Re J (Enduring Power of Attorney) [2009] EWHC 436 (Ch), Court of Protection, 12 March 2009

It has always been expressly provided by statute that a power of attorney that gives the attorney a right to appoint a substitute or successor cannot be an enduring power of attorney (EPA) within the meaning of either the Enduring Powers of Attorney Act 1985 (EPAA) or the Mental Capacity Act 2005 (MCA). However, the statutes are, and hitherto the courts have been, silent on the question of whether or not the donor may appoint a successor/substitute attorney. This was the question that came before Mr Justice Lewison (sitting at first instance as a judge of the Court of Protection) in Re J (Enduring Power of Attorney).

FACTS:

On 9 February 2007, Mr J executed a document, the relevant parts of which read:

I … appoint my wife [W] to be my Attorney for the purposes [of the EPAA] but if she shall have predeceased me or shall be unable to act or to continue to act as my Attorney whether registered or unregistered then in the alternative I appoint [my sons A, B and C] jointly and severally to be my attorney(s) for the purpose of the [EPAA] with general authority to act on my behalf in relation to all my property and affairs.

The Public Guardian took the view that the document did not create a valid EPA because it purported to appoint attorneys in the alternative. He also argued that, even if such alternative appointments are not prohibited, a valid EPA could not appoint successive attorneys where (as in this case) the power contemplated that one of the attorneys might begin to act before subsequently ceasing to act.

It was common ground that a donor could achieve the effect of successive attorneyships by executing two separate EPAs, providing that the second be subject to the condition that it should not come into operation during the lifetime of the attorney appointed under the first. On being asked why a donor could not achieve a particular legal effect by one piece of paper if he could achieve the same effect by two pieces of paper, the Public Guardian submitted that the answer lay in paragraph 20(1) of schedule 4 to the MCA. This provides that an instrument that appoints more than one person to be an attorney cannot create an EPA unless the attorneys are appointed to act jointly or jointly and severally. The Public Guardian further submitted that anyone named in the instrument as an attorney (even those attorneys whose power to act is contingent upon a condition precedent) is an ‘attorney’ for the purposes of that paragraph. Thus, it was argued, the instrument must state whether all those named are to act jointly or whether they are to act jointly and severally.

The Public Guardian relied on a footnote to the Law Commission’s report that preceded the EPAA, which stated that the Commission did not recommend that an instrument should be able to provide for successive EPAs because the benefit of doing so would be out of all proportion to the complexities that it would create. These were identified by the Public Guardian as including the need for a different wording in the prescribed form and the additional complexity that would be involved in the registration process; for example, whether a person who objects to the successor attorney on the ground of unsuitability has to object at the time of first registration, even if the attorney in question cannot yet act.

Mr J’s wife, W, argued that the document created a valid EPA. She considered herself unable to act and wished the power to be registered so that A, B and C could act as Mr J’s attorneys.

HELD:

After noting that the law applicable to EPAs is now contained in schedule 4 to the MCA, which substantially re-enacts the EPAA, Mr Justice Lewison then summarised the essential features of such powers. In particular, he observed that if an instrument appoints more than one person to be an attorney, it must state whether they are appointed to act jointly or jointly and severally. He also observed that there is no limit to the number of EPAs that a donor can create and that such powers can exist concurrently or successively (Re E (Enduring Powers of Attorney) [2001] Ch. 364, 373). For example, one power can relate to a donor’s bank account and the other to his home. The judge accepted the common position agreed between the parties that a donor could achieve the effect of successive attorneyships by executing two separate EPAs with appropriate conditions precedent;

The judge noted that the footnote to the Law Commission’s report was only a footnote, that it did not form part of the main text, let alone part of the report’s recommendations, and that it took neither the form of a prohibition nor a recommendation one way or another. The complexities identified by the Public Guardian were not complexities at all or, to the extent that they were complexities, they were complexities that were not increased by doing in one piece of paper that which everyone accepted could be done by two. The wording of the prescribed form could not add or detract from the proper interpretation of the governing act and, in any event, any necessary additions to the prescribed form were authorised by the relevant secondary legislation, provided that it is made clear in relation to each set of attorneys whether they are to act jointly or jointly and severally;

Furthermore, the Law Commission report contained no policy reasons to support the conclusion that what one can do by two pieces of paper cannot be done by one. Indeed, such policy reasons (as there were) seemed to the judge to point to the conclusion that it does not matter whether a donor uses one piece of paper or two; and,

The sole question, therefore, was whether paragraph 20 of schedule 4 to the MCA could be construed so as to permit the execution of an EPA in the form of the one in the present case. The judge agreed that all of the persons named in the instrument as actual or contingent attorneys were within the meaning of the word ‘attorney’ as used in that paragraph. He held that the paragraph should be construed as meaning that a valid EPA must state whether, in the event that the attorneys exercise the power, they must exercise it jointly or jointly and severally. If, and insofar as, additional words needed to be added to the prescribed form to repeat the designation for each set of attorneys, this was permitted under the secondary legislation.

For these reasons, Mr Justice Lewison held that a power of attorney made under the EPAA could provide for successive attorneyships as long as it made clear whether, while they were acting, the attorneys were to act jointly or jointly and severally.

Thorner v Majors [2009] UKHL 18, 25 March 2009

FACTS:

The appellant, David Thorner (David), appealed against a decision of the Court of Appeal reversing the trial judge’s decision that a proprietary estoppel operated in his favour so as to entitle him to inherit the estate of his father’s late cousin, Peter Thorner (Peter).

At the time of his death, Peter owned a farm and had considerable savings. For nearly 30 years, David had worked on the farm for no remuneration. Peter, who was described in the evidence as a private man of few words, never made any express representations regarding the farm. However, by a series of hints and remarks made by him over the years, David came to believe that he would inherit it. In 1990, Peter handed David a notice relating to two life assurance policies, saying, “that’s for my death duties”. In 1997, Peter had made a will leaving the farm to David, but he subsequently destroyed it and died intestate.

The judge found that the comment regarding the life assurance policies marked something of a watershed: thereafter, David’s hope of inheritance became an expectation. The judge went on to find that David could prove his claim by way of proprietary estoppel because he had reasonably understood Peter’s words and acts as an assurance that he would inherit the farm and Peter had intended them to be understood in that way. The Court of Appeal reversed that decision on the basis that there had been no clear and unequivocal intention on the part of Peter and that his statements could not be considered a sufficient assurance or representation to give rise to a proprietary estoppel. Before the House of Lords, the appellant submitted that there was no requirement that any assurance be “clear and unequivocal”.

HELD:

Their Lordships held (in what Lord Walker of Gestingthorpe admitted was a “thoroughly question-begging formulation”) that to establish a proprietary estoppel, the relevant assurance had to be “clear enough”. What amounted to sufficient clarity would be “hugely dependent on context”. In cases of this type, the meaning of spoken words is inextricably entangled with the judge’s findings of fact about the surrounding circumstances. In the present case, the surrounding circumstances must be regarded as quite unusual. The evidence had dealt with:

… two countrymen leading lives that it may be difficult for many city-dwellers to imagine – taciturn and undemonstrative men committed to a life of hard and unremitting physical work, by day and sometimes by night, largely unrelieved by recreation or female company.

The judge had considered carefully the evidence and was sensitive to the unusual circumstances of the case. There was no sufficient reason for the Court of Appeal to reverse his findings that, in those particular circumstances, there had been a sufficiently clear assurance upon which David had reasonably relied.

It is a necessary element of proprietary estoppel that the assurances should relate to identified property (usually land) owned or about to be owned by the defendant. The respondents submitted that the farm when Peter died was not the same as the farm as it was when the assurance was made in 1990 – some land had been bought and other land had been sold. Their Lordships held, however, that changes in the character or extent of the property in question are relevant to the relief that equity may provide, but do not exclude such a remedy when there is still identifiable property. In the present case, both Peter and David knew that the extent of the farm was liable to change, but there was no reason to doubt that they shared a common understanding that the assurance related to the farm as it existed at Peter’s death.

For these reasons, the House of Lords allowed the appeal and restored the decision of the judge.

Lord Scott of Foscote said that he was in broad agreement with the speeches of his noble and learned friends. However, without disagreeing with their conclusion that David could establish his equity via proprietary estoppel, his Lordship found it “easier and more comfortable to regard David’s equity as established via a remedial constructive trust”. While this comment will no doubt be analysed in the course of the academic debate over whether or not such species of constructive trust is known to English law, practitioners are likely to draw from the case the fact that, even in cases of testamentary proprietary estoppel, an assurance need not meet some external yardstick of clarity or lack of equivocation provided that it is sufficiently clear in the context of the particular case.

Joseph Goldsmith is a barrister at 5 Stone Buildings. He can be contacted at clerks@5sblaw.com