B AND G PARTNERS, pursuers AGAINST H, defender
2014SCFORF53
Sheriffdom of Tayside Central and Fife at Forfar
Judgement
of
Sheriff Gregor Murray
in causa
B and G, Pursuers
Against
H, Defender
AW7/14
Forfar, 7 August 2014
The Sheriff, having resumed consideration of the cause, repels the Defender’s second and fourth pleas-in-law and appoints the cause to the procedural roll of 20 August 2014 to determine further procedure; reserves all questions of expenses arising until said diet.
Sgd
Sheriff
Note:-
Background
- On 17 December 2009, Mr and Mrs B executed documents entitled Continuing and Welfare Powers of Attorney in favour of their children H, B and G.
- Both documents were registered with the Office of the Public Guardian on 18 February 2010 in accordance with s.19 of the Adults With Incapacity (Scotland) Act 2000.
- In August 2011, a dispute arose between Mr and Mrs B’s children over operation of the Powers of Attorney. The Pursuers in this Summary Application, and in another relating to Mr B, crave orders under s.20 of the 2000 Act revoking or restricting the Defender’s appointment as Attorney. The parties’ positions are set out in Statement of Fact and Answer 7 of the Record. Orders have been pronounced revoking the Defender’s powers ad interim.
- Mrs B suffers from significant health difficulties, which are outlined on Record. In March 2012, she and her husband moved to a residential home.
5. Mr B died in April 2014. The action relating to his Power of Attorney is in abeyance.
6. After extensive procedure, this case was set down for Proof over several days in late June 2014. However, after the Defender introduced an argument that Mrs B’s Power of Attorney was invalid, the Proof was discharged. In lieu, the issue was debated on 29 July 2014, after which I made avizandum. I am grateful to the Pursuers’ agent and Defender’s Counsel for their carefully presented and thought-provoking submissions.
The Defender’s Submissions
7. Counsel for the Defender sought dismissal of the action. He submitted Mrs B’s Power of Attorney did not comply with s.15(3)(b), s.15(3)(ba), s.16(3)(b) and s.16(3)(ba) of the 2000 Act. The document contained no clear statements of intention or determination as referred to in those paragraphs. In their absence, s.18 of the Act made clear that Mrs B’s Power of Attorney was invalid. He relied primarily, but not exclusively, on a recent decision from Glasgow Sheriff Court - W (2014) SLT (Sh Ct) 83.
8. It was submitted that decision established:-
a. s.15(3)(b) required every document which fell within its terms to contain a specific statement clearly expressing a granter’s intention that the powers granted should continue in the event of their incapacity
b. A simple statement in a Power of Attorney that a person is appointed as a continuing attorney is not sufficient to constitute requisite clear expression and
c. s.15(3)(ba) ought to be read as requiring a granter to state a preferred mechanism for determination of incapacity within any document granting continuing powers
9. Though the decision in W did not encompass s.16, Counsel submitted certain conclusions could still be drawn from it for the purposes of that section. At paragraph 24 of his decision, the Sheriff found that a “specific statement” was necessary if s.15(3)(b) was to be complied with. As ss15(3)(b) and 16(3)(b) both referred to clear expression of intent, that finding must also apply to s.16(3). Similarly, the higher test imposed by s.16(3)(ba) over its equivalent in s.15 emphasised the importance of the “determinations” required by each.
10. I was also referred to commentaries on W and to the presiding Sheriff’s expertise in this area of law. Though it was accepted it did not bind me, it was highly persuasive and I was urged to follow it. As Mrs B’s Power of Attorney contained no specific statements of intent or any substantive “determination”, as provided for in ss15 and 16, it was invalid. If so, the Pursuers could not competently seek orders under s.20 of the 2000 Act.
The Pursuers’ Submissions
11. The Pursuers’ agent submitted Mrs B’s Power of Attorney fulfilled all relevant statutory criteria.
12. After enactment of the 2000 legislation, in the absence of stipulation to the contrary, financial powers contained in a Power of Attorney have immediate effect. s.15(1) highlighted that state of affairs by creating continuing powers, powers which would otherwise cease on incapacity. There was no need for welfare powers to “continue” as they could only be triggered by incapacity.
13. Accordingly, it was unnecessary for Mrs B to provide that financial powers were to continue on incapacity. In any case, the deed specifically provided for continuing authority. There was no need to state more in a deed as there was no other way to legally confer such powers. Though it was understood the decision in W had been appealed, it was unnecessary to await the outcome.
14. Further, s.15(3)(ba) was only engaged if the granter wished to specify when continuing powers would commence. That was not the case here and so its terms were irrelevant. The requirements of s.16(3) and 16(3)(ba) were respectively met by Clauses 1.2 and 3.2 of the deed. Though the wording of the latter was not ideal, it met the statutory test.
15. The existence and purpose of s.16(5) lent strength to that construction. If a granter did not specify how incapacity was to be determined for the purposes of s.16 in a deed and an attorney exercised welfare powers before incapacity was truly proved, he was protected by the “reasonable belief defence” that sub-section set up.
16. Finally, though the Sheriff’s expertise was acknowledged, it was submitted W could be distinguished, as it related only to s.15 considerations.
Discussion
17. Part 2 of the 2000 Act (which contains ss15, 16 and 18) followed recommendations made in Part 3 of the 1995 Scottish Law Commission Report on Vulnerable Adults. The Report consolidated an earlier discussion paper and responses to it. ss15(3)(ba) and 16(3)(ba) were later amendments introduced by the 2007 Act.
18. Part 3 of the 1995 Report inter alia recommended:-
a. Financial powers of attorney should continue in effect after incapacity only if the deed creating them clearly showed that was the granter’s intention (Recommendation 17(1))
b. Financial powers intended to be exercised after incapacity should be termed “continuing” and those exercising such powers termed “continuing attorneys” (Paragraph 3.4)
c. For the first time, welfare powers should be permitted, but only after incapacity of the granter, or an attorney’s reasonable belief to that effect (Paragraph 3.5)
d. The Public Guardian should be required to register a power of attorney unless it contained a clause prohibiting registration before a specified event; in that event, the Public Guardian should not register it unless satisfied the event had occurred (Recommendation 22)
e. Powers of attorney should only be valid if they contained certificates by appropriate persons confirming the granter understood the nature and effect of the document (Recommendation 21(2))
19. The genesis of the 2007 amendments is unclear. The Adult Support and Protection (Scotland) Bill was introduced to the Scottish Parliament following research into operation of the 2000 Act, monitoring of the Act by the Justice 2 Committee of the Parliament and a consultation exercise (Paragraphs 47-51 of the Bill’s Policy Memorandum). However, there appears to be no reference in the research summary, consultation paper or Policy Memorandum to the amendments. They may have been a consequence of the Justice 2 Committee monitoring, but the Parliament website link to it no longer operates.
20. However, during Stage 1 of the Bill’s progress, Jude Payne of the Parliament’s Directorate of Access and Information briefed members of the Parliament’s Health Committee on the Bill’s aims (Record of the Health Committee sitting on 25 April 2006). Of the proposed amendments, he commented:- “Essentially, welfare powers of attorney, and financial powers where specified, become operational at the point the granter becomes incapacitated. Continuing powers can continue or start on incapacity. However, unless it is specifically stated in the authorisation document, there is no requirement for the attorney to obtain evidence that the adult has lost the ability to have control over their own affairs, for example through obtaining a medical certificate….The Executive….believed that it was a matter for the person who is granting the powers of attorney to dictate at what point the powers should come into effect….the Bill proposes a check in the system so that all continuing and welfare powers of attorney becoming operational on incapacity must contain a statement to the effect that the granter had considered how incapacity should be determined.” The amendments came into force on 5 October 2007.
21. So far as relevant to this case, ss15 and 16 of the 2000 Act as amended provide:-
“15 Creation of continuing power of attorney
(1) Where an individual grants a power of attorney relating to his property or financial affairs in accordance with the following provisions of this section that power of attorney shall, notwithstanding any rule of law, continue to have effect in the event of the granter's becoming incapable in relation to decisions about the matter to which the power of attorney relates.
(2) In this Act a power of attorney granted under subsection (1) is referred to as a “continuing power of attorney” and a person on whom such power is conferred is referred to as a “continuing attorney”
(3) A continuing power of attorney shall be valid only if it is expressed in a written document which–…
(b) incorporates a statement which clearly expresses the granter's intention that the power be a continuing power;
(ba) where the continuing power of attorney is exercisable only if the granter is determined to be incapable in relation to decisions about the matter to which the power relates, states that the granter has considered how such a determination may be made;…
16 Creation and exercise of welfare power of attorney
(1) An individual may grant a power of attorney relating to his personal welfare in accordance with the following provisions of this section.
(2) In this Act a power of attorney granted under this section is referred to as a “welfare power of attorney” and an individual on whom such power is conferred is referred to as a “welfare attorney”.
(3) A welfare power of attorney shall be valid only if it is expressed in a written document which–…
(b) incorporates a statement which clearly expresses the granter's intention that the power be a welfare power to which this section applies;
(ba) states that the granter has considered how a determination as to whether he is incapable in relation to decisions about the matter to which the welfare power of attorney relates may be made for the purposes of subsection (5)(b);…
(5)… (b) shall not be exercisable unless–
(i) the granter is incapable in relation to decisions about the matter to which the welfare power of attorney relates; or
(ii) the welfare attorney reasonably believes that sub-paragraph (i) applies….”
22. As the Commission acknowledged in 1995, financial Powers of Attorney have been common for centuries (Paragraph 3.5). At common law, such powers commence immediately on subscription. While the Commission wished to retain the common law, it recognised immediate commencement might deter some from utilising a relatively cheap and straightforward means of regulating their financial affairs in the event of incapacity. Such granters ought to have the option of granting “springing” financial powers, which would only come into effect on incapacity. Unless and until incapacity intervened, they would retain full control of their financial affairs. In such cases, the Public Guardian would only register the deed if satisfied incapacity has intervened (Paragraph 3.37).
23. It is only after consulting the Commission’s Report that the full purpose of s.15 is made clear. Slightly confusingly, continuing financial powers can either take effect immediately and continue after incapacity or they may be stated to be “continuing” financial powers which only take effect on incapacity. As such, s.15(3)(ba) can only apply to the latter type, so a granter intending to do so can define, if he wishes, the means by which his incapacity is to be judged.
24. s.16(3)(ba) has similar purpose. A granter may, if he wishes, define the means by which his incapacity is to be judged before welfare powers spring into effect. In that way, he retains control of his welfare until his incapacity is proved in a way he considers reasonable. This option both restricts unethical attorneys exercising power early and from being able to rely on s.16(5) “reasonable belief”.
25. Mrs B’s power of attorney:-
a. was prepared by a firm of solicitors, and bears that firm’s references on the backing sheet and each page.
b. was witnessed by a solicitor with that firm.
c. incorporates a Certificate by the solicitor confirming the deed is a combined Power of Attorney which confers financial and welfare powers. The Certificate complies with ss15(3)(c) and 16(3)(c) of the 2000 Act.
d. commences with Clause 1, which is entitled “APPOINTMENT”. Paraphrased, Clause 1.1 provides Mrs B appoints (the parties to this action) “to be my continuing attorneys….in terms of section 15 of the Adults With Incapacity (Scotland) Act 2000….” and Clause 1.2 provides Mrs B appoints the same parties “to be my welfare attorneys in terms of section 16” of the Act.
e. includes Clause 3, which is entitled “GENERAL POWERS”. It consists of four separate numbered paragraphs, including:-
3.1 My Attorneys may manage my whole affairs as my Attorneys think fit and shall have full power for me and in my name or their own names as my Attorneys to do everything regarding my estate which I could do myself and that without limitation by reason of anything contained in this power of attorney or otherwise.
3.2 In the event of my being incapable in terms of the Act in relation to decisions about my personal welfare, or in the event that my Attorneys reasonably believe that is the case, then my Attorneys may make decisions on my behalf in relation to my personal welfare. I have considered how my incapacity will be determined.
f. includes Clause 4, which has no title but consists of nineteen numbered paragraphs which narrate detailed financial powers which the Attorneys may exercise.
g. contains Clause 5, entitled “PARTICULAR WELFARE POWERS”. It consists of eight numbered paragraphs conferring almost unfettered welfare powers on the Attorneys in relation to all aspects of Mrs B’s life.
26. The decision in W has been the subject of discussion and comment, some of which concerned its effect on professional practice and drafting (Law Society of Scotland Professional Practice Update July 2014; Ward – A Majority of all Scottish Powers of Attorney Invalid? Mental Health Newsletter, June 2014; Office of the Public Guardian Website). However, those issues are not part of the ratio decidendi. In relation to ss15(3)(ba), it is evident from paragraph 32 of the judgement that it was conceded the Adult’s financial Power of Attorney was only ever intended to become operational on incapacity. Accordingly, a s.15(3)(ba) statement was essential. In the absence of one, the deed was invalid by operation of s.18. At paragraph 24, the Sheriff holds that a specific statement is required to comply with s.15(b). For the reasons set out in paragraphs 25 and 26, the Sheriff held that no specific statement existed.
Reasons for Decision
27. On my analysis of the legislation, which I note on this point is shared by the Sheriff in W, the Defender’s submission that s.15(3)(ba) applied in this case must fail. It is not pled, nor was it maintained in debate, that the financial powers conferred by Mrs B were only intended to spring into effect on incapacity. Accordingly, s.15(3)(ba) was not engaged.
28. The submissions on ss15(3)(b) and 16(3)(b) can be disposed of concurrently. Though compliance with these sub-sections is a pre-requisite of continuing or welfare powers being validly created, they cannot be regarded in isolation.
29. The 1995 Report rejected prescribed wording in favour of a recommendation that any words showing clear intention of continuing authority being conferred would suffice (Recommendation 17(2)). The legislation adopted that wording. “Intention” connotes the existence of an aim or plan, something which is to be achieved.
30. In addition, ss15(3)(c) and (4) and 16(3)(c) – (5) of the 2000 Act prescribe a number of statutory checks before, at the time of and after subscription of a power of attorney. The initial checks must be undertaken by an approved person or solicitor, who must not be a proposed Attorney. The granter must be interviewed immediately before subscription and understand the nature and extent of the deed when it is signed. A Certificate must be prepared confirming this, which in turn must be incorporated in the deed before it is registered. In this way, the legislation affords protection to the granter, those who exercise powers and those who act on those powers being exercised.
31. In Mrs B’s case, the Certificate shows the pre-execution checks were completed the same day as the deed was subscribed. The solicitor who prepared it consulted her GP, presumably to come to or corroborate his opinion that Mrs B understood the nature and extent of the deed. The Public Guardian accepted the Certificate as she registered the deed.
32. Accordingly, whether Mrs B clearly expressed her intentions in the deed must be approached taking these additional factors into account. She took legal advice. She must have instructed preparation of a power of attorney which was to confer continuing and welfare powers. Her solicitor, after consulting her GP, concluded she was aware of its nature and effect. Her intention in the deed, therefore, was to achieve the immediate appointment of financial Attorneys whose powers, under the 2000 Act, were to continue in the event of her incapacity, to provide for the same Attorneys to be able to exercise welfare powers in the same event and to specify appropriate powers.
33. In the deed itself, the Attorneys are appointed within an appropriate Clause, preceded by an appropriate heading in upper case. The continuing and welfare appointments are made in separate paragraphs, suggesting independent thought and intent. The individual Attorneys are fully designed. The relevant sections of the 2000 Act are specified. Full financial and welfare powers are specified. Where appropriate, the Act is mentioned throughout the deed.
34. I do not dispute that the deed could have been better drafted. However, any errors are, it appears to me, stylistic and not substantial. Mrs B’s intentions to create continuing and welfare powers are, in context, clearly expressed. s.18 is not, therefore, engaged. I respectfully decline to agree with the Sheriff in W that for the purposes of ss.15(3)(b) and 16(3)(b) it is necessary to include a “specific statement” in every deed, for the reasons given above. Every case must turn on its facts. In some, such a statement may be necessary, in others not. If I am wrong in that, W can be distinguished in this case as it deals only with s.15 and the full wording of the deed is not disclosed.
35. Finally, I must address the submission that Mrs B’s Power of Attorney does not comply with s.16(3)(ba). It is not disputed that it is engaged. The wording and location of the final sentence of Clause 3.2 creates an obvious concern – if Mrs B considered how incapacity was to be determined, what was the result? The Pursuers’ submission that the sentence is compliant as it follows the wording of the section is unimpressive for the same reason. If, as the Law Society Professional Practice Update suggests, the sentence derives from a style, those who have used it appear to have overlooked the meaning and purpose of a style.
36. However, it is possible to attribute meaning to the sentence from consideration of other factors. Determining a means of incapacity diagnosis in terms of s.16 is optional. No means must be specified. As the purpose of such a determination is, if the granter wishes, to prescribe a means by which incapacity is to be judged, the deed can be looked at to ascertain if that was Mrs B’s intention. However, there is no suggestion in the deed that Mrs B intended to state a means. Otherwise, the deed would have contained other provisions, most obviously a statement of that means. Generally, the deed is not illustrative of a person who is concerned about welfare powers being exercised by another - the welfare powers are very wide indeed and are stated to be exercisable either after incapacity or in the event of reasonable belief on the part of the Attorneys. In these circumstances, I regard the final sentence of Clause 3.2 as having sufficient meaning for the purposes of s.16(3)(ba).
37. While it does not form part of my decision, my interpretation is consistent with Mrs B not having since sought to vary or recall the Power of Attorney. On Record, it is admitted the deed was signed in 2009. The Pursuers aver she became incapacitated in August 2013; the Defender maintains she retains some capacity to decide certain welfare issues. On either basis, many of the disputes between her children arose well before that, in 2011 and 2012. Had she wanted to recall or vary the deed to state any other means by which incapacity was to be ascertained, she could have done so.
Decision
38. Accordingly, I shall repel the Defender’s second and fourth pleas-in-law; I have, as agreed, put the case down to call on the procedural roll, presumably to fix a new diet of proof, and reserved all question of expenses meantime.