Analysis
XZ was a high-net-worth individual with properties in several countries. On 4 December 2013 he executed a lasting power of attorney (LPA) for property and financial affairs, by which he appointed three attorneys. They were to act jointly in relation to all decisions in connection with the sale and purchase of any real estate and the sale or purchase of any other asset with a value in excess of CDN $3m. Otherwise they were to act jointly and severally in relation to all other decisions. The LPA had been carefully drafted with the assistance of Speechly Bircham, Solicitors. In particular, it contained extensive restrictions and conditions because the donor was unwilling to confer discretionary powers on others without adequate safeguards. There was a precondition that no attorney could act under the LPA unless they reasonably believed at the time of the decision that the donor lacked capacity to make that decision himself and there was a genuine financial need for the action which was under consideration. If that precondition was satisfied, the attorneys could not act (except in limited emergency situations) until the donor’s incapacity had been unequivocally confirmed by psychiatric evidence, more than 60 days had elapsed and that evidence was agreed by a protector or, in default of agreement, at least six months had elapsed. On 23 May 2014 an application was made to register the LPA with the Office of the Public Guardian (OPG) but on 14 August 2014 Speechly Bircham was informed that the Public Guardian was refusing 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 the LPA. On 10 November 2014 the Public Guardian refused a request to reconsider the decision not to register the LPA. On 30 January 2015 the donor made an application for a declaration that the LPA did not contain provisions which would be ineffective or would prevent the instrument from operating as a valid power of attorney and an order requiring the Public Guardian to register the LPA.
Held (making the declaration and order):
The Public Guardian’s objections, focusing on the role of the protector (who was not an attorney nor identified as a person with the expertise to assess the donor’s capacity) and that the time delays were likely to be unworkable and therefore not in the best interests of someone lacking capacity, were overruled. The new prescribed form, which permits a donor to direct that his attorneys could only make decisions when he had lost capacity, contained a warning that this could make the power of attorney much less useful as they would need to prove lack of capacity on each occasion. The provisions in this case, which set out in intricate detail the circumstances in which the attorneys could act, might well render the LPA less effective, and that might be unwise, but they were not ineffective and the Public Guardian had no right to make a paternalistic judgement on the donor’s behalf and decide that it would be in his best interests for those provisions to be severed. The position of the protector in this case was analogous to the provision in the Regency Act 1937 for a third party, who was not medically qualified, to agree with the medical evidence before the powers conferred on a delegate become exercisable. The provisions in this case were capable of taking effect and it was not part of the Public Guardian’s statutory duties to police the practicality or utility of restrictions and conditions which did not contravene the terms of the Mental Capacity Act 2005. The Public Guardian’s function was limited to considering whether they were ineffective or would prevent the instrument from operating as a valid power of attorney. Accordingly, a declaration would be made that the LPA did not contain provisions which would be ineffective or prevent the instrument from operating as such a valid power of attorney. The Public Guardian was ordered to register the LPA.
JUDGMENT SENIOR JUDGE LUSH: [1] This is an application regarding the effectiveness of some provisions contained in a lasting power of attorney (LPA) for property and financial affairs. [2] It is not a type of application for which permission would normally be given for a judgment to be published. However, para 16 of the Practice …Continue reading "Re XZ [2015] EWCOP 35"