Andrew Ritchie QC 9 Gough Square

PROFFESIONAL NEGLIGENCE

Deputies at risk?

ANDREW RITCHIE QC

9 Gough Square LONDON

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Liabilities of Deputies

To understand the liabilities of deputies

We must first consider the duties of deputies

And how they may be breached.

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Duties of a deputy

Deputies owe 3 broad types of duties:

Statutory duties under the MCA

Fiduciary duties as an agent of the principal

The duty to account to the Public Guardians Office

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This fiduciary thingy really complicates pillaging the funds

Type of Deputy

The specific day to day duties depend on the type of deputy

Welfare Or Financial

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Guidance from the OPG on many aspects The OPG has issued guidance sheets: FS01 Getting started Property

Deputy FS02 Info for Property Deputy FS03 Info for Welfare Deputy FS04 Making decisions FS05 Keeping Records FS06 Supervision of Deputies etc

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Duties of a Property and Affairs Deputy The affairs of the Patient: Lord Brandon

..cannot properly be construed as having the wider meaning (to encompass the patients welfare). It must rather be construed as including only business matters, legal transactions

See F v West Berkshire The duties are quite different from a

Welfare Deputy I will mainly concentrate on financial

deputies

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Fiduciary Relationship The relationship has a fiduciary nature The law of principal and agent applies The agent owes 7 main fiduciary duties to

the principal Those duties are:

1. To act within the scope of his authority (the capacity issue)

2. To act in accordance with the authority given by the Court

3. To act with due care and skill 4. Not to delegate discretionary powers 5. To keep accounts 6. To act in Ps best interests 7. To act in accordance with Ps wishes in so

far as PP can express them 8

Decisions, decisions

Duties 6 (best interests) and 7 (wishes) may clash

The Ps best interests judged objectively may clash with the Ps past life, lifestyle or wishes

Wishes: an old person may for his whole younger life have avoided certain expenditure (for instance on gas central heating)

Yet in old age PP may need it. Per Lewison J in Re PP [2009] ruled that there is a limit to the weight given to Ps wishes:

Once a decision making power shifts to the deputy ..I cannot see that it would be a proper exercise for the deputy consciously to make an unwise decision merely because PP would have done so. A consciously unwise decision will rarely if ever be in Ps best interests

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Factors in S.4(1) Best interests

What you cannot take into account. The Deputy:

must not make the decision merely on the basis of

(a)the person's age or appearance, or (b)a condition of his, or an aspect of his

behaviour, which might lead others to make unjustified assumptions about what might be in his best interests.

Sub paragraph (b) is obscurely worded.

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Guidance from the COP on best interests FS04 issued in 2012 states:

The Act doesnt give a definition of best interests as such as (sic) a wide variety of decisions need to be made in so many different circumstances that no definition could cover them all. Instead the Act lays down a set of steps to go through to help work out what would be in someones best interests. In deciding what is in the clients best interests, bear in mind:

their past and recent wishes (s.4) any views the client has expressed in the past (S.4) their beliefs and values (S.4) the views of family members, parents, carers, etc. the possibility that the client could regain capacity (S.4) any other factors that may be specific to a clients

circumstances avoid any type of discrimination based on a persons age,

ethnicity, gender or sexuality avoid restricting the persons rights. Consider taking the least restrictive option.

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Consultation

So consultation is needed to gain the views of PP

And other relevant persons A deputy must inform the relevant

persons of the issues And consult with them For safety, the deputy should record the

views given to her/him by consultees

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Practical Autonomy

The PGO gives the deputy autonomy to run Ps finances

Responsibility and liability is assigned to the deputy

A deputys decisions are made long before the accounts are submitted to the PGO

So how can a deputy protect himself? A deputy may obtain professional advice But cannot delegate the decision This is an onerous responsibility

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COP 4

You sign you wallet away 17 personal undertakings

are laid out in the COP4 These must be signed These bring home to

applicants the range of duties

These stress the weight of responsibility

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Agency - who has the direct liability? Under the MCA 2005 S.19(6):

A deputy is to be treated as Ps agent in relation to anything done within the scope of his appointment ..

Re EG (1914) Buckley LJ: A deputy .. Is constituted agent by the Court which appoints

him it is his duty, if so directed, to do many things which will involve the employment of persons such as auctioneers, land agents, valuers and so on. As a matter of construction of the Lunacy Act it seems to me impossible to say that he is to employ these persons on his own credit and become liable to them. He employs them as agent

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Acting like a prudent business man

Speight v Gaunt (1883)

A deputy in a fiduciary position

Dealing with the money of PP

is bound to act as a prudent businessman would with his own money

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Acting within the scope of Authority

If a deputy acts within the scope of his authority

He binds his principal The contract is made

by the Agent on behalf of the Principal

And the Deputy has no personal liability

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Acting outside the scope of authority But an agent will be held personally

liable if he acts outside the scope of his authority

The main example of this are: Even though PP has no capacity

generally when PP actually has capacity to

make the decision on this issue So that the Deputy does not

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Checking Capacity

So it is always vital for a deputy to check

That the principal lacks capacity on that issue.

Capacity is issue specific

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Liability for Negligence

Common examples of negligence are:

Failing to claim the State Benefits to which PP is entitled

Spending Ps money on things which do not benefit PP

Conflict of interest with PP: making deals where the Deputy or his family have a personal interest in the deal and receive a benefit

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What will occur if a Deputy breaches her/his duty? The court may decide to

enforce the security bond Or authorise someone to

bring a civil claim against the deputy

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Classic Example

Bashir v Bashir [2013] Facts: PP was 39 and was seriously

injured when he was assaulted in 1993 He received 1.7 million in damages from

the CICA PP lacked capacity The money was paid into court and D a

receiver (now deputy) was appointed in 2005

She was his sister

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The claim

Between 2008 and 2001 she withdrew 1.4 million

She paid 50,000 to PP and his wife

The rest was not accounted for

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OPG application

The OPG applied: For an order freezing the remaining

funds in court And for and account with

supporting documents Snr Judge Lush made the order D failed to comply So Snr Judge Lush suspended Ds

powers Still she failed to comply so Snr Judge

Lush removed D from acting as a deputy

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Permission to sue

The claimant then asked for permission to sue and Snr Judge Lush granted it

So PP through his litigation friend issued proceedings and sought a declaration that: The Defendant was a trustee in a

fiduciary position For an immediate account For summary payment to him of

the 1.35 million unaccounted for.

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Freezing Injunction PP applied for an was granted a

Mareva Injunction over Ds assets granted on 26 September 2011

Included in the order was a requirement for the COP to disclose the payments made to D

The COP admitted that that had paid the following sums into an account in Ds sole name NOT labeled deputyship account. Monthly payments of 5,000 Lump sum payments 72,500 in May 2010;

250,000 in October 2010 and 350,000 in November 2011

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Deputys explanation on paper

The Deputy eventually produced an schedule explaining where the money went

And amplified that in her part 18 responses and late served witness statement

D could justify with receipts paying the lawyers fees for the CICA application: 175,000

But not much else She said there was a massive family

squabble

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Summary Judgment application

C applied for summary judgment It was common ground that:

her parents and her 7 siblings lived in the 2 adjacent houses

Her parents did not get on hence the 2 houses

PP was her brother and lived between the 2 houses

PP and his wife had split up after she went to live with her parents

Ps wife bore him 4 children whilst she lived away!

Ps wife took local authority housing in Walthamstow

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Ds case

250,000 was spent on PPs brothers wedding

350,000 was given to PPs wife and mother

27,000 was spent on Ds house

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Ds case: a 350,000 lump sum

D asserted that 350,000 was give to PPs mother in cash to give to PPs wife to purchase a home in Chingford in his name in December 2010

D served a document allegedly signed by PPs mother recording paying over the cash to PPs wife

PP served a witness statement from the mother stating that the document was a forgery

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Ds evidence

PP lived with his wife for some of the post award years but most of the time in the family houses

PP went to live with her permanently in 2009-2010

Large sums from his award were spent on extending the parents homes (when he was not living in them and had no interest in them)

27,000 was asserted as spent on food for the family over 3 years

27,000 was spent on Ds house to install a bathroom for PP who was living there

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Ds case

The family were hostile to her because she inherited from their father

They had threatened her with violence to use PPs funds to the family

She naively did so without receipts If she committed a breach of trust

she should be given relief under S.61 of the Trustee Act 1925

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Summary Judgment decision HHJ Cook ruled

D as a deputy had agency authority The court order granting authority

stated: General authority over property

and affairs May make provisions for the

needs of persons related to PP if he provided for them or might reasonably be expected to provide for them.

Gifts are allowed if the value is reasonable

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The money held and an account

D held all the money paid to her as trustee for PP. It should have been in an account in Ps name

D owned PP the duty to account to her for how each sum had been spent

D could not in principle resist the request for an account made by PP

Payment of the sums should be made now under the account

HHJ Cooke Refused to order the sums on the account. For instance: D had a potential defence on the 350,000

lump sum which had to be determined on oral evidence not summary judgment

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The Deputies expenses

Ds defence that the sums awarded by the CICA for care were her money was not convincing but at the Summary Judgment stage no order could be made for she might make out the defence at trial

The purported expenses of being a deputy at around 10,000 pa were not evidenced by receipts, but again on summary judgment might be made out at trial so no order was made

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The 27,000 on Ds house

No payment was ordered for breach of trust for: the 27,000 spent on the

Ds own house, because D might prove PP

was living there and received some benefit

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Cooke on Conflict of interest

As to the issue of conflict of interest, it is clear that there was such a conflict. But the position of deputy is a somewhat special one; it is commonly the case that the deputy will be a close relative of and/or carer for the protected person and in such circumstances it must be expected that he or she will have to make decisions as to how much the protected persons funds should be used for things such as shared household expenses. Thus decision must be taken despite a conflict of interest, and the deputy will have to balance both or all the interests in deciding what to do.

It depends on the oral evidence 37

The 350,000 to PPs wife?

It was a clear breach of trust to hand over 350,000 in cash without checking that the purchase was actually taking place

It should have been paid to the conveyancing solicitor

The property (if any) should have been bought in the PPs name

D is liable to reconstitute the fund with her own money

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And the 250,000 for the brothers wedding? 50,000 was paid in cash to Ds

mother for the wedding That was not for PPs benefit so D

should replenish the fund. The other 200,000 was handed over

to the mother with no control over how it was spent. This was delegation of decision making on a grand scale and was a direct breach of trust

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Gifts: Public Guardian v D1 and D2

PG v GB and SB [2015] The mother lacked capacity D1 and D2 were 2 of her 4 children

appointed under powers of Attorneys to act for her.

D1 gave up work and cared for m 20,000 was paid to each of the 3

children by D1 She took 15,000 for herself

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Gifts

The Guardian brought the action to remove D1 from the power and for breach of fiduciary duty

D1 asserted they were gifts D1 asserted the 15,000 to

her was because she gave up work

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Snr Judge Lush

The gifts far exceeded the limited authority to make gifts conferred on an attorney by the Mental Capacity Act 2005 s.12(2).

D1 had contravened her authority as attorney. She should have applied to the Court of Protection for an order under s.23(3)(c) and s.23(4) of the Act.

The court would have been sympathetic towards D1 because she had given up her job to care for her mother, and it would probably have awarded an allowance to her from her mother's funds.

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Presumption of Undue Influence

Even if the mother had had capacity to make gifts at the time, undue influence would be presumed because: the gifts were so substantial that they could not be accounted for by ordinary motives.

There was a relationship of trust that placed D1 and D2 in a position to exercise undue influence.

They had failed to ensure that independent advice was made available to their mother.

They were also in breach of their fiduciary duty. They behaved in a way that contravened their authority and was

not in their mother's best interests. The power of attorney was revoked and the third respondent local

authority was appointed as her deputy for property and affairs

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Summary

Check with the family and carers before acting

Record their views Take advice where it is tricky Always leave a paper trail The courts are quite generous

in their approach to the onerous duties

But not if the deputy benefits and the PP does not

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Thank You

Andrew Ritchie QC

9 Gough Square

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