Scottish Sheriff Court Decisions

DECISION BY SHERIFF J. BAIRD

AW 214/07

Application by EF and JF

On 11 January 2008, I granted an application by the above to be appointed both welfare and financial guardians of their uncle, a gentleman of 85 years. He still resides in his own home, with support, but in the recognition that that may not be sustainable in the near future, power is required to sell his dwelling house, with all that is entailed in authorising the sale of a house by persons other than the owner.

For the avoidance of doubt, all of the criteria of the Act were satisfied in this case, and the adult had an extended family with whom he had always had the closest of relationships. It was clear that the applicants (and other members of his extended family) had actively supported the adult for years in a relationship of complete mutual respect and trust. They were manifestly suited for appointment as guardians. The value of the adult's estate, including his house, was £520,000 and I required to fix caution in that sum, to be found within 12 weeks.

When I say I "required" to do so, I explain that at the time of granting the application, and even at the time of writing, that is a mandatory requirement under the Act, and can be dispensed with only if the guardians are unable to find it but are otherwise suitable. Even if it were not, and I had discretion, (and such a provision will come into force at some time), I would not have exercised that discretion in this case. An estate of that size being administered by other persons ought to be protected by insurance.

I also point out that the extended period of 12 weeks fixed to find caution is to allow for the routine inordinate and unexplained delays which insurance companies take to process these applications.

At the time I did so, I had just published an opinion (RL AW114/07 - Scottish Courts Website 28 December 2007) which dealt with the problems in dealing with insurance companies which are being encountered by those who are trying to operate this Act in accordance with the plain intention of Parliament. I said then that while I accepted that insurance is a risk based business, the attitude of the insurers was subverting the intention of Parliament. I advised the solicitors acting in the present case of the potential difficulty they would encounter in obtaining caution for their clients.

That has proved to be correct. They have now reverted to me and produced letters from the only two insurers who offer cover in this area, Zurich and Royal and Sun Alliance ("RSA").

The letter from Zurich, dated 31 January 2008, states that they are unable to assist in providing a bond of caution for the adult (which incidentally betrays a fundamental misunderstanding - the bond is not for the adult, it is to insure the actings of the court appointed guardians in their administration of the estate of the adult), and suggest that the company may be in a position to assist if a partner of the firm of solicitors who act for the guardians becomes a joint signatory on any relevant bank accounts that the adult owns or has or that will be opened during the [guardians'] appointment and also have joint control over any investments. They ask for an irrevocable undertaking from the solicitors countersigned by the guardians to confirm that, and conclude, blithely, that they understand that both the solicitors and their clients may have to return to Court to have additional powers granted to allow a joint signatory on the adult's accounts.

This, frankly, is absurd. The solicitors have no power to act in such a way, nor should they have to seek such powers. The plain intention of Parliament was to move away from the old system whereby such estates were always managed by accountants or solicitors and replace it with one which empowered lay people to take control of the assets of family members who have lost capacity to do so, and to enable them to do so without having to act jointly with professionals at all times. Of course, such lay persons routinely crave power to seek appropriate professional advice where necessary, but to require the system envisaged by Zurich is to defeat the purpose of the legislation.

Furthermore, it will hugely increase the cost of administration. Lay applicants routinely do not seek to be paid for administering the estates of others; professional advisers always do seek, and are fully entitled to, remuneration for so doing. Also, such a scheme could create considerable difficulties with the existing insurance arrangements of solicitors. There is no basis on which solicitors should seek to be involved in such an arrangement.

The RSA wrote, on 11 March 2008 (which illustrates the point made earlier about inordinate delay in dealing with these matters by insurers - they begin by referring to emails and letters of 23 and 30 January and 19 February and apologise for the very long delay in replying).

They then say this:-" I regret to say that we will not be able to offer this bond. This is simply because of the size of the Adult's estate and the caution amount that has been set. For lay guardians only, that is family members or friends of the adult currently we will not normally offer bonds if the estate or the caution amount is over £500,000 and indeed we are very reluctant to do so if the estate or the caution amount is over around £425,000. If a solicitor or chartered accountant was professional (sic) appointed as the sole financial guardian for a case this size then we normally would have no problem offering a bond."

As I have said before, and repeat, the result of this attitude is that the plain intention of Parliament is being defeated. The result in the actual case is that the guardians approved and appointed by this court are unable to find caution and I have now had to waive the requirement to find it, with the inevitable consequence that an estate of this size is uninsured.

I said at the end of the opinion in the case of RL (supra) that this matter needs to be addressed. I am saying that again. I will have to keep saying that until someone listens and does something to remedy the situation.