February round up

Laura Twist with the latest cases and articles

03 February 2016

Second home stamp duty surcharge will create problems for trust beneficiaries

HM Treasury has published draft guidance in relation to the application of the new stamp duty land tax surcharge on second properties.

The 3% surcharge will apply where a purchaser owns more than one residential property at the end of the day of its purchase, irrespective of the intended use of the property. The exception applies to properties bought to replace the main residence, provided the original main residence has been sold. The surcharge will have to be paid if the new main residence is bought before the old one is sold, but the buyer may claim a refund if it is sold within 18 months.

The article goes into detail about the treatment of cohabiting married couples and civil partners and parties who own a property jointly.

Most relevant to our practice, it creates a problem for beneficiaries who have a life interest or interest in possession in a second property. These individuals will be liable to the surcharge, and in some cases may not have the cash to pay it. Where there is no interest in possession in the property, purchases by the trustees will be liable to higher rates regardless of the circumstances. Importantly, the Treasury considers interests in remainder and discretionary trusts to be too remote or insignificant to be counted as an interest held as a beneficiary.

The new rules will affect any contracts made on or after 26.11.15 where completion takes place after 1 April 2016.

For full article: http://www.step.org/news/second-home-stamp-duty-surcharge-will-create-problems-trust-beneficiaries


Re RP [2016] EWCOP 1

This case dealt with a dispute about the appointment of a deputy for property and affairs. In May 2015, RP’s daughter applied to the court for a solicitor, Rheian Davies, to be appointed as his deputy as she raised concerns that other family members were taking advantage of his lack of capacity. This application was objected to by RP’s eldest son who claimed he had been managing his father’s affairs for over 20 years and proposed his wife as an alternative appointment as he did not accept RP’s assets justified a professional deputy’s involvement.

The respondents failed to attend the hearing and SJ Lush decided to proceed. He decided to appoint Ms Davies as interim deputy for a year. The respondents subsequently applied to have this set aside on the basis that they were unaware of the hearing as their solicitors had failed to properly scan in the directions order, scanning only the top side of a double sided document.

The hearing was re-listed and attended by Ms Davies, the respondents and the legal representatives. SJ Lush found that Sarah was unsuitable to be appointed as a deputy cannot investigate his or her own dealings. There were also concerns raised about RP’s accountant being appointed as his suitability as an alternative deputy was of concern. This left a choice between the existing deputy and a panel deputy. SJ Lush chose to appoint a panel deputy for the following reasons:

  1. Given the history of the proceedings, it was more likely that the respondents would cooperate with a panel deputy.
  1. There is the potential for bias as Ms Davies was representing the applicant at the start of the proceedings.
  1. A panel deputy would be able to provide a more nuanced set of skills more suited to dealing with RP’s assets as they are complex and involve both corporate and international elements. He thought a firm experienced in investigating white collar crime and bringing proceedings for the recovery of misappropriated funds along with in house expertise in international and corporate law would be more suitable.

For the full judgment: http://www.bailii.org/ew/cases/EWCOP/2016/1.html

 HMRC publish new guidelines in relation to recovery of debts in the case of vulnerable customers

The Direct Recovery of Debts policy allows HMRC to recover cash directly from the bank and building society accounts, and funds held in cash in Individual Savings Accounts (ISAs), of debtors who owe £1,000 or more (subject to safeguards). The legislation putting this policy in place includes a commitment for HMRC to consider whether someone may be at a ‘particular disadvantage’ in dealing with their taxes before making a decision as to whether to proceed.

HMRC will consider the following indicators in the context of how difficult they make it for P to understand their tax affairs and/or communicate with HMRC, the extent of the difficulty, and the longevity of the indicators.

The guidance provides useful insight into where it may be appropriate to notify HMRC that a client is vulnerable.

For the full guidance: https://www.gov.uk/government/publications/direct-recovery-of-debts-and-vulnerable-customers/direct-recovery-of-debts-vulnerable-customers


Re Z & Ors [2016] EWCOP 4

The central issue in this case was whether the risks taken by a 20 year old woman with autism represented ‘unwise’ decision making or evidenced her lack of capacity.

Z lived her life in many ways typical of a person of her age, however she had taken a number of risks in the past in the way that she has lived her life and made relationships. Some of the risks that she had taken had probably caused her harm.

Declarations were sought as to Z’s capacity to:

Mr Justice Cobb made it clear that in order to determine Z’s capacity, she did not need to use or weigh every detail of the respective options available, merely the salient factors.

One of the issues in this case was that the initial application had been made over one year prior to the hearing and Mr Justice Cobb believed that Z had matured significantly in this time. Dr Rippon’s assessment was carried out in November 2014, which found that Z was likely to be lacking capacity. However Mr Justice Cobb was of the opinion that with the passage of time and Z’s maturity combined with the support of Dimensions care agency that Z had learned from her mistakes and developed sufficiently in her capacity to make relevant decisions and keep herself safe.

Mr Justice Cobb made the following closing comments:

“I have conscientiously cautioned myself against considering outcome when determining Z's functional ability; I repeat this point, as I am conscious that Z is a vulnerable young person who deserves to have, and should be persuaded to receive, support from adult social services going forward. It is tempting for the court to take a paternalistic, perhaps overly risk-averse, approach to Z's future; but this would be unprincipled and wrong. I am satisfied in any event that Z currently has a reasonably fulfilling life, which enjoys; she has a loving relationship with her mother who currently cares for her well and who, I hope, could be encouraged to do so for a while longer while Z grows further in maturity and confidence.”

For the full judgment see: http://www.bailii.org/ew/cases/EWCOP/2016/4.html


PJV v The Assistant Director Adult Social Care Newcastle City Council & Anor [2016] EWCOP 7

This judgment followed on from judgment handed down in this appeal in December 2015. The appeal relates to a CICA award and the part that the Court of Protection should play in the finalisation of an award of compensation.

The compensation arose from injuries suffered by the appellant as a baby when he suffered non-accidental head injuries. He has significant intellectual, cognitive and behavioural problems and is not capable of managing his own affairs. No-one was every charged with any offence relating to the causation of the injuries, however the appellant’s mother, uncle and mother’s partner were present at the time of the injury.

The CICA decided that an award should be made however none of it should benefit the appellant’s father, mother or uncle, or any other family member. The award was to be put on trust for the appellant.

Mr Justice Charles approved the agreed wording for the appointment of the Deputy in this situation and the terms of the trust that were agreed. The approved wording addressed the issues relating to indirect benefit by the appellant’s mother which were raised in the earlier judgment.

For the original judgment, please see: http://www.bailii.org/ew/cases/EWCOP/2015/87.html

For this judgment, please see: http://www.bailii.org/ew/cases/EWCOP/2016/7.html


 Re A [2016] EWCOP 3

This is a contested application for the appointment of a new deputy for property and affairs and a new trustee before Senior Judge Lush. The proceedings related to A who is 78 and from a titled family. A has schizophrenia and in 1959 was the subject of a lunacy inquisition into her ability to manage herself and her estate. A’s sister (B) was appointed to be the committee of her person and committee of her estate. B subsequently became her receiver and ultimately her deputy when the MCA 2005 came into force.

In 2012, B wanted to step down as A’s deputy as she was in her mid-eighties. B’s daughter (C) was appointed in her place. C’s cousin (D) opposed this application and a medical report was subsequently commissioned that suggested that A now had capacity to manage her own property and affairs.

The President of the Court of Protection, Sir James Munby, then instructed Professor Robert Howard to examine A and a hearing was held to determine her capacity. It was determined that she did and does continue to lack capacity.

C wished to step down and due to D’s conduct there were no other family members wishing to take on the role of deputy. As such, SJ Lush determined that it was in A’s best interests for a professional to be appointed as both her deputy and trustee of the settlements involved in the case.

The deputy appointed in this case was Suzanne Marriott. Whilst she is London based and therefore not local to A, it was determined that she was best placed to manage A’s property and affairs due to both her own and her firm’s “considerable know-how in dealing with landed families and private wealth management”.

SJ Lush dealt with issue of the fees in the following way:

“…although Charles Russell Speechlys' fees are likely to be large, it is improbable that they will be excessive because the Senior Courts Costs Office will carry out a detailed assessment of their general management costs on the standard basis each year”

 For the full judgment see: http://www.bailii.org/ew/cases/EWCOP/2016/3.html

 Birmingham City Council v D [2016] EWCOP 8

This case before Mr Justice Keehan, dealt with legal issues in relation to an application by the local authority to determine whether the circumstances of D’s residence and education constituted a deprivation of liberty.

D was diagnosed with ADHD, Asperger’s Syndrome and Tourettes Syndrome from an early age. D’s parents struggled to care for him at home and in 2012 he was referred to his local Child and Adolescent Mental Health team. He was referred to a hospital which provides mental health services to children and young people aged between 12 and 18. D lived at the hospital and attended an on-site school on a full time basis.

The main issue to be determined in this hearing was whether a parent could consent to the confinement of a child. Mr Justice Keehan found that D’s placement at the hospital, aged 15, did not amount to a deprivation of his liberty as “in the proper exercise of his parents' parental responsibility for this young person, then aged 15, they could consent to his confinement at Hospital B”.

In 2015, D was discharged from the hospital to a residential placement. As at his placement in the hospital, D was under constant supervision and control. However, he had attained the age of 16 by this stage and therefore the issue of parental consent arose again. Mr Justice Keehan found that his parents’ consent to the confinement was no longer relevant as such consent fell outside the zone or scope of parental responsibility.

For the full judgment see: http://www.bailii.org/ew/cases/EWCOP/2016/8.html

 Re KJP [2016] EWCOP 6

This is a judgment from SJ Lush in relation to an application for permission to appeal a decision of District Judge Mort in which he authorised the revocation of an Enduring Power of Attorney (‘EPA’).

The proceedings related to Ken, an 87 year old gentleman from Norfolk. Following his wife’s death, he signed an EPA appointing his children, Jacqueline and Nigel, to be his attorneys in relation to his property and affairs.

Ken remarried in 2010 and made a number of substantial gifts to his new stepson. In May 2013, Jacqueline and Nigel applied to register the EPA which went ahead with no objections. In August 2013, Jacqueline and Nigel decided to restrict Ken’s access to his income and capital. The relationship between Ken and his children progressively deteriorated and in March 2014, he executed a deed revoking the EPA.

Ken accompanied his application to the Court of Protection to revoke the LPA with an assessment of capacity by Dr Viale completed in March 2014. He also filed further evidence in June 2014 from his cardiologist, Dr Hughes, who confirmed his capacity.

Jacqueline and Nigel objected to the application on the basis that their father did not have capacity to revoke the EPA. The proceedings progressed, resulting in four separate orders from District Judge Mort, and intermittent participation from Jacqueline and Nigel, particularly Jacqueline.

SJ Lush ultimately upheld District Judge Mort’s decision to revoke the EPA and refused permission to appeal. Jacqueline and Nigel provided no evidence to support their assertion that Ken lacked capacity to revoke the EPA, relying solely on their own observations as to his behaviour. Ken, on the other hand, provided ‘exemplary’ evidence as to his capacity. SJ Lush made the following comments:

“By contrast, Ken's evidence of his capacity to revoke the EPA is exemplary. I would go so far as to say that it is incontrovertible. Dr Nicholas Viale is an experienced consultant in old age psychiatry, who had previously examined Ken four months earlier. There is no question of bias, or a lack of independence, or a conflict of interests, or any other vitiating factor that would undermine his opinion on Ken's capacity.”

“Dr Viale's assessment was both time-specific and decision-specific. It is the only evidence relating to the transaction that took place on 4 March 2014 that will ever be time-specific and decision-specific. Any subsequent assessment of Ken's capacity would be retrospective and, inevitably, inferior.”

As Jacqueline and Nigel had essentially  tried to spin out the proceedings in which there was for all intents and purposes no contest, SJ Lush made a costs order against them for the proceedings that had taken place after District Judge Mort’s final order. He considered the attorneys’ conduct in pursuing the question of Ken’s capacity in light of the evidence of Dr Viale and Dr Hughes was unreasonable.  

For the full judgement, see: http://www.bailii.org/ew/cases/EWCOP/2016/6.html

 North Yorkshire County Council & Anor v MAG & Anor [2016] EWCOP 5

This case relates to two linked appeals brought against the refusal of an application brought by North Yorkshire County Council ("NYCC") for authorisation for the deprivation of liberty of a man ("MAG") at the home where he has lived since 2006.

MAG is a 35 year old man, who suffers from autism, ataxic cerebral palsy, hearing and visual impairments and a learning disability. He has a complex presentation, which includes behaviour which poses a risk to himself and others. Proceedings in the Court of Protection were issued by NYCC on 7 September 2011, where NYCC sought declarations that MAG lacks capacity to:

  1. decide where he should reside;
  1. enter into a tenancy agreement;
  1. make decisions about his care needs;

NYCC also required authorisation that it was in his best interests:

It was agreed that MAG’s current care arrangements amounted to a deprivation of his liberty. NYCC was seeking authorisation for the continuation of this deprivation of liberty on the grounds that there was no immediate alternative residential option and that it was justified as a result of his condition.

DJ Glentworth made a number of specific adverse findings against NYCC including that NYCC "in its attitude towards the search for less restrictive accommodation had caused significant delay and lengthened these proceedings”. She concluded that a care regime which risked breaching MAG’s right to liberty could not be endorsed, despite it being all that was available at present. She was not satisfied that NYCC had taken to sufficient steps to fulfil its obligations. She made the following comment:

“Refusing the authorisation sought means that NYCC must take the steps necessary to ensure that there is no breach. In all the circumstances, I am not satisfied that I should make the declaration sought by the local authority and I will not authorise the deprivation of liberty in its current form".

NYCC subsequently applied for a stay of the order and for interim authorisation of the deprivation of MAG’s liberty, both of which were refused.

On the evidence before him, Mr Justice Cobb determined that the approach that DJ Glentworth took was wrong and granted permission to appeal. He further set aside the order of DJ Glentworth and made an order authorising the deprivation of MAG’s liberty in his current property. A further hearing was to be held to consider the current arrangements for MAG’s care.

For the full judgment, see: http://www.bailii.org/ew/cases/EWCOP/2016/5.html

Re SH [2016] EWCOP 2

This is an application before SJ Lush for the revocation of two Lasting Powers of Attorney (‘LPAs’).

Sybil is a 93 year old lady, with three sons. She executed two LPAs in 2008 appointing the youngest son, Ray, as her sole attorney for property and affairs and health and welfare. She also made a will leaving her entire estate to Ray, with substitute gifts if he were to predecease her.

Since these LPAs were executed, Sybil’s health has deteriorated and she is now severely demented, non-communicative and doubly incontinent. There have been several complaints about the attorney’s conduct, each concern raised by Sybil’s eldest son, Karl. The OPG consequently investigated the matter and applied to the Court for revocation of the LPAs and, if Ray were to be removed as attorney, an order appointing London Borough of Waltham Forest Council as Sybil’s deputy.

The OPG’s investigations identified the following:

  1. Concerns were raised (again) on 23 November 2014.
  2. Ray only visits Sybil once a year and he has delegated his functions as attorney to his niece, Fatima.
  3. He hasn't provided Fatima with a gratuitous care allowance of £300 a week, which he had promised to pay her.
  1. In November 2010 Sybil moved to Trinidad to live with her son Mohammed and his daughter Fatima. It was intended to be a permanent move and Ray was obliged to transfer to Fatima a lump sum of £15,000 from Sybil's funds in order to satisfy the Trinidadian government that Sybil had adequate funds to support herself.
  1. In the event, Sybil returned to her flat in Walthamstow in 2012 and Fatima and her husband and their three daughters joined her.
  2. A Court of Protection General Visitor saw Sybil on 11 February 2015 and confirmed that she has severe dementia and lacks the capacity to revoke the LPAs.

In the interim, Ray contacted the OPG and informed them that he was content to be removed as attorney. Sybil’s granddaughter, Fatima, who was her carer expressed a wish to be appointed as deputy. Karl and Fatima also raised concerns about Sybil’s capacity to make the will in which she left everything to Ray as she received a diagnosis of severe dementia just one month later.

The OPG advised that they had no objection to Fatima being appointed as deputy.

SJ Lush concluded that due to the small size of Sybil’s estate, it was not in her best interests to appoint a professional deputy and proposed to appoint Fatima as her deputy for property and affairs instead in light of her caring role since 2008 and that she “has sacrificed a lot for very little by way of reward”.

He did not appoint Fatima as Sybil’s personal welfare deputy in place of the revoked LPA for the following reasons:

“I can see no obvious need for Fatima to be appointed as a personal welfare deputy. Routine decisions concerning Sybil's day-to-day care can be made by Fatima as her carer. Decisions about her medical treatment should be made by the health care professionals, who will no doubt consult Fatima and Sybil's three sons. If there is any disagreement, an application can be made to the Court of Protection. Accordingly, notwithstanding the revocation of the LPA for personal welfare, I do not propose to appoint a personal welfare deputy to replace the attorney.”

For the full judgment, see: http://www.bailii.org/ew/cases/EWCOP/2016/2.html