J, Re (Enduring Power of Attorney)

B e f o r e :

THE HONOURABLE MR. JUSTICE LEWISON ____________________

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Ms Nicole Sandells (instructed by Moody and Woolley) for the Applicant Mr David Rees (instructed by The Public Guardian) for the Respondent Hearing date: 5th March 2009 ____________________

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Mr Justice Lewison:

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

This form was based on Form 147 in volume 31 of the Encyclopaedia of Forms and Precedents. The short but difficult question is: is it a valid enduring power of attorney?

The Public Guardian, represented before me by Mr David Rees, has taken the view that it is invalid because it purports to appoint attorneys in the alternative. Even if that is not prohibited, a valid enduring power of attorney cannot appoint successive attorneys where (as here) the power contemplates that one of the attorneys might begin to act before subsequently ceasing to act. Mr J's wife, W, represented before me by Ms Sandells, says that there is nothing wrong with the enduring power, and that now that Mr J has ceased to have mental capacity the power should be registered. She considers herself unable to act, and wishes the power to be registered so that her sons can act as Mr J's attorneys.

At common law a power of attorney is an agency created by deed. The agency thus created was terminated by the subsequent loss of mental capacity of the donor of the power. This consequence of loss of mental capacity was widely perceived as a defect in the law; and the Law Commission proposed changing it. Following the publication of both a working paper and a report ( The Incapacitated Principal Law Com No 122) the Enduring Powers of Attorney Bill was introduced into Parliament and was enacted as the Enduring Powers of Attorney Act 1985.

Since 1 October 2007, when the Mental Capacity Act 2005 came into force, it has no longer been possible to create an enduring power of attorney. Now the way of creating a power of attorney which survives the mental incapacity of the donor of the power is by the creation of a lasting power of attorney. However, enduring powers of attorney created before that date continue to have effect. The law applicable to such powers is now contained in Schedule 4 to the Mental Capacity Act 2005, which substantially re-enacts the Enduring Powers of Attorney Act 1985. The relevant parts of that Schedule are set out in Appendix 1 to this judgment. One of the main changes, however, is a change in procedure. Before 1 October 2007 the Court of Protection dealt with both the legal and administrative aspects of enduring powers of attorney. Since then the Court of Protection continues to deal with the legal aspects; but the Public Guardian deals with administrative aspects, and in particular the registration of powers.

The essential features of an enduring power of attorney are these.

i) An enduring power of attorney is a sub-species of powers of attorney generally (Schedule 4 para. 1). Thus it must comply with the formalities necessary to create a power of attorney. It follows from this that, unless qualified by a restriction in the instrument itself, an enduring power of attorney will take effect immediately.

ii) An enduring power of attorney must comply with additional formalities. These include a requirement that the instrument must be in a prescribed form; and that it must be executed not only by the donor of the power but also by the attorney (Schedule 4 para. 2).

iii) 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 (Schedule 4 para. 20).

iv) An enduring power of attorney may contain conditions or restrictions which limit the authority conferred on the attorney by the power (Schedule 4 para. 3).

v) There is no limit to the number of enduring powers that a donor can create; and they may exist concurrently or successively: Re E (Enduring Powers of Attorney) [2001] Ch 364 , 373E.

vi) If the formalities are complied with, an enduring power of attorney will not be revoked by any subsequent mental incapacity of the donor (Schedule 4 para.1).

vii) As soon as an attorney under an enduring power of attorney has reason to believe that the donor is or is becoming mentally incapable, he must apply to the Public Guardian to register the power (Schedule 4 para. 4)

viii) Registration is not discretionary. The Public Guardian must register the power unless one or more of five specified grounds of objection are made out. If any of the specified grounds are made out, then he must not register the power (Schedule 4 para.13). The five specified grounds are contained in Schedule 4 paragraph 13 (9).

ix) Once the power has been registered it cannot be revoked without an order of the court; and the donor cannot extend or restrict the scope of the power or give instructions to the attorney (Schedule 4 para.15).

Some of these essential features of the scheme call for further comment at this stage. First, the instrument creating the power must be made in the prescribed form. Various forms have been prescribed over the years. The operative parts of the form prescribed by the Enduring Powers of Attorney (Prescribed Form) Regulations 1990 are reproduced as Appendix 2 to this judgment. Regulation 2 (1) of those Regulations states:

Thus, subject to the specified provisions, regulation 2 (1) positively allows the donor to make additions to the prescribed form. Regulation 2 (2) deals with certain other aspects of the form of the instrument. In particular there must be excluded one (and only one) of any pair of alternatives. One pair of alternatives is "jointly" and "jointly and severally" in Part A of the form. Thus one of these alternatives must be omitted or deleted. Regulation 2 (3) is not relevant for present purposes. Regulation 4 provides:

Second, the power may contain conditions or restrictions. There is no limitation on the nature of the conditions or restrictions, except that they must not conflict with anything that the Act positively forbids. A condition may, for instance, be a condition precedent to the coming into operation of the power (e.g. "This power shall not be exercisable unless two medical practitioners have certified that I lack mental capacity" or "This power shall not be exercisable unless I have lacked mental capacity for more than three months"). It may be a restriction on the kind of asset with which the attorney may deal (e.g. "This power does not extend to any sale charge or other disposition of land in which I have an interest"); or may place limitations on the manner in which the attorney may deal with a particular asset (e.g. "My attorney may not sell or charge any dwelling in which I reside without the written consent of my spouse").

Third, since there is no limit to the number of enduring powers of attorney that a donor may create a donor may create one enduring power of attorney governing his bank account and another governing his home; or one enduring power of attorney dealing with his property in England, and another dealing with his property in Wales. Given the ability to place temporal conditions or limitations on the operation of an enduring power of attorney it is also possible to create powers which will have alternative operation. Thus a donor may create one power in favour of his wife and another in favour of his children, the latter being subject to a condition that it is not to come into operation unless his wife disclaims under the first power. The same technique may be used to create enduring powers of attorney that have successive operation. Thus a donor may create one power in favour of his wife and another in favour of his children, subject to a restriction that it is not to come into operation during his wife's lifetime.

Fourth, the duty to apply for registration applies to every enduring power that a donor has created. Thus if the donor has created one power in favour of his wife, and another in favour of his children, the latter not to come into force during his wife's lifetime, both his wife and his children must apply to register their respective powers if they have reason to believe that the donor has become or is becoming mentally incapable. As mentioned, the Public Guardian must register the power unless one of the specified grounds of objection is made out. It is not a specified ground of objection that a condition precedent to the operation of the power has not yet been satisfied. In the case just mentioned, therefore, the Public Guardian must register both powers. The Act makes provision for what is called "qualified registration". This arises only under paragraphs 20 (6) and (7) of Schedule 4. It applies only in the case of joint and several attorneys where a ground of objection is made out against one or more of them but not all. In such a case the entry in the register must be stamped with the words:

There is no other power to make a qualified registration. Once a power of attorney has been registered, the Public Guardian must keep a copy of it; and return the original to the person or persons who applied for registration.

Fifth, because the duty to register only arises when the donor has become or is becoming mentally incapable, the power of attorney is likely to be scrutinised for the first time by the Public Guardian at a time when, if it is invalid as an enduring power of attorney because of some technical defect, it is probably too late for the donor to execute another one. This, in turn, means that the donor's affairs will have to be administered by a deputy, which is likely to be more cumbersome, more expensive and more public than administration by attorneys of the donor's choice. One of the important policies of the Mental Capacity Act 2005 is that, so far as possible consistent with his best interests, a protected person's wishes should be taken into account and respected.

It is common ground that, as mentioned, a donor can achieve the effect of successive attorneyships by executing two or more separate enduring powers of attorney. If a donor can achieve a particular legal effect by two pieces of paper, why can he not achieve the same effect by one? The Public Guardian says that the answer to this question is that paragraph 20 (1) of the Schedule precludes that. Paragraph 20 says:

The Public Guardian says that anyone named by the instrument as a present or future attorney (even if the power to act as attorney is contingent on satisfaction of a condition precedent) is an "attorney" both for the purposes of the requirement to execute the instrument creating the enduring power of attorney and also for the purposes of paragraph 20. Thus the instrument must state whether all those named are to act jointly or whether all those named are to act jointly and severally. There can be no mix and match, because one of the two alternatives must be deleted or omitted; otherwise the instrument will not satisfy the statutory requirement that it must be made in the prescribed form. It therefore follows that a purported enduring power conferring power of attorney on W (acting alone) or failing her on A, B and C (acting jointly) or a purported power conferring power of attorney on W (acting alone) and subsequently to A, B and C (acting jointly and severally) fails to comply with paragraph 20 (1) and thus cannot be an enduring power of attorney.

It is fair to say that opinions have differed over the years about whether this is the correct construction of the section. I was shown articles in legal publications by the Assistant Public Trustee which suggested that it was not; booklets issued for public guidance by the Public Trust Office and the Public Guardianship Office which also suggested that it was not. On the other hand, I was also shown extracts from textbooks which suggested that it was. None of these publications gave reasons for their conclusions so they were of limited assistance. I was also shown examples of powers of attorney in the form of that in the present case which the Court of Protection had registered as valid enduring powers of attorney. In those cases the registration was qualified by stamping the power of attorney with words to the effect that it took effect only as regards particular named attorneys.

In support of the Public Guardian's submission Mr Rees relied on passages from the Law Commission's report that preceded the Enduring Powers of Attorney Act 1985. In paragraph 4.92 of their report the Commission said:

Footnote 214 to that paragraph said:

There are two points to be made about this footnote. First, it is only a footnote. It did not form part of the main text of the report, let alone the report's recommendations. Second, it is not a positive recommendation one way or another. Still less is it a firm prohibition. Nevertheless it deserves consideration, if only to try to see what complexities the Law Commission had in mind (which the report itself did not identify).

Mr Rees summarised the difficulties or complexities as follows:

i) The prescribed forms would have needed to be differently worded. This is, in essence, the point that the donor must choose between the two alternatives of "joint" on the one hand or "joint and several" on the other. There are, I think, at least two answers to this. First, although regulations made under and contemporaneously with an Act of Parliament are part of the context, they cannot add to or detract from the proper interpretation of the Act. A recent example of a case in which the draftsman of a prescribed form misunderstood the Act under which the form was prescribed is Scottish & Newcastle plc v Raguz [2008] 1 WLR 2494 Second, regulation 2 (1) expressly permits additions to the prescribed form. I cannot see why that would prevent a donor of an enduring power of attorney from specifying two sets of attorneys, provided that it is made clear in relation to each set whether they are to act jointly on the one hand or jointly and severally on the other.

ii) There would be additional complexity in the registration process. Mr Rees put it thus.

iii) Mr Rees did suggest in oral argument that the fact that there was only one original stamped instrument might present a problem if the instrument purported to appoint successive attorneys. But that problem (if it is a problem) would exist in any case where more than one attorney is appointed to act concurrently, and (if it is a problem) would be particularly acute where the attorneys may act jointly and severally, because one attorney, acting alone, might not have the original instrument. And, as I have pointed out, the existence of only one original stamped instrument may itself guard against potential abuse of a registered enduring power of attorney where two or more powers would otherwise have been registered without qualification.

I do not think that any other alleged complexities were identified. On examination they turn out either not to be complexities at all, or, to the extent that they are complexities they are complexities which are at any rate not increased by doing in one piece of paper what everyone accepts you can do in two. To the extent, then, that the Law Commission's view was based on complexities, it was not, in my judgment, a soundly based one. No other reason of policy was suggested for reaching the conclusion that what you can do by two pieces of paper you cannot also do by one. Such policy reasons as there are seem to me to point to the conclusion that it does not matter whether you use one piece of paper or two.

i) The principal policy objective of the 1985 Act was to abolish the common law rule that a power of attorney was revoked by the subsequent mental incapacity of the donor. The construction for which W contends does not undermine that policy.

ii) At common law, the appointment of successive attorneys is valid, and where the meaning of an Act is doubtful, Parliament is taken to have intended the least alteration of the common law.

iii) The Mental Capacity Act 2005, in which the current provisions are to be found, has as one of its policy objectives the encouragement of autonomy of protected persons. The Law Commission's report, on which the 1985 Act was based, also stressed the importance of the principle that people should be able to make such arrangements for the management of their affairs as they please.

iv) The Schedule should not be construed so as to leave technical traps for donors of powers, where the effect of falling into the trap may be irremediable once the problem has been identified.

v) There can be no doubt that a will appointing alternative or successive trustees would be valid to deal with the management of the affairs of a deceased person after his death. Why should it be any different for the management of his affairs during his lifetime?

So it seems to me that the question is whether paragraph 20 can be construed so as to permit the execution of an enduring power of attorney in the form of the one in this case.

In addition to the general considerations that I have mentioned above, I am also struck by the clear prohibition contained in paragraph 2 (6) of the Schedule which says:

Given the clarity of this provision, it would be surprising if a similar prohibition applied to the donor of the power by the oblique and indirect drafting of paragraph 20.

The persons named in the instrument as actual or contingent attorneys are, I think, within the meaning of the word "attorney" as used in paragraph 20 of the Schedule. So paragraph 20 is engaged where an enduring power purports to appoint successive attorneys. Ms Sandells, for W, submitted that paragraph 20 should be construed as meaning that a valid enduring power of attorney must state whether, in the event that they exercise the power , the attorneys must exercise it jointly or jointly and severally. That, she said, was the correct meaning to be given to the phrase "appointed to act". Provided that an instrument makes this clear it complies with paragraph 20. If and in so far as additional words need to be added to the prescribed form to repeat the designation of each set of attorneys, this is permitted by regulation 2. In my judgment this is a permissible reading of paragraph 20, and I hold that it is the correct one. I further consider that this construction applies whether the power of attorney purports to appoint attorneys in the alternative or in succession. What is important is that the power makes clear whether, while they are acting, the attorneys are to act jointly, or jointly and severally.

I conclude, therefore, that the power of attorney in the present case is a valid enduring power of attorney and must be registered without qualification.

My conclusion on this question makes it unnecessary for me to consider whether there is a power of severance and, if so, what limits (if any) there are upon its exercise. Since that is a difficult question, I prefer to leave it for a case in which it arises.

Note: 1. This form may be adapted to provide for execution by a corporation