HM re-visited – is there really a presumption in favour of Deputyship?

In this case the Court of Protection looked at whether a person who lacks capacity should have a trust or a deputyship. The Court also gave some guidance on what evidence it expects to see in similar cases.

We feature the Court’s summary guidance and our own comment below.

Case summary

The case concerned ABC, an injured adult. The matter of ABC’s capacity was certainly not clear cut and in January 2015 he had set up a revocable personal injury bare trust.  Some months later though, a deputyship application was made.  The Court of Protection needed to decide how ABC’s funds should be managed.

It was common ground that ABC lacked capacity to litigate. The Judge looked at the evidence on capacity, including detailed statements from ABC’s aunt, case manager and another relative, and concluded that ABC did not have capacity to manage the capital element of his property and affairs although he did have capacity to manage his day to day funds.  ABC was intending to sell his current property, which he believed to be in appropriate condition to be sold but which many other people felt was still very much a work in progress.  ABC’s plan was to buy several buy to let properties.  There were serious concerns that ABC was vulnerable and very easily influenced.  There was also a concern that he had taken against his personal injury solicitor to a significant degree, even to the extent that he blamed the solicitor for his accident.  Although the deputy and the deputy’s team had managed to work well with ABC and he did seem to get on well with them, there was still an underlying concern that ABC, if left to his own devices, would not consult professionals and take their advice but would rather go his own way or take advice from inappropriate people.  In her statement, the case manager’s view of ABC was, “a highly vulnerable man who, tragically, does not recognise friend from foe”.

The medical evidence was that ABC could regain capacity to deal with his own financial affairs in the future but that he had not made any progress in the previous two years. On the balance of probability though, it was unlikely that ABC would regain the capacity to deal with his own affairs.

It was also clear from the evidence that ABC lacked insight into his condition and his need for support.

The Judge was concerned that, given the complex nature of the capacity question in this case, an authorised Officer of the Court had made a Deputyship Order. The Judge felt that in such a case the matter should have been referred to a Judge.

Mr Justice Charles identified two sets of risks for ABC. The breakdown risks were that:

i) ABC would want his damages award to be used in property development of his choosing,

ii) if his choices and wishes were not agreed to by a deputy or trustees their relationship with ABC would mirror that set out in those passages between ABC and his solicitor, and whether or not that serious discord arose,

iii) ABC would regularly challenge the view that he did not have capacity to make decisions relating to the expenditure and management of money and property of substantial value, and

iv) if he was found to have capacity and so left (with support) to make his own decisions he would lose significant parts of his capital and so be left in a difficult if not a disastrous situation.

The Judge was also concerned about the vulnerability risk, “I also explained that, leaving aside issues of capacity, the lay and professional evidence showed that it was almost inevitable that ABC would always be vulnerable to influence from others who may well not have his best interests at heart and so may cause him to waste the award. To my mind, as I explained, this means that another factor that needs consideration is the effective inevitability that in the unlikely event that ABC does have capacity in the future to manage large sums of capital and so, for example, engage in property development relating to “buy to let” schemes ABC will be vulnerable and there will be a real risk that cannot sensibly be ignored (the Vulnerability Risk) that he will (alone or under inappropriate influence) make disastrous or bad decisions that deprive him of the use of the damages awarded to meet his needs caused by his brain injury”.

The Judge had wondered whether an irrevocable trust which allowed ABC free rein over the income but which did not allow him to control capital, would help. There was some discussion of this in the Judgment but ultimately, because of the way proceedings had continued, Mr Justice Charles felt that the breakdown risk would be exacerbated by this change given that the relationship with the deputy was working well.  In the author’s opinion this would also have taken the Court into potentially difficult issues if ever ABC were to regain capacity.  The option was discounted and not discussed in further detail.

There was some discussion of the costs of deputyship versus trust. Mr Justice Charles felt that the parties dwelt on these too much.  That is perhaps understandable since this was a very significant factor in favour of the trust in the HM case.

Ultimately, the Judge decided that, especially now that the funds from the personal injury trust have been moved across to the deputy anyway, that discharging the deputy now and creating a new trust would be highly likely to;

1. i) “undo the progress made by ABC and so undo the improvement in his approach to assistance and support that had taken place and was being well supported by professionals (and in particular the deputy and her manager) and his family including a girlfriend who was expecting a baby, and so
2. ii) exacerbate, rather than reduce, the Breakdown Risks”.

The Judge discussed the SM v HM case and said that he felt the case had been misinterpreted. The Judge said that,

” In my view:

1. i) on a proper analysis SM v HM is not authority for the approach taken before me which was effectively that there is a strong presumption in favour of the appointment of a deputy which must be, and only rarely will be, displaced if the COP is to order that P’s property should be held on trust, and in any event
2. ii) if and to the extent SM v HM is authority for the existence of a presumption or starting point that must be displaced I do not agree with it.

A rebuttable presumption founds an approach to a balancing or weighing exercise under which a result needs to be displaced. It is therefore a starting point to a reasoning process that must be displaced. Naturally, reasoning processes must start somewhere but this does not mean that the chosen start (e.g. the existence of a statutory scheme) provides the result unless it is displaced. So there is a real difference between a starting point for a process of reasoning and a starting point that gives the result unless it is be displaced or rebutted.

In my view, an approach based on a presumption, or a starting point that must be displaced, as to the result that is in P’s best interests runs counter to the underlying rationale and purpose of the MCA and, in particular, of its decision and fact sensitive approach to the application of its best interests test in all the circumstances of a given case.

Further, in my view an approach such as that which exists under the Freedom of Information Act 2000 of there being a bias in favour of a particular result, there disclosure of the requested information in the case of a draw (see Lord Wilson – the single minority in Sugar v BBC and Another) [2012] UKSC 4, [2012] 1 WLR 439 at para 25) does not exist under the MCA in determining what order in a given case should be made to best promote the best interests of the relevant P. In the context of the making of orders that the COP has jurisdiction to make, there is nothing in the MCA that says or has the effect that the result will be “X” unless the factors in favour of another result outweigh those in favour of “X”…..

In short, the weighing or balancing of competing factors is at the heart of decision making under the MCA and it does not fit with presumptions, starting points or a bias that have to be displaced”.

The Judge accepted that the weight of the factors in favour of deputyship in many cases “and perhaps the great majority of cases” would outweigh those in favour of a trust but repeated that in his view, “the normality of the appointment of a deputy does not create a presumption, starting point or bias that needs to be displaced”.

The Judge confirmed the deputy’s appointment as being in the best interests of ABC. It is clear this decision was made having taken into account ABC’s personal circumstances, history and views as well as the current circumstances and the assessment of the stability of the deputyship arrangements.

Important points for similar cases

The Judge considered that the points below were ones that ought to be considered in cases similar to the ABC case. Some of them point to specific evidence that will be needed:

(1) “The management regime for a substantial award of damages should be considered as soon as is practicable.

(2) This will involve a careful consideration of what the claimant (P) has and does not have the capacity to do and of his or her likely capacity and/or vulnerability in the future. This is relevant to both jurisdictional and best interests issues.

(3) It will also involve the identification of all relevant competing factors and should not proceed on the basis that there is a strong presumption that the COP would appoint a deputy and would not make an order that a trust be created of the award. Rather, it would balance the factors that favour the use of the statutory scheme relating to deputies (that often found the appointment of a deputy in P’s best interests) against the relevant competing factors in that case.

(4) It will also involve the identification of the terms and effects (including taxation) and the costs of those rival possibilities.

(5) Care should be taken to ensure that applications that are not straightforward are not decided by case officers in the COP but are put before judges of the COP.

(6) The possibility of listing case management hearings or the final hearing of QB proceedings before a judge who is also nominated as a COP judge should be considered. However, the potential for conflict between the respective roles of the judge in the two courts (e.g. one arising from a consideration of without prejudice communication in respect of the QB proceedings concerning its settlement that is not agreed or not approved by the COP judge) and the respective jurisdictions of the two courts need to be carefully considered”.

Comment

It is helpful to have details about what the Court of Protection will want to see in cases similar to ABC. HM had, for a number of years, been taken as the case which established a presumption in favour of deputyship, or at least that was seen as the practical effect.  The cases of HM and ABC are obviously very different, not least because HM was never likely to regain capacity whereas this was a possibility in ABC’s case.

I still suspect that cases of trusts being established by the Court of Protection will be fairly limited but it will be interesting to see what develops.

Case report: Watt v ABC [2016] EWCOP 2532 (02 November 2016)