Charitable trust corporations as deputies

Matthew Duncan explains what a charity-run trust corporation must produce to satisfy the court it is a fit and proper person for a deputyship

A recent ruling from the Court of Protection (CoP) has clarified the ability of a trust corporation not regulated by the Solicitors Regulation Authority (SRA) to be appointed as a deputy. The ruling has provided useful guidance on the issue. In Re Twah [2019] EWCOP 36, Her Honour Judge Hilder held that a charitable trust corporation can be appointed as a professional deputy for property and financial affairs for a mentally incapacitated individual (Twah). From a practitioner’s point of view, the judgment will assist in advising charity-run trust corporations to make successful applications to the CoP for deputyship appointments.

THE BACKGROUND The case concerned an application by Allied Services Trust, a registered charity, to be appointed as a property and financial affairs deputy for Twah. In the earlier case of In Various Incapacitated Persons and The Appointment of Trust Corporations as Deputies [2018] CoP 3 (the 2018 judgment), the CoP specifically considered the suitability of trust corporations associated with a legal practice to be appointed as deputies. The case of Twah was concerned with identifying what information the CoP would require to satisfy itself that a trust corporation not linked with a legal practice could be a fit and proper legal person to hold a deputyship appointment.

LEGAL ISSUES The 2018 judgment set out the legal framework for the appointment of trust corporations as deputies. It identified the information the CoP required when considering the appointment of a trust corporation as a deputy, namely:

— whether a trust corporation can lawfully act;

— whether the internal management, supervision and control of the trust corporation are appropriate;

— what external regulation (apart from supervision by the Public Guardian) applies; and

— the total amount of protected person’s assets and funds held and the level of insurance cover the trust corporation has. In relation to the third point, the 2018 case focused specifically on trust corporations linked to a legal practice. In respect of other trust corporations not linked to legal practices, the court commented that “if the protective effect of regulation by bodies other than the SRA is broadly comparable, it is likely that the court will be similarly satisfied as to the appropriateness of the appointment”. However, the 2018 case did not give any further guidance so the Twah judgment helpfully considered situations where a trust corporation is not linked to a legal practice. It considered what additional steps were needed before undertaking a CoP application for the appointment of a deputy. In the Twah case, Allied Services Trust was found to be subject to the external regulation of the Charity Commission. This meant the CoP was concerned firstly with whether the Charity Commission’s regulatory regime would apply to Allied Services Trust when acting as a deputy; secondly, whether the regulatory framework of the Charity Commission was broadly comparable with that of the SRA. In her judgment, Hilder J explained that the most likely risk that needed to be protected against in a property and financial affairs deputyship centred on the potential misappropriation or mismanagement by a deputy of a protected persons assets. It was felt that where an appointed deputy is a charity, it would prima facie be a failure to act in the charity’s best interests and a breach of trustee duties – causing loss and harm to the charity’s work, its beneficiaries and its reputation – were misappropriation or mismanagement to take place. This would trigger the regulatory remit of the Charity Commission, effectively acting in a similar way to the SRA which would intervene where a professional deputy in a legal practice had misappropriated or mismanaged a protected person’s assets. The CoP received evidence from both the Charity Commission and the SRA to compare and contrast the two regulatory regimes and examined the evidence at some length. The court concluded that in its view it was apparent the Charity Commission regime was ‘broadly comparable’ to that of the SRA. Accordingly, Allied Services Trust (which was subject to the regulatory remit of the Charity Commission) could be viewed as a proper legal person and therefore capable of being appointed as a deputy.

PRACTICAL STEPS The CoP considered what documentation should be submitted to enable it to be satisfied that a trust corporation linked to a charity is a suitable legal person for the purposes of being appointed as a deputy. The court made reference to the 2018 judgment which included a schedule of the information and undertakings required for a trust corporation linked to a legal practice. It noted that it is standard practice for legal trust corporations to provide information and undertakings by filing additional pages to their CoP4 declarations. In the Twah case, the CoP adopted the same approach suggesting that, with appropriate modifications, this could be adapted for trust corporations linked to charities. It was confirmed that the requirements to be filed in an additional page to the CoP4 when lodging an application are:

— The total amount of the protected person’s assets and funds held; in whose name and in what accounts such assets and fluids are held; and the level of insurance cover the trust corporation has.

— The proposed trust corporation deputy must be a trust corporation within the meaning of section 64(1) of the Mental Capacity Act 2005.

— The trust corporation will comply with the Public Guardian’s published standards for professional deputies.

— The trust corporation is regulated by the Charity Commission and will notify the Public Guardian immediately if that ceases to be the case.

— The trust corporation undertakes to maintain insurance cover that includes indemnity in respect of all work undertaken by the trust corporation, including the discharge of its functions as deputy and provides a sum insured for any one claim of no less than £3m.

— The trust corporation will lodge a copy of the insurance policy with the Public Guardian.

— A copy of the authorisation by the Lord Chancellor to act as a trust corporation.

— Confirmation of its charitable registration.

FUTURE APPLICATIONS

The Twah case is helpful to practitioners, providing an update on current practice when dealing with the CoP. The court has confirmed that the information and undertakings required (as set out in schedule 2 of the 2018 judgment. along with the requirements set out in the Twah judgment) involve filing an additional page to the usual CoP4 declaration. The additional page to be submitted must be endorsed with the name of the case, and the name, position and signature of the authorised signatory completing the application. Also, when completed section 5 of the CoP4 must make it clear the additional page is part of the declaration. For the avoidance of doubt, the additional page must be provided for each new application by the charity to the court.

Matthew Duncan is a partner at Druces druces.com