Chandler v Lombardi [2022] EWHC 22 (Ch) – Gift Giving Under an LPA

8th April 2022 Will Disputes

Introduction

Where a Lasting Power of Attorney (“LPA”) for property & finance is in place, there is scope for the attorney appointed (the donee) to make gifts on behalf of the person they are acting for, who has lost capacity (the donor). The rules governing gift giving under an LPA are set out in s 12 Mental Capacity Act 2005.

Subject to any conditions or restrictions expressly stated in the LPA itself, the donee can make gifts on behalf of the donor either on customary occasions to people (including the donee themselves) who are related to or connected with the donor or to any charity that the donor made or might have been expected to make gifts. ‘Customary occasions’ include anniversaries of a birth, marriage or the formation of a civil partnership as well as any other occasions which are customary within families or amongst friends or associates.

However, such gifts must not be unreasonable having regard to all the circumstances. Particular consideration is given to the value of the gift in light of the size of the donor’s estate.

Background

This case involved a family dispute in relation to a residential property, which was in the sole name of Mrs Concetta Chandler (“Concetta”). The claimant was her son, Mr Anthony Chandler (“Cl”), and the defendant was her daughter, Ms Janet Lombardi (“D”).

In November 2016, Concetta put in place LPAs, for both property & finance and health & welfare, appointing D as her sole attorney. Neither Cl, nor Concetta’s two other children, were made aware of this.

In November 2017, Concetta was admitted to hospital. During her stay it was noted that she was suffering from dementia and delirium. Some records also referred to paranoid schizophrenia. Concetta was subsequently discharged into a residential nursing care home.

In June 2018, relying on the LPA in respect of property & financial affairs, D transferred Concetta’s property into the joint names of both her and Concetta, as tenants in common in equal shares. A transfer deed was drafted, signed by D in her own capacity as well as in her capacity as Concetta’s attorney and then submitted to the Land Registry for registration. No consideration was given for the transfer.

In October 2018, Cl learned of the transfer and, in light of Concetta’s dementia and history of longstanding mental health issues, he issued a claim against D acting as Concetta’s Litigation Friend. In January 2019, Concetta sadly passed away due to ‘end stage dementia’. She left a will appointing Cl as her sole executor. Following her death, Cl was substituted as the claimant in the proceedings, in his capacity as the executor of his late mother’s estate.

Cl asked the court to declare that the transfer of the property was void and, in turn, asked them to order the rectification of the title register. He argued that Concetta lacked capacity at the time the transfer was made and that D, as her attorney, did not have the power to make such gift. On the other hand, D argued that her mother did have capacity and that she made the gift in accordance with her own wishes.

Judgment

The Judge did not consider Concetta’s capacity at the time of the transfer, because she had not herself signed the transfer deed. Instead, he solely focused on the issue of whether or not D, as Concetta’s attorney, had the power to make such a transfer.

The Judge concluded that D did not have the power to transfer Concetta’s property into their joint names. He deemed the transfer as a gift of half of Concetta’s interest in the property to D and he therefore had to consider whether that gift fell within the scope of authority for a donee to make gifts on behalf of a donor under s 12 Mental Capacity Act 2005.

The gift of half the property to D did not constitute a permitted gift under this section, most particularly because it was not made on a customary occasion or to a charity. Furthermore, the property was worth in excess of £154,000, therefore in any event the gift would have been of unreasonable value (being for half that sum, £77,000, which was a significant sum with reference to Concetta’s assets). As the gift fell outside of the scope of s 12, D should have applied to the Court of Protection to obtain permission to affect the transfer. However, she failed to do so and therefore did not have the necessary authority to make the transfer.

As a result, the gift was rendered void. Consequently, the Judge ordered that the title register be rectified, showing Concetta (then her estate) as the sole owner of the property.

In his decision, the Judge emphasised that D’s lack of knowledge of needing to seek the Court of Protection’s permission to make such a gift was not a defence. When appointed under an LPA, all attorneys have a responsibility to familiarise themselves with the powers they have and duties they owe under the Mental Capacity Act 2005 and its accompanying Code of Practice, which includes the restrictions on gift giving.

Summary

Attorneys/donees have the power to make gifts on behalf of the donor if the type of gift falls within the scope of s 12 Mental Capacity Act 2005. Where a gift falls outside the scope of s 12, prior to making the gift, the attorney/donee must first obtain the Court of Protection’s permission.

Where permission is not sought prior to a gift which requires it, the gift will be void and the attorney/donee in question may be removed from their position.

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Alison Parry is a Partner located in Manchester in our Will and Trust Disputes department

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Travis Coulson is a Trainee Solicitor located in Manchesterin our Trainee Solicitors department

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