The advice that we provide to our clients who manage the financial affairs for a family member as lay deputy is significant, and the burden of decision-making that we carry as professional deputies is onerous at times, as we consider the payments that we are authorised to make. A number of recent cases in the CoP have focused on gratuitous care payments, and deputies are placed in a difficult position if requests are made of them by family members under the powers of their deputyship for financial support.

Much as we are all familiar with the framework of the Mental Capacity Act 2005 (MCA 2005), these recent decisions, coupled with increasing scepticism about the current effectiveness of some aspects of the act, make for a changing landscape.

Legal powers of a deputy

Subject to any contrary or additional provision in the deputyship order (or any subsequent order made by the CoP), the powers of a deputy are set out in section 18 of the MCA 2005 as follows:

Recent cases in the CoP have focused on gratuitous care payments, and deputies are placed in a difficult position if requests are made of them by family members for financial support

‘(1) The powers under section 16 as respects P’s property and affairs extend in particular to –

(a) the control and management of P’s property;

(b) the sale, exchange, charging, gift or other disposition of P’s property;

(c) the acquisition of property in P’s name or on P’s behalf;

(d) the carrying on, on P’s behalf, of any profession, trade or business;

(e) the taking of a decision which will have the effect of dissolving a partnership of which P is a member;

(f) the carrying out of any contract entered into by P;

(g) the discharge of P’s debts and of any of P’s obligations, whether legally enforceable or not;

(h) the settlement of any of P’s property, whether for P’s benefit or for the benefit of others;

(i) the execution for P of a will;

(j) the exercise of any power (including a power to consent) vested in P whether beneficially or as trustee or otherwise;

(k) the conduct of legal proceedings in P’s name or on P’s behalf.’

Supplementary provisions

The supplementary provisions to these powers are set out in schedule 2 to the MCA 2005, and the guidance to the execution of these powers is set out in the Mental Capacity Act Code of Practice as follows.

‘Deputies must carry out their duties carefully and responsibly. They have a duty to:

  • act with due care and skill (duty of care);
  • not take advantage of their situation (fiduciary duty);
  • indemnify the person against liability to third parties caused by the
  • deputy’s negligence;
  • not delegate duties unless authorised to do so;
  • act in good faith;
  • respect the person’s confidentiality; and
  • comply with the directions of the Court of Protection.’

Having set out the statutory position, we can look at specific types of payments and the authorisation of the deputy in relation to them.

Gifts

Lay deputies will vary considerably in what they consider to be in P’s best interests when deciding upon the obligations for birthdays, Christmas and wedding gifts. In many ways, this is understandable when we consider how our own relatives’ habits and financial positions vary. Fortunately, the supervision of the Office of the Public Guardian (OPG) requires the annual submitting of accounts in which such gifts must be declared and, we trust, reliably investigated if there were any cause for concern.

At the other end of the spectrum, we have all acted for those over-cautious lay deputies who are so constrained by their overwhelming sense of responsibility to account for their management of P’s financial affairs that they ask our advice throughout their deputyship.

Professional deputies, however, can only rely upon what they are told or have seen by way of P’s habits, if indeed they had any, before their mental incapacity impacted on their ability to manage their own finances. Many professional deputies are only appointed as a result of a family conflict, making the request for gifts a more difficult one to assess.

OPG has published a practice note on the subject (02/2012, September 2015), although the opening summary states: ‘There can be no generalised approach to gifts. Each decision must be made considering its own context and timing.’

This is not particularly helpful; the general consensus is that the gifts should be modest and in the context of P’s estate and on customary occasions. The deputy’s primary duty is to provide for P’s needs, and so if a larger gift is considered, the advice must be to apply to the CoP for specific authority. The procedure is set out in part 9 of the Court of Protection Rules 2007 (Practice Direction F).

Smaller specific gifts – perhaps items of sentimental value that may seem appropriate in the context of clearing P’s property, for example – must be considered in the light of the provisions in P’s will. It is unlikely that P would gift a specific item to another if it is specifically bequeathed, and the general practice is to give such item to the intended recipient to look after for P’s lifetime.

A professional deputy can find themselves caught in a spider’s web of family conflict over the allocation of gifts, and it is essential to remain impartial and not to treat one party differently to another unless there is good reason to do so. If there is any hint of objection to a proposed gift, I would recommend seeking the permission of the court.

If a long habit of charitable donations is evident from P’s bank statements during the time that they had capacity, it is usually accepted, provided there is no risk to P financially, that these are permitted to continue. If there is any change to P’s financial position, the deputy’s primary responsibility is naturally to ensure that they do not run out of funds for their own needs.

Gratuitous care payments

A more appropriate term would be non-gratuitous care payments, but the above term has come to represent a situation where a family member seeks to be paid for the care that they provide for P. The issue has recently come before the CoP, quite possibly as an effect of OPG’s closer supervision of deputies that came into effect in 2015.

In fact, the first of these significant cases was Re HC [2015] EWCOP 29 in March 2015, where OPG applied to the CoP for the revocation of a lay deputyship on the basis that the deputy had exceeded his powers in several ways, all of which actually related to the cost of the care he (and his sister) was providing to his family member (in this case his mother). It is an interesting case that was only published in accordance with OPG’s ‘Transparency in the Court of Protection: Publication of Judgments’ practice guidance because it sought to dispose of the appointment of a deputy. The reason that it caught our attention was because of the findings in respect of the payments that the deputy had made to himself for the care he was providing for his mother.

In this case, OPG looked to the CoP for a decision to revoke the deputyship order because the Public Guardian viewed the care costs as unauthorised gifts made by the deputy from P’s funds to himself and his sister. Senior Judge Lush ‘was impressed by the deputy and his brother and sister and was generally satisfied with their explanations’. He provided retrospective authority for the payments that had been made, and authorised future payments for care to both the deputy and his sister. He ordered an indexation of the approved monthly fee to avoid too many further expensive applications to the court, setting the scene for the current climate of gratuitous care allowances.

The deputy’s case was undoubtedly assisted by his research and presentation of comparable costs of nursing home fees to the care that he was providing in his mother’s own home. He provided detail to the court of the care that P required and was receiving, together with clear insight into what was in her best interest.

In July 2015, the matter came before Senior Judge Lush again in Re HNL [2015] EWCOP 77. Here, he elected to publish the judgment in the public interest because of the very fact that the Public Guardian is now reviewing all cases in which clinical negligence or personal injury damages are paid. In such cases (of which there are thousands), the settlement is very often a lump sum combined with a periodic payment, usually paid by the deputy to a family carer (often both being the same person).

Interestingly, the circumstances in Re HNL reflected a family situation that Senior Judge Lush had himself dealt with many years previously under the old receivership regime, where agreement had been reached as to the payment of a carer’s allowance. The Public Guardian here sought retrospective approval to such agreement. Fortunately, once again, the care provided, and indeed the financial reward for doing so, was found to be more than appropriate for the circumstances. At paragraphs 43 and 44 of the judgment, the following was set out: ‘If a deputy were to remunerate himself without obtaining a court order authorising him to do so, there would be a conflict with his fiduciary duty, which is described in paragraph 8.58 of the Capacity Act Code of Practice in the following terms:

“A fiduciary duty means deputies must not take advantage of their position. Nor should they put themselves in a position where their personal interests conflict with their duties. … Deputies must not allow anything else to influence their duties. They cannot use their position for any personal benefit, whether or not it is at the person’s expense.”

Because of this conflict of interests, a deputy should always apply to the court for authority to pay himself or herself a gratuitous care allowance. A lay or non-professional deputy should also apply to the court for approval if he or she intends to pay a gratuitous care allowance to any other member of the family.’

This is the crux of the judgment for practitioners, whether we are advising lay deputies or acting as deputies ourselves.

By way of guidance, however, it is useful to note that a gratuitous care allowance should be set at a commercial rate for the care required, and therefore a full assessment of the care is wise. Where this is not available (perhaps due to a lack of co-operation by family members), the court can order one. The commercial rate of pay is discounted by 20 per cent to take into account that this is not a true employment situation; the family member receiving the payment is not in an enforceable employment contract, and there are no income tax or National Insurance obligations. In fact, this is the formula applied by the civil courts when they look at personal injury settlements.

It is also established that where a close relative with a well-paid job gives up employment to become a carer for P, it is not the loss of income that is the benchmark by which the care allowance is to be set. It is the usual commercial rate of pay for the care provided. This is often a difficult conversation to approach when acting as a professional deputy if the family’s expectation is that their ‘lost’ salary will be covered by the payments from monies controlled by the professional deputy.

The supervision of deputies, particularly professional deputies, is closer and stricter than ever before. It is now necessary to estimate your own professional fees for the year ahead and to forecast expenditure

OPG practice guidance on family care payments (SD14) requires lay deputies to seek court approval in all cases where the payment is made to either themselves or a close family member. It states quite categorically that if the guidance is followed, it does not require professional deputies to seek court approval. Professional deputies can make gratuitous care payments if they can demonstrate to OPG that they have followed the following criteria in deciding that it is a best interest decision to pay the family member carer.

  • Care is required and is to a good standard. If this is unknown, a deputy may seek an assessment from social services.
  • Payments must be affordable.
  • Payments must reflect the input by the family member / carer.
  • Care must be provided (temporary breaks such as periods in hospital do not count, but if alternative living arrangements (eg a care home) are made, this would need to be revised).
  • They should be supplemental payments to support professional care.
  • Payments should save the cost of professional care.
  • Payments should take into consideration P’s contribution to the home and living arrangements (eg if the deputy lives in P’s home rent-free, or P pays the majority of the bills, the payments need to be decreased accordingly).
  • Payment should be made in agreement with other carers / family members where possible.

Applications to the court for approval

With specific reference to applications to make gratuitous care payments, it is helpful to manage the proposed carer’s expectations at this stage. Arrange some time to speak to them in more detail about P’s needs so you can understand the level of care P requires. No matter how well the carer can describe P’s needs, a professional opinion will almost always be required by the court. Speaking to the carer can also offer an opportunity to explain which provisions of the Care Act 2014 may be of help to the carer themselves if they need to seek additional care, either for their own needs as a carer or as further support for P.

The process by which the application is made to the court is found in part 9 of the Court of Protection Rules 2007.

Paying for goods and services and other expenditure

Under section 7 of the MCA 2005, there is an obligation to pay a reasonable price for both the supply of goods and the provision of necessary services to a person without capacity to contract for them, and it is the person who lacks capacity who must pay.

The definition of necessary is ‘suitable to a person’s condition in life and to his actual requirements at the time when the goods or services are supplied’ (section 7(2)). This extends to a deputy being able to sign a tenancy agreement on behalf of P and thereafter paying the rent or applying the housing benefit received for the tenanted property.

Expenditure

For acts in connection with care or treatment under section 8 of the MCA 2005, deputies have authority to meet expenditure involved with goods or services (under section 7).

However, this provision cannot be used to enforce a contract that is grossly overcharging for goods and/or services. As ever, the deputy has a duty to use P’s funds wisely and must be able to demonstrate that they have undertaken a good level of research into the reasonableness of the cost of services and that they are regularly reviewed.

In terms of agreements for gratuitous care allowances, in a number of instances the court has ordered indexation to provide longevity to

the decision made following the Court of Appeal’s decision in Tameside and Glossop Acute Services NHS Trust v Thompstone [2008] EWCA Civ 5, which confirmed that the Annual Survey of Hours and Earnings (ASHE) for the occupational group of care assistants and home carers (occupational group 6115) was the correct measure for the indexation of future care costs. In light of this, it may be argued that ASHE (6115) should be used for assessing past gratuitous care as well.

David Ross v A [2015] EWCOP 46

This was, in my view, a wise but brave application to the CoP by a professional deputy who took a pragmatic approach to the difficult family circumstances of their client, who was a young woman in receipt of a very large settlement for clinical negligence at birth.

The situation was that P’s younger brother’s own emotional and educational development had suffered significantly during his formative years as a result of the very difficult circumstances that his sister’s severe disabilities had placed on his family. His school reported this problem and recognised the cause but also, and helpfully, were able to identify that appropriate schooling would enable him to achieve his potential. The deputy therefore made an application to the CoP to permit him to use some of P’s funds to pay for her brother’s school fees. Although this was outside the norm of a deputy’s powers to pay for the needs of others, a deputy does have the express power to do so. However, the application to the court was clearly the right route to take, as school fees over many years amount to a significant sum.

Unfortunately, the case took a long time to reach the CoP, and so the deputy simply paid the fees. His decision was not supported by the Official Solicitor, who went as far as to suggest that the deputy should replenish the funds used to pay the school fees. Fortunately, Senior Judge Lush did not support this view, and decided that it was in P’s best interests that both past and future school fees were to be paid from P’s funds.

Interestingly, the point was made that the MCA 2005 best interests checklist (set out in chapter 5 of the MCA code of practice) was not much use for a case such as this, and that section 4(7)(d) should apply instead, which requires the court to take into account the views of the deputy as to what is in P’s best interests.

The current position

Unfortunately, for those of us in practice seeking to advise our lay deputy clients and hoping for clear guidance for ourselves as deputies, the very nature of CoP work means that each case must be looked at in its own context. Our caseloads are as varied as the unique family dynamics in one family to another, but in the words of Baroness Hale in Aintree University Hospitals Trust v James [2013] UKSC 67: ‘The courts have been most reluctant to lay down general principles which might guide the decision. Every patient, and every case, is different and must be decided on its own facts.’

Consequences of making unauthorised payments

We are all aware of the principle of the deliberate deprivation of assets commonly applied when a person with capacity has chosen to gift their assets to their chosen heirs, rather than have their value taken into account for residential care home financial assessment. However, it is also possible that a deputy can be found to have placed P in this position if excessive and unauthorised gifts are made to the extent that there are insufficient funds left to meet P’s needs.

Likewise, confirmation should be sought from HM Revenue & Customs that any other form of payments – gratuitous care payments, or gifting of large sums, for example – hold no tax liabilities to ensure that there is no unforeseen liability.

One thing is certain: the supervision of deputies, particularly professional deputies, is closer and stricter than ever before. It is now necessary to estimate your own professional fees for the year ahead and to forecast expenditure. With an ever greater number of deputyships, there is increased risk that a lay deputy may not have the expertise or even the intention to deal with P’s monies appropriately, and misappropriation, even fraud by abuse of position, is unfortunately prevalent. It is essential that we are vigilant and not persuaded by heartstring tugging or empathy for a family’s situation to authorise payments or overlook our duty to P.

As professional deputies, our duties are more onerous than ever as we face a higher level of accountability and are granted greater decision-making powers. We can be criticised for making unnecessary expensive applications to the court on matters that we should be able to decide for ourselves, but at the same time we may have doubt as to the extent to which we feel comfortable in spending P’s funds. I would err on the side of caution, with perhaps a dash of David Ross’s courage, if the judgment in the school fees case above is indicative of the court’s current approach.