The validity of continuing powers of attorney, granted in favour of a bank, have been questioned by Sheriff Baird at Glasgow Sheriff Court.
The court held that the continuing power of attorney in favour of Clydesdale Bank failed to meet the requirements of section 15(3) of the Adults with Incapacity (Scotland) Act 2000, as it had not been validly constituted. Not only did it fail to clearly express the granter’s intention that the power be a continuing power, as required by section 15(3)(b), but, it failed to state that the granter had considered how a determination of incapability might be made – as per section 15(3)(ba).
The Continuing Power of Attorney in favour of the bank, had been granted by Mrs X in 2008, following the death of her spouse. Thereafter, Mrs X lost capacity and her next of kin sought Financial & Welfare Guardianship under Sections 57 & 58 of the 2000 Act. Upon notification of the application, the Office of the Public Guardian advised that Mrs X had granted a power in the Clydesdale bank’s favour, a fact of which Mrs X’s next of kin were unaware. Despite never having exercised their power, the Clydesdale bank opposed the guardianship order on the basis that they now planned to do so. In turn, the next of kin of Mrs X, sought revocation of power in favour of the bank.
Sheriff Baird explained: “I have said that the document which purported to create a continuing Power of Attorney in favour of the Bank is not valid as it does not comply with the requirements of section 15(3)(b), and separately, section 15(3)(ba) of the Act, and as such in terms of section 18, has no effect during the adult’s in capacity. Assuming that I am correct about this, and for the reasons articulated, there will likely be wider implications. The document drawn up and signed in this case is of a “pro forma” standard type. It is likely therefore that this particular commercial organisation has other such documents in its favour, and perhaps many other such documents in its favour, ostensibly granted in purported compliance with the Act and registered with the Office of the Public Guardian. If I am correct in the view which I have taken as to validity, then none of such documents have been granted in accordance with the provisions of section 15 and none are valid, since such a continuing Power is valid only if it is expressed in a written document which complies with the requirements of section 15(3).”
Interestingly, the court also held that even if the Continuing Power of Attorney had been validly constituted, with the Bank failing to exercise their powers as Mrs X’s Attorney, it would have revoked the power and appointed Mrs X’s next of kin to administer her affairs.
To read the judgment in full, please visit: http://www.scotcourts.gov.uk/opinions/2014SCGLA1.html