Property and Affairs Deputies: limits on authority, and managing conflicts of interest
The Court of Protection has handed down an important judgment, which every property and affairs deputy should consider. The judgment establishes strict limits on the authority of property and affairs deputies, and the court has laid down steps which must be taken to protect P from conflicts of interest where the deputy uses in-house legal services.
In ACC & Ors (property and affairs deputy; recovering assets costs for legal proceedings) [2020] EWCOP 9, Senior Judge Hilder considered three cases where a deputy had been appointed to manage P’s property and affairs.
The common feature between the three cases was that each had a deputy who was, in some way, part of the same firm of solicitors. For two cases, the deputy was Irwin Mitchell Trust Corporation Ltd; for the third, the deputy was a partner of Irwin Mitchell LLP.
The court considered whether, and in what circumstances, the deputy can recover from P’s assets costs for legal advice and litigation. The court also considered how deputies should manage a conflict, where they proposed to seek legal services from within their firm.
Scope of authority – legal advice
The standard deputyship order, which the court usually makes, confers ‘general’ authority to manage P’s property and affairs. The court emphasised that such authority only encompasses those common or ordinary tasks which are required to administer P’s estate efficiently.
As for obtaining legal advice, the court held that the authority conferred by ‘general’ authority is limited; limited to ordinary non-contentious legal tasks, including obtaining legal advice, as are ancillary to giving effect to the general authority.
So, if the deputy has authority to buy and sell property, instructing a conveyancer would be in the scope of the deputy’s authority. The judgment suggests that deputies ask themselves whether their authority is sufficient to allow them to act on the advice received? If so, seeking the advice is likely to be in the scope of their authority, see [53.8].
Litigation
Many property and affairs deputies will have proceeded on the basis that their general authority entitled them to litigate on P’s behalf. However, the court has held that litigation is beyond the scope of general authority.
General authority may permit taking legal advice in respect of, and taking formal steps towards, litigation. However, the authority only extends up to sending and receiving pre-action letters. Subject to two narrow exceptions, a property and affairs deputy, with ‘general’ authority, has no authority to commence or to conduct litigation on behalf of P. If such a deputy proposes to embark on litigation, they must first seek specific authority from the court.
The two exceptions to litigation being out of the scope of ‘general’ authority are that a property and affairs deputy, with general authority, can:
1. Bring proceedings, in the Court of Protection, if those proceedings related to P’s property and affairs;
2. Bring Court of Protection proceedings, on a welfare issue, if the issue means that P’s care regime is arguably unlawful (e.g. where there is no authorisation for a deprivation of liberty), and where the body which should have brought such an application fails to do so / delays doing so. In such cases, the deputy’s authority is said to be limited to commencing the litigation; the court may direct that the litigation is continued by someone else.
The court recognised that there may be circumstances where litigation has to be commenced quickly before an application for specific authority can be made. The court suggested that urgent applications for such authority would be dealt with on an urgent basis. But, if deputies litigate without prior authority, such steps would be taken at risk of costs. The deputy will have to make a retrospective application to authorise recovering the costs from P’s estate. There is, the court said, no presumption that such applications will be granted – each application will be considered on its merits.
Deputies faced with an urgent need to litigate to protect P’s affairs will, naturally, wish to promote P’s welfare. However, it is difficult to envisage circumstances in which a deputy would be advised to take proceedings, where he would be at risk of costs.
The litigation may be necessary, but, until the court approves an application to give the deputy authority to litigate, the litigation would be out of the deputy’s scope of authority. The delay arising from applying to the Court of Protection may prejudice P’s interests. But, providing that the deputy promptly applies to the court for authority, it is difficult to see how a deputy could be criticised for inaction.
Welfare issues
The judgement establishes a stricter limit on property and affairs deputies engaging in matters of P’s welfare.
The court held that ‘general’ authority of property and affairs deputy does not encompass steps in contemplation of an appeal against the decision of an Education, Health and Care Plan.
The general authority of a property and affairs deputy does permit the deputy to pursue an application for NHS continuing healthcare (‘CHC’) funding, including taking advice on the application. However, the court held that lodging an appeal against the refusal of funding would be out of the scope of ‘general’ authority. A deputy would need specific authority to pursue a CHC appeal.
The rationale for pursuing an application for CHC being in scope, but pursuing an appeal being out of scope, is not entirely clear. As the court acknowledged, an appeal against the refusal of CHC funding is an administrative process, with far less formality and Tribunal proceedings.
Using in-house lawyers, managing conflicts of interest
The judgment also imposes limits on the use a deputy can make of in-house legal advice. The measures imposed are designed to address the conflict of interest which arises where a deputy commissions services, at P’s expense, from within the deputy’s firm.
There are only two routes by which a deputy can commission in-house advice. First, the deputy can ask, when being appointed, for express authority to instruct in-house lawyers. Whether such authority is given will depend on the facts.
The court is unlikely to give general authority, and is more likely to give authority for in-house services in respect of defined issues, and up to a certain value. The deputy will need to persuade the court why such authority is appropriate.
The judgment refers to this route as being one a deputy might take when seeking appointment. However, there appears to be no reason why existing deputies cannot apply for such authority to be granted. Such an application may, in some cases, be more cost-effective than taking the second route.
The second route by which a deputy can commission in-house advice requires the deputy to:
1. Obtain 3 quotes for the work
2. Make, and record, a best interests decision as to which lawyers to instruct, and
a.if the deputy selects a different firm, the instructions can proceed, but
b.if the deputy selects the in-house provision, the deputy will need to seek approval from the court if the cost will be more than £2,000 plus VAT, and
c.set out any legal fees in the deputy’s return to the OPG, appending notes of the decision making process.
The judgment advises that obtaining quotes should be done in a way which is proportionate to the magnitude of the costs involved and the importance of the issue to P. However, where the deputy envisages needing legal services on a range of low-value issues, it may well be more cost-effective to apply for authority to instruct in-house on those matters, than to obtain 3 quotes for each piece of work.
However, in these early days, it is difficult to predict how the court will deal with applications for prior authorisation of in-house work. As ever, all will depend on the facts. It is likely that prior approval will only be forthcoming if the deputy can show that obtaining quotes for the anticipate work will cost P more than simply instructing in-house. Even then, the court might consider that obtaining external advice is of sufficient value to P to justify the additional costs.
Public authority deputies
The judgement does not expressly consider the position of public authority deputies. Clearly, the conclusions as to the scope of authority will apply equally to public authority deputies. However, the court’s conclusions as to managing conflicts of interest may have less relevance to public authorities.
Certainly, if public authority deputies can obtain in-house advice, with no charge to P, there would appear to be no need for the deputy to (i) seek authority for obtaining such advice, or (ii) obtain quotes. However, where the in-house legal advice to a public authority would be charged to P, the same processes should be followed.
Next steps
Many deputies are likely to have thought their authority was broader than this judgment confirms. Many professional deputies, and public authority deputies, are likely to have obtained in-house advice for P.
Deputies should carefully review their cases, and ensure that they are not pursuing steps beyond their authority. If proceedings are already ongoing, deputies might consider seeking a stay, pending receipt of authority from the Court of Protection to pursue the litigation. Deputies will also need to consider how they can regularise any ongoing in-house instructions, which may require speedy applications for approval by the court.
Lee Parkhill specialises in public law and mental capacity law. You can contact Lee by email at teamsam@cornerstonebarristers.com, or on 0207 242 4986.
