The Protector, two psychiatrists and the Office of the Public Guardian

Must the OPG register an LPA regardless of how complex the provisions are? Yes says the CoP

Speedread

In what appears to be one of the most complicated LPAs ever seen, the Court confirms that the donor of a lasting power of attorney has the right to impose any number of conditions specifying when and how it can be used.

Comment

There have been a number of cases where supervisions have been required by the Office of the Public Guardian.  In most of those cases of course the most pragmatic solution if the donor still has mental capacity is to agree to severance or execution of the LPA.  However, in some cases, probably because the donor has been particularly intent or because they have already lost capacity, the Court of Protection has had to decide on the validity of a number of provisions.

This case gives very helpful guidance for practitioners when advising clients with very particular requirements.  However, just because something looks as if it will be difficult to implement or make life quite tricky on the ground for the attorneys, that does not mean that the LPA should not be registered.

Interestingly, Senior Judge Lush thought that this guidance might be useful to practitioners or prospective donors which is why he allowed its publication.  His words were “I can’t imagine that the general public would have the slightest interest to professionals who specialise in this area of the law and draft LPAs on a regular basis, and also to people who are considering making an LPA themselves, and for this reason I shall permit its publication”.  It is, I suppose, fairly unlikely that this case will provoke much comment down the pub but I for one am very grateful to Senior Judge Lush for having allowed this case to be published.

The Office of the Public Guardian have a very helpful summary of provisions that have been found to be ineffective entitled: Avoiding Invalid Provisions in your LPA

Case Review

It is fair to say that the conditions in the Lasting Power of Attorney in this case could be the most complicated the Office of the Public Guardian had ever seen. Indeed, the OPG thought the provisions were too complicated to be workable and refused to register the Lasting Power of Attorney on that basis. The Court of Protection thought otherwise.

XZ, the donor of the Lasting Power of Attorney in this case, is not your run of the mill client.  He is in his 70s, owns properties in several countries and “by any reckoning, is a high-net-worth individual”.

XZ executed a Lasting Power of Attorney for Property and Financial Affairs appointing three close friends and business associates as his attorneys.  Two were American and one was Canadian.  XZ ticked the box dreaded by practitioners, allowing his attorneys to act jointly for some decisions and jointly and severally for other decisions.  He did not stop there though.  The attorneys were to act jointly in relation to all decisions in connection with the sale or purchase of any real estate or the sale or purchase of any other asset with a value in excess of three million Canadian dollars.  They were allowed to act jointly and severally in relation to four other decisions but subject to a veritable raft of restrictions and conditions. Some of these restrictions and conditions were the reason this case became before the Court.

It seems that XZ’s Health and Welfare Lasting Power of Attorney was more straightforward because the terms of that did not come before the Court.

When XZ’s solicitors applied to register the Property and Affairs Lasting Power of Attorney, the Public Guardian refused to register it because he considered that “most of the conditions imposed an unreasonable fetter on the attorneys’ power to act and were, therefore, ineffective as part of an LPA”.

Senior Judge Lush sets out the restrictions and conditions in the Schedule which makes up approximately one third of the length of the Judgment.  That probably gives you a flavour of the issue before the Court, not to mention the Herculean efforts of those drafting the provisions in an attempt to give effect to their client’s very specific wishes.

The provisions objected to included :

1. Subject to the following provisions, no attorney (which shall for the purposes of these restrictions include any replacement attorney) shall have authority to take any decision under this Lasting Power of Attorney unless:   (A) My attorneys reasonably believe at the time of the decision that I lack capacity to take the decision (“the Relevant Decision”) myself and that there is a genuine financial need for the action which is under consideration; and
2. Either:
   1. a Psychiatrist’s Opinion has been issued, more than 60 day have elapsed since the issue of that opinion, the opinion is an Uncontested Opinion and, if a Contested Opinion has been issued previously, at least six months have elapsed since the issue of that Contested Opinion; or
   2. my attorneys consider that the Relevant Decision should be taken as an emergency measure for the preservation of any asset or its value or the realisation of such value, and the value of the asset does not exceed CDN $25 millions (twenty five million Canadian dollars).”

The definitions to this clause cover almost two A4 sides of the Judgment and provide amongst other things that the psychiatrists’ opinion is not a typo but indeed two psychiatrists are required.  The provisions also referred to a protector, a concept familiar to those dealing with trusts in some other jurisdictions but until now not one that has occurred in the context of the Court of Protection.

The Public Guardian felt that the requirement to obtain two medical opinions before taking any action would be unworkable, as would the sixty days delay prescribed.  The Public Guardian was also unhappy with the provisions concerning the protector. He said “The Protector is not an attorney, yet they are in a position to interfere with the attorneys’ duty to act in the best interests of XZ.  As the Protector is not a party to the LPA they are not bound by the same duties as the attorneys”, but the Public Guardian did not feel that the clause allowing the attorneys to make decisions in an emergency would save any of the clauses to which he objected.  He made it clear that asking for a medical opinion in itself is generally acceptable but the particular requirements here were effectively too much.

Importantly, Senior Judge Lush pointed out that this was not an application by the Public Guardian to sever the provisions in the Lasting Power of Attorney but an application by the donor, XZ himself for the Court to determine the meaning and effect of his Lasting Power of Attorney under Section 23.1 of the Mental Capacity Act.

Senior Judge Lush discussed the Lasting Power of Attorney forms and the warnings on them.  Specifically, the donor is asked when the attorneys can made decisions and is required to tick one of two boxes  “beneath the words I do not have capacity is a message which reads:

1. “As soon as my LPA has been registered (and also when I don’t have mental capacity)
2. Only when I don’t have capacity.

Beneath the words “only when I don’t have capacity” is a message, which reads like a government health warning:

‘Be careful – this can make your LPA a lot less useful. Your attorneys might be asked to prove you do not have a mental capacity each time they try to use this LPA’.

Essentially, this warning is what this case is all about”.

The Judge discussed the provisions and felt that they were essentially XZ setting out that he wanted his attorneys only to act when he lacked capacity.  XZ described “in intricate detail” the circumstances in which he could be said not to have capacity to make a particular decision.  Senior Judge Lush did say that these provisions made his LPA “a lot less useful” but said that whether they were ineffective as part of an LPA was entirely different matter.  The Judge felt that “XZ acknowledges that his LPA will be a lot less effective because of these provisions but, nevertheless, he wishes them to remain as an integral part of the registered instrument for his own reassurance and peace of mind. Some people may think that this is unwise, but it is his will and preference and it should be treated with respect. The Public Guardian has no right to make a paternalistic judgment on his behalf and decide that it would be in his best interests for these provisions to be severed”.

Senior Judge Lush drew a distinction between the Public Guardian’s duty to sever anything which is “ineffective as part of a Lasting Power of Attorney” and, provisions that might cause practical difficulty but are not ineffective.  Senior Judge Lush said,

“With respect to the Public Guardian, it is no part of his statutory duties to police the practicality or utility of individual aspects of an LPA.  In the context of section 23 and Schedule 1, paragraph 11 of the MCA 2005 the phrase ‘inefective as part of a lasting power of attorney’ clearly means ‘not capable of taking effect, according to its legal terms as part of an LPA”.  Examples of provisions which would be effective as part of a power of attorney would include:

1. A provision which purported to permit the attorney to make gifts which go beyond the statutory restrictions found at section 12 MCA 2005.
2. A provision which purported to go beyond what a person can do by an attorney (such as make a will or vote).
3. A provision which purported to permit the attorney to consent to a marriage on behalf of the donor (see MCA section 27(1)(a).

Neither the court nor the Public Guardian are concerned with whether a restriction that does not contravene the terms of the MCA 2005 may pose practical difficulties in its operation”.

Senior Judge Lush did not consider that any of the submissions on behalf of the Public Guardian had identified any specific provision in the Mental Capacity Act or the LPA/EPA and Public Guardian regulations or the Common Law Agency that had been infringed by the provisions in this LPA.  For that reason, he declared that;

“XZ’s LPA does not contain any provisions which:

1. Would be ineffective as part of an LPA; or
2. Would prevent the instrument from operating as a valid power of attorney”.

Senior Judge Lush also ordered the Public Guardian to register the LPA.

Case: XZ, Re [2015] EWCOP 35 (19 May 2015)