Analysis
The claimant, who was born in 1934, left all financial matters to her husband until his death in 2005. He had made ample provision for her, with an annual income of about £100,000. She lived in a large house, in Northumberland, which for inheritance tax planning reasons she transferred to her son, the defendant, in 2006. As she continued to live in the house, to comply with the reservation of benefit rules she paid her son a monthly rent of £2,500. The claimant’s health began to deteriorate in 2011, subsequently suffering a stroke which left her with hemiplegia. By 2013, as a consequence of a road accident, she was rendered incapable of independent living and moved into a care home. Medical assessments of her mental capacity painted a mixed picture of her cognitive abilities, though it was established that she lacked capacity to make decisions as to the making of lifetime gifts from September 2015. Since the death of her husband, the claimant left the responsibility for her finances to the defendant and her bank accounts were placed into their joint names. The claimant made two Lasting Powers of Attorney (‘LPAs’) in March 2013, one of which gave the defendant and his then wife joint and several authority over her property and financial affairs. These were both registered with the Office of the Public Guardian (‘OPG’) in June 2013. Following concerns raised by the care home, the OPG carried out an investigation into the defendant’s conduct and this resulted in an application to the Court of Protection seeking an order directing him to account for his management of the claimant’s property and financial affairs, failing which an order revoking and cancelling both LPAs. By an Order dated 15 December 2016 HHJ Oliver revoked the LPAs, appointed the claimant’s daughter as her deputy and required the defendant to account for his actions as attorney to the OPG. No account was rendered and, as a result of an analysis by an independent accountant, it was established that during the period from January 2011 and January 2017 (‘claim period’) a total in excess of £900,000 of the claimant’s money was paid into the jointly-held bank accounts. Of the expenditure approximately £200,000 was identified as having been paid over the claim period for the claimant’s expenses. A balance in excess of £700,000 was, it was claimed, misappropriated by the defendant. At the trial the defendant did not appear and such evidence as was adduced on his behalf was not tested by cross-examination. He denied misappropriation and asserted that the claimant had gifted the balances standing to the credit of the accounts at the time they were placed into joint names and all subsequent deposits; or alternatively that most of the money expended was used for the claimant’s benefit.
Held
A presumption of law applies that a gift is not intended where the holder of a bank account adds someone else’s name. This presumption was not rebutted by any evidence giving rise to a presumption of advancement. The defence lacked any particularity as to what the claimant allegedly said or did by way of lifetime gifting in the period prior to September 2015. Instead of making outright gifts, the claimant merely gave the defendant access to her accounts in order to facilitate his management of the money on her behalf and for her benefit. In the period after September 2015 a defence of outright gift would not have succeeded in any event because the claimant lacked capacity after that date. There was no evidence to suggest that the claimant had intended to create a trust for the benefit of the defendant. On the contrary, the only conclusion which could be reached was that the defendant held the money in the accounts, whenever it came into his hands, on bare trust for the claimant and, in the absence of sworn evidence from him, there was no basis for thinking that his expenditure was, or could ever have been thought to have been, in the claimant’s best interests as required by the Mental Capacity Act 2005. Apart from two motor cars, a failure to account for the expenditure resulted in a finding that it was paid away in breach of trust.
<![CDATA[ JUDGMENT ANDERSON QC: [1] This claim has been brought by Dorothy Purvis acting by her litigation friend (her daughter Vicki Ann Rudd) against Ms Rudd’s only sibling, Jason. Since the participants are all members of the same family, I shall refer to them by their first names. [2] The claimant was represented before me by Tom Poole of counsel. …Continue reading "Purvis v Purvis [2018] WTLR 585"