England and Wales Court of Protection Decisions

COURT OF PROTECTION
MENTAL CAPACITY ACT 2005
IN THE MATTER OF DP

		First Avenue House 42-49 High Holborn, London, WC1V 6NP
		11 February 2014

Senior Judge Lush:

1. The practice guidance on transparency in the Court of Protection, issued by the President on 16 January 2014, requires judges to give permission for 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."
2. This is such a case. It is an application by the Public Guardian to revoke and direct the cancellation of the registration of a Lasting Power of Attorney ('LPA').

The background

3. DP was born in 1925 and was an only child. Her mother died in 1960 and her father died four years later. She worked for the BBC World Service at Bush House in the Aldwych, London WC2 for thirty nine years.
4. In 1964, shortly after her father's death, she married a Russian and became a member of the Orthodox Church. Her husband died in 1997 and was buried in Brookwood Cemetery. They had no children.
5. Her closest relatives are two elderly female cousins and a number of first cousins once removed, who live in Hampshire and Dorset.
6. DP and her late husband owned a large house at Barons Court, London W6, which she sold in 2005, when she downsized and moved to Orpington.
7. It is not clear why she decided to move to Orpington, but there is some suggestion that, even when there was no question that she lacked mental capacity, she may have been the victim of financial abuse. However, these events have no connection with the present application.
8. The respondent is JM, who was born in 1945 and lives in the Dartford postcode area. He has known DP since 2006 and was formerly her gardener.
9. On 30 August 2011 DP executed her last will and testament in which she:

(a) appointed JM and her accountant to be her executors;

(b) gave 10% of the net proceeds of sale of her house in Orpington to Brookwood Cemetery and another 10% to the Russian Orthodox Church; and

(c) gave the remaining 80% of the net proceeds of sale of the house and her entire residuary estate to JM.

10. Two months later, on 31 October 2011, she executed an LPA for property and financial affairs, in which she:

(a) appointed JM to be the sole attorney;

(b) did not appoint a replacement attorney;

(c) did not impose any restrictions or conditions on the attorney's authority;

(d) did not set out any guidance for him to follow;

(e) did not agree to pay him for his services as attorney; and

(f) named nobody who was to be notified when an application was made to register the LPA.

11. Her accountant witnessed her signature and two friends completed Part B of the prescribed form, in which they certified that DP understood the purpose of the LPA and the scope of the authority conferred under it, and that she was not being pressurised into making it.
12. An application was made to the Office of the Public Guardian ('OPG') to register the LPA and it was registered on 20 February 2012.
13. Since 4 April 2012 DP has lived in a residential care home in the London Borough of Bromley.

The application

14. On 3 July 2013 Marion Bowgen of the OPG applied to the Court of Protection for:

(a) an order under section 22(4)(b) of the Mental Capacity Act 2005 for the revocation and cancellation of the registered LPA made by DP; and

(b) an order directing that a member of the panel of deputies be invited to make an application for appointment as deputy to manage DP's property and affairs.

15. The application was accompanied by a witness statement, made on 25 June 2013 by James Morrey, a senior investigations officer at the OPG. In summary, he said that:

(a) On 12 January 2012 Jenny Payne, a social worker with Oxleas NHS Foundation Trust, contacted the OPG to express her concerns about JM's conduct. On New Year's Eve, DP had been found on a bus in a confused state and was admitted to hospital. JM had visited DP on the ward, insisted there was nothing wrong with her, and demanded that she be discharged immediately into his care. As a result the NHS Trust placed her under a safeguarding alert. However, as the power of attorney was an LPA for property and financial affairs, and because the NHS's concerns were of a personal welfare nature, the Public Guardian felt that he was unable to intervene.

(b) The attorney, JM, made a complaint to the Financial Ombudsman Service about the mis-selling of an investment product. DP's financial adviser had recommended that she transfer her investments from Legal & General to Aviva, and appears to have received a generous commission for giving this advice. When the Ombudsman adjudicated on the complaint, the value of the Aviva product was £138,811.97, net of an early exit charge of £4,293.45, whereas if the funds had remained with Legal & General, they would have been worth £177,418.29. On 2 August 2012 the Ombudsman awarded DP compensation in the sum of £38,606.32.

(c) On 15 February 2013 JM sold DP's house for £165,000 and placed the net proceeds of sale in a high interest account at Barclays Bank in his own name. When he became aware that the OPG was investigating his actions, he made arrangements for the account to be registered in DP's name.

(d) On 4 March 2013 John Stevenson, a senior risk consultant at Aviva UK Life Financial Crime Team, contacted the OPG to express concerns regarding the encashment of DP's investment bond. On several occasions JM had requested that either the bond be transferred into an account in his own name by way of a gifting arrangement or, that it be transferred into a bank account in DP's name. Aviva refused to act on JM's instructions and, in effect, it froze the bond, which still forms part of DP's estate.

(e) Following the tip-off from Aviva, the Public Guardian commenced an investigation into the attorney's management of the donor's property and financial affairs.

(f) It transpired that in November 2012 JM had made a gift to himself of £38,000, which was roughly the amount of compensation that the Ombudsman had awarded to DP as a result of his intervention.

(g) JM was unable to explain the purpose of a banker's draft for £1,500 which was drawn on 7 June 2012.

(h) He was also unable to account for numerous cash withdrawals from ATMs from March 2012 to March 2013 totalling £8,520.

(i) JM claimed that he had spent £10,300.70 on improvements to DP's house in order to make it presentable for sale, but he was unable to produce any receipts to verify this claim. It emerged that £7,300 of this sum represented a salary of £20 a day that he had decided to pay himself for 365 days' house clearance and rubbish removal. He also awarded himself a salary of £1,040 for twelve months' gardening at a rate of £20 a week.

(j) On 6 July 2012 JM paid a deposit of £599 from DP's funds to lease a Motability vehicle – a Nissan Qashqai 1.5 dCi - for his wife for three years. He then withdrew £55 a week from DP's funds to hire the vehicle, being an equivalent sum to the mobility component that his wife receives as part of her Disability Living Allowance. He also paid for the petrol for this car from DP's funds at a rate of about £10 every two or three days. JM explained that DP was financing the lease of the vehicle because it had been acquired for her benefit so that he could take her on trips and to hospital appointments and so he could use it whenever he visited her property.

JM's witness statement

16. In response to the application JM made a witness statement on 17 November 2013, in which he said as follows:

"I have known DP since 2006 and we became very good friends. She had relatives, but no one seemed to bother with her. We used to have her over for Christmas. She used to stay a few days with us. She was well known to all my family. They all like her and she felt part of the family.

DP would go on holidays with us and have days out with us. She always enjoyed them.

DP confided in me quite a bit and gave me specific instructions of things she wanted me to do should anything happen to her. I have done my best to fulfil her wishes.

I was always available day and night for her, when she was in her own house. She would ring me when she had any problems, even at night, such as heating and electrics, etc.

She had Christmas with us in December and had another Christmas in January with her church, which was Russian Orthodox.

On 31st December 2011, DP was found by police wandering around the streets where she lived. The police took her to Farnborough Hospital Kent, when she was seen by doctors, who said there was nothing wrong with her. The hospital let her out late evening where she was getting on and off buses parked up in the hospital grounds. She was then taken to Queen Mary's Sidcup. We were not aware of this at the time.

This was now 1st January 2012. After trying to contact her both by phone and visiting the house, I was getting worried about her and my wife and I reported her missing to the police. There are two statements in the bundle explaining this and other accounts of what I have done with DP's money, clearing her house out and eventually selling it. Finding a suitable home for her.

Aviva has misled the Office of the Public Guardian by giving false information to them regarding transfers of bonds which I asked for to put into a high interest a/c in Barclays

Bank. They claim there was over £4000 loss if they were cashed in early, which as I understand from the financial adviser, this is not so. I have paperwork confirming this because of misdealings with DP's bonds, which went to the Ombudsman, and DP was awarded compensation.

I object to the Office of the Public Guardian investigating me and my wife about potential fraud and money laundering. I object to investigation concerning DP before I knew her in 2005. I know nothing about this. The social worker asked for the police search on me. Police felt there was no evidence to pursue any investigation (10.1.12) so why am I still being investigated (9.4.13)?"

The hearing

17. On 20 December 2012 the application was set down for hearing on 4 February 2014, and in anticipation of the hearing, James Morrey wrote a position statement on behalf of the Public Guardian, in which he said that JM's response contained nothing to cause the Public Guardian to change his position regarding the application.
18. The hearing took place on Tuesday 4 February 2014 and was attended by:

o Marion Bowgen, on behalf of the OPG; and

o JM and his wife, who were accompanied by Marian Wellings of the Personal Support Unit.

19. Mrs Bowgen conceded that JM had co-operated with the OPG's investigation as far as he could, and said that, unlike many cases which the Public Guardian is called upon to investigate, there were no arrears of care home fees and DP was regularly receiving a personal allowance.
20. Mrs Bowgen reminded JM of the Part C declaration in the LPA, which he had signed on 31 October 2011. It states that:

"By signing below, I confirm all of the following:

Understanding of role and responsibilities

I have read the section called 'information you must read' on page 2 of this lasting power of attorney.

I understand my role and responsibilities under this lasting power of attorney, in particular:

I have a duty to act based on the principles of the Mental Capacity Act 2005 and have regard to the Mental Capacity Act Code of Practice

I can make decisions only when this lasting power of attorney has been registered

I must make decisions in the best interests of the person who is giving this lasting power of attorney

I can spend money to make gifts but only to charities or on customary occasions and for reasonable amounts

I have a duty to keep accounts and financial records and produce them to the Office of the Public Guardian and/or to the Court of Protection on request."

21. JM accepted that he should have kept proper accounts, but suggested that this was water under the bridge. Everything is settled and stable now and there should be no further need for him to make further withdrawals from DP's accounts, apart from £55 a week for his wife's car and the petrol money.
22. He warned the court that, if it were to revoke the LPA, he would no longer be able to afford the Motability car payments, which would mean that he could no longer afford to see DP and take her to visit her husband's grave at Brookwood Cemetery or take her on outings to the seaside.
23. There was a conflict in the evidence. In her report of 28 March 2013 a Court of Protection General Visitor stated that, "according to the deputy home manager the attorney visits approximately every three weeks." JM has consistently claimed that he visits DP two or three times a week, and he resolved this contradiction by saying that that the Visitor's report had been written at the end of a long, harsh winter, when he had been unable to visit DP as often as he would have wished.
24. JM said that DP is comfortable and contented in the home he selected for her. The fees are £550 a week, whereas the home in which Jenny Payne, the social worker, had wished to place her, would have charged £900 a week, and he had saved DP a considerable amount of money by his prudent management of her finances.
25. DP's current assets are as follows:

AVIVA Bond	147,000.00
Barclays Platinum Banking Current Account	5,884.69
Barclays Essentials Savings Account	0.08
Barclays Everyday Saver Account	128,111.62
	£280,996.39

The legal framework

26. The Public Guardian's application was for an order under section 22(4)(b) of the Mental Capacity Act 2005 revoking the LPA and directing him to cancel its registration.
27. Section 22(4)(b) provides that:

"The court may –

(a) …

(b) if P lacks capacity to do so, revoke the instrument or the lasting power of attorney."

28. This should be read in conjunction with section 22(3)(b), which 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."

29. To be able to revoke an LPA on the basis of the attorney's past performance, the court needs to be satisfied that:

(1) the attorney has contravened his authority; or

(2) the attorney has not acted in the donor's best interests; and

(3) the donor lacks capacity to revoke the LPA.

30. I shall consider the donor's capacity first, and then go on to examine the attorney's behaviour.

The donor's capacity

31. The only evidence we have of DP's capacity to revoke the LPA comes from Barbara Joyce ('the Visitor'), who is an approved social worker under the Mental Health Act 1983. She has a post-qualifying diploma in social work with deaf people and a certificate in dementia care, and has been a Court of Protection General Visitor for the last four years.
32. In her report dated 28 March 2013 the Visitor described her assessment of DP in the following terms:

"I explained the LPA to DP. I informed her that she had nominated someone and asked her to tell me who that person was. She could not. I then gave her the first name of the attorney. She was unable to match his surname. I then gave her his full name and asked her if she could tell me that it was the person she had nominated. She said 'It sounds familiar – but I don't know who he is.'"

33. The Visitor's report was commissioned by the OPG pursuant to section 58(1)(d) of the Mental Capacity Act 2005 and follows a set format. It is sixteen pages long.
34. In response to the question, "Does the donor have an impairment of or disturbance in the functioning of his/her mind or brain?" the Visitor replied, "Yes, the case notes indicate that the client has a diagnosis of dementia with confusion and self neglectful behaviours." She went on to state that, "I am able to confirm that DP has a specified mental condition that conforms to the requirements of the Mental Capacity Act 2005 so as to meet the first stage of the Mental Capacity Assessment. The Diagnostic Test is met in that a diagnosis of dementia exists."
35. The Visitor then stated:

"Moving on to the second stage Functional Test:

Understand

DP was able to understand the meaning of the LPA but did not understand the implications of the LPA in any meaningful sense.

Retain

She did not have the ability to retain information. I demonstrate this in that I reminded her who she had nominated and when I returned to this information she was unable to recall this 15 minutes later.

Use and weigh

When I presented her with information such as who JM was, why she had chosen him or who else could act as her attorney she was unable to acknowledge or process this information and use it in any meaningful way.

Communicate

Although the donor has speech, she was unable to assimilate the information that I had given her in order to communicate an opinion of the LPA.

I am, therefore, able to conclude that it is my professional opinion that DP does not have mental capacity in relation to a decision about revoking or suspending the LPA.

36. Although the Visitor's report is the only evidence that addresses the specific issue of DP's capacity to revoke the LPA at the material time, there was a lengthy letter to the OPG from Jenny Payne of Oxleas NHS Foundation Trust dated 21 May 2012 stating that the healthcare professionals had doubted whether DP had the capacity to create the LPA in the first place:

"We had concerns regarding [DP's] mental capacity to manage her finances and to sign documents for LPA and change the contents of her will prior to her coming to the notice of the mental health services."

37. I am not aware of any improvement in DP's condition since the Visitor saw her and, on the balance of probabilities, I am satisfied that she lacks the capacity to revoke the LPA.

The attorney's conduct

38. It is unusual for the OPG to receive referrals about an attorney's conduct from two completely unrelated sources. In this case concerns were initially raised by Oxleas NHS Trust more than a year before Aviva alerted the OPG to the attorney's suspicious behaviour in seeking to transfer the balance on DP's investment bond into an account in his own name by means of a gifting arrangement.
39. By making a gift of £38,000 to himself, JM contravened the provisions of section 12 of the Mental Capacity 2005, which sets out the limited circumstances in which an attorney may make gifts to persons, who are related to or connected with the donor, including himself. In order to have made a gift of this magnitude, he should have applied to the Court of Protection for formal authorisation pursuant to section 23(4) of the Act.
40. Regardless the inherent artificiality of his 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 contravened his authority by awarding himself a salary. Section 7 of the LPA, 'About paying your attorneys', was left blank by DP. The guidance to that section states: "You can choose to pay non-professional attorneys for their services, but if you do not record any agreement here, they will only be able to recover reasonable out-of-pocket expenses." JM had no authority to charge for his services under the LPA itself and, if he wished to receive a salary, he should have applied to the Court of Protection for directions under section 23(3)(c) of the Act, whereby the court can authorise an attorney's remuneration or expenses.
41. By failing to keep proper accounts and financial records, he was in breach of his fiduciary duties as an attorney.
42. I was unmoved by JM's suggestion that, if the LPA is revoked, he will be unable to afford the Motability vehicle and will no longer be in a position to visit DP and take her on outings. The purpose of the Motability scheme is to enable someone who is in receipt of Disability Living Allowance (in this case, JM's wife) to use the mobility component in their DLA to lease a vehicle. I do not understand why JM's wife cannot apply her mobility component for the purpose for which it was intended and I am surprised that, having received a substantial gift of £38,000 from DP's estate as recently as November 2012, JM should have insufficient resources to keep up the payments on the vehicle.
43. At the end of his witness statement JM said that the police had concluded that there was no case to answer, and he asked why he was still being investigated by the OPG.
44. There are significant differences between a police investigation and an investigation conducted by the OPG. When the police investigate an alleged crime, they need to consider whether there is sufficient evidence to present to the Crown Prosecution Service ('CPS') to guarantee a realistic prospect of conviction, which in this case would have been on a charge of theft or fraud by abuse of position. The CPS would have had to prove that JM was aware that he was acting dishonestly and they would have had to prove this 'beyond reasonable doubt', the standard of proof in criminal proceedings. The decision not to prosecute him simply means that the CPS was not totally confident that it would be able to prove JM's guilt so as to ensure a conviction. It does not imply that his behaviour has been impeccable.
45. By contrast, an investigation by the OPG is concerned primarily with establishing whether an attorney or deputy has contravened his authority under the Mental Capacity Act 2005, or has acted in breach of his fiduciary duties under the common law of agency, or has behaved in a way that is not in the best interests of the person who lacks capacity. The standard of proof, 'on the balance of probabilities', is lower than the criminal standard.
46. Like the police and the CPS, the OPG carries out a comprehensive sifting process, and the Public Guardian will only make an application to the Court of Protection in cases where he has good reason to believe that an attorney or deputy has acted inappropriately and that it is in the best interests of the person who lacks capacity for the attorney or deputy to be discharged.
47. In fact, the OPG make comparatively few applications to the court. According to the Office of the Public Guardian Annual Report and Accounts 2012-2013, at pages 6 and 7, the Public Guardian received a total of 2,982 safeguarding referrals during the financial year 2012/13. 728 (24%) were referred for full investigation and the Public Guardian approved 480 investigation case recommendations. Of these, only 136 resulted in an application to the Court of Protection for the removal of an attorney or deputy.
48. Having regard to all the circumstances, therefore, I am satisfied that JM has behaved in a way that has both contravened his authority and has not been in DP's best interests.
49. Accordingly, I revoke the LPA under section 22(4)(b) of the Mental Capacity Act 2005 and direct the Public Guardian to cancel the registration of the instrument under paragraph 18 of Schedule 1 to the Act. I also direct that a member of the panel of deputies be invited to make an application to be appointed as deputy to manage DP's property and affairs.

Addendum on ademption

50. There is one final point I must mention, and this relates to DP's will. It will be recalled that she left 10% of the net proceeds of sale of her house in Orpington (approximately £16,000) to Brookwood Cemetery and 10% to the Russian Orthodox Church. The remaining 80% of the proceeds were to pass to JM, who was also the residuary beneficiary.
51. When the house was sold in February 2013, the subject matter of the gifts to the cemetery and the church no longer formed part of DP's estate, so the gifts failed or, to use the technical legal term, they 'adeemed'.
52. In view of Aviva's stance in freezing the encashment of the investment bonds, it was an appropriate course of action for JM to sell DP's house in Orpington to make funds available to pay her care home fees. The ademption of the gifts 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.
53. The law regarding ademption caused by an attorney is a minefield and over the last twenty years there have been a number of conflicting judgments in several Common Law jurisdictions. For example:

(1) Re Dorman [1994] 1 WLR 282, a decision of David Neuberger QC (as he was then) in our Chancery Division.

(2) Re Viertel [1996] QSC 66; [1997] 1 Qd R 110; a decision of Thomas J in the Supreme Court of Queensland, which was later reported at [2003] WTLR 1075.

(3) Shirley Anne Banks v National Westminster Bank Plc & Another [2005] EWHC 3479 (Ch), a decision of His Honour Judge Rich QC in our Chancery Division.

(4) Gordon Turner v John Turner and others [2012] CSOH, BAILII: [2012] ScotCS CSOH_41 , an opinion of Lord Tyre in the Outer House of the Court of Session in Scotland, dated 7 March 2012.

(5) RL v NSW Trustee and Guardian [2012] NSWCA 39, a decision of the Court of Appeal of New South Wales, handed down on 12 March 2012, in which Campbell JA presented a comprehensive and scholarly analysis of the previous authorities on this issue.

54. There is no need for me to consider these authorities in this judgment because the problem they address can easily be averted during DP's lifetime by the execution of a statutory will on her behalf.
55. I imagine that one of the first tasks to be undertaken by the panel deputy after their appointment as DP's deputy will be to apply to the court for an order authorising them to execute a statutory will, which will give effect to her wish that Brookwood Cemetery and the Russian Orthodox Church should receive some kind of financial benefit on her death.