Analysis
The application was made by JS for appointment by the Court of Protection under s19(1) of the MCA 2005 as DB’s deputy in relation to her property and financial affairs. JS was DB’s daughter. KB was DB’s son. MP was a local solicitor appointed to the court as deputy for DB on 13 February 2013. That application was resolved finally, save for the question of costs, by HHJ Hodge QC on 6 September 2013. By order made on that date (which was consensual), it is recorded inter alia that JS agreed not to pursue her application to be appointed as DB’s property and affairs deputy. The total bill of costs of the three parties is in the region of £70,000. The issue was whether the costs of this litigation incurred by KB and MP (on behalf of DB) should be paid by JS, or paid by DB or charged to her estate. The court had to consider the costs provisions of s55 Mental Capacity Act 2005 and Part 19 of the Court of Protection Rules 2007.
Held
The general rule is that the costs of the proceedings or the part of them concerning P’s property and affairs shall be paid by P or charged to his estate. Here, it would be unconscionable for DB to bear the costs of these lengthy proceedings. Parties were not well-placed financially to shoulder their own responsibility for costs, let alone the costs of others; both KB and JS are retired with limited funds, in each case invested in property.
The court has regard to the fact that it is JS who currently provides good quality daily care for her mother. She has made lifestyle sacrifices to do so. However, JS’s application for deputyship status was doomed to failure given her obvious conflict of interest, given diversion of DB’s funds into JS’s name. Even if JS could be excused for launching the litigation, it is not easy to absolve her from pursuing it after August 2012, and maintaining her declared objective to be her mother’s deputy right up to 6 September 2013.
It was not prudent for her to pursue a claim to a beneficial interest in a property bought with the proceeds of sale of DB’s home, when it must have been clear to her, particularly when she had legal advice, that the manner in which she had placed her mother’s funds in her name was (at best) highly questionable, or (at worst, and in the words of MP) ‘financially abusive’.
KB allowed his sister to deal with his mother’s affairs, without checking her authority to take the steps she did. He assumed that JS had a power of attorney, but did not check. He failed to enquire about the whereabouts of the entire proceeds of sale of Ash Grove, notwithstanding that, on his case his sister’s conduct in one material respect left him feeling uneasy at the time of key discussion about these arrangements. In the circumstances, KB is not entirely blameless, and must bear a part of his own costs. Having regard to all of the matters discussed above, fairness and justice requires in this case that JS should pay two-thirds of KB’s costs.
It is likely that had JS not pursued her own claim for deputyship, KB would have made application to the Court of Protection; had that occurred, a professional deputy may have been swiftly appointed. There would have been modest costs to DB in this process. In the circumstances, JS shall pay four-fifths of the deputy’s litigation costs to date. Further, JS shall pay two-thirds of the litigation costs of KB.
Given the possibility that JS will be unable to fund the costs within a reasonable time, either from the sale of the Spanish property or otherwise, MP is given leave to explore the mechanics of an equity release scheme to permit JS to discharge her liability for costs by way of a loan against the equity in Beech Avenue. This relief is granted to MP on the basis that any equity released shall clearly be a loan against the equity in the Beech Avenue property, to be repaid by JS. If, at the date of DB’s death, the loan has not been repaid by JS, the loan will be an asset of DB’s estate, with the amount to redeem the loan being set off against the half-share which JS will be entitled to from DB’s residuary estate.
JUDGMENT This judgment was delivered in private. The judge has given leave for this version of the judgment to be published on condition that (irrespective of what is contained in the judgment) in any published version of the judgment the anonymity of the incapacitated person and members of their family must be strictly preserved. All …Continue reading "JS v KB & anr [2014] EWHC 482 (COP)"