By Denzil Lush
High interest rates proved attractive to a patient of the Court of Protection, as Denzil Lush explains
The origins of the Court Funds Office date back to An Act For Better Securing The Monies And Effects Of The Suitors, passed in 1726. Until then, the Masters in Chancery held suitors’ funds in their own accounts and invested them, sometimes speculatively.
Everything ran smoothly until 1720, when the South Sea Bubble burst and several masters became extremely embarrassed – both financially and professionally.
The catalyst that led to the 1726 Act was the case of the wealthiest woman in the land – Elizabeth, Dowager Duchess of Montagu (1654-1734). A jury of sixteen had unanimously decided that she was a lunatic, at an inquisition held on 31 March 1709, three weeks after the death of her second husband Ralph Montagu. He was an unashamed fortune-hunter whom she had married only because he convinced her that he was the Emperor of China.
Her sisters’ husbands were appointed to manage her estate. In January 1725, they presented a petition to parliament complaining that Thomas Bennett, the Chancery Master who had invested the Dowager Duchess’s funds, had failed to comply with court orders requiring him to deposit a sum of £9,000.
King George I intervened with the result that not only was the new legislation passed to ensure greater security for suitors’ funds, but also the impeachment of the Lord Chancellor Lord Macclesfield.
The Court Funds Office operates an account called ‘special account’, which is available only to protected parties and minors. For many years, it paid a favourable rate of interest (peaking at 15 per cent in 1980), primarily because the underlying funds had been invested in longer-term UK bonds.
But in 2009, following the collapse of financial markets worldwide, the interest rate plummeted from 6 per cent on 31 January to 0.5 per cent on 1 July. It has remained at that level ever since.
Eric was born in 1928. He worked at the Ford factory in Dagenham. In 1990, he suffered a head injury in a car accident, as a result of which he became a patient of the Court of Protection. He made a personal injury claim which was settled for £550,000.
On 21 August 1996, Eric wrote to the court requesting an order determining proceedings (ODP) – an order releasing him from the court’s jurisdiction. He was asked to produce medical evidence of his recovery and his GP completed a certificate stating that he had “improved mental ability, improved speech and communication skills, and improved writing”.
Although the medical evidence wasn’t perfect, it was broadly satisfactory and I was prepared to proceed with the ODP without requiring a second opinion.
Three weeks later, Eric wrote to the court saying: “After some thought, we have decided to leave things as they are for the time being. This decision was made after consultation with the rest of the family.”
I asked his caseworker to write to him to find out why he still wished to be a patient. On 10 November, Eric replied saying: “I would like to say that, although I am mentally capable of managing my property and affairs, I don’t think I would be able to get such a good return if I invested the money myself. I must apologise for any inconvenience or misunderstanding my letter may have caused.”
He was referring, of course, to the interest being paid by the Court Funds Office on special account, which was then 8 per cent – almost double the rate available in most high street banks and building societies.
It cut no ice. If I needed further evidence that Eric was capable of managing his financial affairs, this was it. And so, on 9 December 1996, I formally released him from the court’s jurisdiction.
Denzil Lush is a retired senior judge at the Court of Protection