State of play: case summaries

W City Council v Mrs L - Deprivation of liberty

In this case a local authority asked the court to consider the living arrangements of Mrs L, which it said amounted to a deprivation of her liberty.

Mrs L was 93 years old and had been diagnosed with severe dementia. She lived in an upper-floor flat with access to a garden which was not enclosed. Following an incident when Mrs L had left her home inappropriately clothed, her daughters arranged for a fence and two gates to be erected.

One of them was a pedestrian gate and the second gate allowed vehicular access. The front door of Mrs L's flat, which led into the garden area, was locked with a Yale lock which Mrs L could operate herself.

Neither of the garden gates locked but they were difficult to operate. At night, there were door sensors which would be activated if Mrs L were to leave the property. If this happened, an alarm call would automatically be made to one of her daughters.

The local authority's opinion was that these arrangements amounted to a deprivation of Mrs L's liberty because, inter alia: (a) the garden gates were kept shut, thereby deterring Mrs L from leaving the property unless escorted; and (b) if Mrs L left the property at night, the family would be alerted and would escort her back to her home.

In the case of Cheshire West v P [2014] AC 896, Lady Hale set out the components of a deprivation of liberty, namely: (i) whether the person was confined to a restricted place for a significant period of time; (ii) they did not consent to the confinement; and (iii) whether the state was responsible for the confinement.

In considering the term 'confinement', the key question was whether the person was under complete supervision and control, without any freedom to leave.

Bodey J noted from the case law that the question is highly fact-sensitive. He found that, even though Mrs L did not have capacity to make decisions as to her residence, she was capable of expressing choices such as going in and out of her garden at will.

He also observed that article 5 of the European Convention on Human Rights referred to everyone having a right to liberty and (importantly in this case) security of person. Mrs L's security was being achieved by the arrangements put into place as being in her best interests, even though they involved restrictions.

The restrictions were not continuous or complete and the carers' visits were kept to the minimum.

The judge found that while the arrangements clearly placed restrictions on Mrs L's liberty, they did not amount to a deprivation of liberty. Furthermore if that finding was incorrect, he was of the view that the deprivation could not be imputed to the state.

The arrangements had been set up by agreement with a caring and pro-active family, and the responsibility of the state was diluted by the strong role which the family was playing.

See W City Council v Mrs L [2015] EWCOP 20

 

The Public Guardian v IT - Removal of an attorney

This case involves the unusual dismissal of an application by the public guardian for the revocation of an EPA.

DT was 72-years-old and had a history of anxiety and depression.
In 1996, after he had been through
a particularly self-destructive phase,
his wife left him on the advice of social services. They had three sons, in whose favour DT had made an EPA. After DT was diagnosed with dementia, the EPA was registered.

Three years after the EPA had been registered, the public guardian applied to the court for:

• a declaration as to DT’s capacity to make decisions concerning his finances;

• if DT should lack capacity, an order that the attorneys provide accounts; and

• should the attorneys’ fail to provide accounts, an order that the EPA be revoked.

A special visitor who visited DT at the request of the court reported that he did not have capacity to mange his own financial affairs, but he did have capacity to direct his attorneys to manage his affairs and that he trusted them implicitly.

It was very clear that DT was very happy with his sons’ management of his finances and he did not wish his wife to be involved.

The Office of the Public Guardian argued that there were significant arrears of care home fees. All the rent from the previous matrimonial home was paid to DT’s wife, and the sons did not keep accurate accounts.

SJ Lush considered Re S and S (Protected Persons) [2008] COPLR Con Vol 1074, where it was held that, if P expressed a view that was not irrational, impractical or irresponsible, then that view carried great weight and effectively gave rise to a presumption in favour of implementing those wishes, unless there was some detrimental effect to P in doing so.

SJ Lush concluded that DT’s wish that his sons continue as his attorneys’ was not irrational, impractical or irresponsible, and their conduct had not had a sufficiently detrimental effect on DT to override his wishes.

Very unusually in a case of this kind, there was no evidence of dishonesty on the part of the attorney. Even though they had not produced satisfactory accounts, SJ Lush felt it very unlikely that any of the sons would have misappropriated DT’s funds.

The principal criticism was that they had applied DT’s funds towards their mother, who would otherwise be dependant on means-tested benefits. The Mental Capacity Act 2005 schedule 4 para 3(2), allows attorneys under an EPA to make provision for other persons where the donor might reasonably be expected to provide for them.

Therefore the sons had been acting within their authority, but the judge was of the view that they had made more generous provision than DT would have done, including paying the entirety of the rent from the former matrimonial home to her, rather than just half. Nonetheless to revoke the EPA would not be proportionate and would not respect his rights and wishes.

See The Public Guardian v IT [2015] EWCOP 10

 

Re Savile - Estate dispute

In this case the beneficiary of the late Jimmy Savile’s will opposed a scheme for dealing with the personal injury claims of his alleged victims, and attempted to have the executor of his will removed.

James Savile, better known as Jimmy Savile, died in October 2011 leaving the residue of his estate to the Jimmy Savile Charitable Trust. Natwest Bank was named sole executor. Following high profile allegations that Jimmy Savile was a serial child abuser and sex offender, Natwest began to receive letters from a number of potential victims seeking compensation.

It became apparent that, given the sheer volume and potential value of the claims, there was a real risk that the estate could become insolvent should the claims be successful. Accordingly a scheme was negotiated between the potential victims, Natwest and other third party defendants (including the BBC) which aimed to resolve potential claims without costly litigation.

The trust robustly opposed this scheme and applied to have Natwest removed as executor. It argued that relations had broken down between NatWest and the beneficiaries, such that they no longer retained confidence in NatWest to administer the estate.
It was alleged that NatWest had failed to distinguish between the interests
of the potential claimants and those
of the beneficiaries under the will.

The High Court approved the scheme and dismissed the removal application. Sales J could find no evidence that Natwest had acted unreasonably or without proper regard to the trust’s interests.

Moreover the court ordered adverse costs against the trust in respect of NatWest’s approval application, to reflect what the judge described as its ‘unreasonable conduct’.

The court’s decision was upheld by the Court of Appeal in December 2014 (save for the orders as to costs). Lord Justice Patten, delivering the leading judgment, relied on the case of Letterstedt v Broers, stating that direct intervention by the court in the removal of an executor must be ‘justified by evidence that their continuation in office is likely to prove detrimental to the interests of the beneficiaries’.

He stressed that a ‘lack of confidence or feelings of mistrust’ are not in themselves sufficient to justify removal.

The court found that there would be no benefit to the beneficiaries in changing the executor; the bank had acted and would continue to act fairly and with proper regard to the interests of the beneficiaries in administering the scheme.

Additionally the scheme had already been approved by the court and future administration would be largely ‘mechanical’ in nature, hence NatWest’s views and alleged hostility towards the trust would have no material effect on its operation.

The court did allow the trust’s appeal against certain orders for costs made during the course of proceedings. Among other things, the court had been wrong to order the trust to pay the costs of the approval application.

In the circumstances, the matters relied upon by the judge were not sufficient to justify a departure from what would be the usual costs order on such an application.

See National Westminster Bank Plc v Lucas & Ors [2014] EWHC 653 (Ch) (11 March 2014) 

 

Arasbridge Unit Trust - Trusts

This case concerned an application by a trustee to surrender its discretion to the court (a so-called Public Trustee v Cooper category 3 type application).

The trustee sought directions in relation to a number of matters arising in connection with a major multi-class open-ended unit trust.

The trust was constituted in 2006 and had been promoted widely in Europe. Over 360 investors were represented in the proceedings by a court appointed representative. The trust was initially authorised by the Guernsey Financial Services Commission, under the Protection of Investors (Bailiwick of Guernsey) Law, 1987.

It was then suspended in 2009 following concerns regarding the accuracy of certain documentation, including the net asset value calculations. While many initial concerns were addressed by agreement between the parties, three issues remained to be resolved by the court. They broadly concerned the nature of a number of the investors’ funds and in particular, in which investment they should be deemed to have participated.

The application was made under sections 68, 69(1)(a)(i), (iii) and (iv), 69(2)(b) and 71 of the Trusts (Guernsey) Law, 2007 and Rule 35 of the Royal Court Civil Rules 2007. The basis for surrendering discretion was that decisions on each of the three issues would have the effect of favouring one group of investors at the expense of another.

The court accepted that this was appropriate in the circumstances, noting that it is a well-established principle that a trustee faced with a conflict of interest that ‘disables’ it from acting, may surrender its discretion to the court. 

The court highlighted that, if the trustee were to take a decision, there would be a perception, or a real risk of a perception, that it was acting in its own interest. The court appointed representative of the investors faced a similar dilemma given that he represented the entire body of investors, and owed duties to each of them. 

Having decided that it was appropriate to make the decisions on the trustee’s behalf, the court then had to consider the correct principles to apply in reaching the decisions.

The court acknowledged that it was a struggle to find a legal principle to assist, where alternative proposed options offered such significantly different financial outcomes to the investors concerned. However the following guidance from Lewin on Trusts (18th edition) was cited with approval:

‘Where the trustees surrender their discretion to the court…the court will act as a reasonable trustee could be expected to act having regard to all the material circumstances and is not bound by the wishes of any beneficiary. The court has, however, no greater powers than the trustees have either under the trust instrument or under the general law.’

The court concluded that it must decide upon a course of action that achieved a ‘balance of fairness’ between the conflicting interests of the investors. Ultimately, the court had to consider what ought to have been done in the best interests of the trust, ignoring any potential for damages claims against any of the entities concerned.

See In the matter of the Arasbridge Unit Trust, Guernsey Judgment 02/2015

 

Jennifer Ridgway is an associate in the private client team at Michelmores

Karen Bayley is a solicitor at Barlow Robbins

Jennifer and Karen write regular case updates for Private Client Adviser