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Conflicts of interest and the extent of the 'general authority' where a deputy instructs its own firm to carry out instructions or conduct litigation on P's behalf.

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This issue, along with various others, was considered by HHJ Hilder in ACC & Ors [2020] EWCOP 9. The test case related to three applicants who lacked capacity to manage their property and affairs or conduct litigation. None of the deputyship orders contained any express provisions in relation to the deputy’s authority to conduct litigation, or instruct solicitors, on Ps behalf. In each case, the deputy applied for authorisation, or respective authorisation, to conduct appeals or proceedings.

The cases were joined so that the court could consider the wider questions.

It was ultimately held that standard deputyship orders do not authorise the deputy to engage in contentious litigation. If the deputy wishes to engage in contentious litigation, then authority must be obtained from the Court to proceed. Various additional steps are required if the deputy wishes to instruct their own firm. The issues and guidance are addressed in more detail as follows:

The extent of ‘General authority’

The Court gave guidance in relation to the definition of ‘general authority’ in terms of seeking legal advice. HHJ Hilder stated that the ‘general authority’ to undertake an act on behalf of P included authority to undertake such legal tasks as are a necessary part of that act. Such specific examples given were preparation of tax returns, employment contracts for support workers and work in relation to the lease and preparation of tenancy agreements if P is a tenant in rented accommodation. This work can reasonably be delegated to other persons in the firm who may be experienced in these areas.

Where it comes to the conduct of litigation, HHJ Hilder found that the deputy had the authority to make an application to the Court of Protection without a prior application for permission to do so. However, this was strictly limited to issues in relation to property and affairs and not welfare, or other issues. The exception to this is the making of an application to bring the Court’s attention to a welfare issue.

More generally, a distinction was also given as to when obtaining legal advice becomes formal proceedings (the ‘general authority’ encompassing steps in contemplation of litigation). The Court suggested that once the response to the letter of claim is received, authority should be sought. This would provide the Court with an overview of the merits of the claim and allow them to attach certain conditions to the authority before it is granted.

It is possible that when seeking authority from the Court that various restrictions may be imposed, based on the merits of the proposed action. The Court may only grant authority up to a certain stage in proceedings, or they may place a cap on the level of costs which can be incurred. They may also require further authority to be sought if costs exceed a certain level.

Specific authority is also required for a property and affairs deputy to pay a third party’s legal costs, even if the litigation is to the benefit of P.

Conflicts of interest

A key issue identified in this matter was the conflict of interest where a deputy instructs their own firm to conduct litigation or to obtain legal advice. In order to address this issue, HHJ Hilder provided guidance on the approach that should be taken. This includes considering, at the time of the application to be appointed a deputy, whether there is a realistic prospect that the deputy will wish to instruct someone else to carry out ‘ordinary legal tasks’. If the prospective deputy also considers that they may wish for their own firm to undertake the work, then such request should be included in their application.

The Court’s authorisation must be limited so that it is not unreasonable having regard to all the circumstances and in particular the size of P’s estate. HHJ Hilder commented that “In some cases, the suggested limit of £2 000 + VAT in any given year may be considered sufficiently modest so as not to be disproportionate, to be sufficiently generous to be useful, and be in the best interests of P to avoid the delay and expense of tendering. In other cases, a different limit, or no such authorisation at all, may be more appropriate;”

Where seeking advice, or undertaking ordinary legal tasks is within a deputy’s authority but they do not have specific authority to instruct their own firm, the deputy must obtain three quotations for that work. One of these quotations can be from his own firm. The deputy must then make a best interests decision as to which firm to instruct. If the deputy wishes to instruct their own firm, and the costs are likely to exceed £2000 + VAT; an application must be made for specific authority. Details of the legal fees incurred and the decision making process must be included in the account to the Public Guardian.

This is likely to have an impact on the amount of work conducted by both the deputy and their own firm, as it may be in the P’s best interests to instruct a different firm. This should be seen as a boost to firms without a deputyship team, as this may increase the level of work they receive from protected parties, but it also could have an impact on firms who also manage deputyships, as this work can no longer be specifically ‘ear marked’ for themselves.

Charging for acting as a Litigation Friend

The Official Solicitor, who personally attended the hearing, offered to act as a litigation friend, without charge, for all current cases which fit the relevant criteria. HHJ Hilder was not required to, and did not, determine whether or not a party acting as a litigation friend can charge for that work.

Potential impact to costs assessments

As the Court is likely to impose these requirements when a deputy seeks to engage in contentious litigation, it is likely that it will have a knock on effect on assessment of the deputy’s costs.

HHJ Hilder states that a standard deputyship order does not permit the deputy to engage in contentious litigation. It would logically follow that the costs of this will not be recoverable at assessment.

In order to avoid the potential costs consequences of engaging in contentious litigation without authority, deputies should seek authority as soon as is practical. Ideally, this should be requested once the letter of response is received, to enable the Court to assess the prospects and reasonableness of proceeding.

Despite the ruling in ACC & Ors, the Court are unlikely to retrospectively authorise the deputy to engage in contentious litigation except in limited circumstances. HHJ Hilder warned deputies that appropriate authorisation should be secured in advance and an explanation will be required if this is not the case. While this does not rule out the possibility of retrospective authority being granted, not seeking approval in the first instance may lead to wasted costs and the deputy will be undertaking the work at risk to their costs of that work.