14 August 2020 | Comment | Article by Joy Davies

Considerations for property and financial affairs deputies

Six months on from Senior Judge Hilder’s landmark Court of Protection Judgement in ACC & Ors (property and affairs deputy; recovering assets costs for legal proceedings) [2020] EWCOP 9 I intend to explore the inevitable impact the guidance will have on Property and Financial Affairs Deputies.

Eleanor Goodridge, a solicitor of Hugh James, has helpfully prepared a detailed summary of the reported case.

Eleanor has highlighted the nine questions raised by Senior Judge Hilder which arose from the three applications.

Here, I explore the questions raised and guidance provided by Senior Judge Hilder in further detail:

  1. What authorisation is required to conduct litigation on behalf of P?

Senior Judge Hilder determined that the standard Property and Financial Affairs Deputyship order does not permit a deputy to engage in contentious litigation on a P’s behalf. To pursue contentious litigation a deputy will be required to obtain specific authorisation from the Court of Protection.

Moving forward, Property and Financial Affairs Deputies will need to make an application for authority to conduct contentious litigation. As part of the proceedings, the court will consider whether there should be limits to such authority. If the court has concerns as to the merit or cost of the litigation then the authority could be granted to a specified stage of proceedings. Thereafter, a further application would be required to assess the merits or costs at that specified stage.

  1. What about further proceedings in the Court of Protection?

Senior Judge Hilder was keen to ensure that a distinction was made between proceedings regarding P’s property and affairs and proceedings relating to P’s welfare.

It was held that any contemplated litigation in the Court of Protection in respect of a property and affairs issue would not require a prior application for authority to do so. However, a Property and Financial Affairs Deputy is required to obtain specific authority to conduct welfare proceedings in the Court of Protection.

Senior Judge Hilder acknowledged that there may be a body or institution more appropriately placed to make an application regarding P’s welfare issue.

In practice, it is a frequent occurrence for Property and Financial Affairs Deputies to have to intervene in welfare issues. Often this is as a result of the responsible bodies not taking immediate action.

To that end, I was pleased that Senior Judge Hilder clarified in this instance the ‘general’ authority of a Property and Financial Affairs Deputy, would extend to include an application to the Court to draw to their attention to the need for welfare proceedings. Furthermore, Senior Judge Hilder provided helpful guidance on the information required when making such application.

  1. To what extent does ‘general authority’ encompass authority to take legal advice on behalf of P?

Senior Judge Hilder assisted Property and Financial Affairs Deputies by providing a couple of specific examples:

  • the preparation of an annual tax return would be deemed as an ordinary part of managing P’s property and financial affairs and it may be good practice to delegate this task. Furthermore, the deputy may seek independent advice from a tax expert as to the completion of the return; and
  • the instruction to prepare and deal with employment contracts of directly employed carers will be encompassed within the ‘general’ authority to manage P’s funds.

To assess if the subject of the non-contentious advice is within the deputies authority they will need to ask themselves if their existing authority will be sufficient to act on the advice if taken? If not, seeking advice is likely to be outside their authority.

Although Senior Judge Hilder declined to fix a financial limit to the non-contentious legal tasks within a deputy’s authority, it is clear from the judgement that if there is any doubt then an application should be made.

Moreover, Senior Judge Hilder clarified that a deputy may take formal steps towards litigation in the form of sending and receiving pre-action letters. She concluded that ‘general’ authority includes the authority to take some advice in respect of some contentious litigation. Specific examples considered by Senior Judge Hilder included recovery of debts incurred by P and grounds to evict a tenant of a property belonging to P.

Senior Judge Hilder has helped clarify the position. However, it will be vital for all deputies to distinguish between contentious litigation relating to P’s property and affairs and other litigation which would not be considered within the ‘general management’ provision.

  1. Where is the line drawn between seeking advice and conducting litigation?

Senior Judge Hilder confirmed that it stops short of formal issue of proceedings. However, it was acknowledged that the court will need to assess the prospects of success of the litigation. Therefore, evidence will need to be obtained in the first instance.

Senior Judge Hilder also considered two decisions which impact Property and Financial Affairs Deputies:

  • Applications for continuing healthcare funding is deemed within the ‘general’ authority of a Property and Financial Affairs Deputy. However, the deputy should seek specific authority to conduct the appeal on behalf of P; and
  • A Property and Financial Affairs Deputy should seek specific authority to take any steps in respect of challenging an Education, Health and Social Care Plan.

Caroline Bielanska, a member of the Law Society Mental Health and Disability Committee, has raised concerns regarding the limit on the authority of a Property and Financial Affairs deputy to challenge NHS Continuing Healthcare claims on the basis that such a challenge should not be considered as litigation but instead a review process. It is clear that the implications of this judgment will take some time to work out.

  1. What about urgent matters?

The court recognised that there may be instances where litigation must be commenced before an application for authority can be made. In this instance, Senior Judge Hilder confirmed that the deputy had to make a best-interests decision on the facts and retrospective approval of any action taken would be necessary.

As to recovering costs for legal proceedings made without the necessary authority the deputy will have to make a retrospective application to authorise this. Senior Judge Hilder warned that there is no guarantee that this will be granted and therefore, it comes with a risk of costs. Each application would be considered on its merits.

Once again, Senior Judge Hilder provided helpful guidance when making such an application. She advised that the deputy will need to explain why a matter was so urgent that the authority could not be sought prior to the instruction. 

  1. How should conflicts of interest be addressed?

Limits were imposed to address the potential conflict of interest which arises where a deputy commissions services, at P’s expense, from within the deputies firm. Senior Judge Hilder was not persuaded that assessment of costs by the SCCO alone is sufficient protection for P against the potential for conflict of interest when a deputy instructs his firm.

In her judgment, Senior Judge Hilder stated that the proportionate and required approach to addressing conflict of interests is as follows:

  • a prospective deputy can request within his COP1 application express authority to instruct his firm to give the advice or carry out the task subject to a specified limit as to costs;
  • where seeking advice where no specific authority to instruct his firm has been granted, preceding instructing his  firm a deputy must:
    • Seek, in a manner which is proportionate to the magnitude of the costs involved and the importance of the issue to P, three quotations from appropriate providers (including one from his firm), and determine where to give instructions in the best interests of P;
    • seek prior authorisation from the Court if the anticipated costs exceed £2 000 plus VAT; and
    • clearly set out any legal fees incurred in the account to the Public Guardian and append the notes of the decision-making process to the return.

It is considered that the court is unlikely to give general authority, and is more likely to give authority in respect of defined issues, and up to a certain value. The deputy will need to persuade the court why express authority would be appropriate.

Senior Judge Hilder confirmed that the court will expect that, as part of his supervisory function, the Public Guardian will refer to it any failure to make an application to the court as a potential breach of fiduciary duty.

  1. What about cases where the deputy is not the instructing party?

Senior Judge Hilder also clarified that specific authority is required for a Property and Financial Affairs Deputy to use P’s funds to pay a third party’s costs, even if that third party is a family member. The ‘general’ authority of a property and affairs deputyship does not encompass such  use of P’s funds.

  1. What about acting as litigation friend?

Senior Judge Hilder confirmed the need to apply for specific authority to conduct litigation on P’s behalf as the general order does not give such authority. The judgment suggests that in such an application, the deputy should consider whether there should be limitations as to the extent of the authority, for example to a certain stage in the proceedings.

Additionally, as the general order does not give authority to conduct litigation, CPR 21.4(2) will not apply to allow a deputy to be appointed litigation friend unless he gets specific authority to conduct the litigation. A Property and Financial Affairs Deputy may be appointed under section 21.4(3) in the same way as a non-deputy is appointed. However, there will be a risk as to costs.

In this case the Official Solicitor extended an offer to act as litigation friend to P without charge in any case where her usual criteria for appointment are met. In view of this, Senior Judge Hilder did not address the question as to whether a different litigation friend may charge for acting as such. This is likely to be confirmed in future applications.

  1. What if P has capacity to give instructions for the work in question?

This landmark case also confirmed that if P has the capacity to give instructions on a particular matter, he or she will also have the capacity to agree on the costs of that matter.

Consideration for Property and Financial Affairs Deputies

Senior Hilder’s judgement acts as a useful review of a Property and Financial Affairs Deputy. Clarification has been provided on a number of points, particularly regarding:

  • what is included within the Property and Financial Affairs Deputies ‘general’ authority; and
  • the limitations on the Property and Financial Affair’s Deputies authority to conduct litigation.

The judgment makes clear that there is an ongoing expectation that deputies will consider in detail the limits of their own specific authority and address any potential conflicts of interest with each step that they take. If there is no specific authority in the deputyship order then authority should be sought from the Court of Protection.

Financial and Property Affairs Deputies will have to give additional care in respect of instructing in-house legal services for contentious litigation now that specific guidelines have been provided on the matter. If proceedings are already ongoing, Deputies may believe it appropriate to seek a stay in proceedings to request authority from the Court of Protection to pursue the litigation.

Furthermore, deputies that refer cases within their respective firms to conduct litigation will need to be able to demonstrate that they have acted in P’s best interest and demonstrating why, for instance, their firm has the best rates or their professionals have the necessary expertise.

It is inevitable that Professional Property and Financial Affairs Deputies will now be at a greater cost risk following this explicit guidance. Two main examples of this is if the Office of Public Guardian deem the actions taken by the deputy to not be in P’s best interests or if P’s deputy fails to follow the guidance prior to any retrospective approval.

Disclaimer: The information on the Hugh James website is for general information only and reflects the position at the date of publication. It does not constitute legal advice and should not be treated as such. If you would like to ensure the commentary reflects current legislation, case law or best practice, please contact the blog author.

Business news, knowledge and insight