England and Wales Court of Protection Decisions

a.     Whether the court can, or should, appoint as deputy the holder of a specified office or position (as distinct from a named individual holding such office at the time of the appointment);

b.     If such appointment is made, the effect of any change to the holder of the office on the deputyship appointment; and

c.     If the court is minded to appoint the Applicant as property and affairs deputy for SH, whether there should be any specific requirements in the order of appointment in respect of notification to the Court and/or the Office of the Public Guardian of any change to the holder of the office of Head of Business Development and Client Finance at the Applicant company.

d.    Whether acting as property and affairs deputy is within the powers of Focus Independent Adult Social Work C.I.C.;

e.     The extent of the professional indemnity insurance cover held by Focus Independent Adult Social Work C.I.C., and the court’s approach to the application in the light of any limitations.

The background

“4. It appears from the documents filed by the Applicant that

(i)          Focus Independent Adult Social Work is a company limited by guarantee, the limit of each member’s liability being £1.

(ii)        The Objects of Focus Independent Adult Social Work cover the provision of social work services but do not cover the provision of financial deputy services.

(iii)      The insurance cover relates to public liability and product liability in respect of accidents. It is not clear that it provides professional indemnity cover in relation to the delivery of financial deputyship services.

5. The court has been informed that Focus Independent Adult Social Work agreed with Deputy Bond Services an arrangement whereby Deputy Bond Services would bond the organisation Focus Independent Adult Social Work rather than an individual working for the organisation in respect of deputyships for property and affairs, notwithstanding that Focus Independent Adult Social Work is not a Trust Corporation within the meaning of the Mental Capacity Act 2005.”

The order directed the Public Guardian to file a position statement addressing the following issues:

(i)                  Whether Howdens has carried out due diligence to satisfy themselves that Focus Independent Adult Social Work is a suitable organisation to be bonded and whether they have agreed to do so

(ii)                Whether the Memorandum and Articles of Association of Focus Independent Adult Social Work empower Focus Independent Adult Social Work to carry out the functions of a deputy for property and affairs appointed by the Court of Protection or whether such functions are ultra vires

(iii)              Whether the insurance cover obtained by Focus Independent Adult Social Work complies with the requirements set by Deputy Bond Services, Howdens or the Public Guardian and whether it provided appropriate insurance cover in respect of the exercise of the authority of a deputy for property and affairs under an order made by the Court of Protection

(iv)              Whether the aggregate value of the estates subject to deputyship orders held by Focus Independent Adult Social Work falls within the upper limit set by the insurers

(v)                Please provide a full copy of the professional indemnity insurance documentation

(vi)              Any other matter that the Public Guardian considers should be brought to the attention of the Court of Protection concerning the suitability of Focus Independent Adult Social Work to act as a deputy.

“If the Public Guardian’s interpretation is correct, there would appear to be

(i)                  No advantage to appointment being of the holder of an office, as opposed to the named individual currently holding that office;

(ii)                Disadvantages, in the lack of transparency of who is exercising the functions of the office at the time of appointment and subsequently.

Noting the need to keep costs to a minimum the order recited that “The court is minded either:

(a)     To appoint “Sarah Savage, Head of Business Development and Client Finance, Focus Independent Social Work CIC….” as property and affairs deputy for [SH], with specific requirement that she make application to the Court for further directions in the event that she ceases to hold the office of Head of Business Development and Client Finance of Focus Independent Social Work CIC; or

(b)      To list the matter for attended hearing, at which the identification of the appointment will be considered further.”

The Applicant and the Public Guardian were directed to notify the court whether they agreed to the appointment as set out or sought an attended hearing. Both sought an oral hearing. Consequently, by order made on 22 ^nd January [ B85 ] this hearing was listed, with the issues identified as above.

a.        Included a recital recording that the Applicant and the Public Guardian both invited the court to make no order as to costs at the conclusion of the application;

b.       Required the Applicant to file and serve submissions addressing the sufficiency of its professional indemnity insurance to cover the activities of a deputy for property and affairs and, in particular, whether it excluded cover for the deputy’s investment of P’s funds;

c.        Required the Public Guardian to file and serve submissions addressing the vires issue and the adequacy of the insurance cover;

d.       Provided for the Applicant to file and serve submissions in response to the Public Guardian, including as to any proposal to amend the Articles of Association. 

Documents considered

On behalf of the Applicant

Sarah Savage, 4 ^th September 2017 [ C95 ]

Sharon Pearson, 14 ^th September 2017 [ C99 ]

Position statements dated 21 ^st February 2018 [ 32 ] and 27 ^th February 2018

On behalf of the Public Guardian

Wendy Hill, 20 ^th October 2017 [ D274 ]

Sacha Chauhan & Alan Eccles, 2 ^nd November 2017 [ D282 ]

Position statements dated 21 ^st December 2016 [ A3 ], 30 ^th November 2017 [ A28 ] and 16 ^th January 2018 [ A30 ]

The parties’ positions

a.        Yes – the court can, and should, appoint as deputy the holder of a specified office or position (as distinct from a named individual holding such office at the time of appointment);

b.       If the holder of a specified office or position is appointed (as distinct from a named individual holding such office), then any change to the holder of the position/office will not affect the deputyship appointment;

c.        The Applicant appreciates that a change of post holder may affect the Public Guardian’s assessment of risk and has no objection to an order requiring notification of a change of post holder. However, the Applicant considers that any subsequent post holders are likely to have similar qualities and experience to the current holder, such that the court would be likely to be satisfied of suitability. Any requirement to make an application to the court would therefore add cost for the protected person without adding any real benefit. Rather, the Applicant favours a requirement that the Public Guardian be notified;

d.       Focus’ Articles of Association do not expressly provide for acting as deputy but the Applicant maintains that acting as deputy is intra vires.

“2. The Applicant’s insurance broker, Bluefin, has advised the Applicant that the policy:

‘ does not cover any error or omission in respect of any investment of, or direct advice on the investment of, client funds valuation of physical property operation or administration of any pension or employer benefit scheme or trust fund, or the sale or purchase of or dealing in any stocks, shares or securities liability for any breach of any taxation.”

a.        He has no objection to the individual appointment of “Sarah Savage, Head of Business Development and Client Finance” but objects to an appointment of “the Head of Business Development & Client Finance” without specifying the name of the individual holding such post at the time of appointment.

b.       The effect of an order appointing as deputy an office holder is that, when the holder of the specified office leaves their post, the new holder of the office is not permitted to take over the deputyship without another order appointing that individual. An order appointing an office holder should be interpreted as “ appoint[ing] an individual as deputy only for the time which they are in the named office. As such when the holder of the office leaves they would no longer be responsible for the management of P’s affairs but the new holder of the office would not take over the deputyship without another order being made. ” [ 289 ] This position was based on concerns that “ when appointing a head of office there is an ongoing risk that the person initially selected may leave and his/her replacement may not be suitable ” [ A29 ]; and that, mindful that appointment of a deputy is ‘best interests’ decision, “ By having a generic role, the Court is deprived of the opportunity to make that best interest decision if or when the post holder leaves. ” [ 321 ]

c.        A specific requirement to return to court if the office holder at the date of appointment ceases to hold the office “ may diminish [the Public Guardian’s] concern ” but “ will have a financial impact on P .” After taking specific further instructions, it was confirmed that the Public Guardian was willing to accept as part of his supervisory responsibility the role of receiving reports of a change in the individual holding the office, and referring the matter to the court where appropriate.

d.       Initially, the Public Guardian was unwilling to take a position on the vires issue. However Ms. van Overdijk’s Note filed after the hearing confirmed that the Public Guardian “did not disagree” with the Applicant’s position.

e.        Initially, the Public Guardian was satisfied that Focus’ professional indemnity insurance does provide sufficient coverage for deputyship cases. However Ms. van Overdijk’s Note filed after the hearing:

                                                                          i.       identifies the effect of the insurance exclusion as being that “any loss suffered by the protected party as a result of investment of their funds by the Company will not be covered by its professional indemnity insurance…. Recoverability of any such losses would be limited to the calling in the security bond;”

                                                                        ii.       Identifies that existing deputyship appointments may be exposed to a risk which is not adequately safeguarded because the court would not have had in mind the effect of the exclusions when setting security;

                                                                      iii.       Suggests that, when considering any future application, the court should take into account the limits of the professional indemnity insurance when determining the suitability of the Company to act, and at what level the bond should be set. 

The appointment of an officeholder

(1)    A deputy appointed by the court must be –

(a)    an individual who has reached 18, or

(b)    as respects powers in relation to property and affairs, an individual who has reached 18 or a trust corporation.

(2)    The court may appoint an individual by appointing the holder for the time being of a specified office or position.

“A section of an Act is the primary indication of the legislature’s meaning and intention, and must be construed, by virtue of the functional construction rule, as a proposition, or series of propositions, consisting of one or more enactments. Historically, judges have said that the division of an Act into sections is arbitrary, and ought not to be treated as furnishing a guide to its construction. This is no longer the cases, as drafters take great care to design a section so that it deals with a single point; and the way the sections are organised and arranged is to be taken as a reliable guide to legislative intention.”

Halsbury’s Laws, Vol 96 para 1099

“It is presumed that the legislature intends that the court, when considering, in relation to the facts of the instant case, which of the opposing constructions of an enactment corresponds to its legal meaning, should find against a construction that produces a futile or pointless result, since this is unlikely to have been the legislature’s intention.”

Halsbury’s Laws, Vol 96 para 1183

and, most importantly, section 12 of the Interpretation Act 1978:

“12 Continuity of powers and duties

(1)    Where an Act confers a power or imposes a duty it is implied, unless the contrary intention appears, that the power may be exercised, or the duty is to be performed, from time to time as occasion requires.

(2)    Where an Act confers a power or imposes a duty on the holder of an office as such, it is implied, unless the contrary intention appear, that the power may be exercised, or the duty is to be performed, by the holder for the time being of the office.”

The vires concerns

The objects of the Company are to carry on activities which benefit the community and in particular (without limitation) –

(a)      To provide social work professionals, clinical health professionals and care services that meet the needs of vulnerable members of the community;

(b)      (b) to engage with service users, carers, partners and the wider community in the design and delivery of health and social care functions;

(c)       To promote high standards in health and social care, and health and social work practice.

“ Unless a company’s articles specifically restrict the objects of the company, its objects are unrestricted.”

            He submits that the Focus Articles are not specifically restricted; that a company with unrestricted objects has an unrestricted capacity; and therefore it is within the vires of Focus to act as deputy.

“ 39 A company’s capacity

(1)            The validity of an act done by a company shall not be called into question on the ground of lack of capacity by reason of anything in the company’s constitution.

(2)            This section has effect subject to section 42 (companies that are charities.)”

and also to the Government’s Explanatory Notes for section 31 of the 2006 Act, which state that

“ This section provides for a new approach to the question of a company’s objects…. Instead of companies being required to specify their objects, companies will have unrestricted objects unless the objects are specifically restricted by the articles (see subsection (1)). This will mean that unless a company makes a deliberate choice to restrict its objects, the objects will have no bearing on what it can do. Some companies will continue to restrict their objects. Companies that are charities will need to restrict their objects (under charities legislation) and some community interest companies may also choose to do so.”

She also emphasises that the ultra vires doctrine, based on a company’s objects, remains fully functional for internal purposes: under section 171 of the 2006 Act directors must observe the constitutional limits on their powers, and are liable to pay compensation if they fail.

a.        she ceases to hold that post; and/or

b.       there is any change to the competence of Focus Independent Adult Social Work C.I.C. to carry out the functions of deputyship, by variation of its Articles of Association or otherwise. 

HHJ Hilder

17 ^th September 2018