IMPORTANT NOTICE

This judgment was delivered in private. The judge has given leave for this version of the judgment to be published on condition that (irrespective of what is contained in the judgment) in any published version of the judgment the anonymity of the incapacitated person and members of their family must be strictly preserved. All persons, including representatives of the media must ensure that this condition is strictly complied with. Failure to do so will be a contempt of court.

Case No: 1251200T

Neutral Citation Number: [2014] EWCOP 41
COURT OF PROTECTION
MENTAL CAPACITY ACT 2005

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

Date: 5 November 2014

Before:

Senior Judge Lush

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Re PC 

Between:

	THE PUBLIC GUARDIAN	Applicants	
	- and -		
	AC and JC	Respondents	
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Fatima Chandoo for the applicant
JC in person
AC did not attend

Hearing date: 30 October 2014
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JUDGMENT
Senior Judge Lush:

1.	This is an application by the Public Guardian for the court to revoke a Lasting Power of Attorney (‘LPA’) for property and financial affairs and to direct him to cancel its registration.

The background

2.	PC was born in 1936 and was formerly a primary school teacher. Her husband, who died in 1983, was a teacher, too.

3.	She used to live in West Molesey, Surrey, and still owns her house there. It is worth in the region of £360,000. Her attorneys have let it to tenants under an assured shorthold tenancy agreement at a rent of £1,350 per calendar month. 

4.	Since December 2009 PC has lived in residential care. She is self-funding and her care fees are currently £735 a week. 

5.	She has mixed dementia, a combination of vascular dementia and Alzheimer’s disease.

6.	She has two sons, both of whom live in the Kingston upon Thames postcode area, namely: 
(a)	AC, who was born in 1961 and is a private hire driver; and
(b)	JC, who was born in 1962 and is a company director and independent financial adviser.  

7.	On 8 June 2009 PC executed an LPA for property and affairs, in which she appointed her sons jointly and severally to be her attorneys.

8.	Her GP witnessed her signature and formally certified that she had the capacity to create the LPA.

9.	An application was made to the Office of the Public Guardian (‘OPG’) to register the LPA and it was registered on 12 August 2009.

The application

10.	On 3 June 2014 the Public Guardian applied to the Court of Protection for the following orders: 

1.	An order under section 23(3)(a) of the Mental Capacity Act 2005 directing AC and JC to account to the Public Guardian for their dealings under the Lasting Power of Attorney from 12th August 2009 to the date of the order.

2.	An order under section 22(4)(b) of the Mental Capacity Act 2005 directing the revocation and cancellation of the registered Lasting Power of Attorney made by PC if the attorneys fail to provide satisfactory accounts with full supporting documentation within 28 days of the order.

3.	An order inviting an application from a member of the panel of deputies to apply to be appointed deputy to investigate and report as to the past management of PC’s affairs and be empowered to take such proceedings or steps as may be necessary to restore her estate to the correct level.

11.	The application was accompanied by a witness statement made by Rachel Bloore, who had investigated the case on behalf of the Public Guardian. In summary, she said that:
(a)	on 23 January 2014 the OPG was informed that the attorneys were not paying their mother’s care fees and that significant arrears had accumulated.
(b)	a Court of Protection General Visitor (Sue Joyce) visited PC on 25 February 2014 and commented in her report that “it is evident from brief conversations with a range of professionals that JC takes the lead in these matters and he is difficult to engage,” and that “in all the contacts with people involved in this case, each had indicated that they had had difficulty in their contact with JC, PC’s son and attorney.”
(c)	the Visitor had also remarked that “if PC has a property either rented out or sold or other assets, it is questionable why she should have to share a room (unless it is out of personal choice).”
(d)	the Visitor was of the view that PC lacked capacity to suspend or revoke the LPA.
(e)	on 18 February 2004 Rachel Bloore had received a call from JC, who said that he did not understand why he and his brother should have to account to the Public Guardian.
(f)	£15,000 was given from PC’s funds to AC to cover his son’s university fees.
(g)	JC had set up monthly standing orders of £250 to himself and his brother in March 2012, when the unpaid care fees amounted to £9,174.56.
(h)	in the context of Inheritance Tax planning, JC had suggested that it would be “unprofessional not to take the opportunity of structuring our mother’s affairs accordingly.”

Court orders

12.	On 10 June 2014 I made an order requiring:
(a)	the OPG to serve the papers on the respondents by 20 June;
(b)	the respondents to provide a full set of accounts with supporting documentation to the OPG by 18 July;
(c)	the OPG to file and serve a witness statement by 1 August confirming whether the respondents had complied with my order and whether the accounts were satisfactory; and that
(d)	the matter be referred back to a judge on the first available date after Monday 4 August 2014.

13.	On 18 June 2014 JC filed an application notice in which he sought an extension of time and eventually, on 7 August, seven large lever arch files were delivered to the Court of Protection, rather than to the OPG. 

14.	On 14 August 2014 I made an order reciting the fact that the court had received the respondents’ files and had forwarded them to the OPG, and:
(a)	directed the Public Guardian to file and serve a witness statement by 26 September describing the outcome of his examination of the accounts;
(b)	gave the respondents an opportunity to respond by 20 October; and
(c)	listed the matter for hearing on Thursday 30 October 2014.

Rachel Bloore’s witness statement

15.	Having reviewed the information produced by the attorneys, Rachel Bloore filed a witness statement on 25 September, in which she said as follows:

“The income for the period (from 12 August 2009, when the LPA was registered, to the date of the court order’s on 10 June 2014) totalled £328,079.15 and expenditure for the period totalled £327,761.12.

Direct debits and standing orders totalled £178,168.47. Of this amount I am satisfied that a total of £158,894.65 has been spent on care home fees. Of the remaining £19,273.82 a total of £8,273.82 has been spent on utility bills and insurance while £11,000 was paid to the attorneys in standing orders, as described by the attorneys during the Public Guardian’s investigation, for ‘inheritance tax purposes’.

Card payments for the period totalled £32,924.34. Of this the attorneys have provided receipts for payments totalling £474.01. I am satisfied that payments of £8,000.00 to BUPA were care fee payments. The attorneys have not provided proof of expenditure for the remaining £24,450.33, nor have they provided receipts. Card payments included – Enterprise Rental £10,503.11; £3,000 to Civvals Ltd (chartered accountants and business advisers); £980.44 to Ziani Ltd (restaurant); £982.86 to JBW Ltd (Judicial Services Group) and £600.00 to Lloyds TSB. Other payments include Domain Hosting websites, Companies House, Vodafone, restaurants and ticket sales (entertainment).

Cash withdrawals for the period totalled £26,173.89, made up from £20,183.89 in ATM withdrawals and £5,990.00 in branch withdrawals. The attorneys have provided only one receipt which confirms payment in cash for £270.00 at John Lewis. This expenditure was for a fridge freezer for (address of PC’s house). During the Public Guardian’s investigation (the care home) confirmed that PC received £1,000.00 in personal allowance. Therefore a total of £24,903.89 in cash withdrawals has not been accounted for.

Cheque payments for the period totalled £64,426.20. No evidence or explanations have been provided to explain this expenditure.

Payments made in branch during the period totalled £10,900.00. Of this amount £5,400.00 was referenced ‘Mrs PC’, £1,500.00 referenced ‘Mr JC’ and £3,000.00 was referenced ‘(name of JC’s company)” No evidence or explanations have been provided for these payments.

A CHAPS payment of £15,023.00 was made on 11 September 2009 to JC. During the course of the Public Guardian’s investigations the attorneys confirmed that this was a gift to AC to fund his son’s university fees. At the time that this gift was made, PC’s care fees were in debt by £11,671.71. The balance on the current account was reduced to £1,026.20.

The attorneys have provided invoices totalling £1,099.98 as evidence of expenditure from PC’s funds since 12th August 2009. Not all the invoices can be matched to transactions on the account and it has not been explained how payment was made. Although taking these receipts into consideration, direct debits for utilities, payments for care fees and personal allowance, a total of £150,347.45 remains either unaccounted for or has been gifted to the attorneys.

It is the Public Guardian’s position that the attorneys have not satisfactorily accounted for their management of PC’s financial affairs. Furthermore, the attorneys have not acted in PC’s best interests by gifting themselves funds that should have been used to pay her care fees.

Therefore the Public Guardian seeks an order under section 22(4)(b) of the Mental Capacity Act 2005 to revoke the LPA made by PC and an order directing that a panel deputy is invited to make an application for appointment as deputy to investigate and report as to the past management of PC’s affairs and be empowered to take such steps as are necessary to restore her estate to its correct level.”

16.	The respondents did not file a response to Rachel Bloore’s witness statement until the hearing itself, when JC handed in a witness statement that he had signed on 29 October 2014, but none of the exhibits to which the witness statement referred. He said that they would be submitted later.

The hearing

17.	The hearing took place on 30 October 2014 and was attended by Fatima Chandoo of the OPG and JC in person.

18.	JC’s witness statement and his presentation at the hearing were essentially a diatribe against: 
(a)	BUPA, who had been the whistleblower in this case;
(b)	PC’s previous care home; and
(c)	Barclays Bank, Lloyds TSB, RBS, Aviva and Sainsbury’s who, he claims, had ‘hijacked’ the name of his company in order to promote their own financial services. He has been involved in protracted litigation with them. 

19.	In response to the reference in Rachel Bloore’s statement that no explanation had been given for cheque payments totalling £64,436.20, JC said:

“The cheque payments relate to the payment of £15,000 to AC to cover his son’s university costs. The balance of cheques was used to purchase art. Several leading Royal Academy artists, including the sculptor of the ‘Battle of Britain’, Mr Paul Day, had work purchased. A series of desirable prints were purchased. Works by Sir William Russell Flint RA, Robert Soden, Fred Cumming and Bernard Dunstan RA have also been acquired. These items are not included within the cash assets or investments. However, discussions with Christie’s, Bonhams and Sotheby’s are under way.”

20.	JC concluded his witness statement by saying that: 

“When private pensions, state pensions and other benefits plus rental income are taken into account we have ensured that our mother has sufficient income to cover all care costs, etc. Her total income is £43,000 whereas her care costs are £36,000. This therefore permits her to be safe and secure, at last receiving the care required and without being a burden to the UK taxpayer/NHS.”

Decision

21.	Subsections (3) and (4) of section 22 of the Mental Capacity Act 2005 provide that, in order to revoke the LPA, the court needs to be satisfied that:
(a)	PC lacks capacity to revoke the LPA herself; and
(b)	the attorneys have behaved in a way that contravenes their authority or is not in her best interests.

22.	The Court of Protection General Visitor, Sue Joyce, who met PC on 13 February 2014, stated in her report of the visit that: 

“PC has advanced dementia. She is unable to sustain conversation beyond a definite answer to a question (Yes or No) and then she is unable to continue beyond that and drifts off into unrelated areas of conversation.

She has no capacity to manage her own affairs.

She does not have capacity to revoke her LPA or make a new one.

It is unlikely that she has the capacity to direct her attorneys to make decisions on her behalf.

She has no awareness of her situation and may not realise that she is living in a nursing home.

Due to the above conclusions, the question of her property wasn’t raised as it was considered that this might upset or distress her.

I don’t believe that she has capacity to make financial gifts. It wasn’t possible to hold a sustained conversation with PC and so it wasn’t possible to pursue the question of financial gifts that she has made.

Neither was it possible to discuss with her wishes and feelings towards her finances.

She could not recall her son AC and the staff advise that she believes that any male member of staff at the home is JC.

It wasn’t possible to determine if PC is happy with the way the attorneys act for her.” 

23.	I accept the Visitor’s report and I am satisfied that PC lacks capacity to revoke the LPA herself. 

24.	As far as the attorneys’ conduct is concerned, JC has: 
(a)	conceded that he intermingled his mother’s money not only with his own but also with his company’s funds. He claimed that it was a good thing he had done so because, otherwise, “five individuals (meaning himself, his wife and their children) would have found themselves homeless and depending on the state for benefits.”
(b)	admitted that “since our mother’s home already exceeded the nil rate Inheritance Tax band it was felt sensible to use this facility to legitimately reduce the overall value of our mother’s eventual estate.”
(c)	failed to provide a satisfactory explanation for payments totalling £150,347.45. I shall give a trivial example. Ziani’s is an Italian restaurant close to JC’s office in Chelsea. He ran up a bill there of £980.44 on his mother’s account, though she never accompanied him on any of the occasions when he visited the restaurant and incurred this expenditure.

25.	By any standards, these are serious breaches of his fiduciary duties, and I am satisfied that he has behaved in a way that has contravened his authority and has not been in PC’s best interests. Hence, I shall revoke his appointment as her attorney.

26.	I must comment briefly on the use of an LPA for Inheritance Tax planning purposes. Section 12 of the Mental Capacity Act 2005 confers on attorneys a limited authority to make gifts of a reasonable amount on customary occasions. If attorneys wish to make more extensive for Inheritance Tax planning purposes, such as setting up monthly standing orders of £250 to themselves, they should apply to the Court of Protection for an order pursuant to section 23(4) of the Act. 

27.	JC suggested that that it would have been “unprofessional not to take the opportunity of structuring our mother’s affairs.” What I would regard as unprofessional conduct, particularly on the part of someone who holds himself out to be an independent financial adviser and acts for the families of people who are in exactly the same position as his mother, is that JC went ahead and structured his mother’s affairs without obtaining a court order authorising him to do so.

28.	As this is a joint and several LPA I must consider the possibility for limiting the registration to JC’s co-attorney, AC, acting as the sole attorney. 

29.	In the witness statement he handed in at the hearing on 30 October, JC said:

“In early September 2009 an incident occurred where PC disagreed with her eldest son AC. PC somehow injured her lip. JC was not present at the incident. Nevertheless, as you would expect, it was felt that AC should be kept away from his mother for the immediate future. JC spoke with both police and social services and satisfied both parties that the incident was an isolated case. The family were fully briefed and asked whether any party had an issue with AC remaining as attorney. The answer was no.”

30.	I have no idea whether it is true or not and, in any event, my decision doesn’t hinge on it. AC has also: 
(a)	benefitted personally from his mother’s estate in contravention of his authority as an attorney; and 
(b)	failed to respond satisfactorily to the Public Guardian’s application.

31.	Attorneys are jointly responsible and accountable and, having regard to all the circumstances, therefore, I am satisfied that AC also has contravened his authority and not acted in PC’s best interests. 

32.	Accordingly, I shall allow the Public Guardian’s application and make an order revoking the LPA and inviting a member of the panel of deputies to apply to be appointed as PC’s deputy for property and affairs.