The benefits of having a well-drafted Lasting Power of Attorney are widely known – it gives you the opportunity to appoint, in advance, those who you trust to act on your behalf in relation to all aspects of your property and financial affairs.
You may wish your Attorneys to assist you straightaway or perhaps more commonly, via a Lasting Power of Attorney which can give you the piece of mind that should you lose mental capacity in the future, your Attorneys will be able to immediately start to manage your affairs on your behalf without the need for a costly and time consuming application to the Court of Protection for the appointment of a Deputy. However, it is incredibly important for both you and your Attorneys to understand that there are limits on their authority to assist you, particularly in relation to gifts and transfers of property. The recent case of Chandler v Lombardi  EWHC 22 (Ch) is a cautionary tale and serves as a reminder of the very strict limits imposed on Attorneys.
This case concerned CC, who had a history of mental health issues, including paranoid schizophrenia. During 2016, CC executed Lasting Powers of Attorney in relation to both property and financial affairs and health and welfare, in favour of her daughter (the defendant). In 2018, the defendant transferred CC’s house – her principal asset – into the joint names of herself and CC, signing the transfer documentation as CC’s Attorney. This action was challenged by CC’s son on the grounds that CC lacked capacity to make the gift and that in any event, the defendant, acting as Attorney, had no authority to make the gift on CC’s behalf. The defendant argued that CC had capacity to make the gift and that the transfer was therefore valid.
What is the law?
Section 12 of the Mental Capacity Act 2005 sets out the very limited scope of an Attorney to make gifts of a donor’s property. Gifts are restricted to customary occasions (e.g. Christmas or birthdays) and any gift must be reasonable in the context of the size of the donor’s overall estate. It is possible for the Court of Protection to authorise larger gifts, however the Attorney must seek authorisation from the Court before doing so.
What did the Court decide?
The Court held that the transfer of the property was void as it was outside the scope of the Attorney’s authority under s12 of the Mental Capacity Act 2005. As a result, the ownership of the property at the Land Registry was rectified so as to reinstate CC as the sole legal owner of the property.
Crucially in this case, the issue of whether CC had the mental capacity to agree to the transfer (and therefore to the gift) was not considered by the Court. This is because it was the Attorney who carried out the transfer, by signing the transfer documentation herself. Had CC signed the legal paperwork to transfer the property, the Court would have considered whether CC had the mental capacity to understand the transaction but in fact, the only question was whether the Attorney had the authority to make the gift itself, which she did not.
If you are appointed as an Attorney, it is incredibly important that you understand the limits on your authority to act, especially in relation to gifts, whether that be cash, personal possessions or property. If you have any doubt as to whether you have the authority to make a gift in your capacity as an Attorney – whether or not the donor has capacity – you should always seek legal advice to avoid acting outside the parameters of your authority. It may be necessary to make an application to the Court for authority to make a gift and if so, we are here to help.
Birketts has a specialist Court of Protection Team who can advise you in relation to all aspects of managing someone’s affairs, either as an Attorney or Deputy. We can give clear advice in this complex area to ensure that you know how to act in the best interests of a person for whom you are appointed, in order to protect both their position and yours, and to avoid criticism from the Court.
The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at February 2022.