The Singapore Mental Capacity Act (‘SinMCA2010’) (which can be found at statutes.agc.gov.sg) came into force in 2010. As it was the Singapore Parliament’s intention to model SinMCA2010 after the England and Wales Mental Capacity Act 2005 (‘MCA 2005’), key sections in the SinMCA 2010 were replicated from the MCA 2005 (see comparative table available here). As such, with the great similarities between both MCAs, cases from the Court of Protection (‘COP’) have, thus far, been an excellent resource to both Singaporeans MCA Practitioners and the Singapore’s Family Justice Court (‘FJC’) in interpreting and applying key principles in the SinMCA2010.
Re TQR  SGFC 98 is an example of a novel FJC case where the basis of its decision was formulated with reference to the similarly novel case of Re Buckley: The Public Guardian v C  EWHC 2965 (COP). Re TQR, like Re
Buckley, focused on laying out guidelines governing the deputy’s investments of P’s monies and it is suggested that such close referencing was possible considering Section 24(9)(b), SinMCA2010 and Section 19(8)(b), MCA2005 are identical where both the COP and the FJC may,
…confer on a deputy powers to exercise all or any specified powers in respect of it, including such powers of investment as the court may determine.
P had assets amounting to over SGD $6 million and P’s Deputies were seeking to be given powers to make investment decisions in respect of P’s assets. The FJC had to decide if such powers should be given and if so, the extent of such powers.
Decision: Investment Principles and Guidelines
The FJC adopted a similar approach to that of Senior Judge Lush in Re Buckley:
- Making reference to the MCA principles (Sections 3(4) & 3(5) SinMCA 2010, identical to Sections 1(4) & 1(5) MCA 2005), the FJC concluded that unlike a person with mental capacity who is free to make any investment decision he wishes, a Deputy who makes an investment decision for P does not have the luxury of making unwise decisions but is required to make decisions that are in P’s best interest (at  & , see Re Buckley at  & ).
- Making reference to Section 6(7) SinMCA 2010 (identical to Section 4(6) MCA 2005), while a Deputy making an investment decision for P must consider what P would have done in the same circumstances (e.g. P was a reckless high-risk investor and would risk all his assets on some high risk investment), as P has lost mental capacity and even though P could and would have made such a decision if he had mental capacity, the Deputy does not have the same right to make such a decision and have to consider whether the proposed course of action is in P’s best interest. (see  to  and Re Buckley at  – ).
- The FJC stating at  that relationship between a Deputy and P is akin to the fiduciary relationship between a trustee and a beneficiary (see Re Buckley at ). The FJC adopted a different approach, however, to that adopted in England and Wales in the following key respects (a full comparison is not possible in this limited space):
- Powers of investments should not be routinely granted to Deputies but should only be granted when necessary and appropriate in the circumstances of the case (at ). In contrast, ‘powers of investments’ are included in the standard COP order given to Property and Affairs Deputies.
- That in the determining of P’s ‘best interest’, section 6(6), SinMCA 2010, is an important factor and the Singaporean Deputy has an obligation to ensure that P’s property is preserved towards the costs of P’s maintenance during his life at . (There is no similar provision in MCA 2005) This means that while a person with mental capacity is fully entitled to disregard the issue of preservation of his assets while making decisions on his assets, his Deputy cannot disregard this and must always consider the issues of preserving P’s assets for his maintenance (at  & ). This means that the Singaporean Deputy is obliged to adopt a financially more conservative position than an English or Welsh Deputy.
- The FJC stated at  that it has to consider the following steps when deciding on investment powers:
- whether P has enough assets to permit some of them to be used for investment;
- the relationship between P and the Deputy; and
- the safeguards that should be put in place to protect P’s assets from bad investment decisions.
- This need to preserve P’s assets means that the FJC may only permit investments if P has significant assets that are more than sufficient for his needs and future maintenance, such that his maintenance would not be affected in the event that the investments resulted in significant losses (at  & ). It is important to mininise the risk of loss to P and to limit the extent of possible loss in addition to ensure that there is a reserve of funds or assets for P’s use no matter what happens to the investments (at ).
- It is noted that the FJC agreed with the Deputy’s proposed safeguards to maintain a sum of $200,000 as a reserve fund which would not under any circumstances be invested. The Deputies also agreed to be personally responsible to P for losses in the event that P’s investments fall in value by more than 30% and would reimburse P for the loss sustained. [See ]. However, it is noted that these safeguards may not be necessary in England & Wales, due to the COP routinely ordering Security Bonds when granting powers to Property and Affairs Deputies. The ability for the COP to enforce the bond means that P’s capital is secured and any investment losses would be restituted to P’s estate almost immediately with the Deputies liable for such amount restittuted.
It is suggested that the probable reason for the FJC adopting the position that only P’s excess funds may be invested is perhaps linked to Singapore’s recent memory of the 2008 global financial crisis where it was reported that many elderly investors lost their life-savings through junk ‘mini-bonds’ offered by Lehman Brothers.3 The FJC concluded that ‘no investment is safe from risk and even if the investment itself carries minimal risk, no investment is safe from risks arising from the global economy as seen during the global financial crisis of 2008’ (at ). It also expressed concerns that if P has very little assets, that there would be very little buffer ‘if anything goes wrong’ (at ).
At the same time, the FJC made an interesting observation as to the Singapore context and came to three further conclusions:
- It is not uncommon for people [in Singapore] to make investment decisions with a view towards increasing their asset pool for the eventual benefit of their future beneficiaries of their estates (at ). (Before stating that a Deputy cannot base his decision solely, or even mainly on how this would impact P’s heirs in the future’ at .)
- If the Deputy is the future beneficiary of P’s estate, it is possible that the Deputy would subconsciously be thinking about his future inheritance when making investment decisions which also means that the Deputy is less likely to engage in risky behaviour since such behaviour is likely to impact on his future inheritance (at ).
- The Deputy is more likely to be concerned about P’s interest if he/she is a close relative of P (although the FJC did concede this is certainly not always true) and the court may be more willing to entrust the Deputy with the power to invest P’s money (at ).
While it may be true that a risk-adverse beneficiary might be incline to adopt a conservative approach towards investing P’s monies, the converse could also be true. Additionally, considering the increasing number of reports in the England & Wales on Deputies and Attorneys financially abusing P’s monies, it would regrettably seem that often, it is those who are the closest related to P that ends up being hauled to court to have their Attorneyship/Deputyship revoked.
Absent a crystal ball for predicting if a Deputy would end up abusing P, the better way to minimise abuse would be ensure that the safeguards put in place for each case are suitably tailored to each unique set of facts to best discourage that particular Deputy from villainously exploiting the person whom he is supposed to protect. It is suggested that currently, the ordering and enforcing of Security Bonds provide the best safeguard against exploitative behaviour.
It is still early years in the development of the jurisprudence concerning MCA 2005 and SinMCA 2010 and the writer hopes that as ‘iron sharpens iron’, that the concurrent developments and clarifications in both MCAs will allow P to be supported to the greatest extent in making his or her own decisions and if he or she is not able to, to ensure that decisions on his welfare, property and affairs would continue to be in clean, honest hands.