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Various Lasting Powers of Attorney, Re [2019] EWCOP 40

Application by the Public Guardian pursuant to section 23 & para 11(3)(a) of Schedule 1 of the Mental Capacity Act 2005 [‘MCA’] for determination of the meaning and effect of certain instruments that the Public Guardian [PG] had been asked to register as Lasting Powers of Attorney [LPA’s].

The court considered 11 instruments wherein the donors had expressed an intention that the appointed attorney used donor's funds to benefit someone other than the donor, in 1 case that 'someone' being the attorney, that intention being expressed either in the sections headed 'a preference' or 'an instruction' to the attorney under the current forms.

The court noted that the current forms, which set out headings using the terms 'instructions' and 'preferences' were a departure from the statutory language which had caused difficulties, including the note to the forms that "your attorneys will have to follow your instructions exactly."

Although all donors were aware of the applications, none filed evidence or took an active role in the proceedings. The OS declined an invitation to act as advocate to the court, on the basis his costs could not be met.

Under paragraph 11 of Schedule 1 of the MCA the PG is required to seek a determination if it appears to him that the instrument to be registered contains a provision which either:

a)    would be ineffective as part of a lasting power of attorney, or
b)    would prevent the instrument from operating as a valid lasting power of attorney

In the event the court determines the instrument does contain such a provision the court, pursuant to paras 11 (4), (5) and 6 of Schedule 1 of the MCA must:

a) Either notify the Public Guardian that it has severed the offending provision (whereupon the Public Guardian must register the instrument with a note to that effect attached to it);
b) or direct the Public Guardian not to register the instrument.

In considering any instrument the court must determine whether the authority falls foul of sections 1 and 4 of the MCA - the 'principles' and 'best interests' provisions.

Best interests are to be understood widely, are not restricted to 'self-interest' and must be viewed from the donor's point of view, which will take into account the donor's expressed wishes which are to carry great, but not paramount, weight, and which, in an appropriate case, may mean the best interests of the donor are served by acting altruistically.

However, the instruments must also be considered in the light of the limitations on the scope of LPAs with respect to gifts set out in section 12 of the MCA, namely any LPA conferring authority on the attorney to make decisions regarding P's property must not authorise the attorney to dispose P's property by way of gift, except gifts on 'customary occasions' or to a charity to whom the donor made or might be expected to make gifts, subject to a limitation that the value of such gifts must not be unreasonable in all the circumstances, including the size of the donor's estate.

The court considered, inter alia, the decision of Baker LJ in The Public Guardian v. DA & Ors [2018] EWCOP 26 which concluded:-

1) An instruction is a direction in mandatory terms wherever it appears on the form.

2) If a lasting power of attorney contains an instruction requiring the attorney to act in a manner that is inconsistent with the Act or the general law, it will generally be "ineffective as part of the LPA"; but

3) If the words used by the donor are purely precatory ("an expression of a wish"), and even if that wish is not capable of being given effect within the confines of attorney's permitted powers, then they

a) cannot prevent the instrument from operating as a valid LPA; and,
b) should not be considered as "ineffective as part of an LPA"

The court came to the conclusion, contrary to prior decisions of Senior Judge Lush, that "there is no basis to limit the parameters of 'best interest' considerations so that an attorney can only use a donor's funds to benefit someone else if in doing so the benefit is meeting 'needs' (of a type which the donor might be expected to provide for, or otherwise.)" In short, the court considered that:-

1. best interests is wide enough to encompass altruism;
2. the concept that provision for other persons was limited to providing for their 'needs' was contrary to the statute and would be meaningless when understood as meaning 'needs as the donor sees them'; and,
3. a workable definition of 'needs' so as to distinguish payments to meet needs from gifts has proved elusive.

The real question to be when is a benefit to someone, other than the donor, not a gift?

In the key discussion of the judgment the judge concluded:-

54. In my judgment, an attorney's use of his donor's funds to benefit someone else is not a 'gift' when it is not linked to a 'customary occasion' as defined by s12(3) of the Act, and the attorney is under a degree of obligation in respect of it. The obligation may come from the general law (as in spousal maintenance obligations recognised by Senior Judge Lush in Re Bloom and Re Strange). Or it may be the effect of s4(6) of the Act: when making best interests decisions, the attorney "must consider, so far as is reasonably ascertainable" the donor's "past and present wishes and feelings (and, in particular, any relevant written statement made by him when he had capacity)." If the donor includes in the instrument an expression of a wish that his funds be used in a certain way, the attorney under a lasting power of attorney is obliged to have regard to those wishes when exercising his authority under the instrument.

55. This obligation on a best interests decision-maker is however not absolute, in the sense that the duty is only to consider wishes, feelings, values and beliefs; it is not to give them effect. So, the attorney would only be acting within his authority to use the donor's funds to benefit someone else in accordance with the donor's wish expressed in the instrument if the attorney also reasonably considers it to be in the best interests of the donor at the time of the contemplated payment.[23] As acknowledged in paragraph 28 above, we cannot always have our own way. So, the donor's wishes may have to yield to circumstance. If a donor's estate no longer stretches to protecting his own interests and also conferring benefit on someone else, the attorney's 'best interests' decision may conclude that the wish cannot be given effect.[24]

56. If an attorney under a lasting power must be free in appropriate circumstances reasonably to determine that it is in the donor's best interests not to give effect to his [the donor's] desire to benefit someone else, it follows that the realisation of that desire cannot be a condition of authority under the instrument. In other words, the donor's desire cannot be expressed in mandatory terms. To do so would be to fail to account for the attorney's duty to act in accordance with the statutory principle of best interests. It would therefore be ineffective as part of a lasting power of attorney. A donor can go no further than to express his wish in precatory terms (and trust to his chosen attorney's ability to weigh that appropriately in the balance of best interest decision-making.)

The court went on to consider the potential for conflicts if the expressed wishes of the donor included provision of benefit for the attorney, concluding that the position the apparent conflict was qualified where the principal gave informed consent, highlighting the importance of the certification process, noting that a certificate provider may later have to account for his opinion of capacity. 'However, in the absence of either capacitous demonstration of such beliefs and values, or express statement of wishes in the instrument, where the use of funds under contemplation gives rise to a conflict of interest on the part of the attorney, the attorney should make an application to the court for prior authority pursuant to section 23(2) of the Act.'

Of the 11 instruments considered, the court found that 10 instruments had mandatory provisions which would be incompatible with or prevent the attorney properly exercising a best interests decision, were ineffective a part of the LPA, but if severed, the instrument could operate as valid LPA's. The court severed the provisions and directed the LPA's be registered with a note to that effect. The other instrument had wishes to benefit another in precatory terms, which did not prevent the instrument as operating as a valid LPA and should be registered.

Case summary by Barry McAlinden, Barrister, Field Court Chambers

Read the full judgment of  Various Lasting Powers of Attorney, Re [2019] EWCOP 40 on BAILII