-
Andrew Ritchie QC 9 Gough Square
-
PROFFESIONAL NEGLIGENCE
Deputies at risk?
ANDREW RITCHIE QC
9 Gough Square LONDON
2
-
Liabilities of Deputies
To understand the liabilities of deputies
We must first consider the duties of deputies
And how they may be breached.
3
-
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
4
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
5
-
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
6
-
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
7
-
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
9
-
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.
10
-
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.
11
-
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
12
-
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
13
-
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
14
-
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
15
-
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
16
-
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
17
-
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
18
-
Checking Capacity
So it is always vital for a deputy to check
That the principal lacks capacity on that issue.
Capacity is issue specific
19
-
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
20
-
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
21
-
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
22
-
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
23
-
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
24
-
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.
25
-
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
26
-
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
27
-
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
28
-
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
29
-
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
30
-
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
31
-
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
32
-
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
33
-
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
34
-
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
35
-
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
36
-
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
38
-
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
39
-
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
40
-
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
41
-
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.
42
-
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
43
-
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
44
-
Thank You
Andrew Ritchie QC
9 Gough Square
45