Revocation of errant donee’s powers as a property and affairs donee for her father’s lasting power of attorney

High Court allows appeal

I.     INTRODUCTION

1.   We are pleased to share that our client has won an appeal in the Family Division of the High Court of Singapore in a mental capacity case concerning the circumstances under which a donee’s powers may be revoked under the Mental Capacity Act (“MCA”).

II.     BACKGROUND TO DISPUTE

A.   The Lasting Power of Attorney

2.   Our client and her older sister had been appointed as donees under a Form 1 lasting power of attorney (“LPA”) executed by their elderly father (the donor). The sisters had been given powers to make decisions concerning their father’s Property and Affairs and Personal Welfare in the event that he lost mental capacity.

3.   The father also allowed the sisters to act jointly and severally as his donee. This meant that the sisters could exercise their powers under the LPA without the consent or knowledge of the other.

B.   Circumstances leading to Mental Capacity Act Application before the Family Courts

4.   Shortly after the execution of the LPA, the father suffered a stroke and his treating doctor determined that he was mentally incapacitated. The sisters split their responsibilities in the care of their father – the younger sister (our client) taking care of his day-to-day needs and medical care, the older sister taking care of his finances, including supervising their father’s sole proprietorship funeral parlour business (“Business”).

5.   Some months passed under this arrangement, until the younger sister realised that the older sister was not properly accounting for their father’s income from the Business, and substantial sums of monies were unaccounted for. The younger sister then questioned the older sister about this but received no response.

6.   The younger sister was then alerted by an employee of the Business that the older sister had taken their father to a law firm to execute various legal documents (e.g. a Power of Attorney and a Statutory Declaration) (“Legal Documents”). The Legal Documents had the effect of transferring the ownership of the Business to the older sister.

7.   Given her day-to-day interactions with the father, the younger sister knew that her father did not have the mental capacity to sign legal documents.

8.   The younger sister (our client) thus made an urgent application to the Family Courts for the revocation of her older sister’s powers under their father’s LPA. The younger sister also sought an order for an investigation by the Office of the Public Guardian (“OPG”) into the older sister’s conduct to be made.

C.   The Family Court’s Decision

9.   Over a five-day trial, the trial judge in the Family Court heard evidence of parties and agreed with the younger sister (our client) that the father did not have the mental capacity to execute the Legal Documents, and deemed the Legal Documents invalid.

10.   The trial judge also found that the older sister’s conduct was “egregious” and that her acts leading to the execution of the Legal Documents “speaks of entitlement and not responsibility”.

11.   The trial judge also ordered the OPG to investigate the monies withdrawn by the older sister to meet her personal expenses, and ordered the older sister to reimburse these monies to the father upon conclusion of the investigation.

12.   However, despite the trial judge’s findings and an investigation being ordered, the trial judge did not revoke the older sister’s powers as donee.

13.   Instead, the trial judge “modified” the two sisters’ powers by ordering that each sister could not make a decision regarding the Business without the written consent of the other. It was only in the event of a disagreement that the younger sister could make final decision.

14.   The trial judge allowed the older sister to continue to have powers in terms of other financial affairs of the father, as the misconduct by the older sister was only in the realm of the father’s business and did not extend to other financial aspects.

15.   The Family Justice Court’s decision was published in VHI v VHJ [2020] SGFC 37.

16.   Our client (the younger sister) appealed to the Family Division of the High Court.

III.     THE APPEAL TO THE FAMILY DIVISION OF THE HIGH COURT

A.   Arguments on Appeal

17.   On behalf of our client (the younger sister), we raised various arguments on appeal. We set out only the key ones, for brevity.

18.   Our key argument was that the Court does not have the power to modify donee powers and re-write the terms of the LPA on the donor’s behalf. The power to modify is not expressly provided for under the MCA. There are also no precedent cases both locally and overseas where a Court has done so.

19.   By ordering that each sister could not make decisions for the Business without the other sister’s consent, the Court restricted both sisters’ powers, including the non-errant younger sister, when previously either could act without the consent of the other.

20.   We argued that, under the MCA, it is for the Court to either revoke or decline to revoke an errant donee’s powers. The Court does not have the power to modify an errant donee’s powers.

21.   Furthermore, there should not be an arbitrary distinction between aspects of one’s misconduct. As long as there has been misconduct or a risk of potential harm to the donor (i.e. the father in this case), the powers of a financial affairs’ donee ought to be revoked in its entirety. Otherwise, the older sister in this case would still have free reign to deal with other assets belonging to the father.

22.   Lawyers for the older sister argued that the trial judge’s decision should remain, as the Family Court had the power to modify the ambit of the donee’s powers under the MCA. It was also argued, inter alia, that the older sister was not an errant donee but rather simply made a grave mistake, and thus the Family Court’s decision not to revoke the older sister’s powers was a right one.

B.   Decision by Justice Debbie Ong – Younger Sister’s appeal to revoke Older Sister’s Property and Affairs LPA allowed

23.   Our appeal was heard by Justice Debbie Ong on 11 November 2020. Representatives of the Office of the Public Guardian were also present at the hearing.

24.   On 3 December 2020, Justice Ong gave her decision to revoke the older sister’s powers as a donee for Property and Affairs.

25.   Justice Ong recognised that the Family Court had found the older sister’s conduct to be “egregious”, “self-serving, and irresponsible”. Given those findings, Justice Ong found there was sufficient reason to ensure, to protect the best interest of the father, that the older sister did not have the power to manage his Property and Affairs. Justice Ong however allowed the older sister to continue to remain as the donee of the father’s personal welfare.

26.   Justice Ong did not find it necessary to decide on whether the Court indeed has the judicial power to modify a donee’s powers or not, as she found that a modification would not be appropriate on the facts of the case in any event.

IV.     CONCLUDING REMARKS

27.   Although it has been ten years since the MCA has come into force, the law on mental capacity remains a developing area of practice. This case appears to be the first case tried in court in which a donee had acted against the best interest of the donor, and has been stripped of her powers (as a property and affairs donee) pursuant to an application by a co-donee.