Re Buckley: Ignorance of an Attorney’s Duties “No Excuse”
The law on capacity is constantly developing and jurisprudence from other jurisdictions is often of interest in this specialized practice area. Cases from the English Court of Protection are of particular interest. Like the Consent and Capacity Board in Ontario, the Court of Protection addresses and focuses on issues relating to incapable persons and decision-making, such that its cases frequently touch on our areas of practice. As a specialized court, they also have expertise and experience on issues of capacity.
The March 2014 STEP Journal1 (the publication for the Society of Trust and Estate Practitioners) provides an overview of the recent Court of Protection case of Re Buckley2, that highlights that it is not only in Ontario that attorneys for property are held to strict duties for incapable persons.
In that case, Senior Judge Lush of the Court of Protection reviewed the actions of an attorney for property in light of the Mental Capacity Act 2005 and Code of Practice. The attorney for property in that case had invested a significant portion of the monies she was managing for an incapable person into her own business. That venture, a reptile company, ultimately failed. While the attorney had argued before the court that the incapable person would have liked for her monies to be invested in the attorney’s business, as she had a fondness for animals and had a close relationship with the attorney and would have wanted to support her, the presiding judge highlighted the fiduciary obligations of the attorney. While an individual may certainly make any decision, wise or otherwise, with his or her own money and is not required to keep accounts of such, an attorney is required at all times to act in the donor’s best interests.
Senior Judge Lush carefully set out the duties of trustees when investing an incapable person’s funds which include the requirement to carefully ensure that the investments are suitable, diversify these investments, and review and vary those investments and obtain and consider “proper advice”. The presiding judge explained that “proper advice” should be given by a properly authorized financial advisor.
Senior Judge Lush in his decision also highlighted that attorneys require court authorization in order to make certain financial decisions, including making gifts that exceed the statutory authority, making loans to the attorney or members of their family, making investments in the attorney’s business as well as other transactions where there is a potential conflict of interest between the attorney and the donor.
Due to the attorney’s actions in handling of the incapable person’s funds in breach of her fiduciary duty, Senior Judge Lush ordered that the attorney was to be removed. Senior Judge Lush pointed out that her “[i]gnorance is no excuse…”.
Interestingly, the author of the article on the case, Alex Elphinston, notes that before 2007 that there had been specific guidelines for investments on behalf of incapable persons which had been used by the Court of Protection respecting the manner in which monies ought to be invested. Those such guidelines are no longer available, and Senior Judge Lush indicated in the decision that it may be useful for the Office of the Public Guardian to produce further guidance in that vein. The article also notes that while there is guidance for attorneys found in the Mental Capacity Act 2005 and the Code of Practice, those documents are not in fact provided to attorneys for property.
So while the decision is a practical reminder of the seriousness of attorneys’ duties, it also points to the paucity of information provided to attorneys for property. Similarly in Ontario, attorneys for property often operate without a basic understanding of their very onerous duties. Perhaps, as is suggested by Justice Lush in the decision and the author of the article, it would be helpful for the relevant government bodies to flesh out the relevant guidelines, and then ensure there is a way for attorneys to receive that information in a meaningful manner.
www.step.org/journal
—
1. March 2014, vol 22, Issue 2
2. [2013] CoP case 122 to 8697
Written by: WEL Partners
Posted on: June 30, 2014
Categories: Commentary
The law on capacity is constantly developing and jurisprudence from other jurisdictions is often of interest in this specialized practice area. Cases from the English Court of Protection are of particular interest. Like the Consent and Capacity Board in Ontario, the Court of Protection addresses and focuses on issues relating to incapable persons and decision-making, such that its cases frequently touch on our areas of practice. As a specialized court, they also have expertise and experience on issues of capacity.
The March 2014 STEP Journal1 (the publication for the Society of Trust and Estate Practitioners) provides an overview of the recent Court of Protection case of Re Buckley2, that highlights that it is not only in Ontario that attorneys for property are held to strict duties for incapable persons.
In that case, Senior Judge Lush of the Court of Protection reviewed the actions of an attorney for property in light of the Mental Capacity Act 2005 and Code of Practice. The attorney for property in that case had invested a significant portion of the monies she was managing for an incapable person into her own business. That venture, a reptile company, ultimately failed. While the attorney had argued before the court that the incapable person would have liked for her monies to be invested in the attorney’s business, as she had a fondness for animals and had a close relationship with the attorney and would have wanted to support her, the presiding judge highlighted the fiduciary obligations of the attorney. While an individual may certainly make any decision, wise or otherwise, with his or her own money and is not required to keep accounts of such, an attorney is required at all times to act in the donor’s best interests.
Senior Judge Lush carefully set out the duties of trustees when investing an incapable person’s funds which include the requirement to carefully ensure that the investments are suitable, diversify these investments, and review and vary those investments and obtain and consider “proper advice”. The presiding judge explained that “proper advice” should be given by a properly authorized financial advisor.
Senior Judge Lush in his decision also highlighted that attorneys require court authorization in order to make certain financial decisions, including making gifts that exceed the statutory authority, making loans to the attorney or members of their family, making investments in the attorney’s business as well as other transactions where there is a potential conflict of interest between the attorney and the donor.
Due to the attorney’s actions in handling of the incapable person’s funds in breach of her fiduciary duty, Senior Judge Lush ordered that the attorney was to be removed. Senior Judge Lush pointed out that her “[i]gnorance is no excuse…”.
Interestingly, the author of the article on the case, Alex Elphinston, notes that before 2007 that there had been specific guidelines for investments on behalf of incapable persons which had been used by the Court of Protection respecting the manner in which monies ought to be invested. Those such guidelines are no longer available, and Senior Judge Lush indicated in the decision that it may be useful for the Office of the Public Guardian to produce further guidance in that vein. The article also notes that while there is guidance for attorneys found in the Mental Capacity Act 2005 and the Code of Practice, those documents are not in fact provided to attorneys for property.
So while the decision is a practical reminder of the seriousness of attorneys’ duties, it also points to the paucity of information provided to attorneys for property. Similarly in Ontario, attorneys for property often operate without a basic understanding of their very onerous duties. Perhaps, as is suggested by Justice Lush in the decision and the author of the article, it would be helpful for the relevant government bodies to flesh out the relevant guidelines, and then ensure there is a way for attorneys to receive that information in a meaningful manner.
www.step.org/journal
—
1. March 2014, vol 22, Issue 2
2. [2013] CoP case 122 to 8697
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