The Hinduja family are at the top of the 2022 Sunday Times Rich List and have more recently been taking over the headlines in the private client sector due to the recent litigation consuming India’s billionaire family. The family net more than 28 billion pounds and are led by 86-year-old patriarch Srichand Hinduja.

Readers will likely be aware of the long running dispute in the family, culminating in a judgment by the High Court on 11 November 2022 to lift a restriction on the reporting of the matters and allow the judgments in the 20 something hearings to be made public.

I will not attempt to summarise the extensive number of proceedings that have taken place in this matter, but will highlight the key issues relating to the preparation of Lasting Powers of Attorney (LPAs) that are central to the proceedings.

In June 2015, Srichand had made a Lasting Power of Attorney (LPA) for property and financial affairs, solely appointing his wife, Madhu, and his daughters, Vinoo and Shanu, as his replacement attorneys for his property and financial affairs. 

Madhu disclaimed, leaving Vinoo and Shanu to act jointly and severally. Madhu and Vinoo were appointed jointly and severally as his attorneys for health and welfare. In Court of Protection (COP) proceedings issued in June 2020, Srichand's brother, Gopichand, challenged the validity of the LPA and claimed that, due to his diagnosis of dementia, Srichand lacked the capacity to make the LPA in the first place.

Justice Falk commented in his judgement of 23 June 2020 that the LPAs included certification of Srichand's capacity from both his neurologist and a private client solicitor, and this no doubt aided the family in defending the claims made by Gopichand. In an order dated 17 March 2021, various orders were made about Srichand's care, including the appointment of a solicitor, Andrew Hine, as deputy.  

It became apparent that the daughters were utilising Srichand's funds for their litigation costs. Funds can be applied from the donor’s assets to cover the donor’s litigation costs and the attorney’s reasonable expenses. 

However, funding your own high-cost litigation is quite understandably not considered a reasonable expense. The judge acknowledged this was a ‘flagrant conflict of interests’ and subsequently led to the daughters stepping down as attorneys of their own volition, no doubt in recognition that they had compromised their position, and being replaced by an independent deputy.

Attorneys have a duty to act in the best interests of the donor and must report to the Court of Protection in carrying out that duty. Any breach of their duties can result in the attorneys being removed and replaced by the Court of Protection by a more suitable alternative, as seen in this case.

Whilst the average family may not experience the same complexities that the Hinduja family have encountered, the key principles remain the same. Such matters are very personal and can be emotive, and the issues relating to the two LPAs can be inextricably linked.

The case highlights the complications that can arise when preparing and implementing LPAs, even for the wealthiest families with the utmost resources available to them. In fact, the donor’s high net worth can add to their vulnerability.

Modernisation of the LPA preparation process

Practitioners will already be aware that the preparation of LPAs is moving online, in a bid to improve the accessibility of this service. The service has been rolled out for lay persons and is awaited for practitioners. 

The Ministry of Justice recently released the results of their consultation of July 2021 on the online service and the key takeaways for practitioners are:

• There will be no obligation for donors to use a solicitor to make LPAs, but the MoJ is looking into how to better inform the public as to the legal advice available.
• There will be no obligation for solicitors to use the online service, although this will be encouraged and may become obligatory in the future. Many elderly clients would not be familiar with the online process, therefore it remains to be seen if the paper process could feasibly be phased out entirely.
• There will be no option for an urgent service as the MoJ wants to improve the service for all, not just for some.
• The legal four-week notification period will remain, but the MoJ is looking into how to make the process for making objections easier and the waiting time may be shortened in the future.
• The applicant will need to confirm the identity of the donor and certificate provider when submitting the LPAs for registration.
• The use of electronic signatures is being considered and it remains to be seen whether they can be implemented without an increased risk of financial abuse.
• The consultation results acknowledged that the certificate provider is more important than witnesses. Certificate providers will remain extended to non-professionals, and there should be no obligation for the certificate provider to be a professional.
• The law will be changed to implement the updates as soon as a space can be obtained in parliament.

Practitioners should note that as part of the update to the online forms, certain preferences and instructions are no longer obligated to be included. Specifically, LPAs will no longer require an express instruction that discretionary management schemes should continue. 

In practical terms, this can allow the discretionary management to continue immediately once an LPA is in play, however, attorneys should be wary of relying on the status quo and should still review the terms of discretionary management schemes on appointment to ensure that the donor’s investments are being properly managed.

The results of the consultation have highlighted the difficulty in utilising LPAs in banks and hospitals, and the online service should be a welcome means of using technology to facilitate the process and improve access to justice. However, the use of a solicitor in LPA matters will remain and may well increase if the use of technology is, for some, a vulnerability risk. 

The issues highlighted in the Hinduja proceedings highlight the reasons for obtaining legal advice and having LPAs prepared for a solicitor, particularly when there are high net worth individuals and/or complexities in the family. 

The involvement of a solicitor is an added layer of protection for the donor and will ensure that any vulnerabilities are properly considered, and proper certification provided as to the donor’s capacity.