PW [2024] EWCOP 16

The Court of Protection rules very firmly against Deputies appointing connected asset managers, in a decision which will be important throughout the industry.

The very hotly awaited decision of Her Honour Judge Hilder in the case of PW [2024] EWCOP 16 is now to hand.

This case concerned the appointment of an investment manager (IM) which had a financial relationship with the Deputy

The question was whether there was a conflict of interest in appointing IM, and what the effect of that was. The issue was raised by the Official Solicitor during the course of an application for a statutory Will.? An Order was made in June 2020 requiring the Deputy to seek retrospective authority for that appointment.

The judgment provides a very good summary of the position of a Deputy in relation to acting as an agent, fiduciary and in relation to the rules against self-dealing and also conflicts of interest. In effect the Court re-stated the well-known rules preventing fiduciaries from acting whenever there is a conflict of interest. In the celebrated speech of Lord Crawnworth LC in Aberdeen Railway v Blaikie 136:

" it is a rule of universal application, that no one, having such duties to discharge, shall be allowed to enter into engagements in which he has, or can have, a personal interest conflicting, or which possibly may conflict, with the interests of those whom he is bound to protect."

The Deputy asserted that it had a robust process for the appointment of IM which negated the conflict of interest. The Court did not accept either that the process was sufficiently robust, nor that any process would lead to a valid appointment.

As to whether the appointment in this instance should be ratified by the Court, that issue still needs to be decided and further evidence is required.? The question of what is in PW's best interests will need to be considered and that could include whether PW has a potential claim against the IM in respect of the investment management fees already paid.

As to whether approval from the Court is sufficient as a one-off application going forward, the position of the Official Solicitor is that the approach taken in the case of Re ACC should be distinguished.? In that case the question of the Court approving the Deputy appointing their own firm related to a one-off transaction (a house purchase for example).? In this case, fees are paid to the IM every year they manage P's investment portfolio.? The Court would therefore be expected to potentially ratify a lifelong conflict of interest.

Of course, the process of seeking ratification of the appointment involves cost to P in respect of the Court application. The position of the Official Solicitor, supported by the Public Guardian, is that can be avoided entirely by never appointed a connected IM.

It is therefore absolutely clear:

1. Appointing an investment manager where there is a financial connection or benefit to the Deputy / their firm is a clear conflict of interest,
2. That conflict can't be avoided by the application of a beauty parade, scorecard approach etc,
3. Court approval is required where the Deputy wants to appoint an in-house or connected investment manager.

As to current cases where an in-house or connected investment manager has already been appointed, it is still a watch this space as to whether those appointments will be ratified by the Court and what the position is in respect of any charges paid to the investment manager to date.

Stacey Bryant

Chair Professional Deputies Forum

19.03.2024