Re Joan Treadwell (Deceased)
Summary: This was an application by the Public Guardian to enforce a security bond in respect of unauthorised gifts made by the late Mrs Joan Treadwell's deputy for property and affairs, Colin Lutz. As Senior Judge Lush noted, it was the second case involving excessive gifting by deputies to have come before him during the last few months. The first was Re GM [2013] COPLR 290. They came before the Court because of the Public Guardian's statutory duty to supervise deputies under s.58(1)(c) MCA 2005. In the course of supervising these deputies, the Public Guardian became aware that they had exceeded their authority to make gifts, and the OPG advised them to apply to the court for retrospective approval.
Mrs Treadwell married three times; Mr Lutz was her eldest child by her first husband. After she was diagnosed with Alzheimers, she sought to appoint her third husband, William ('Bill') Treadwell as her sole attorney under an EPA; when Mr Treadwell sought to register the EPA Mr Lutz objected; those objections were dismissed, but he sought subsequently to revoke the application on the basis of various allegations of financial impropriety against his stepfather. Those objections were never determined as Mr Treadwell ultimately disclaimed his appointment on the basis of ill-health. Mr Lutz was then appointed his mother's receive under the MHA 1983 and then, after the coming into force of the MCA 2005, her property and affairs deputy. He was required to obtain and maintain security in the sum of £200,000.
Some years previously, Mrs Treadwell had made a will in which left her entire estate to her husband and appointed him to be her sole executor. In the event that he predeceased her, she (1) appointed Colin Lutz and her two stepdaughters to be her executors; (2) gave £1,000 to each of her five children; and (3) gave her residuary estate to her stepdaughters, Joanna Wildgoose and Emma Treadwell, in equal shares. Her most valuable asset was her half share of the matrimonial home.
In 2007, Mr Lutz applied for an order authorising him to execute a statutory will on his mother's behalf, disinheriting her stepdaughters and leaving the estate to her children in equal shares. A compromise was reached between the various parties, and a statutory will was executed after a consent order was endorsed, providing for the appointment of two solicitors to be her executors and trustees, the giving of her personal chattels to her children in equal shares, the giving of pecuniary legacies of £5,000 to each of her five children and her two stepdaughters, and the giving of her residuary estate to her stepdaughters in equal shares. Mrs Treadwell died in October 2012.
In his capacity as deputy, Mr Lutz gave gifts on his mother's behalf totalling some £59,375 over the period 10 April 2009 to 9 April 2012 to family members and other individuals; the primary beneficiaries were Mrs Treadwell's great grand-children (none of whom were the issue of Mr Treadwell's children). These included housewarming, christening and graduation gifts in the order of £1,800 to £2,500. The Public Guardian was concerned as to the level of gifting and advised Mr Lutz to apply for retrospective approval. Mrs Treadwell died before the application was heard.
In his judgment, Senior Judge Lush did not reiterate the detailed discussion of the law relating to the making of gifts by deputies in Re GM; rather, he approved on behalf of the Court certain aspects of the current practice of the OPG which were set out in a witness statement provided by the OPG's legal adviser. In particular, he approved the "OPG's general approach to quantifying loss to the estate by identifying, first, the gifts that the deputy was authorised to make and, secondly, any additional gifts that, having regard to all the circumstances, might reasonably have been ratified by the court" (para 62). He also endorsed the proposition that gifts made at a christening, housewarming and graduation may be regarded as gifts that are made on customary occasions, along with birthday and Christmas presents, but subject to the proviso that they are "not unreasonable having regard to all the circumstances and, in particular, the size of [the donor's] estate" (paras 64-5).
Whilst Senior Judge Lush agreed that it is not possible to lay down any general rule as to the amounts a deputy will give away, each case turning on its facts, he agreed with the OPG's submission that "Mrs Treadwell's income was approximately £10,000 a year. As she was fully funded, it is submitted that the deputy could have made gifts to close family members each year in the total sum of £1,000 within the terms of the deputy order" (para 72). He considered that for someone in her financial position, anything over, say, £100 for a christening or graduation gift, was unreasonable having regard to all the circumstances, and in particular the size of her estate (para 68), and, in the case of the housewarming gifts, anything over about £50 was unreasonable. As he noted, "[o]ne would normally expect such a gift to be either a specific item for use or ornament in the home or garden or vouchers from a high street department store that offers a wide selection of household goods" (para 69). It did not help Mr Lutz's cause in this regard that the graduation gift made to his daughter was made some four years after she had graduated.
At para 72, Senior Judge Lush also endorsed the OPG's observations regarding the extent to which the court may have ratified gifts in excess of £1,000 over the three accounting years in question. "In paragraph 40 of her witness statement Jill Martin said that, in the particular circumstances of this case:
'… the court would have been prepared to ratify these [customary] gifts in the sum of £12,000 on the basis that, if the deputy had applied in each of the three years for authority to make gifts to family members of £4,000 (in addition to the £1,000 a year which arguably fell within the terms of the deputy order), the court would have granted the application for the following reasons:
(i) Mrs Treadwell's needs were being met;
(ii) she would be left with an income of about £5,000 a year to cover unforeseen expenses; and
(iii) the intention behind the statutory will was to preserve funds deriving from Bill Treadwell for his daughters, not to preserve Mrs Treadwell's own unspent income.'"
Senior Judge Lush went on to consider the Court's jurisdiction after the death of the person to whom the proceedings relate. He noted that, in respect of deaths after 1 May 2010, a security bond taken out by a deputy will remain in force until the end of the period of two years beginning with the date of death or until it is discharged by the court: Lasting Power of Lasting Powers of Attorney, Enduring Powers of Attorney and Public Guardian Regulations 2007, Regulation 37(3), as amended by the LPA, EPA & PG (Amendment) Regs 2010, Reg 4.
Senior Judge Lush further noted that, ordinarily, the personal representatives would make any application to call in a security bond after the death of the person to whom the proceedings related but that, because the Public Guardian had been actively involved in this matter immediately before Joan Treadwell's death, he considered that it would be appropriate for his office to make the application on this occasion. Senior Judge Lush implicitly endorsed this course of action. Whilst the Court does not have jurisdiction to ratify any gifts made by the former deputy after the death of the person to whom the proceedings relate, Senior Judge Lush agreed with the OPG that in the unusual circumstances of the case it would only be appropriate to call in Mr Lutz's security bond "only in respect of any unauthorised gifts which the court would not have ratified had the earlier proceedings not been discontinued. It may be considered harsh to include in the estimation of loss any gifts which would have been ratified but for Mrs Treadwell's death" (paras 78-9).
Senior Judge Lush then turned to the extent to which Mr Lutz had sought improperly to interfere with his mother's succession rights as little as possible. Having rehearsed the historical position, he found that "[i]n the context of testate succession, at least, the principle that deputies should interfere with succession rights as little as possible is compatible with the principle set out in section 1(5) of the Act, namely, that an act done or decision made for or on behalf of a person who lacks capacity must be done or made in their best interests" (para 85). Further, by s.4(6) MCA 2005, one of the factors that any substitute decision-maker is required to take into account is any relevant written statement made by the individual when they had capacity; "[i]n the context of someone's property and financial affairs," Senior Judge Lush continued, "I can think of no written statement that is more relevant or more important than a will, and when testators make a will, they have a reasonable expectation that their wishes will be respected" (para 88). In the instant case there was, in reality, relatively little difference between the will made by Mrs Treadwell and the statutory will executed on her behalf following the approval of the consent order put before the Court.However:
"93. Although he was a party to it, Colin Lutz resented the compromise reached over the statutory will and subsequently sought to undermine it by dissipating any residuary estate his mother might leave on her death.
- 94. The figures speak for themselves. Mrs Treadwell's income was approximately £10,000 a year and over a three year period Mr Lutz made gifts from her estate totalling £59,375. Having disposed of her entire income, he made inroads into her capital.
- 95. I was unconvinced by his invocation of the comments of Mr Justice Lewison in Re P (Statutory Will) [2009] COPLR Con Vol 906, at paragraph 44, that his mother was 'doing the right thing.' She played no part in the process and, instead of doing the right thing as her deputy, Mr Lutz was interfering with the succession rights under her will by redirecting his stepsisters' inheritance in favour of his own family by making excessive gifts to them.
- 96. In my judgment, Colin Lutz exceeded the authority conferred upon him by the court when making excessive unauthorised gifts on Mrs Treadwell's behalf, and … I calculate the loss to her estate to be £44,375. I allow the Public Guardian's application and order enforcement of the security in that sum."
Comment: To use a non-technical term, Senior Judge Lush is on something of a roll at the moment in the terms of promulgation of judgments defining the scope of the obligations upon deputies and attorneys. It is to be hoped that this judgment, along with that in Re GM and Re Buckley (relating to attorneys) will serve the educative purpose that he referred to at the close of his judgment, especially given that, as he noted at the outset of the judgment, there is very much less ability to control and to sanction misconduct on the part of attorneys, there being both no statutory obligation on the part of the OPG to scrutinise attorneys, and no equivalent obligation upon attorneys to obtain and maintain security.
