By Ann-Marie Aston, Partner at The Wilkes Partnership
Where an adult situated in England and Wales owns property but loses mental capacity, the law provides that their property can be managed either by a registered Lasting Power of Attorney or Deputy Order issued by the Court of Protection (COP) in England and Wales. However, it is increasingly the case that for an incapacitated adult present in England and Wales or those owning property there, they may have stronger connections to another country or jurisdiction meaning cross-border arrangements for incapacitated adults may need to be considered.
The explosion of international travel in the latter half of the twentieth century was followed by travellers/holidaymakers wanting to “live the dream” and buy a holiday home or even move to their dream destination. Coupled with economic migration and global investment, it is not unusual in today’s society for people to be a national of one country, live and work in another or multiple countries and own property or investments in yet other multiple jurisdictions.
Each country where an individual has a connection will have its own system of laws which govern property ownership and succession but not all countries have an established process to deal with the situation where the property owner or resident loses mental capacity.
So what happens when a person living in England or Wales loses mental capacity who owns property abroad or someone who usually resides abroad owns property in England or Wales?
The Hague Convention on the International Protection of Adults 2000 (the “Hague Convention”)
The phrase “the Hague Convention” conjures up all sorts of high-brow legal connotations but it’s actually a fairly straightforward piece of law – it’s the practice in the particular jurisdiction that remains complicated!
The Hague Convention is a convention or cross-border agreement between the countries who have signed it with the aim to “improve protection of adults who by reason of an impairment or insufficiency in their personal faculties are not able to safeguard their own interests”. The Hague Convention also sets a framework of rules and applicable law for subscribing states to apply with the objective of mutual recognition and enforcement of “protective measures” between those states.
Thus far, only 19 states have signed the Hague Convention and of those, only 12 have ratified it i.e. legally incorporated it into their own laws. Scotland has ratified but England, Wales and Northern Ireland are yet to do so. However, since the Hague Convention is mentioned in the Mental Capacity Act 2005 (MCA 2005) which has been enacted, the Government appears to still support it and expects to ratify at some point.
It must be noted that the MCA 2005 has a broader operation than the Hague Convention, the English Court of Protection may recognise a foreign order even if there is no reciprocal obligation from that country.
The MCA 2005 role in the Court of Protection (COP)
Sections 15 and 16 of the MCA 2005 provides the COP with powers to make a declaration where an adult:
- is habitually resident in England and Wales;
- owns property in England and Wales;
- is present in England and Wales, or who owns property there, if the matter is urgent;
- is present in England and Wales, if a “protective measure” which is temporary and limited in its effect to England and Wales is proposed in relation to him.
Habitual residence is a question of fact and is not defined in either the Hague Convention or the MCA 2005 but is largely where an adult has some degree of integration in a particular place. Contrast this with domicile, which is a legal concept and has no bearing when the court is considering the question of habitual residence. Domicile is, of course, an important question in relation to succession but not in determining habitual residence and the COP’s jurisdiction to make decisions for an incapacitated adult under the MCA 2005. There has been much case law, particularly in determining habitual residence in relation to child matters in the family courts.
A “protective measure” as defined by the Hague Convention is “a measure directed to the protection of the person or property” and includes “the designation and functions of a person having charge of the adult’s person or property, or representing or otherwise helping him”. A Deputy Order granted by the COP would come under this measure and should therefore be recognised as a “protective measure”. Likewise, subject to the process of an equivalent to a Deputy Order in another jurisdiction, such an order issued by an overseas court could potentially be “ratified” by the COP thereby allowing the person appointed to manage property or assets in England and Wales using the “ratified” overseas order.
What about Powers of Attorney or their overseas equivalents?
A Power of Attorney executed in another jurisdiction does not automatically have “protective measure” status in England and Wales in its core form. For instance, a durable Power of Attorney executed in a US state for use in that particular state could not automatically be used by the attorney to manage the donor’s property in England and Wales. However, the durable Power of Attorney could become a “protective measure” if it has been through a court registration process in the state where it is operative.
In 2019, the COP considered various Powers of Attorney executed in different countries to determine whether they were valid “protective measures” which could be confirmed by the COP and made operative in England and Wales.
Firstly, the court considered a Continuing Power of Attorney made in Ontario, Canada. On scrutiny, Her Honour Judge Hilder found that the document/matter had not gone through a process of scrutiny and confirmation of the donor lacking mental capacity in the Ontario court. For this reason, it could not be ratified by the COP and given “protective measure” status and therefore could not be used to deal with the donor’s property in England and Wales.
In a second case, a “Certificate of Incapability” issued by the court in British Columbia in Canada was recognised as a “protective measure” as it had been scrutinised and allowed the British Columbia’s public guardian to manage the protective person’s assets in England and Wales.
In another case, the COP considered an Enduring Power of Attorney executed in New Zealand but had not been through any registration process in the New Zealand court confirming the donor lacked mental capacity. This meant that it could not be recognised as a “protective measure” by the COP without first going through such a process in New Zealand.
Validity of a Lasting Power of Attorney or COP Deputy Order in an overseas jurisdiction
Where an adult has a connection with, or assets and property, in a Hague Convention country where the Convention has been ratified then a Lasting Power of Attorney or COP Deputy Order has the ability to be recognised in that other country as being a “protective measure”. However, it is likely that a Lasting Power of Attorney would need to go through the COP process to be recognised as a “protective measure” in that jurisdiction.
Where an adult has property or connections in a non-Hague Convention country, the requirements in that country will largely depend on how established that country’s domestic laws are on dealing with the property and affairs of an incapacitated adult. Whether or not the connected country is a Hague Convention country, lawyers will need to be instructed in that country to advise on the requirements there and what measures, if any, need to be taken here first before the matter can be taken to the court in that jurisdiction.
Increasingly as people migrate around the globe, they establish connections in multiple jurisdictions. For those who come to own property or assets in those multiple jurisdictions but then lose mental capacity, their property may need to be dealt with in those jurisdictions.
Navigating the process is not straightforward. Specialist legal advice should be sought as to whether a Power of Attorney or Court Order granted in another jurisdiction (where the adult may be habitually resident) would likely be granted “protective measure” status by the COP to be used in England and Wales because that person also has property or assets there.
Likewise, it is likely that a Lasting Power of Attorney granted in England and Wales would need to go through the COP to confirm its validity and donor’s lack of mental capacity before the court in an overseas jurisdiction would consider bestowing “protective measure” status and declaring it valid in that jurisdiction. Where a Deputy Order is applied for, the COP should be given as much information as possible about overseas assets so the necessary powers to take steps to deal with them can be granted.
However, legal advice should always be sought in the particular overseas jurisdiction to ensure that the correct steps are taken here before applying to the court there to gain “protective measure” status, or its equivalent, to the power. Indeed, the overseas court may not have any systems in place to recognise an overseas power meaning it may be necessary to start from scratch. It is again essential that specialist legal advice is sought at the earliest opportunity.
You can contact Ann-Marie Aston, Partner at The Wilkes Partnership on 0121 733 8000 or email [email protected].
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This article was submitted by The Wilkes Partnership as part of their sponsorship package for the 2022 SWW Conference. The views expressed in this article are those of the submitter and not those of The Society of Will Writers.