Court strips woman's power granted under father's LPA after she took money from his business account

The High Court allowed the elder sister to remain as a co-donee in matters relating to her father’s personal welfare, and did not find it necessary to decide on whether it has the judicial power to modify a donee’s powers or not, as a modificatio
The High Court allowed the elder sister to remain as a co-donee in matters relating to her father’s personal welfare, and did not find it necessary to decide on whether it has the judicial power to modify a donee’s powers or not, as a modification would not be appropriate on the facts of the case.PHOTO: ST FILE

SINGAPORE - A woman succeeded in a court appeal to oust her elder sister, who meddled with their mentally incapacitated father's business, from jointly and severally managing his property and affairs.

This is believed to be the first such reported case under the Mental Capacity Act (MCA) - which was introduced in 2008 - of a co-donee being stripped of powers under a Lasting Power of Attorney (LPA), after acting against the best interest of the person making the LPA.

Two sisters had been appointed in June 2017 as donees in an LPA executed by their elderly father that granted them powers to act jointly and severally in his personal welfare, and his property and affairs.

This meant that in the event that the man (the donor) lost his mental capacity, his two daughters, X and Y, could make decisions independently concerning his assets and finances, and his health and medical care - without the consent or knowledge of the other.

Shortly after executing the LPA, the man - a funeral parlour owner - suffered a stroke in July 2017, which left him mentally impaired.

A few months later, X discovered that her elder sister, Y, was not properly accounting for the funeral parlour's business income, and substantial sums of monies were unaccounted for.

An employee also informed X that Y had taken their father to a law firm to execute legal documents, which transferred his interests in the company to Y, converting it to a private limited company and appointing her as its director and sole shareholder.

X took Y to court over these matters, seeking a revocation of her elder sister's powers under their father's LPA, and to stop Y from doing business under the converted company and using any monies from his account.

A family justice court ordered in 2019 that the original company, of which the father was the sole proprietor, be reinstated.

While finding Y's conduct "egregious", the judge did not revoke her powers under the LPA as donee.

Instead, the court ordered the two sisters to work together in managing the business.

The judge adjusted their powers as donees with regard to the funeral parlour, requiring that any business decisions be made only with written consent.

Y was allowed to retain powers in terms of her father's other financial affairs, as the complaint was only in the realm of the father's business.

On appeal to the Family Division of the High Court, X's lawyers from Jacque Law argued that under the MCA, the court does not have the power to modify donee powers and re-write the terms of the LPA on the donor's behalf. There are also no precedent cases where a court has done so, they added.

"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," said the firm, in a post about the case on its website.

High Court Justice Debbie Ong last month found there was sufficient ground to revoke Y's powers to manage her father's property and affairs, in order to protect the donor's best interests. The judge, however, allowed her to remain as the donee in matters relating to her father's personal welfare.

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 based on the facts of the case, according to the firm's post.

Jacque Law managing director Jacqueline Chua said: "Although it has been 10 years since the MCA has come into force, the law on mental capacity remains a developing area of practice. Our client believes the decision is in the best interests of their father."