A smiling carer chats with an elderly lady

Public Guardian v JM: Another Cautionary Tale for Attorneys

Guidance issued by the Court of Protection’s President on 16 January 2014 requires judges (where permission is sought) to allow judgments to be published in “any case where the issues include whether a person should be restrained from acting as an attorney or a deputy or that an appointment should be revoked or his or her powers should be reduced.

Senior Judge Lush’s judgment in the matter of Public Guardian v JM (heard on 4 February 2014) has now been published: http://www.bailii.org/ew/cases/EWHC/COP/2014/B4.html.

The Public Guardian applied to the Court of Protection (CoP) requesting the Court to revoke and direct the cancellation of the registration of a Lasting Power of Attorney (‘LPA’) and to appoint a Panel Deputy instead.  Judge Lush was satisfied that the attorney had both contravened his authority as an attorney and had not acted in DP’s best interests. He revoked the LPA and directed the Public Guardian to cancel its registration. He also directed that a member of the panel of deputies be invited to make an application to be appointed as deputy for DP. This judgment is of interest for a number of reasons:

  1. The OPG’s investigation began after they were tipped off by a senior risk consultant at Aviva UK Life Financial Crime Team. The attorney (JM) had requested Aviva to transfer the donor (DP)’s bond of over £130,000 into an account in the attorney’s own name, saying that it was a gift from DP. Aviva refused to do so. He also asked for the bond money to be transferred into a bank account in DP’s name. Again Aviva refused to act on the attorney’s instructions and froze the bond. Now that these cases are being published with greater frequency, perhaps more banks and institutions will tackle problems with attorneyships and deputyships in this way.
  2. In this case, the attorney had carefully ensured that care home fees were paid up to date and spending money was provided to DP. The care home may have been oblivious to what the attorney was doing. He had “gifted” himself £38,000, paid himself a salary without authority and made substantial cash withdrawals without keeping accounts.
  3. Judge Lush confirmed that Section 12 of the Mental Capacity Act 2005 (‘the Act’) sets out the limited circumstances in which an attorney may make gifts to persons, related to or connected with the donor, including the attorney himself. In order to have made a gift of this magnitude (£38,000), he should have applied to the CoP for formal authorisation under section 23(4) of the Act.  Judge Lush has already provided useful guidance on gifting in the recent cases of Re GM and Re Joan Treadwell deceased.
  4. The judge referred to the ‘inherent artificiality’ of the attorney’s claim for remuneration at a rate of £20 a day for 365 days’ house clearance and rubbish removal and £20 a week for 52 weeks’ gardening. JM had no authority to charge for his services under the LPA itself. If he wished to receive a salary, he should have applied to the Court for directions under section 23(3)(c) of the Act.
  5. JM’s witness statement of 17 November 2013 objected to the OPG investigating him about potential fraud and money laundering. He argued that? DP had become part of his family; they would go on holidays and days out together.? He said that Aviva had ‘misled’ the OPG by giving false information.  He said that the police had concluded their investigation and not taken things further so he did not understand why the OPG was still investigating.  Judge Lush explained the different standards of proof involved in criminal and civil investigations.  The police may not have felt there was enough evidence to pursue a criminal charge: to convict him of a financial crime would require evidence “beyond reasonable doubt.  However, the Court of Protection’s role was to judge whether the LPA should be revoked on the “balance of probabilities, a lower threshold.
  6. The judgment brushes upon the law regarding ademption caused by an attorney. This is where gifts in a will fail because the subject matter of the gift no longer exists, perhaps because the attorney has disposed of it either deliberately or unwittingly. Judge Lush refers to this area of law as a minefield. In this case, the issue was that the house named in the will had been sold by DP’s attorney so it would not form part of DP’s estate on death. Judge Lush commented in an addendum to this judgment that because Aviva froze the investment bond, it was entirely appropriate for JM to sell DP’s house to make funds available to pay her care home fees. The ademption of the gifts in the will to Brookwood Cemetery and the Russian Orthodox Church was “unavoidable and there was no intentional interference on JM’s part with the succession rights under DP’s will, even though he was aware of the contents of the will and stood to gain substantially from the ademption as the residuary beneficiary.”
  7. The judge revoked the LPA and said a panel deputy should be appointed.  He commented further that a statutory will application should be considered by the new Deputy to give effect to DP’s wish that Brookwood Cemetery and the Russian Orthodox Church should receive some kind of financial benefit.
  8. Senior Judge Lush also referred to the OPG’s Annual Report and Accounts 2012-2013, revealing some interesting statistics.  Relatively few matters investigated by the OPG will culminate in an application to the CoP for the removal of an attorney or deputy. Last year a total of 2,982 safeguarding referrals were made to the OPG. 728 (only 24%) were referred for full investigation and the Public Guardian approved 480 investigation case recommendations. Following investigation, only 136 resulted in an application to the CoP for the removal of an attorney or deputy.

This case serves as a further warning to attorneys that they cannot simply pay themselves or gift what they want, particularly if there is no provision for this in the LPA itself.  By failing to keep proper accounts and financial records, JM was in breach of his fiduciary duties as an attorney.  Panel deputyships often arise from these sorts of situations. For further information about panel deputies, please see this article drafted by Anthony Fairweather, the only panel deputy in Bristol.

For assistance with Lasting Powers of Attorney, or for further detail on the background to the judgment in OPG v JM, please contact Jess Flanagan.