Abuse of Power by an Attorney and how to report it

The most common reason an attorney for property and affairs abusing their power is financial gain, and sadly in most cases the abuse is committed by a family member. Family are sometimes simply not suitable, think for example of children where the appointment of one over others may cause a conflict, or where a child believes their parent has more than enough money to see them through and is tempted to advance to themselves what they see as their inheritance. This makes choosing your attorney very difficult. There may be some protection in having two attorneys acting jointly and severally, but that will not necessarily prevent abuse. In instances where there are no family to be appointed, the abuse can be just as likely, in part because the attorney may be able to influence the person or gets a sense of entitlement.

For welfare matters, there are also similar considerations with family members acting as attorneys, since they may struggle to make decisions around welfare matters, despite the advice of the treating professionals or where they are concerned that the cost of care will deplete what they see as their inheritance.

With the start of the Covid pandemic the numbers of abuse cases increased with the Office of the Public Guardian, who supervise attorneys, reporting applications for censure or removal of attorneys hitting record highs in late 2019.

What’s The Alternative?

An alternative might be a professional (or joint professional) who will not only be held to higher account, but more importantly are independent and can take an impartial view. Their expertise means that they will be fully aware of what powers they have and when they might need to seek additional authority.

Case Law

Re OL [2015] EWCOP 41

The Public Guardian v AM [2015] EWCOP 86

Reporting Abuse by an Attorney or Deputy

It is possible to report a concern to the Office of the Public Guardian (OPG), who supervise attorneys and deputies either through emailing the OPG130 form to opg.safeguardingunit@publicguardian.gov.uk or alternatively you can call their helpline on 0115 934 2777.  Please see a link to their guidance.

The OPG have recently reported applications for censure or removal of attorneys hitting record highs. Whilst the OPG’s service is free, their investigations are thorough and very lengthy. Many clients report long delays and then lack of progress in investigations. For example, we had a case of a deputy who went to prison for five years for fraud, who was not removed as a deputy until after he was released.

An alternative, for those with sufficient closeness to the vulnerable person, such as family or close friends, is to make an urgent application to court themselves. This is direct to the Court of Protection, rather than waiting for the OPG investigation and the OPG then making the same application. That court process should be undertaken with the input of specialist lawyers, as without expert advice there is a possibility not only of wasting money, but also of being obliged to pay other people’s legal costs in defending such an action.

Sometimes, wrongdoing may only come to light after the vulnerable person has died and a new professional or other family member is appointed to administer their estate.

Investigating claims against attorneys and deputies who have abused vulnerable persons

Where a vulnerable person is unable to look after their finances, courts can appoint an attorney or deputy to do so for them.  Sadly, we are seeing a growing number of cases in which that attorney or deputy then goes on to seek financial advantage of the vulnerable person.

The Office of the Public Guardian (OPG) has responsibility to oversee attorneys and deputies.

Whilst deputies have a duty to produce annual accounts, attorneys have no formalised reporting to the OPG.  It is often the case that an attorney will manage that person’s finances for decades and have no contact whatsoever with the OPG.  As such financial abuse is unlikely to be checked early.

Over time, some attorneys come to consider their relative’s money to be part of their own family money. It is quite common for such attorneys not to keep good accounts, separating the two sets of finances. In these cases, it is not clear how money has been spent or the extent of any wrongdoing.

A review of spending often only occurs after the vulnerable person has died and a new professional or other family member is appointed to administer their estate. It can be a daunting task to undertake an analysis of spending and to make a considered decision as to whether to prosecute a claim.

Lifetime gifts: Invalidation for lack of capacity and undue influence

A gift made by an individual during their life will only be valid if made while they had sufficient mental capacity to make the decision, and while they were free from undue influence. Litigation of such gifts will often occur after death, when estate beneficiaries or executors find that the deceased person gave away substantial assets before their death. In these situations, Court orders would be needed to overturn the gifts and claw the relevant assets back into the estate.

Capacity to make a gift is judged differently to the capacity for making a will. The test as set out in the case of Re Beaney [1978] 1 WLR 770. The standard of capacity expected is relative to the gift being made, meaning that the greater the gift – the higher the level of understanding required.

Whilst lack of capacity can lead to a gift being voidable, often there is overlap between the principles that apply to the doctrines of lack of capacity and that of undue influence, in that lower capacity can make someone more vulnerable to undue influence.

The test for whether undue influence caused a gift to be made is often split into two categories. The first is actual undue influence – which is when the level of coercion is so high that the gift giver is no longer making the decision for themselves. Evidence of the coercion would be needed to reverse any gift.

Presumed undue influence is the second category, and this is based on the nature of the relationship between the influencer and the person making the gift. Relationships of confidence and trust between parties or a specific relationship such as that between parents and a child, doctor and patient, solicitor and client can indicate an already existing influence. The nature of the relationship is looked at as a whole and in particular the balance of power between the parties.  If the person giving the gift is in such a relationship as the influenced party, then the Court can presume that there was undue influence – unless the party with the power/influence in the relationship can explain the gift in a way that discounts undue influence in the decision.

Overturning gifts for want of capacity or on the basis of undue influence can be difficult, not least because of the lack of evidence often available in relation to these transactions. Early specialist advice should always be sought if a gift of value has been made by someone who may lack capacity or be subject to influence from another party.

Anthony Gold are proud of their work in recovery of assets taken from vulnerable persons and a founder sponsors of Hourglass a charity that works to prevent Elder Abuse.

Recovery of monies for the elderly lost through fraud

Unfortunately, we are seeing more and more cases where elderly persons have lost monies through fraud. The elderly are often targeted because they are vulnerable and reliant on others to help them, so people are given access to their finances and assets. Sadly the culprit is often a trusted family member or friend who has taken advantage of the situation.

The fraud can occur in many different ways. A signature may be forged on documents such as a cheque or on a Will. Fraud by an Attorney appointed to assist the vulnerable person with their finances. If the Attorney abuses their position of power to make financial gain then there are a number of remedies to this breach of trust.

Ultimately, it can lead to the vulnerable person losing a substantial amount of money which could affect their standard of living and future care.

Victims often do not realise the fraud has taken place and it usually only comes to light after the elderly person has passed away, when previous transactions are scrutinised in the administration of their estate.

Hourglass is the UK’s only charity focused on the abuse and neglect of the elderly. They offer a 24/7 free helpline on 0808 808 8141, and we would encourage anyone that needs help to reach out to them.

Alternatively, if urgent legal action is needed, we offer a fixed fee advice session in which we will set out your options. If you would like our advice, please contact the Contentious Probate Department at Anthony Gold on 020 7940 4000.

Proprietary Estoppel and Promises That Never Were: The Earl and The Tenant Farmer

Proprietary estoppel provides a cause of action in equity which could prevent a person who gave a promise in relation to land from backtracking from the promise. The Court in such cases has broad discretion as to how it will attempt to satisfy the promise in equity.

In the case of Rawlings v Chapman [2015] EWHC 3160 (Ch), HHJ Cooke set out the requirements for proprietary estoppel as follows:

“A proprietary estoppel arises where:

  1. a) the owner of land induces encourages or allows the claimant to believe that she has or will enjoy some right over the owner’s property;
  2. b) in reliance on this belief, the claimant acts to her detriment to the knowledge of the owner;
  3. c) the owner then seeks to take unconscionable advantage of the claim by denying her the right or benefit which she expected to receive.”

LJ Kitchin in Farrer v Miller [2018] EWCA Civ 172 indicated that an agreement between the parties is not required, but that the property owner making the promise must have “induced, encouraged or allowed” the other party to think that they had or would acquire and interest in the disputed land. LJ Hoffman in Walton v Walton (Unreported, CA 14 Apr 1994) stated that there must be no ambiguity on these inducements/promises, and that they need to appear to have been taken seriously.

In the case of Earl of Plymouth v Rees [2021] EWHC 3180 (Ch), the trustees of the farm land (The Earl, his daughter and son) had intentions for a residential development on the land outside Cardiff. In order to proceed they served notices to quit on the tenant farmers and sought possession.

The tenants brought a counterclaim on the basis that they had been told by the agents of the landowners that they would not have land taken from them until it needed to be built on and could retain the farmhouse, as well as being given an offer of further available land to continue farming, or alternatively receive reimbursement of costs for moving their farming business elsewhere.

The case turned on whether these discussions met the standard of being an inducement/promise that could be relied upon, and whether the tenants suffered detriment as a result of that reliance such that the landowners should be estopped from obtaining their possession order and evicting the tenants without some sort of interest/satisfaction of the equity being given to the tenants.

The tenant was the key witness and gave oral evidence in Court about the representations made by the agent. His evidence was largely not in dispute, but rather the debate between the parties turn on whether the inducements and detriment alleged were sufficient to give rise to the estoppel.

In the end, the judge did not find that the representations of the agent were sufficiently clear or certain to constitute a promise capable of being relied upon for proprietary estoppel purposes, nor that the tenants were able to make out the detriment they had suffered in relying upon any such assertions. On this basis the counterclaim by the tenants failed and the landlords succeeded in obtaining possession.

The case highlights that in order to succeed in proprietary estoppel claims, the promise, reliance and detriment must be unambiguous and clear enough for the court to make a decision that it would be unconscionable for the promise to be resiled from.

 

Ryan Taylor is based in the London Bridge office and specialises in contentious probate and contentious trusts matters.

*Disclaimer: The information on the Anthony Gold website is for general information only and reflects the position at the date of publication. It does not constitute legal advice and should not be treated as such. It is provided without any representations or warranties, express or implied.*

Professional Negligence – Maximising Damages

Often establishing a breach of duty is fairly straightforward in professional negligence cases. Recovering damages is harder.  The recent Supreme Court decision in Tiuta International Ltd (in liquidation) v Villier Surveyors Ltd (2017), UKSC 77, illustrates the need before commencing an action, to consider exactly who caused what damage. Failure to do so can result in the recovery of only nominal damages and great legal expense.

It is interesting to note that the judges came to different decisions, but asserted a straightforward common-sense analysis that would lead to the right result. As a judge once told me – “I have found that common sense is not that common.“

The case involved a second loan agreement or what might be commonly known as re-mortgage. The final appeal held that the damages against the negligent valuer, would be limited to only the extra amount advanced between the first loan and the second loan.  In this case, both the first and second loans were from the same lender. The first loan was repaid using part of the second loan, hence very little extra was advanced. Doubtless, after a considerable amount of expense, the disappointed lender will consider amending their claim to plead negligence in relation to the first valuation – they are not time barred in this case.

The Supreme Court’s decision flows from their analysis of the chain of transactions. However, it does not explain what would happen if there were two different loan companies.

In conclusion, this case illustrates the need to carefully analyse the history of any negligence. From that one can ensure that all proper defendants are included and every act of negligence that might be recoverable is pleaded.  As such, it will inevitably lead to more complex pleadings requiring specialist legal analysis.

Beware of binary options trading schemes

We have seen an increase in the number of enquiries from clients relating to losses from binary option trading schemes.

A binary option, or fixed odds betting is a financial option where the payoff is either a fixed amount or nothing at all. An example would be to bet on whether a particular share price will be above or below a certain amount. Investors suggest they can gain high returns from small amounts but this often leaves clients losing large sums of money.

Figures from Action Fraud show the amount lost to binary options trading increased from £6,200 in 2012, to £27m in 2017. Binary options scamming has been described by the consumer group Which? as “Britain’s biggest investment con”. Evidence of bad practice across the board has been identified with high pressure sales tactics and unfair terms and conditions being used.

These schemes are increasingly being used by fraudsters using illegitimate companies to target vulnerable victims through cold-calling and pop up adverts. These companies are often registered in a foreign jurisdiction which makes them harder to trace and pursue. It is therefore very difficult to recover losses suffered unless there has been a UK based professional who facilitated the loss.

From January 2018, the Financial Conduct Authority will take over the regulation of binary options trading.  Hopefully, this will increase the regulation of binary options companies and reduce the amount that has been lost by clients.

If you require any further information or any assistance, please contact the commercial team at Anthony Gold.

* Disclaimer: The information on the Anthony Gold website is for general information only and reflects the position at the date of publication. It does not constitute legal advice and should not be treated as such. It is provided without any representations or warranties, express or implied.*

Avoidance tactics: looking at loss

When a loss occurs through a professional’s negligence, it is natural and often essential, for the loss to be avoided as quickly as possible.  In commercial contexts, this might involve refinancing a loan or restructuring a transaction that went wrong.

But if this is done so that the loss is avoided, is the claimant prevented from recovering from the professional the loss that it caused in the first place?

In two cases that were before the Court in 2017 the Judges had to consider whether a benefit enjoyed by the claimant after suffering the loss should be taken in to account as collateral in assessing damages. That both cases, Swynson v Lowick Rose LLP [2017] 2 WLR 1161 and Tiuta International v De Villiers Surveyors [2017] 1 WLR 4627, were before the Supreme Court should tell us that it is not an easy question to resolve.

In Sywnson, the claimant company made three loans to a borrower. The claimant relied on professional advice from accountants in making the loans. The accountants’ advice turned out to be negligent; the borrower experienced cash-flow problems and defaulted on the loans.  The controlling shareholder of the claimant company stepped in to lend the borrower money which it could use to repay the claimant company the first two loans. The claimant company then issued a negligence action against the accountants in respect of all three loans.

The accountants conceded liability, but argued that because the claimant company had been repaid the first two loans, it was not entitled to damages arising from negligence relating to those loans because the loss had been avoided.

The claimant argued res inter alios acta (a thing done between others does not harm or benefit others) and that the refinancing did not affect the claimant’s recoverable loss.

Lord Sumption held that the general rule is that loss which has been avoided cannot be recoverable as damages, unless it was a collateral benefit which could not be treated as making good the claimant’s loss. The Court held that collateral payments can be characterised as those where the receipt of benefits for the claimant arises independently of the circumstances arising from the loss. Lord Sumption gave the examples of gifts, or insurance contributions, which he said are tantamount to the claimant making good the loss from his own resources because they are attributable to his own work or contributions.

The defendant in Swynson argued that because the loans had been redeemed by the loan from the shareholder of the claimant company the payment was not truly collateral and so should not be ignored in the assessment of damages. Lord Sumption decided that the association of the claimant shareholder was no more relevant than if the loans had been redeemed by money from a bank or an unconnected third party. The critical point was that the payment discharged the very liability at the heart of the transaction; the loans had been repaid by the borrower to the claimant company and thus the loss had been avoided. The transaction between the shareholder and the borrower was not true collateral and could not be ignored in assessing damages.

The Supreme Court overturned the Court of Appeal’s ruling on this point and reinforced the principled approach, which is not so much concerned about doing justice between the position of claimant, defendant and the unconnected party in making good the loss, but looking at the substance of the transaction.

In Tiuta, the question of collateral benefits arose in the context of a negligent valuation of property, which was the basis of a second loan. The second loan of £3.1m was used to refinance a first loan of around £2.8m. The borrower defaulted on the second loan and Tiuta faced the difficulty of having its damages cut down by virtue of the decision in Preferred Mortgages v Bradford & Bingley Estate which establishes that where a loan is paid off by further borrowing the first loan is treated as being redeemed.   To get around that problem, Tiuta argued that the redemption of the first loan should be treated as a collateral benefit and so should be ignored for the purpose of assessing damages, thus not confining Tiuta’s loss.

The Supreme Court did not accept the argument. Lord Sumption held that “the concept of collateral benefits is concerned with collateral matters. It cannot be deployed so as to deem the very transaction that gave rise to the loss to be other than it was”.

In summary, steps taken to avoid loss, if they go to the heart of the transaction, will only be recoverable if they are completely independent from the circumstances of the loss.

* Disclaimer: The information on the Anthony Gold website is for general information only and reflects the position at the date of publication. It does not constitute legal advice and should not be treated as such. It is provided without any representations or warranties, express or implied.*

Carillion – what happens now?

Carillion is, or was, the second largest construction firm in the UK.  It’s collapse on Monday 15 January 2017 was confirmed when the High Court ordered the compulsory liquidation of the various companies in the group.  It employed 20,000 people and the projects of the business included the HS2 rail project, Battersea Power Station redevelopment, military contracts and the maintenance of schools, prisons and hospitals.  So, what happens now?

Carillion outsourced projects to a significant number of smaller businesses and spent £952million with local suppliers in 2016.  The construction giant stated that this demonstrated its commitment to generating economic growth and development. Many of these firms are now waiting in the wings to learn if they will be paid.  It has been suggested that the small suppliers are already out of pocket due to being made to wait 120 days for payment.  For small business owners, extending this sort of credit may put the entire business at risk.

The BBC reported on 16 January 2017 that Cabinet Office Minister David Lidington said there would be Government support for public sector contracts. This means that employees will be paid.  However, this will only extend to two days and does not extend to companies working on private projects.

It was well known that Carillion was experiencing financial difficulty.  Last year, the company issued three profit warnings, had debts of approximately £1billion and a £600million pension deficit.  Richard Howson was the company’s chief executive until he stepped down in July 2017, after the first profit warning was issued.  He will continue to be paid until October this year fuelling increasing criticism about executive pay.  It will be interesting to see whether this leads to greater shareholder engagement regarding director’s pay, particularly in companies which are not performing well.

The Government is also likely to come under scrutiny as it encouraged small businesses to get involved with Carillion and continued to award several billion-pound contracts to them, even after substantial financial issues were reported.

Accountancy firm PwC is overseeing the liquidation and made the following statement:

“Unless told otherwise, all employees, agents and sub-contractor are being asked to continue to work as normal and they will be paid for the work they do during liquidations.”

Contrary to this, there have been reports where workers attended projects and were told to go home.  Redundancies have also already begun, for example, Flora-tec is a landscaping services company which Carillion owes £800,000.  They were forced to make 10 people redundant when the collapse was announced.

It is PwC’s job to sell Carillion’s assets, and to try to satisfy the many creditors to which debts are owed.  It is not clear whether this will prevent suppliers becoming insolvent, which may depend on whether the debts are secured and if insurance for such an event was in place.  As with all liquidations, it is highly unlikely that there will be sufficient funds available to pay everyone what they are owed.

If you are an SME, or an employee of a business, that has been affected by Carillion’s demise, please contact Elaine O’Connor on 0207 940 4000 or at eoc@anthonygold.co.uk.

* Disclaimer: The information on the Anthony Gold website is for general information only and reflects the position at the date of publication. It does not constitute legal advice and should not be treated as such. It is provided without any representations or warranties, express or implied.*

Beware of Pension Reviews

Your pension is probably one of your  largest assets and the result of a lifetime’s hard work and saving.  It is also the prefect target for fraudsters.

One way in which pensions can be targeted is through what is known as a “Pension Review Fraud” which is designed to persuade the victim to move money from a pension pot into an investment which the victim is told offers much higher rates of return

How does a Pension Review Fraud work?

Imagine the scenario, you are sitting at home and receive a cold call from somebody offering  you a free pension review. They either claim to be FCA authorised or they say that they do not need to be FCA authorised as they are not giving you any advice themselves. They produce impressive brochures and direct you to a professional looking website.

Having gained your confidence they tell you that they have reviewed your pension and that it could be doing much better. They claim to know of a new unusual investment that promises guaranteed returns and will allow you to take a cash sum from your pension now. They might warn you that your current pension provider will do whatever it can to hang on to your pension pot by claiming that “due-diligence is needed”.

It might be many years before you realise that in fact the “unusual investment” never existed and that you have been defrauded out of your life savings.

What can you do?

There are simple steps that you can take to reduce your risk of being a victim:

  1. Reject unsolicited calls or emails; legitimate companies should not contact you out of the blue.
  2. If you have been contacted, check the FCA register or FCA warning list here.
  3. If you are still thinking about investing, seek independent financial advice from an FCA regulated firm.

If you have been a victim of a fraud contact the Anthony Gold fraud team on 020 7940 4060.

* Disclaimer: The information on the Anthony Gold website is for general information only and reflects the position at the date of publication. It does not constitute legal advice and should not be treated as such. It is provided without any representations or warranties, express or implied.*