New ways of working

The Mental Capacity Act 2005 finally came into force on 1st October 2007 and while the core principles of the Act have been understood for some time, the detail of how the Act will be implemented in practice is only now becoming apparent. And as the detail emerges, so does the temptation to run away and go back to conveyancing or probate, or try a different career altogether. There cannot be many areas of law where so much has changed in such a short time, with such a small net benefit to show for it. However, as most lawyers are less qualified for other areas of gainful employment than even career politicians, we must be courageous and do our best to understand and work with the legislation that has been given to us, and make use of it to protect and support the clients for whom we act.
There is no doubt that the Mental Capacity Act 2005 is an impressive piece of legislation, pulling together a substantial part of the law relating to the property, affairs and welfare of persons without capacity. The Act sets down clear rules as to how we assess capacity and how we must act for persons without capacity. It provides a legal basis for acts carried out for persons without capacity at several different levels:

A general authority for the performance of acts in connection with care and treatment (where there is no other legal authority);
Delegation of decision-making powers to an attorney under a Lasting Power of Attorney dealing with welfare matters as well as property and affairs;
Refusing treatment in advance;
Creating a new Court of Protection, which can make decisions or give permission on behalf of persons without capacity; and,
Allowing the Court to appoint a deputy to make decisions on behalf of persons without capacity in the future.

The problem inherent in providing different remedies is that they are not mutually exclusive. Not only do they overlap with one another, but they also overlap with a person’s right to make such decisions as he is capable of making. Where a person (‘P’) can make a decision (and as ‘capacity’ under the Act is function specific, each decision must be assessed on its own terms) neither the Court nor a deputy appointed by the Court has legal authority to make a decision for that person.1 Thus the Court may appoint a deputy for P to manage P’s finances on the basis that P cannot manage his property and affairs. P can, however, manage a small bank account and pay his carer to do the weekly shopping. The deputy is responsible for managing the investments and paying some of the bills. But at what point is the deputy acting without authority if he performs an act that P could perform in person?2 This dilemma is more marked in welfare cases as neither a deputy nor a donee of a Lasting Power of Attorney can make decisions where P has capacity. A person dealing with P must start with the presumption that P has capacity and only when satisfied that P lacks capacity, can he turn to the legal authority to make a decision on behalf of P.
The position is clearer where a donee is appointed to act under a Lasting Power of Attorney dealing with property and affairs. The fact that the Lasting Power of Attorney has been created by registration with the Public Guardian does not denote any lack of capacity on the part of the donor. The donor is still presumed to have capacity and, to the extent that he does have capacity, the donee acts in the same way as an attorney acting for his principal under an ordinary power of attorney. In effect the donor and the donee have a shared or concurrent authority. Either can go to the bank to withdraw funds, sell a property or buy shares, and the relationship is no different to that between a capable donor and his attorney under an ordinary power of attorney or an unregistered Enduring Power of Attorney. However, the difficulty for anyone acting as donee or for the donee is that it may not always be clear who is instructing whom. Who for instance is the client where the donor still has capacity? And what happens when the donor and donee are giving conflicting or contradictory instructions?3 There is no simple signal, as there is with a registered Enduring Power of Attorney, which allows the attorney, adviser or third party to know where he stands in his dealings with the donor. Of course it is wrong to make assumptions about a person lacking capacity and we should encourage people to make decisions as far as they can. But not all situations are so clear cut and a presumption of capacity can work to the disadvantage of the vulnerable person, who is perhaps confused or subject to undue influence.
The positive aims of the Act therefore give rise to confusion between the rights and powers of the individual and his attorney or deputy. There is an inherent tension in any structure concerning rights, which is usually resolved by balancing rights with responsibilities, by providing a system of checks and balances. The Act, however, enshrines the rights of the individual to make decisions with as much liberty and as little interference as possible. While this may cause alarm in some situations, it is a risk that Parliament has seen fit to take for the benefit of society as a whole. What may have been less apparent to the legislators is that rights enshrined in the Act apply not just to the individual to make certain decisions, but also to the person who makes decisions when he lacks capacity.
As the donor has chosen his attorney and reposed trust and confidence in him, he must take the risk of making an unwise choice and so the attorney can act without any formal regulation or supervision. The law does impose strict standards on anyone acting in a fiduciary position, whether as an attorney or a deputy. The Mental Capacity Act 2005 also requires anyone acting in this role to act in the best interests of the person concerned and to have regard to the Code of Practice. However, these standards are not readily enforceable, so that in practice the attorney can do as he pleases. The position was however different for a person appointed by the Court. A receiver appointed under the Mental Health Act 1983, was regarded as an imposition and therefore in addition to his fiduciary obligations, also had to account to the Court for his conduct. Not only would the receiver have to submit a detailed account, but he would need the Court’s permission to deal with any major decisions such as the sale and purchase of property, the expenditure of large amounts of money or the investment of funds. Access to funds was carefully controlled and the receiver’s discretion was limited to the income received by him and such capital only as the Court would allow as being necessary for the receiver to carry out his responsibilities.
There may never be a satisfactory solution to the simple dilemma: how much intervention is strictly necessary to protect the person without capacity while also being flexible, efficient and unobtrusive? Clearly, the Court cannot monitor every single expense incurred and many of the bureaucratic failures of the former Public Trust Office and Public Guardianship Office were simply due to those bodies taking on too much responsibility, much of which was evidentially unnecessary. However, over the year or two before implementation of the Act, the Public Guardianship Office and the Court seemed to be striking the right balance between empowerment and protection. Thus where there were professional receivers or close family members in long running or straightforward receiverships, a greater degree of autonomy was allowed to receivers. In other cases, authority was limited so that the receiver would need to come back to the Court for further authority. This might appear to have been a cumbersome approach, but many day-to-day decisions were dealt with by the Public Guardianship Office and the nominated officers on a fairly informal basis.4
This benign, if technically muddled, regime was swept away on 1st October. The Act requires a clear separation of powers between the judicial functions of the Court and the supervisory functions of the Public Guardian. This is a theoretical paradigm, but does cause practical difficulties. A deputy cannot now make an informal approach for a major expense – a purchase of a new car or long haul holiday – or the investment of a damages award, or take instructions for the making a Will where P has testamentary capacity.5 The Public Guardian cannot give permission or even give advice which might be construed as consent to a proposed act. The deputy must instead make a formal application to the Court for the matter to be dealt with judicially, which in itself has costs implications, particularly if a hearing is required. Therefore the only way to prevent the Court becoming gridlocked by endless routine requests is to allow deputies as much freedom to act as possible. In consequence new orders appointing deputies in almost all cases provide deputies with ‘carte blanche’ to do as they wish – without formal consent or supervision – even though this is inconsistent with section 16(4) of the Act, which requires the Court to have regard to the principle that ‘the powers conferred on a deputy should be as limited in scope and duration as is reasonably practicable in the circumstances.’ This inconsistency has the potential to place the deputy in an invidious position in attempting to exercise his powers in the best interests of the client.
It is therefore clear that despite the Act’s clear calling for limits on the deputy’s authority, most deputies will, where a person’s property and affairs are concerned, have as much autonomy as an attorney acting under a registered Enduring Power of Attorney or a Lasting Power of Attorney. The only differences will be that the deputy will be bonded, submit an account and pay an administration fee to the Public Guardian. Whether this is a positive development or not remains to be seen. All this article does is explains a change in policy and process, which (at least in part) is driven by administrative necessity. In many cases, greater autonomy for deputies is helpful or makes little difference to a receivership under an extended order. However, the Mental Health Act regime provided a framework within which all receivers had to operate and if the honest majority suffered as a result, this was deemed to be a small price to pay for the maintenance of a protective mechanism. Not all receivers – or deputies – are as competent, experienced or honest as might be expected. It is also important not to overlook those cases where a deputy needs the guidance or support of an impartial public body, not just to give permission but also to have the ability to say ‘no’ to: the relative who is being maintained and always needs more money; the client who wants to spend more of his money than he can afford; the financial adviser who is very persuasive; or, the family who see a licence for more holidays, a new car or a bigger house. The result of this policy is therefore that the deputy has not only more autonomy, but a great deal more responsibility to make the right decision. The burden of risk has to a large extent been privatised: professional deputies must look to their own expertise, quality control systems and ultimately, their insurers. Lay deputies need to act with caution or with professional advice. By the time a deputy’s account has been checked, it may be too late to discover the error or fraud that has taken place.6
The framework created by the new Act therefore has two effects: where day-to-day decision making is concerned, deputies are left to their own devices to work things out as best they can; where decisions are required from the Court whether for deputies, attorneys or other bodies, there is a complex and expensive process to undertake. The length and number of court forms (the Court of Protection Rules 2007 that go to over two hundred sections, the thirty-two Practice Directions and the Lasting Power of Attorney, Enduring Power of Attorney and Public Guardian Regulations 2007 in addition to the provisions of the Act itself and the Code of Practice) make for a very complicated procedural framework. The irony is that an Act, which is designed to support individual autonomy, protect the vulnerable and promote access to justice, has other consequences which counterbalance its clear benefits. A practitioner advising elderly and vulnerable clients may well feel entitled to look at both sides of the equation and conclude that the net benefit, as mentioned at the outset of this article is modest. It will however be for further articles to explain the complex framework provided by the Act for applications to the Court of Protection, the Lasting Power of Attorney jurisdiction and the role of the Public Guardian, and to see that the benefits of the Act can be properly accessed for the benefit of those who need them most.

Martin Terrell is a partner at Thomson Snell & Passmore. He can be contacted at martin.terrell@ts-p.co.uk

References
1. See Section 16(1): the Court’s power to make decisions and appoint deputies only applies ‘if P lacks capacity in relation to a matter or matters’ and Section 20(1);
2. It might be good practice for a professional deputy to have a retainer or even a power of attorney from P to deal with those financial matters where P may have capacity;
3. A far from hypothetical case might involve an attorney instructing a solicitor to sell the donor’s property. Does the solicitor need to know or enquire whether the donor is in a nursing home and lacks capacity or has capacity and is unaware of the transaction or how the proceeds of sale will be applied;
4. Although it is still early days, the removal of this function seems to have had an adverse effect on the speed and efficiency of dealings within the Court and the OPG as both bodies and the deputies dealing with them come to terms with the new system;
5. Under the Mental Health Act regime, these matters would often be dealt with by correspondence with the Public Guardianship Office;
6. Most cases will be dealt with as ‘Type 2’ supervisions, where a summary account is submitted without supporting evidence and only spot checks carried out.