AW 399/12

Opinion of

John A Baird, Esq., Advocate

Sheriff of Glasgow and Strathkelvin at Glasgow

In the case of

Application on behalf of MH

28 February 2013

Background

• This is an application for the grant of Welfare Guardianship under the provisions of the Adults with Incapacity (Scotland) Act 2000 and for the grant of an Intervention Order under the provisions of section 53 of that Act, on behalf of an adult who was born with profound learning disabilities and is now 44 years old.
• The application in respect of Welfare Guardianship raises no new issues, but that for the Intervention Order is an example of a growing trend of practitioners bringing forward applications which seek to regulate the affairs of an adult with incapacity in a way which does more than simply authorise the general management of their property and financial affairs, but which seek to make particular provisions which include the making of Deeds of Variation or of Family Arrangement.

The Adult's Circumstances

• These are of a relatively familiar nature. She was born with cerebral palsy, and has in fact never possessed capacity to deal with her own affairs. She remains unable to communicate in any meaningful way. As is common in many such situations, the responsibility for her care was discharged by her own mother, who faithfully attended to all of her needs until her own health deteriorated. The adult then required to be accommodated in supported accommodation, and at present lives in a unit managed by Quarriers, recognised as leading operators in this field. It is sufficient to narrate that her present living circumstances are as satisfactory as can be achieved for her, that her family, who are her siblings, are extremely appreciative of the level of care and support afforded to her, and are anxious that she be maintained there, or at least at an equivalent level, for the foreseeable future. For the avoidance of doubt, she is plainly an adult with incapacity as defined, and it is plainly necessary that a Guardian be appointed to be responsible for her future welfare, all the requirements of the basic principles of the Act being satisfied.
• The adult's income consists of benefits, principally Income Support, Housing Benefit and Disability Living Allowance. Quarriers are the corporate appointees for the management of those benefits, which are paid into an account in the adult's name to which only Quarriers have access. The balance on the account is modest, and the sums at credit used to pay the adult's utility bills, and for general expenses to make her life as comfortable as possible. The funding for her care package comes from the Local Authority's Social Work Department and amounts to just over £88,000 per annum. There is a monthly client charge for this, and that is deducted from her capital and paid on her behalf to the Local Authority.
• Sadly, the adult's devoted mother died in January 2011. She left an estate, and the effect of the law on intestacy is that the adult is due to inherit the sum of approximately £22,000.
• All other beneficiaries have had their entitlement to the estate satisfied, but the question remained as to the effect that paying the adult's share over to her and placing it simply in her account would have on her financial status and on her entitlement to continue to receive the benefits she currently enjoys and is entitled to receive. There is a further issue surrounding certain aspects of medical treatment including surgical intervention to which the adult was subject in the past, and in respect of which questions have arisen as to the standard of care received, questions which may potentially lead to the raising of litigation.

The Proposed Intervention

• As a result, the applicant, who is the adult's eldest sister, consulted Mr Martin Monaghan of Caesar and Howie Solicitors, who have considerable experience in these matters, and it was proposed on the adult's behalf that authority be given to grant an Intervention Order authorising the signing of an appropriate discharge of the adult's legal rights in her late mother's estate, to have a modest amount of that entitlement paid into her existing account, and to authorise the signing of a Deed of Variation or Family Arrangement which would create a Discretionary Trust with the applicant, her brother, and a firm of professional corporate trustees as trustees, and the balance of her entitlement being paid into that Discretionary Trust.

The Need for a Safeguarder

• The proposed creation of a trust would have the effect of diverting funds from the adult's account (controlled as it is by others) and effectively placing them beyond the control of the adult (or those who have access to her funds) and I expressed concern as to whether that intervention ought to be authorised. One of the issues which concerned me was that the application disclosed the possibility of litigation on behalf of the adult and of a kind which is well known to be potentially expensive. The adult's existing capital resources are below the threshold for a contribution in the event that an application was made for the assistance of Legal Aid, but if her whole entitlement was simply to be paid into her account, her capital resources would be above that threshold, and would, at least potentially, be taken into account by the relevant authority in assessing her means for the purposes of an application to fund litigation. The court has the status of a Public Authority in these matters, and I was concerned that authorising this particular intervention might result in another Public Authority or authorities incurring a financial liability in a situation where such could be avoided or at least limited.
• The vast majority of applications for interventions in the affairs of adults with incapacity proceed without a contradictor, but section 3(4) of the Act obliges the court to consider in every case whether a person should be appointed to act to safeguard the interests of the person who is the subject of the application. In fact, that is only necessary in a very small minority of cases, but the application here was of such a nature that I was quite satisfied that I required the input of an independent solicitor to act here, and that I should appoint a practitioner with considerable experience of private client work, in order that I could be fully advised of the potential implications for the adult in granting, or in refusing to grant, this application. I accordingly appointed Mrs Gillian Campbell of DWF Biggart Baillie, Solicitors, to fulfil that function in the case. She duly reported, and I am grateful to Mrs Campbell and to Mr Monaghan for their most helpful submissions on the issues disclosed.

The Issues involved in Approving the Proposed Scheme

• It was of particular importance to the applicant and her brother that there was to be a firm of professional trustees involved in the proposed arrangement. The adult lives in a flat rented from a Housing Association, which of course means there is an obligation to pay rent for her accommodation. Having regard to her situation and available means, which are known to all relevant authorities, her obligation to pay rent is discharged by way of the receipt of Housing Benefit from the Local Authority. If the balance in the adult's account rises by an amount more than it is proposed to pay into it under the terms of the proposed scheme, the appointees will acquire a legal obligation to disclose that to the Department of Work and Pensions, who of course pay to the adult her principal benefits. If the whole of the adult's due entitlement were to be paid into her account, that would be declared to the DWP and in consequence she would lose her entitlement to Income Support. The consequential effect of that would be that she would no longer be entitled to receive Housing Benefit and that would be withdrawn also. The consequences for the adult in losing her entitlement to both of those benefits would be nothing short of catastrophic.
• The information as to the care package in place, currently some £88,000, was that there was no present risk of that being reduced, even if all of the money due to the adult in terms of her inheritance was paid directly into her account and she became responsible for paying for all of her own care. What would happen is that her assessed monthly contribution would increase. Both the Social Work Department, in respect of the care package, and the DWP, in respect of payable benefits, approach each case on its own merits and it is known that they may take into account in reaching assessments funds which have been re-directed into a Discretionary Trust, and may notionally include them in any financial assessment. That however, is a matter for them.
• One further area which was highlighted as a matter from which the adult would benefit from the proposed arrangement is in the taking of day trips and holidays. For a person such as this adult, who needs to be accompanied by at least two other persons for such purposes, such outings have an obvious additional expense, but they have also an obvious benefit for her. Prior to the medical interventions which have been mentioned, she used to have such excursions more often than now, but it is hoped that as her health gradually improves, the funds to be placed in the Trust would clearly be capable of being used to fund such outings, and that would benefit the adult. Conversely, if placed simply in her account, with the effects on her entitlement to receive her existing benefits as already set out, she would in all likelihood derive no benefit at all, and indeed lose benefit.
• Dealing then with the submissions as to the legal position with regard to all of these matters, using a Deed of Variation to create a Discretionary Trust to protect funds from means tested benefits may still be subject to attack on the grounds of deliberate deprivation of capital. If the proposed order was granted, then the advice was that the inheritance should still be disclosed both to the Local Authority and the DWP. They would then have discretion as to whether to disregard them or take them into account. The same consideration may apply to the Local Authority's Social Care Charging Policy, though, as I have said, the understanding is that the level of the current care package will not be reduced albeit the client's monthly contribution may increase.
• Finally, attention was drawn to the Legal Aid Regulations and the possibility that litigation might ensue involving an application for assistance from public funding. The relevant regulations do specify what is to be included in the computation of available capital and do include an interest in an estate. As with the other authorities mentioned, the Scottish Legal Aid Board does have discretion to disregard capital if it sees fit. Equally, those regulations make specific provision to the powers of the Board if it takes the view that there has been deprivation of resources with intent to reduce disposable capital for the purposes of making a person eligible for civil legal aid or reducing that person's liability to make a contribution towards it.
• The ultimate position would therefore appear to be that all relevant public authorities which may be affected by the proposal in this case have discretion given to them to have regard to the placing of some of the adult's entitlement in a Discretionary Trust, or to disregard that, and the proposed trustees are well aware of the obligation to disclose.

Decision

• In this situation then, the submission on behalf of the applicant, supported by the Safeguarder, was that the court should approve the proposed scheme, as it complied with the general principles of the Act and would be to the benefit of the adult. As has been highlighted, refusing to approve it would be to the adult's detriment, in a number of most significant ways.
• A number of other important matters also emerged.
• Care has to be taken with the appropriate wording of such a clause asking the court for authority with regard to legal rights on intestacy. All that should be discharged is the adult's actual rights to the estate, not her entitlement under the provisions of intestacy, as such wording might imply a renunciation of all rights on intestacy, with the effect of transferring the adult's rights to the Crown as ultimus haeres. Further, any funds received on behalf of an adult as a result of litigation in respect of personal injuries ought to be paid into a separate personal Injuries Trust established for that purpose, and not into the Discretionary Trust.
• It should be noted that funds held in a trust do not have the protection of supervision by the Office of the Public Guardian, or of a Bond of Caution. Consideration has to be given to the potential conflict of interest in having two siblings of the adult as trustees, but in the present proposal there will also be a professional and independent third trustee, so protection is afforded by the taking of that step. I was also advised that the set up and administration fees chargeable by that professional firm of trustees would be less than that charged by a professional financial Guardian.
• I am therefore able to distinguish the circumstances here from those disclosed in the case Applications by the Guardian of P (Scottish Courts Website 23 November 2012), and in a number of ways, not least on account of the points just made but also principally because in that case the court had knowledge of the specific intentions of the adult, made in her will only 3 years earlier, whereas here the adult has unhappily never been in a position to communicate, let alone express a view. In the present case I am assured that the whole intention of setting up the Trust is to benefit the adult, and I accept that.
• Accordingly, I accept that what is proposed here will be to the benefit of the adult, and I will approve and authorise it. Neither the applicant nor her brother were willing to take on the responsibility of being a financial Guardian, and accordingly what is now proposed does constitute the least restrictive option in relation to the freedom of the adult, consistent with the purpose of the intervention (S1(3)).