorneys have to make gifts of the Donor’s property under the Mental Capacity Act 2005. DA also failed to keep the Donor’s money and property interests separate from her own in respect of the property that DA owned in South Norwood. The court was satisfied on the report of the Court of Protection General Visitor that OL lacked capacity to revoke the LPA. In relation to EL’s appointment as OL’s deputy for property and affairs, the court found that he had not sufficient detachment or impartiality to manage his mother’s affairs and the court sensed that EL was motivated partly by a desire to salvage his own inheritance and partly by a craving for revenge against the sister and brother. The court found that to appoint EL as deputy jointly and severally with a panel deputy would impede the decision-making process and increase the costs incurred by OL’s state. Accordingly the court appointed a panel deputy and authorised them to take such steps necessary or expedient to restore OL’s estate so far as possible to the position it would have been in before the attorneys began acting recklessly and irresponsibly.
Given the conduct of the attorneys the court departed from the general rule as to costs in property and affairs (that is to say payment out of the Donor’s estate) and made no order as to costs.
This is yet another case of family members taking advantage of an elderly relative – in this case their own mother. Had it not been for a sibling making a complaint to the OPG, this case probably would never have come to court. It again highlights the duties imposed upon attorneys acting under a LPA, in particular their fiduciary duties, duties to keep accounts and importantly their duties to keep the Donors money and property separate – in this case all of which were breached.
Such was the dim view taken by the court that it made no order as to costs. Thus the costs of the representation of DA and YS by counsel and solicitors would have to be met by DA and YS themselves and not from the Donor’s estate as would normally be the case.
It is a useful case for those with elderly relatives who are concerned as to how the monies of that relative of being expended by others. It clearly highlights remedy available in the first instance which is to contact the OPG if there is sufficient evidence to instigate an investigation and if warranted make an application to the Court of Protection.
Read the full text of the judgment on Bailii