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[2014] NSWCATGD 5
NCAT Guardianship
2013-09-16
Boland J
Original judgment source is linked above.
reasons for decision 1On 20 January 2014 the New South Wales Civil and Administrative Tribunal, Guardianship Division ("the Tribunal") reserved its decision in respect of an application to review an enduring Power of Attorney dated 17 July 2012 granted by Mrs HLT to her solicitor, Ms MMR, and her son, Mr BES. The proceedings commenced in the NSW Guardianship Tribunal ("the GT") but by reason of the of the Civil and Administrative Tribunal Act 2013 (NSW) ("the Civil and Administrative Tribunal Act"), which statute came into force on 1 January 2014, the Guardianship Tribunal was abolished, and pursuant to the transitional provisions in that Act the matter continued in the Tribunal. 2On 7 February 2014 the Tribunal made a declaration under s 36(3)(a) of the Powers of Attorney Act 2003 (NSW) ("the Powers of Attorney Act") that Mrs HLT did not have the mental capacity to make a valid power of attorney on 17 January 2012. 3The Tribunal also made a final financial management order under s 25E of the Guardianship Act 1987 (NSW) ("the Act") in respect of Mrs HLT's estate. The NSW Trustee and Guardian ("the NSW Trustee") is appointed as the financial manager. 4These are the Tribunal's reasons for the declaration and the order made. The reasons should be read in conjunction with the Guardianship Tribunal's earlier reasons in respect of orders made on 4 November 2013 following the determination of a guardianship application in respect of Mrs HLT ("the guardianship reasons"). Also relevant to aid understanding of these reasons are reasons published by the Guardianship Tribunal after the first day of the hearing that took place at regional NSW on 16 September 2013 ("the first reasons"). 5As in the first reasons, and the guardianship reasons, the Tribunal, with the consent of the parties, to avoid confusion and to aid understanding of the reasons set out how we would describe relevant parties and entities associated with the applications before the Tribunal. We now again set out the descriptions used in [5] of the guardianship reasons:
The applications and issued identified 6When the proceedings commenced at [regional NSW] in September 2013 there were three applications before the Tribunal:
Background 13At paragraph 18 of the guardianship reasons the Guardianship Tribunal set out relevant background material as at the date of those reasons. That background is now repeated with the insertion of some additional factual material adduced in evidence on 20 January 2013 or relied on by one or more of the parties on that day. 14The following matters, unless noted by us to be an assertion, were accepted as relevant facts established to the requisite civil standard. 15Mrs HLT was born on [date removed] 1930. She is accordingly presently aged 83 years. At the date of the resumed hearing she was living with Mr GAU and Mrs OEU in [Property A in Sydney]. No decision had been made by the Public Guardian about her accommodation pending the outcome of this hearing. Mrs HLT was interviewed by [representative A] from the Public Guardian's office after the making of the guardianship order. [Representative A] was not available at the date of the hearing, but [representative B] from the Public Guardian's office told the Tribunal that Mrs HLT had expressed a strong view to [representative A] that she wished to remain living at [Property A in Sydney], to resume her lawn bowling activities and to see her local friends. 16Mrs HLT and her late husband adopted three children. One child died in infancy. Their surviving children are Mr GAU and Mr BES. 17Mr FOT held interests in hotels and lived for many years at [regional] NSW. He and Mrs HLT commenced living in their former matrimonial home at [Property B in Sydney] about thirty-six years ago. Mrs HLT's father lived with them for some time until his death and was cared for by Mrs HLT. 18Mrs HLT lived principally in property B until about late November/early December 2012 when she commenced living with Mr BES and Mrs NES at regional NSW. Mrs HLT left regional NSW in about December 2013 for the purpose of attending family functions in Sydney. At the date of the adjourned hearing she had been living in Sydney for approximately 11 weeks. Mr BES asserted he had no contact with his mother during this period. 19While living at Property B in Sydney prior to 2012 Mrs HLT enjoyed an active social life, had many friends, and enjoyed bowling and other activities at her local bowling club and in her immediate locale. 20In May 1999 Mrs HLT executed an enduring Power of Attorney ("the 1999 instrument") by which she appointed Mr GAU and Mr BES as her attorneys. The 1999 instrument was formally revoked by Mrs HLT on 7 July 2010. No copy of the 1999 instrument was provided to the Tribunal. 21Prior to January 2013 Mrs HLT's major assets comprised property B, and other real property. She had the potential, as a beneficiary, to receive distributions from the Trust. Property B in Sydney was encumbered by mortgage of approximately $1M. The mortgage advance was obtained to purchase two properties: Property C in regional NSW and Property A in Sydney. The purchase price of Property C was $415,000. The purchase price of the Property B was $600,000. Property C was initially purchased in the name of Mrs HLT but subsequently transferred to Mr BES and Mrs NES as joint registered proprietors. Mr BES and Mrs NES made one rent payment of $5,000 prior to the transfer of the property to their names. Property B is registered in Mrs HLT's name, but occupied after its purchase by Mr GAU, Mrs OEU and their two adult children. It is asserted by Ms MMR that no evidence of rent paid by Mr GAU and/or Mrs OEU is disclosed in Mrs HLT's bank statements. 22The appointor of the Trust is Mrs HLT, and on her death Mr GAU and Mr BES are the appointors. The beneficiaries are Mrs HLT, Mr FOT, Mr GAU, Mr BES, their wives and children. The Trust Deed was not in evidence before the Tribunal on the second day of the hearing, but was subsequently produced to the Tribunal at our request. There is no provision in the trust deed to deal with the situation if the appointor becomes incapable. 23Ms MMR, also at the Tribunal's request, produced the financial statements for the Trust for the years ended 30 June 2011, and 30 June 2012 for the adjourned hearing. Ms MMR also produced income tax returns for the financial years ended 30 June 2011 and 30 June 2012 for Mrs HLT as well as the partnership returns for a partnership between Mrs HLT and the Trust. The financial statements for year ended 30 June 2013 are incomplete and it is asserted they cannot be completed until the conclusion of these proceedings. 24In the year ended 30 June 2012 Mrs HLT, as a beneficiary of the Trust, received the total gross income of the Trust $102,564 and the partnership profit $104,064. The balance sheet for the partnership discloses a loan owing by the Trust to the partnership of $303,445.51. It is asserted by Mr BES that Mrs HLT has a debt to her late husband's estate, but Mr DOX asserts that the debt is one owed to Mr FOT by the Trust. The 2011 balance sheet for the trust shows a credit loan account in the name of Mr FOT in the sum of $294,751.97 and a credit loan account in Mrs HLT's name of $470,815.18. The same balance sheet discloses debit loan accounts in the names of Mr GAU, Mrs NES, [Mr BES' son], [Mr DEU] and Mr DEU. A demand addressed to Mr WER for repayment of Mr GAU's debit loan account has been made by Ms MMR. 25Ms MMR, in a letter dated 5 June 2013, states Mrs HLT holds a [savings account A] with a then current balance of $94,000 a [savings account B] with a balance of $960,000 and [savings account C] with a balance of $540. Additionally, Mrs HLT is noted to be the registered owner of a vehicle with a value of approximately $19,500. It is asserted that [Mr BES' son] became the registered owner of the vehicle in about January 2013 when Mrs HLT's licence was cancelled. 26Mrs HLT's current liabilities are asserted by Mr BES to be a capital gains tax debt of approximately $400,000, a debt to the estate of Mr FOT of $300,000 and a mortgage indebtedness secured over the property B, the precise quantum of which was not before the Tribunal. Mr BES asserts the property B must be sold to meet Mrs HLT's ongoing financial needs notwithstanding the sale of her interest in the Hotel. Ms MMR in her letter to the Tribunal dated 5 June 2013 does not mention these debts but does list as Mrs HLT's liabilities a Quarterly BAS/PAYG/GST of $41,130 to be adjusted in June quarter BAS following the sale of the Hotel. The list of Mrs HLT's assets and liabilities was not updated for the adjourned hearing. 27From about 2008 Mrs HLT commenced suffering a decline in her cognitive capacity. She continued, until late November 2012, to see and be cared for her general practitioner, Dr Z, whom she consulted for a period of about 30 years. 28In 2008 Ms MMR commenced acting for Mrs HLT. Ms MMR had formerly acted for Mr BES. Her firm also, at some stage, acted for Mr GAU drawing a Will for him. Mrs HLT's files and those of Company A were obtained from her former solicitor, Mr QHT of [firm name removed]. Mr QHT wrote to Ms MMR on 18 December 2008 at the time of the handover of his files and advised that Mrs HLT had been diagnosed suffering from "early stage Alzheimer's dementia". Mr QHT noted that his reports to Ms MMR of his discussions with Mrs HLT were "true and correct" and that her inconsistent instructions (to his firm and as recorded by Ms MMR) may be as a result of her diagnosis. 29On 16 June 2010 a cheque signed by Mrs HLT and drawn on her account to pay professional fees of Ms MMR in the sum of $9,233.66 was dishonoured. It is also asserted by Mr DOX that Mr BES claimed a cheque signed by his mother and drawn in favour of the ATO was also dishonoured. At about this time Mr GAU and Mrs OEU were absent from Sydney on a cruise. Mrs HLT told Mr BES she had no funds and he travelled to Sydney and arranged a transfer of funds into her cheque account so that there were funds to meet the dishonoured cheques and to provide for his mother's living expenses. 30On 7 July 2010 Mrs HLT executed an enduring Power of Attorney ("the July 2010 instrument") in favour of Ms MMR. Mr DOX executed the relevant certificate of understanding. Ms MMR, pursuant to the July 2010 instrument, took over the management of Mrs HLT's financial affairs. Ms MMR paid Mrs HLT's bills and rendered accounts for professional services and also charged for payment of accounts. It is asserted Mrs HLT received rental income from the Hotel either in her own capacity, or by way of distribution or by a loan advance from the Trust of approximately $23,000 per month. Mrs HLT is asserted to have requested Ms MMR pay her the sum of $800 per week for her personal expenses. Ms MMR arranged for a periodical payment to be made to Mrs HLT by payment into a separate bank account, which arrangement remained in place at the date of the hearing. 31On 16 February 2011 Mr DOX, on behalf of Ms MMR wrote to Mr BES. He explained the firm may have to cease to act for her, that Mr BES could apply to the Guardianship Tribunal to be appointed as Mrs HLT's financial manager, and that he may wish to telephone Mr DOX to discuss. It is asserted this letter was written because of unexplained withdrawals on Mrs HLT's account. 32On 25 January 2012, Mrs HLT executed a further Power of Attorney ("the January 2012 instrument") by which she again appointed Ms MMR as her attorney. Mr DOX said on the same day Mrs HLT executed a Power of Attorney on behalf of Company A appointing Ms MMR as Company A's attorney ("the January 2012 Company A instrument"). It is asserted by Mr DOX that these documents were executed as a precaution because Mrs HLT was unable to recollect whether she had signed other documents before a solicitor in Sydney sometime after July 2010. The July 2010 instrument was not formally revoked. The January 2012 instrument was not included in the papers provided to the Tribunal for the hearing. However, Ms MMR provided a copy of the January 2012 Company A instrument to the Tribunal on 15 January 2014. It is asserted this instrument was executed to facilitate the sale of the Hotel. Mr GAU attended the conference with Mrs HLT and Mr DOX. 33Mr DOX's file note dated 25 January 2012 refers to Mrs HLT's account being overdrawn. It also set out items of expenditure in respect of the property B and Mrs HLT is noted to be getting a quote for painting at home at a cost of about $13,000. 34Shortly after Mrs HLT executed the January 2012 Company A instrument and January 2012 instrument she contacted Ms MMR's office, on 3 February 2012, and advised she wished to revoke both instruments. 35On 7 February 2012 Ms MMR (per Mr DOX) wrote to Mrs HLT and noted he was "somewhat disappointed" at her decision. The letter concluded: Upon receipt of the signed and witnessed Revocations, I will be declining to act any further in the matter and will render a bill of my costs, will seek your authority for deduction of those costs from the monies in the account and then have the account transferred back to your sole control. 36Also on 7 February 2012, Mr DOX, on behalf of Ms MMR's firm, wrote to Mr BES noting Mrs HLT had executed a power of attorney from Company A in "[Ms MMR]'s favour to enable the sale to proceed". He further explained Mrs HLT had telephoned her instructions to revoke the January 2012 Company A instrument. He then said: You will need to go on to the New South Wales Guardianship Tribunal website and complete an online application form. If you need help in completing it please telephone the writer as I think the application should be for the New South Wales Trustee & Guardian to be appointed both guardian and financial manager so that the Hotel can be sold. I have spoken to [agent's name removed] who will attempt to keep the purchaser on hold pending an appointment of a financial manager. 37On 10 February 2012 Mr DOX spoke to Mr BES and discussed the proposed application to the Guardianship Tribunal. His file note states "Havent rec'd forms from office". On 13 February 2012 an employee of Ms MMR sent an email to Mrs NES requesting her to advise Mr BES she had been unable to download the Guardianship Tribunal forms which could only be completed online. 38On 13 February 2012 Mr DOX wrote to Mrs HLT asking her to advise the name of the firm of solicitors who would be taking over her matters. 39On 15 February 2012 Mr DOX telephoned Mrs HLT. He recorded in his file note "Discuss POWERS OF ATTORNEY - she tore up the revocation - says she did that because Mr BES told her to - taken by surprise. He also noted: Advise she needs to decide whether POWERS OF ATTORNEY (2) stay in place - if not then we can't continue to act for her - couldn't operate on bank a/c to pay bills etc - have to send everything back to her and she get another slr. 40After speaking to Mrs HLT, Mr DOX telephoned Mr BES the same day and reported to him the details of his conversation with Mrs HLT. 41On 16 February 2012 Ms MMR wrote to Mr BES. She advised him that, as funds had been withdrawn from an ATM at [Sydney], she could "no longer control withdrawals from the account". She proposed she either "cease acting as a financial manager of your mother" or "withdraw all of the funds from the account and place them in an account in my own name from which the outgoings may be paid". Ms MMR said, in concluding her letter, "You may wish to telephone to discuss this before I write to your mother". At the resumed hearing Ms MMR referred to two transactions that caused her concern namely two withdrawals each of $8,500 made respectively on 26 March 2012 and 29 March 2012, that is over a month after her letter to Mr BES. 42On 10 May 2012 Mr DOX wrote to Mrs HLT seeking instructions from her about matters concerning the tenant of the Hotel. 43On 16 May 2012 Mr DOX telephoned Mr BES. He recorded in his file note "Discussed letter. Will make apt for next Wednesday with [Mrs HLT]. Need to do something re (1) POWERS OF ATTORNEY (2) bank a/c". 44On 2 July 2012 Mr DOX telephoned Mr BES. An appointment for Mrs HLT was cancelled because of Mr FOT's illness. Mr DOX recorded "Also re-do POWERS OF ATTORNEY x 2 and when he can get mother up to see me he will - possibly 2-3 weeks". 45Mr DOX asserts, again because Mrs HLT was unable to recollect whether or not she had signed other documents in Sydney before a solicitor, on 25 July 2012 she executed a Deed of Enduring Guardianship ("the July 2012 deed") appointing Ms MMR and Mr BES as her joint and several guardians ("the July 2012 deed") and an enduring Power of Attorney appointed Ms MMR and Mr BES as her joint and several attorneys ("the July 2012 instrument"). Ms MMR and Mr DOX are unable to locate the file note of Mr DOX's attendance on Mrs HLT on 25 July 2012. 46On 19 November 2012 Mr DOX wrote to Mr BES. He noted: [Mr GAU] has advised that there will be a telephone monitoring system on both [Mrs HLT] and his own telephones which will record all conversations. If you feel it appropriate you should complete an application to the Guardianship Tribunal for:
The hearing 76The adjourned hearing was conducted at the Tribunal's Balmain premises. Mrs HLT attended the hearing as did all other parties except Mr BES. Mr BES was contacted by the Tribunal on his only phone, a mobile phone, but there were problems experienced with the connection. The Tribunal offered Mr BES the opportunity to make an application for an adjournment so that he could come to Sydney to participate in the hearing, but he informed the Tribunal he would not come to Sydney. With Mr BES's permission, after several occasions when his phone "dropped out", and some considerable time after the hearing commenced, the call was disconnected. However, the Tribunal telephoned Mr BES at the end of the hearing and afforded him the opportunity to make any submissions and to hear other parties' and the Separate Representative's submissions. 77As has been the case throughout the course of this matter, further documents were provided to the Tribunal during the adjourned period, and on the day of the resumed hearing. The separate representative described the piecemeal provision of documents to the Tribunal as being received in "dribs and drabs". She noted the difficulties caused by the sheer volume of documents many of which were supplied during the course of the hearing in response to her requests or that of the Tribunal. We agree with the separate representative's comments. The manner in which the Tribunal received documents made it difficult to adhere to the object of the Civil and Administrative Tribunal Act 2013 (NSW) that the proceedings be conducted justly, cheaply and quickly and with as little formality as possible (see s 3(d)). 78The Tribunal, at the commencement of the hearing raised with the parties, the option of a transfer of the proceedings to the Supreme Court as a more suitable venue given the then identified complexities in the matter (see s 34 of the Powers of Attorney Act). All parties opposed this course. Those complexities increased as further evidence became available to the Tribunal during the subsequent two hearing days. 79The separate representative noted in her final submissions that she was unable, by reason of lack of documents, to be confident about Mrs HLT's assets and liabilities and various financial transactions which have occurred in recent times. The Tribunal agreed with her submission and found it too could not be confident about all relevant financial transactions, or Mrs HLT's true asset and liability position at the conclusion of the hearing. 80The Tribunal is required under s 66 of the Guardianship Act not to make a decision (in this case in respect of the financial management application) until it has used its best endeavours to achieve a settlement. Unfortunately the Tribunal was unable to facilitate the parties reaching a negotiated settlement in this matter.
Standing to bring the application 81An application may be made to the Tribunal under s 35 of the Powers of Attorney Act in respect of a reviewable power of attorney, by the attorney, the principal, the guardian of the principal, or an enduring guardian. An application may also be made by "any other person, who in the opinion of the review Tribunal, has a proper interest in the proceedings or a genuine concern for the welfare of the principal" (see s 35(1)(d)). No objection was taken to Mr GAU's standing to bring the review application by any party to the proceedings. The Tribunal was independently satisfied that Mr GAU fulfils the criteria in s 35(1)(d). 82Section 33 of the Powers of Attorney Act describes a reviewable power of attorney as one which the Tribunal to whom the application is made has jurisdiction to deal with the application. There was no dispute this Tribunal has jurisdiction to review the instrument.
Statutory provisions - reviewable power of attorney 83Section 36 of the Powers of Attorney Act provides that the Tribunal may, or may not, decide to carry out a review of:
Relevant law capacity to grant an Enduring Power of Attorney 88The determination of capacity to enter into a valid Power of Attorney is the subject of considerable authority including appellate authority and academic discussion. 89The learned authors of Powers of Attorney in Australia and New Zealand, Federation Press, Berna Collier and Shannon Lindsay refer at page 68 of their text to the seminal decision of the High Court in Gibbons v Wright (1954) 91 CLR 423. The authors note: The High Court in Gibbons preferred to avoid prescribing a standard of capacity for the execution of any particular instrument and instead held: The mental capacity required by the law in respect of any instrument is relative to the particular transactions which is being effected by means of the instrument, and may be described as the capacity to understand the nature of that transaction when it is explained. 90The authors go on to note that the High Court held "that in order to possess the requisite capacity, the person executing the instrument must be capable of understanding not only the general purport of the instrument, but the effect of a wider transaction which the instrument is a means of carrying out". 91The question of capacity is also explored with reference to authority by O'Neill and Peisah in Capacity and the Law 2011 SyUPLawRK 12 (Chapter 10). 92The principle enunciated by the High Court in Gibbons has been discussed (and followed) in many matters. The High Court's statement remains the definitive authority on this topic. 93Particularly helpful on this topic however is the discussion by Young J (as his Honour then was) in Ranclaud v Cabban (1988) NSW ConvR 55-385. His Honour expands, in a practical way, the meaning of the principles pronounced by the High Court in Gibbons. In Ranclaud his Honour said: Such a power permits the donee to exercise any function which the donor may lawfully authorise an Attorney to do. When considering whether a person is capable of giving that sort of power one would have to be sure not only that she understood that she was authorising someone to look after her affairs but also what sort of things the Attorney could do without further reference to her. 94Young J's decision in Ranclaud provided the basis for legislation in the ACT, and has been widely followed in other state jurisdictions in Australia. 95Two recent decisions of the NSW Supreme Court are instructive. The trial Judges in these cases both adopt the test used by Young J in Ranclaud but appear to differ in their reasoning as to whether or not the test of capacity to grant a Power of Attorney is identical to the test of testamentary capacity (to make a will). In Szozda v Szozda [2010] NSWSC 804 Barrett J expressed the view that a different consideration of capacity is necessary when considering the appointment of an attorney. He said (referring to the granting of a power of attorney) "an understanding of the transaction to be facilitated is indispensable to an understanding of the power of attorney". 96By contrast, in Scott v Scott [2012] NSWSC 1541 Lindsay J explained that the "standard" test for capacity to make a will (as described in Banks v Goodfellow (1870) LR 5 QB 549 at 564-565) may be the appropriate test. At paragraphs 199 to 201 of his reasons Lindsay J refers to the necessity to examine each case on its own facts, consideration of the events leading up to the execution of the instrument as well as the time of its actual execution and notes "A longitudinal assessment of mental capacity, along a time line extending either side of the focal point, may be necessary .....in order to examine the subject's mental capacity in context". He goes on to note "Medicos and lawyers, alike, tend to embrace that approach... Context has a temporal as well as spacial and relational dimensions". 97Lindsay J in his remarks at [201] notes, given Equity's regard for the vulnerable person, that the question of capacity will often "invite a critical inquiry as to whether any element of undue influence may be discernable".
Expert Medical Evidence 98In our guardianship reasons the Guardianship Tribunal summarised, without making findings, the evidence about Mrs HLT's capacity to grant the instrument in December 2012. We summarised the expert medical evidence at paragraphs 81 to 95. For convenience, we now repeat those paragraphs: Ms MMR sought to rely on a report of Dr X obtained after the first hearing day. Dr X has not seen Mrs HLT since April 2013. We do, however, refer briefly to Dr X's reports. Dr W completed a Heath Professional Report Form dated 28 March 2013. She noted Mrs HLT's diagnosis to be dementia (Alzheimer's disease) which was present since 2008. She also recorded Mrs HLT has a past history of depression, hypertension and paroxysmal atrial fibrillation. She opined Mrs HLT would not be able to look after herself or find accommodation, that she needed help with medications, and assistance with managing her financial affairs. Dr W recorded a mini mental state examination ("MMSE") conducted by her on 22 March 2013 revealed a score of 19/30. She also opined that she thought Mrs HLT could make a limited contribution at the hearing. She recorded Mrs HLT's current medications are Aricept, Citalopram, Coumadin, Karvea, Lipitor, Minax, Panadol Osteo and Tripim. Under the heading "Social History" in the clinical notes produced from Dr W's practice is it recorded "2 children, other son [Mr GAU] has defrauded her of a large sum of money". Dr W, in her oral evidence, explained that she had seen Mrs HLT on nine or ten occasions. The doctor explained Mrs HLT suffers a significant deficit in short-term memory recall, and if provided with information, unless written down, she would forget the information and not follow instructions. Dr W also explained Mrs HLT is eager to please people and is very compliant. She expanded this opinion in her oral evidence and noted that she had concerns for Mrs HLT in a legal setting as, if she had to give evidence in court, a barrister could easily lead to her agree to things with which she would not normally agree. She explained Mrs HLT has a number of other health issues, that she needs help to take her medication, and it would not be "ok" for her to live independently. She further explained she did not think Mrs HLT could weigh up options, and she stressed she had concerns about Mrs HLT being easily led. In her report date 18 April 2013 Dr Y noted she had first seen Mrs HLT in 2008 and again in 2009 when she presented with short term memory loss. At that time her MMSE score was 29/30. At this consultation (ie April 2013) Dr Y explained Mrs HLT had scored 16/30 with all points lost in orientation and in recall although she drew a good clock and placed the hands correctly. Mrs HLT was unable to tell Dr Y about any properties she owned other than [property B in Sydney] (where she thought she was living). When asked where she would like to reside, Mrs HLT said with Mr BES and Mrs NES and explained she was happy there and well looked after. Dr Y opined: It is my opinion that Mrs HLT suffers with Alzheimer's Dementia (moderate) and that she displays no testamentary capacity today to manage her own affairs. In terms of accommodation and lifestyle choices Mrs HLT does appear to have much better capacity in making choices on the information provided to her. I would postulate that in most cases she has capacity in lifestyle choices although this would need to be determined. The Tribunal notes Dr Y requested Ms MMR to provide a copy of the December 2012 instrument "to see when it was dated". Dr X saw Mrs HLT on 30 April 2013. In his report dated 30 April 2013 he noted Mrs HLT's MMSE of 19/30 and noted he had also performed the Montreal Cognitive Assessment (a more rigorous test) in which she scored 12/30. In his oral evidence, taken via the telephone from Balmain, Dr X confirmed that score achieved in the Montreal test is a low score. He explained that he did not question Mrs HLT about her capacity to understand specific concepts but relied on her MMSE and Montreal Cognitive Assessment results. In a further report, dated 15 May 2013, Dr X opined Mrs HLT "is in need of a guardian". Although we do not propose in these reasons to refer to Dr Z's evidence about Mrs HLT's capacity at the date of executing the December 2012 Deed and instrument, and the December 2012 Company A instrument, it is important we refer to aspects of her letter received 30 January 2013. In this report Dr Z explained the length of time Mrs HLT has been her patient. At paragraph 5 of her letter she stated: Mrs HLT's cognitive capacity has been declining steadily, particularly in the past year. She became confused often and her memory was poor. While she can attend to her personal hygiene and showering she is unable to cook, organize appointments, manage her own medication, finances, and required the support of her son Mr GAU and his wife Mrs OEU for most tasks. Either has accompanied Mrs HLT to appointments at the practice in recent years. It is my opinion that Mrs HLT is better in a familiar environment, such as her home for the past 30 years. In her oral evidence Dr Z explained that either Mr GAU and/or Mrs OEU had accompanied Mrs HLT to all medical appointments in recent years. She told the Tribunal that Mr FOT was very concerned about Mrs HLT's cognitive decline in the eighteen months prior to his death reporting to Dr Z that Mrs HLT was unable to do simple banking, could not write a cheque, and was unable to cook. Dr Z also explained that Mrs HLT was a private patient, but she lacked the capacity to pay her bill at the end of a consultation, and Mr FOT had put in place alternate arrangements to meet her fees. She also explained that she had been able to track Mrs HLT's failure to take prescribed medication on a weekly basis, notwithstanding it was packed in a "Webster" pack, by consulting her pharmacist. She noted that at the time of Mr FOT's hospital admission, prior to his death, the hospital social worker had organised an Aged Care Assessment Team ("ACAT") assessment of Mrs HLT. Dr Z reported Mrs HLT also demonstrated word finding difficulty on occasions (aphasia). In a Health Professional Form dated 30 January 2013 Dr Z noted that on 1 November 2011 Mrs HLT had scored 17/30 on the administration of a MMSE and on 26 November 2011 25/30. When questioned by Mr BVC about her clinical notes for a consultation on 26 November 2012 which records "This result indicates that no significant cognitive impairment has been identified" next to the MMSE score of 25/30, Dr Z explained this is a "computer generated" recording, and not her professional opinion. The computer programme automatically generates the description on entry of a MMSE as part of prescribing protocols under the Pharmaceutical Benefits Scheme. Dr Z pointed out that the MMSE is a test that should not be used as an "isolated tool", but stressed the importance of observing how a patient presents over a number of appointments, together with the input of family members to obtain an overall clinical picture. She also explained how MMSE scores can fluctuate, and stressed the danger of looking at results in isolation. In discussing Mrs HLT's ability to make life-style decisions about where she might live, Dr Z opined that Mrs HLT was very settled at [property B], that she seemed very reliant on Mr GAU and Mrs OEU, that she had a good social network, and health care provision. Notwithstanding her evidence that, had the option of moving away from [property B] been fully explained to her, she could have expressed a view, Dr Z opined Mrs HLT does not have the capacity to live independently. 99Dr Z in her oral evidence confirmed that, in the latter part of 2011, she was seeing Mrs HLT on a fortnightly basis. Dr Z saw Mrs HLT last on 26 November 2012. She said that she did not believe Mrs HLT had the capacity to understand the nature and effect of a power of attorney at 17 December 2012. The underlying facts on which she based her opinion included:
The lawyer's evidence 103Detailed written statements were relied on in these proceedings by both Ms MMR and Mr DOX. Ms MMR told the Tribunal that she had typed her statement, but before doing so she had read Mr DOX's statement, cross-referenced her statement to his statement (which she had relied on) as well as independently checking file notes. There is, unsurprisingly given Ms MMR's candid evidence on this topic, significant overlap in the statements. 104Mr DOX is retained as a consultant by Ms MMR's firm. Ms MMR is a sole practitioner. Mr DOX generally works in her office two to three days per week. He has worked with Ms MMR since about 2003/04. Clients seen by Mr DOX are charged professional fees by Ms MMR slightly in excess of the sum she pays to Mr DOX. Ms MMR freely explained in her oral evidence that she relies on Mr DOX's experience and expertise in a number of areas of the law. 105Mr DOX gave evidence that he has considerable expertise, gained over of a period of over 30 years, in Wills and Powers of Attorney. He also has expertise in liquor licensing law. Mr DOX, in his oral evidence, explained that on the majority of occasions, Ms MMR sees a client and takes instructions in respect of a power of attorney, and he then sees the client, checks their understanding of the nature and effect of the instrument, and provides the necessary certificate. (Ms MMR confirmed this regime is followed if she is appointed as the attorney, or a family member or third party is appointed) Ms MMR also volunteered in answer to questions posed to her that on occasions Mr DOX suggests to a client who does not have a suitable relative to act as attorney, that the client appoint Ms MMR. Ms MMR indicated she has a dozen or so appointments as attorney for clients. 106Mr DOX indicated that, although he had not read them for some time, he was familiar with the Law Society Guidelines relating to capacity and powers of attorney. Mr DOX and Ms MMR were extensively questioned in a manner similar to cross-examination by Mr WER and the separate representative although, as is the usual practice in Tribunal hearings, neither their statements or oral evidence was sworn or affirmed. The Tribunal also itself directed a number of questions to each of them. The Tribunal was satisfied as officers of the Court the material presented to the Tribunal and their answers to the Tribunal should be truthful. 107Material which the Tribunal found relevant to this matter included many of Mr DOX's file notes. Many of the relevant file notes and documents summarised by us under the heading "Background", were produced pursuant to Summons or at the request of the Separate Representative. A number of documents were not made available to the Tribunal until the final day of the hearing. This, in part, led to our decision to reserve our decision. 108It is unnecessary we set out the details of Mr DOX's and Ms MMR's statements. The statements are basically identical. Specific details of their respective file notes (which were not attached to the statements are summarised under "Background" in this reasons). Each recites in their respective statements:
Ms MMR's evidence 124Ms MMR was subject to what was a careful and extensive cross-examination by the separate representative. She was also questioned by Mr WER, Mr KCC and the Tribunal members. 125Ms MMR was questioned about the circumstances in which she acted under the July 2010 instrument, and her action in closing Mrs HLT's principal bank account and opening the account in her name as trustee for Mrs HLT. She explained that Mrs HLT is a lady who likes to be very pleasing and who is compliant. She was unable to say whether she had discussed with Mrs HLT, either before or after the event, her action in closing the bank account. She acknowledged no letter had been sent to Mrs HLT advising about this action. 126Ms MMR was asked why she had disbursed the sum of $200,000 to Mr BES from the sale proceeds of the Hotel and also "reimbursed" him the sum of $32,000. Ms MMR gave evidence that she relied exclusively on a letter dated 22 January 2013 signed by Mrs HLT as her authority to pay these sums. She agreed she made no independent inquiries of Mrs HLT as to why Mr BES should receive these sums. She also agreed that she had not paid the sum of $200,000 less stamp duty payable on the transfer of property A to Mr GAU as instructed by Mrs HLT in the same letter. 127Ms MMR explained that how the sums advanced to Mr BES are to be treated had been referred to the accountants. She also explained that Mr DOX handled tax issues. 128Ms MMR explained that the sum of $32,000 reimbursed to Mr BES represented a repayment of funds he advanced to provide the deposit for the purchase of property D. Ms MMR provided a bank statement to support her explanation. She conceded however that only three deposits were made into Mrs HLT's account ($10,000, $11,000 and $6,000). She was unable to explain why Mr BES received an additional $5,000. She was also asked whether the sum of $11,000 was reimbursement by Mr BES for fencing paid for by her on Mrs HLT's behalf for fencing of property D. The purpose of the fencing was explained as necessary because Mr BES has dogs and cattle on the property. 129Ms MMR also gave oral evidence that she was unaware of the disposal or gifting of Mrs HLT's motor vehicle to Mr BES' son, until she contacted Mr BES in January 2013 when she received Mrs HLT's licence renewal and was informed by him that her licence had been cancelled and the car transferred to [Mr BES' son]. 130Ms MMR answered a number of questions about costs agreements between her firm and Mrs HLT and Company A. She conceded she was unaware of the Law Society's recommendations in relation to costs agreements where a solicitor is to be appointed as an attorney. She was unaware the Law Society recommend the appointment of a co-attorney who can scrutinize and approve bills rendered by the solicitor if the principal lacks capacity. 131When asked whether she felt the costs agreement or charges made were was appropriate for charges made for payment of Mrs HLT's household utilities, rates etc. as distinct from professional work conducted by a solicitor, she explained the basis of her charges were, in her view, reasonable. 132Ms MMR agreed that a costs agreement in relation to the Hotel had been provided to Mrs HLT disclosing costs of $5,000 but this agreement was amended. She did not dispute that she signed the costs agreement with her firm in her capacity as Mrs HLT's attorney. She did not dispute that Mrs HLT was charged $10,300 but said the increase in the conveyancing costs was to $8,500 and extra charges were made for a Deed relating to arrears of rent ($1,800) and the issue of a Notice of Complete ($200). Ms MMR acknowledged Mrs HLT was only provided with the amended costs agreement when a bill was rendered on 12 April 2013 and the agreement was attached to the bill. A copy of the amended costs agreement was again forwarded to Mrs HLT with a bill on 10 May 2013. 133Ms MMR also conceded she had signed, in her capacity as Mrs HLT's attorney, a costs agreement with her firm in respect of the fees charged for the purchase of property D on 17 January 2013. 134When asked about her assessment of Mrs HLT's cognitive capacity on 17 December 2012 she explained she was aware Mrs HLT was a "bit confused" about things, and she did not know whether this was attributable to short term or long term memory loss. However, she said she was able to exchange pleasantries with Mrs HLT, and she explained she observed what she was wearing, noting she was well groomed with matching shoes and handbag, and that her appearance was not dishevelled as is the case with some other persons who have attended her in conference with their carer. 135Ms MMR was also extensively cross examined about the purchase of property D and whether or not she had discussed with Mrs HLT the suitability of the property for her needs. She explained that although Mr BES at first instructed the property should be purchased in his name and that of Mrs NES, neither she or Mr DOX agreed with that proposal when it became clear the funds for the purchase were to be provided by Mrs HLT. 136When asked about the removal of Mrs HLT's furniture from property B in January 2013 Ms MMR gave evidence she thought this was to make Mrs HLT comfortable, and that she was not aware of the removal (and placement of Mrs HLT's furniture into storage) until she received the bill. 137In the course of Ms MMR's oral evidence the Tribunal became aware that a letter of demand had been sent by her firm to Mr WER's firm for repayment of the loan account in Company A in Mr GAU's name. Ms MMR agreed she was unaware of how the loan accounts came into existence. She explained she had written to Mrs HLT's former accountants last year but said "she did not have a clear picture of the loans". 138It also emerged during her evidence that Mr BES has made a claim under the Succession Act 2006 (NSW) for provision out of the estate of Mr FOT and that Mr GAU, as the executor of the estate, is the defendant in proceedings in the Supreme Court. Ms MMR is acting for Mr BES in the proceedings. She explained the demand for repayment of the loan had been made in reaction to a demand by Mr GAU, as executor, for repayment of Mr FOT's loan account to his estate. 139When questioned as to whether she thought her decisions made her capacity as Mrs HLT's attorney had been in her best interests, and in particular the sale of her interest and that of Company A in the Hotel, Ms MMR did not answer the question directly, but explained that she needed Mr DOX's input to make decisions in Mrs HLT's best interests. 140At the end of her oral evidence Ms MMR was asked by the Tribunal about her understanding of Mrs HLT's capacity in July 2010 and in 2012 when she assumed control of the bank account in a trustee role. Ms MMR explained that, in her opinion in 2010, while Mrs HLT could manage some day-to-day matters, because of the complexity of her affairs she found her financial affairs in relation to trust "very cumbersome and very confusing". She opined that had Mrs HLT's affairs been a "house and garden" matter she could have managed, but at least by mid 2012 her affairs were so complex she found them overwhelming.
Mr GAU's evidence 141Mr GAU provided a statement in support of his application, and statements in response to statements relied on by Mr BES and Mrs NES. He was not subject of any significant questioning by the other parties. Mr BES however asserted that Mr GAU had consistently withdrawn the sum of $1,200 per fortnight from Mrs HLT's account and paid himself $600 to be his mother's carer and this would be clear from an examination of the relevant bank statements. Mr GAU disputed Mr BES's assertions.
Mr BES's statement and oral evidence 142In his statement Mr BES provided evidence of driving to Sydney to assist his mother when her cheque account was overdrawn in June 2010. He said he arranged to transfer $15,000 into her cheque account which enabled her to pay Ms MMR's account and her overdue tax bill. 143Mr BES said he accompanied Mrs HLT to the bank and was shown withdrawal slips signed by Mrs HLT including one for a withdrawal of $10,000. 144In his statement received by the Tribunal on 26 August 2013 Mr BES stated "we" began renting property D and that Mrs HLT had become attached to it. He also referred to Mrs HLT purchasing property D in April 2013. In his oral evidence on the last day of the hearing in response to questions asked by Mr WER, Mr BES explained that he had known property D was listed for sale as it was owned by a friend, who worked in the mines, and he paid the friend cash for the occupation of the property until its purchase. 145Mr BES explained that when she came to live with him and Mrs NES that Mrs HLT was quite alright most of the time, but not after she had "a couple of wines" in the evening. He went on to state that Mrs HLT had gone "downhill" in the last three months and if they went to the [name of venue removed] in the afternoon by evening she did not recollect going there.
Other witnesses 146As noted in the guardianship reasons, the Tribunal had statements from a number of other witnesses (friends and relatives of Mrs HLT). The material in those statements was principally relevant to the guardianship proceedings and it is unnecessary in these reasons that we refer to them. 147Mr KCC relied on his statements and those of Mrs TCC in the proceedings. He explained his long-term relationship with his cousin, Mrs HLT, and how she had told him in about 2008 that she had dementia. He attached to his statement his curriculum vitae in which details of his extensive corporate experience in the tobacco industry at a senior management (CEO) level is detailed. 148Mr KCC referred to difficulties he experienced contacting Mrs HLT after her move to regional NSW, and aggressive behaviour displayed to him and Mrs TCC by Mr BES. 149Ms RXZ provided an affidavit sworn on 15 August 2013. She deposed to Mrs HLT living with her in Queensland from 18 January 2013 when Mrs NES took her to that city until 3 February 2013 when Mr BES collected her and returned to regional NSW. She noted after Mr BES flew into Queensland on 2 February 2013 "He had the hard task of informing [Mrs HLT] of [Mr GAU's] unsuccessful attempt at suicide and how he was now trying to stop the sale of [Mrs HLT's] house at [Sydney]". She also reported Mrs HLT said "out of the blue" that "[Mr GAU] and [Mrs OEU] were going to put me in a nursing home". She later recorded Mrs HLT's saying "I cant believe [Mr GAU] was going to put me in a home".
The Law Society Guidelines 150In 2003 the Law Society published comprehensive guidelines for solicitors acting on instructions to prepare a power of attorney for a client. The guidelines also deal with the situation where the client, as principal, appoints his or her solicitor as the attorney. 151The guidelines on capacity include the following statement: To be capable of granting an enduring power of attorney, a person (the donor) must understand the nature and effect of the document when explained to them. The person must be able to take in what is being explained to them and be able to demonstrate their understanding by communicating this back to the explainer. A person may be taken to understand the nature and effect of the document if they understand the matters set out below. The matters should be explained to the client by the solicitor instructed by them to draft their power of attorney. The matters to be understood are that: (i) the donor may, in the document, specify or restrict the power to be given to the attorney and instruct the attorney about the exercise of the power; (ii) the power begins at the time chosen by the donor in the instrument of appointment; (iii) subject to any directions contained in the power, the attorney will be able to anything with the donor's property which the donor could have done; For example that the attorney's power is restricted to the sale of real property and the investment or disposition of the proceeds of sale. (iv) the types of actions or things the attorney will be authorised to do by the power of attorney without further reference to the donor; (v) the donor may revoke the enduring power of attorney at any time when they have the mental capacity to do so; (vi) the power the donor has given continues even if the donor subsequently loses his or her mental capacity; (vii) the donor is unable to oversee the use of the power if they subsequently lose mental capacity. [footnotes omitted] In particular cases there may be additional aspects of the power of attorney which must also be understood by the client. 152Under the heading "Approaches to questioning to explore client capacity" the guidelines suggest: Questions susceptible to a yes/no answer may be inadequate for the purpose of assessing the donor client's capacity. For example if the matters set out above were mentioned to the donor and the solicitor asked 'Do you understand this?' an affirmative answer would be unlikely to satisfy the tests for capacity. However if the donor was asked 'What will your attorney be able to do?' and 'What will happen if you become mentally incapable?' the donor's answers should indicate whether they understand the nature and effect of the power. The assessment of a donor's mental capacity may take place at a time when the donor is in a vulnerable situation, for example, because of a recent illness or because the donor has been advised that they can no longer live at home independently. Special care should be exercised in these situations to make certain the donor in fact understands the nature and effect of an enduring power of attorney and is not being subjected to pressure or influence from others. Solicitors should also refer to the Law Society's Client Capacity Guidelines, September 2003 for further information about communication with clients where capacity may be in issue. Referral for medical opinion or reports If there is doubt about the client's capacity to understand any of these matters, an appropriate medical professional should be approached to give an opinion as to the competence/ capacity/ mental capacity of the person to grant a power of attorney. The solicitor should explain this to their client in terms of protecting the client's best interests in ensuring that the power of attorney is validly made. The solicitor should also obtain the client's consent to the disclosure of health information by the doctor or health professional to the solicitor. If consent is not obtained the health professional may not disclose the information on the basis of privacy legislation. The client's general practitioner will usually be able to give a useful opinion, provided that the person has been the general practitioner's patient for a sufficient period of time to enable the general practitioner to comment on any change in the person's general state of health and mental capacity... 153Of particular relevance in this case is guideline 7 which deals with the situation where the solicitor is to be the attorney. 7. SOLICITOR-ATTORNEYS If a solicitor is to be appointed the attorney, Rule 11.1 of the Revised Professional Conduct & Practice Rules (in relation to wills) provides a useful model in assisting the solicitor to avoid a conflict of interest. This means that the certificate under the Powers of Attorney Act 2003 in relation to the grant of an enduring power of attorney should be completed by a solicitor entirely independent of the solicitor- attorney. [our emphasis] Where a solicitor is appointed as attorney, or where it is intended that a particular solicitor will deal with the general management of the donor's affairs, a costs agreement should be entered into in accordance with the provisions of Part 11 of the Legal Profession Act 1987. Under that Act, a procedure is in place by which a solicitor must render a bill to the client before transferring any moneys held on trust in payment of costs. If the power of attorney is of an enduring nature, at some point the donor will lack capacity to approve the bills. For this reason, and for the purposes of accountability and avoiding any perception of conflict of interest, a solicitor should be jointly appointed with another person who is not an associate of the solicitor, and arrangements made for that person to approve any bills rendered from time to time. Solicitors should, again, be mindful of the provisions of Rule 11 of the Revised Professional Conduct & Practice Rules, which is set out in Appendix B. In a number of cases solicitor-attorneys have disclaimed when it became apparent that the donor's assets were insufficient to make the attorneyship cost-effective. The Law Society's view is that, if solicitors intend to disclaim in such circumstances, they should not take on the attorneyship in the first place, and should advise the donor of the alternatives for financial management: either the possible need for a financial management order in the future; or an approach to the Public Trustee NSW who retains a statutory obligation not to refuse to act in matters just because of low value.
The NSW Solicitor's conduct rules 154It aids assistance of understanding the guidelines if we set out the relevant professional conduct rule in force in the period from 2010 to December 2012. New Australia wide conduct rules only came into force on 1 January 2014. Revised Professional conduct rules 1995 11.2 A practitioner who receives instructions from a person to - 11.2.1 draw a will under which the practitioner or an associate will, or may, receive a substantial benefit other than any proper entitlement to commission (if the practitioner is also to be appointed executor) and the reasonable professional fees of the practitioner or the practitioner's firm; or 11.2.2 draws any other instrument under which the practitioner or an associate will, or may, receive a substantial benefit in addition to the practitioner's reasonable remuneration, including that payable under a conditional costs agreement, must decline to act on those instructions and offer to refer the person, for advice, to another practitioner who is not an associate of the practitioner, unless the person instructing the practitioner is either: 11.2.3 a member of the practitioner's immediate family; or 11.2.4 a practitioner, or a member of the immediate family of a practitioner, who is a partner, employer, or employee, of the practitioner. 11.3 For the benefit of this rule: "substantial benefit" means a benefit which has a substantial value relative to the financial resources and assets of the person intending to bestow the benefit. 155The Solicitors Professional Conduct and Practice Rules 2013 commenced operation on 1 January 2014. As noted above, The Tribunal accepts that these rules were not in force at the time of the execution of the instrument, or the earlier instruments executed by Mrs HLT. The comparative table cross referencing the new rules to the 1995 rules notes that there is no substantial change between the old rule 11.3 and the new rule 12. However we note that the new rule, which has Australia wide application, refers only to benefits under a Will and not another instrument. This appears to us to be an unfortunate omission from the current rules.
Submissions in respect of the review enduring power of attorney
(a) the Separate Representative's submissions 156The separate representative made careful and detailed submissions to the Tribunal at the conclusion of the hearing. The Tribunal acknowledges the significant amount of time and effort expended by the separate representative. Her carefully structured cross-examination, procuring of documents and submissions all directed to Mrs HLT's best interests provided substantial assistance to the Tribunal, and made our task in this matter much easier than would otherwise have been the case. We acknowledge her assistance with gratitude. 157The separate representative submitted in summary that the evidence of Ms MMR and Mr DOX had been "reconstructed" in the light of subsequent events. In respect of Mrs HLT's capacity to enter into the instrument she submitted that: (1)we should find that Mrs HLT lacked capacity to enter into the 2012 instrument; (2)that Mr DOX and Ms MMR were on notice from the time they received Mr QHT's letter that there was an issue about Mrs HLT's capacity, and in those circumstances of heightened awareness, they had a duty to obtain medical certification from Mrs HLT's long standing general practitioner; (3)further matters should have alerted them to the fact a medical opinion should be sought including: (a)Mrs HLT's inability to explain withdrawals in 2010 (b)Mrs HLT's inability to say whether or not she had executed other powers of attorney or deeds of guardianship between 2010 and January 2012; (c)Mrs HLT's inability to say whether or not she had executed other powers of attorney or deeds of guardianship between January 2010 and 2012 (4)The advice given to Mr BES to approach the Guardianship Tribunal to seek a financial management order to facilitate the sale of the Hotel and the need for two medical reports to support such an application implied a lack of capacity. 158In respect of s 36(3)(b)(ii) of the Powers of Attorney Act the separate representative also submitted that Mrs HLT was subject to undue influence to execute the instrument. In support of this submission she noted that in each case it was Mr DOX's suggestion that Ms MMR should be appointed as attorney, and Mrs HLT had been deflected from her own suggestion she would like Mr BES and Mr GAU as attorneys. Further, in respect of the events leading up to the execution of the instrument, the separate representative pointed out that this instrument was signed within weeks of Mr FOT's death. She also referred to the likely effect on Mrs HLT of the advice her home could be at risk if she did not sell the Hotel to discharge the mortgage obtained to purchase property A and property C. 159In the alternative to a finding of lack of capacity to grant the instrument, the separate representative submitted, if we found it would be in the best interests of Mrs HLT to do so, that we could make an order under s 36(4)(f) revoking the instrument. In this regard she referred to the unsatisfactory or incomplete evidence about the circumstances of the Hotel transaction, the lack of capacity of Mrs HLT to give instructions to commence the Supreme Court proceedings and that she had not been given any advice about costs of those proceedings or costs orders which may be made by the Court. Further, she alluded to the impropriety of commencing such proceedings when Mrs HLT was found by Mr DOX as at February 2013 not to satisfy the test in Banks v Goodfellow. 160The separate representative's submissions were adopted by Mr WER.
(b) Submissions made on behalf of Ms MMR 161Mr BVC referred to his written submissions provided to the Tribunal when hearing the guardianship aspect of the applications. He referred primarily to the decision of Lindsay J in Scott v Scott, particularly at paragraph 209 of his reasons where his Honour cited with approval Barrett J's statement in a probate case "the most valuable evidence is usually given by the experienced solicitor who witnessed the will as opposed to a very highly qualified psychiatrist whose evidence is based not on any personal observation of the testator, but who has reasoned his or her opinion from medical and hospital notes". 162In short, Mr BVC's position was initially that the Tribunal did not need to look at the issue of capacity at all because Ms MMR did not pursue maintenance of her position as an attorney, rather she sought we should simply proceed to treat the application as one for financial management. Secondly, he submitted when the Tribunal made it clear that it did intend to conduct the review as requested in the application, that we should find Mr DOX and Ms MMR, as experienced practitioners, had satisfied themselves of Mrs HLT's capacity at the relevant time. Mr BVC again referred to the evidence in Dr Z's file of the MMSE where the result was 25/30 notwithstanding Dr Z evidence as recorded by us in the guardianship reasons was that this was a computer generated statement for the purposes of the PBS for prescribing of cholinesterase inhibitors such as Aricept.
Discussion and conclusions capacity 163The Tribunal found each of the submissions made by the separate representative to be soundly based and supported by the evidence. The Tribunal accepts that, given Mrs HLT's diagnosis in 2008, her state of confusion, inability to remember withdrawals, lack of instructions during a significant period of 2012 and her susceptibility to suggestion were matters which should have led Ms MMR and/or Mr DOX to obtain medical certification from Dr Z who had a detailed and extensive doctor/patient relationship with Mrs HLT over a period of in excess of 30 years. 164In this regard Young J's observations in Ranclaud v Cabban have particular resonance. His Honour said: [in the present case] experienced solicitors on both sides have witnessed Powers of Attorney and Revocations of Powers. One might ask how a person who was incapable could make a Power of Attorney in the presence of such professional gentlemen. I think the answer is relatively clear. A person only seeing a little bit of the picture and seeing [the Principal] for a short time may well form the view that it is safe to allow [the Principal] to proceed. It is only when one get a complete overview of the evidence that one can see just how incapable the principal really is 165The Tribunal is satisfied that Ms MMR and Mr DOX were on notice of Mrs HLT's diagnosis from 2008. They were aware she was unable to handle financial transactions in 2010 and could not explain or remember withdrawals from her account. In 2011 Mr DOX suggested to Mr BES he should make an application to the Guardianship Tribunal. We do not accept that was merely a suggestion. The advice was repeated in 2012. It was a remedy pointed out by a highly experienced practitioner who was well aware that such an application would not be successful if Mrs HLT had capacity to manage her own affairs. 166Ms MMR's evidence of her opinion of Mrs HLT's capacity in both 2010 and March 2012 is telling. She noted Mrs HLT found managing her affairs in respect of the Trust to be "cumbersome and confusing". 167The Tribunal accepts it was not Mrs HLT's own view that Ms MMR and Mr BES should be her attorney. It was a suggestion, made by Mr DOX in the presence of Ms MMR, to a woman who was clearly known to Ms MMR to be compliant with suggestions at a very vulnerable time in her life shortly after her husband's death. 168Notwithstanding Mr DOX's careful explanation of what an attorney can and cannot do, his evidence did not satisfy us that his interview elicited from Mrs HLT evidence of her understanding. Rather, it indicated she acquiesced in what he said and asked few questions. The Tribunal finds both Mr DOX and Ms MMR relied heavily on Mrs HLT's appearance and learned social skills without critical examination of her cognition, or more particularly without the benefit of any medical opinion. The Tribunal notes at the three occasions we had the benefit of Mrs HLT's presence at the hearing she was immaculately groomed, exchanged pleasantries with the Tribunal members and maintained a high level of what may be broadly described as "social skills" despite her obvious lack of cognitive capacity. 169The Tribunal found Ms MMR's evidence about the independence of Mr DOX, and the appropriateness of him providing the certificate of understanding, unfortunate. Ms MMR's own evidence demonstrates a close working relationship between herself and Mr DOX, that she receives a financial gain from her employment of him as a consultant, and that she heavily relies on his advice and expertise in areas of the law in which she does not regularly practice. We accept that she has relied on Mr DOX's advice in making decisions for Mrs HLT and has not exercised her own independent discretion as attorney. The Tribunal did not find the requisite degree of independence clearly referred to in guideline 7 observed. In saying this, we note the guidelines are not mandatory, but they reflect "best practice". Observance of the guidelines is likely to avoid challenges of the type now before the Tribunal. 170The Tribunal accepts, without qualification, the medical evidence of Dr Z, which is supported by that of Dr W on the issue of Mrs HLT's lack of capacity to understand the nature and effect of an enduring power of attorney in December 2012. It is unnecessary we make findings about her capacity to enter into the earlier instruments, as they are not subject of this review. We accept and prefer the evidence of Dr Z to that of Mr DOX and Ms MMR. 171The Tribunal finds the statement of Lindsay J (referring to Barrett J) at [209] in Scott v Scott readily distinguishable in this case. She was not a specialist reasoning from pursing medical records, but a treating doctor. Dr Z has had a much longer relationship with Mrs HLT than Mr DOX or Dr X. Dr Z relationship with Mrs HLT stretched over 30 years. She was seeing Mrs HLT on a fortnightly basis at the relevant time, and in addition to her own observations, and the MMSE she conducted, she had the benefit of input from Mr FOT about Mrs HLT's lack of ability to handle the simplest of financial transactions and domestic arrangements. Against this background and noting that Mr DOX said Mrs HLT asked very few questions when he recited his standard information about the effect of a power of attorney we accept Dr Z was in a better position to judge capacity than was Mr DOX.
The operation and effect of the instrument 172Even if we are wrong about Mrs HLT's capacity to understand the nature and effect of the instrument, or that she was not subject to undue influence, the Tribunal is satisfied the power of attorney should nonetheless be revoked. Our primary finding is however that the 2012 instrument is void by reason of Mrs HLT's lack of capacity. 173The circumstances surrounding the sale of the Hotel and the purchase of the property D and whether those matters were in Mrs HLT's best interests could not be fully investigated in this forum. But those matters which came to light during this hearing, and which we have summarised under background and in our recording of the questions asked of Ms MMR and Mr DOX, lead us to a finding that the instrument has not, and is not, working in her best interests. 174The circumstances of Mrs HLT's letter of 22 January 2013 raise significant issues about the credibility of and true authorship of the matters expressed in that document. We acknowledge it is in Mrs HLT's handwriting, but accept Dr Z's evidence about Mrs HLT's lack of capacity to express the sentiments or to give the instructions set out in the letter. Ms MMR did not seek any further information about the document. The letter, which Ms MMR thought came by ordinary post was not date stamped in accordance with the practice in her office. Mrs HLT was in Queensland on 22 January 2013 and in accordance with Ms RXZ's affidavit evidence was unaware of Mr GAU's suicide attempt until 2 February when told about it by Mr BES. Mr BES did not mention in his statement that he had travelled to Queensland to see Mrs HLT during the period of her residence there, but said he may have done so when questioned on this topic. It appears inherently improbable in the light of Ms RXZ's evidence that Mrs HLT could have written the letter on 22 January 2013 containing as it does references to Mr GAU's suicide attempt. 175Ms MMR was unable to explain, other than in reliance on the letter of 22 January 2012, the basis she had caused $200,000 to be paid to her co-attorney, nor could she account for the shortfall of $5,000 from the sums deposited by Mr BES and the "reimbursement" made to him. 176Mrs HLT did not receive independent advice, as explained by the Law Society Guidelines, prior to signing of the instrument. Ms MMR's evidence of her reliance of Mr DOX was telling. The Tribunal had no hesitation in finding Ms MMR does and has relied on Mr DOX expertise, experience and views and not her own independent assessment. The Tribunal is satisfied she failed to appreciate the lack of independence between herself and Mr DOX in providing advice and suggesting that she be appointed as attorney with Mr BES. 177The Tribunal found her execution of costs agreements with her own firm in her capacity as attorney, and lack of prior discussion or provision of those agreements, to Mrs HLT failed to meet the Law Society guidelines. The deficiency of lack of independent advice and/or a co-attorney who could scrutinise bills once Mrs HLT lacked the capacity to do prior to payment is not in our view overcome by the subjective view of Ms MMR of the "reasonableness" of the charges. The Tribunal also found it was not in Mrs HLT's best interests that the amended costs agreement was not provided to her until the rendering of the bill in respect of the sale of the Hotel. Such an action defeats the rationale of a client knowingly agreeing to costs to be charged to him or her. 178In reaching our findings about Ms MMR, the Tribunal accepts that she was candid in her oral evidence to the Tribunal. The Tribunal has no doubt Ms MMR was genuinely concerned about the unexplained withdrawals from Mrs HLT's account and tried to establish how the funds had been obtained from the bank account. 179We note that at the commencement of the hearing the separate representative indicated that she would ask the Tribunal to make an order appointing auditors to investigate Mrs HLT's financial affairs including those of Company A and the trust. When the Tribunal pointed out that such an order would require the auditors to report to the Tribunal, the separate representative changed her position to a recommendation that the financial manager appointed should appoint auditors. 180There can be no doubt that if Mrs HLT is validly appointed as governing director of Company A pursuant to the Constitution, as amended by the 1995 meeting of directors, she can execute a power of attorney in her capacity as governing director by reason of the provisions of s 124 of the Corporations Act 2001 (Cth). In light of the copy of the Constitution provided to us we make no finding about that matter. Nor is it in doubt a duly appointed attorney for a corporation can sign documents to convey property on behalf of the corporation (see s 51A Conveyancing Act 1919 (NSW)). 181Mrs HLT, it appears, has been treated in the conveyance of the Hotel and receipt of its proceeds as the alter ego of the trust. While she prima facie has the ability to control the Trust by the appointment and removal of the trustee, the directors of Company A have a fiduciary duty as trustees to the named beneficiaries (see Kennon v Spry [2008] HCA 56 per French CJ at [75]-[77 ). The Tribunal notes the trust deed contains no provision for the appointment of a substitute appointor in the event of the incapacity of the appointor, only on the appointor's death do Mr GAU and Mr BES become the appointors of the Trust. These are matters beyond the direct scope of these proceedings, but clearly support a recommendation to a financial manager appointed by the Tribunal to appoint auditors to investigate and report on Mrs HLT's financial affairs which are intrinsically linked with Company A and the Trust.
FINANCIAL MANAGEMENT 182Section 25G of the Guardianship Act 1987 (NSW) ('the Act') sets out the criteria to be established by the Tribunal if it is to make a financial management order. The Tribunal must be satisfied, to the relevant civil standard, of three matters. First, that the person the subject of the proposed order is not capable of managing his or her financial affairs. Secondly, that there is a need for another person to manage those affairs on behalf of the person, and thirdly that it is in the person's best interests that the order is made.
Is Mrs HLT incapable of managing her financial affairs? 183There was no issue by any party that, at the commencement of this hearing that Mrs HLT lacked the capacity to manage her financial affairs. That remained the situation at the conclusion of the hearing. 184The Tribunal however notes in making a financial management order the Tribunal must look, not just at the circumstances on the day of the hearing, but to the reasonably foreseeable future (see McD v McD (1983) 3 NSWLR 81 at 86). We are satisfied by reason of Mrs HLT's diagnosis and her cognitive decline her capacity is not likely to revive.
The evidence relevant to Mrs HLT's financial affairs 185We have set out in our reasons in respect of the review of the enduring power of attorney a summary, as best we have been able to glean, of Mrs HLT's financial affairs. Those affairs are of some complexity. We repeat our earlier findings.
Who should be the financial manager? 186In appointing a financial manager, as in making all other orders under the Act, the Tribunal must act with the interests of the person concerned as the paramount consideration and in accord with the other principles set out in s 4 of the Act. 187Section 25M of the Act provides that, if the Tribunal makes a financial management order, it may appoint a suitable person to manage the person's estate or may commit the management of the estate to the NSW Trustee. 188The matters or "guidelines" which a Tribunal should consider when determining who to appoint as a financial manager are discussed by Lindsay J in M v M [2013] NSWSC 1495 at [50]. There his Honour, albeit in the context of an application to replace a financial manager, said: As presently advised, and subject to reconsideration in light of further experience and argument in contested cases, I adopt the following propositions as non-exhaustive "guidelines" (or, in deference to Kirby P's observations in Holt v Protective Commissioner (1993) 31 NSWLR 227 at 241E-F and 243E-F, a "framework of approach" or a "checklist of considerations") that might be borne in mind when the Court is called upon to make a decision about the identity of a manager of a protected estate or the substitution of one manager for another: (a) First, the jurisdiction the Court is called upon to exercise is not a "consent jurisdiction". An order for the appointment, removal or replacement of a particular manager is not to be made merely because a party, or some other person, seeks it, consents to it or acquiesces in it: JJK v APK (1986) Australian Torts Reports 80-042 at 67, 881 (first guideline); JMK v RDC and PTO v WDO [2013] NSWSC 1362 at [60]-[62]. The Court is bound to exercise an independent judgment because of the public interest element in the decision to be made and the possibility, if not the fact, that the protected person lacks the mental capacity requisite to informed decision-making. (b) Secondly, the governing purpose of the jurisdiction exercised by the Court is protection of the welfare and interests of the particular protected person concerned: Holt v Protective Commissioner (1993) 31 NSWLR 227 at 238B-C and 241A-B and F-G. (c)Thirdly, any decision made affecting the welfare or interests of a protected person must be made in a manner, and for a purpose, calculated to be in the best interests, and for the benefit, of the protected person: Holt v Protective Commissioner (1993) 31 NSWLR 227 at 238D-F and 241G-242A. (d) Fourthly, care needs to be taken in all decision-making affecting a protected person to focus on the facts of the particular case, preferably with due consultation with the protected person, his or her family and carers who may be well placed to inform the Court of the protected person's particular circumstances: Holt v Protective Commissioner (1993) 31 NSWLR 227 at 238C-239B, 240D, 241B-F and 243E-F; Re L [2000] NSWSC 721 at [10]. (e) Fifthly, in the choice of a manager consultation of the welfare and interests of a protected person may favour appointment of a member of his or her family over the appointment of an institutional manager: Holt v Protective Commissioner (1993) 31 NSWLR 227 at 238G-239B. (f) Sixthly, decisions need to be made in the context of a prudential management regime that can be administered, without strife in the simplest and least expensive way, in the interests of the protected person: HS Theobald, The Law Relating to Lunacy (Stevens and Sons, London, 1924), pp 380 and 382. (g) Seventhly, regard needs to be had to the value and nature of the property comprising a protected person's estate in deciding upon the identity of a manager or an appropriate management plan: Holt v Protective Commissioner (1993) 31 NSWLR 227 at 242E and 243D-F. (h) Eighthly, recognition needs to be given to the status and obligations of a manager of a protected estate as the holder of a fiduciary office. This means that the Court, managers and other affected persons need to be alive to the importance of avoiding, or at least minimising, exposure of a protected person to dangers associated with a manager having a conflict between a duty owed to the protected person and the manager's personal interests: Holt v Protective Commissioner (1993) 31 NSWLR 227 at 239B and 242B-C; Re L [2000] NSWSC 721 at [12]. Nevertheless, it must also be recognised that the liability of a manager of a protected estate to account may differ from that of a trustee of an ordinary trust to the extent necessary to accommodate the protective purpose of the manager's appointment: Countess of Bective v Federal Commissioner of Taxation (1932) 47 CLR 417 at 420-423. (i) Ninthly, in conformity with fiduciary law, the office of a manager of a protected estate must generally be regarded as a gratuitous one unless, by an order of the Court or by legislation, a special arrangement to the contrary is made: Gell v Gell (2005) 63 NSWLR 547 at 553-554 [21]-[23]; Macedonian Orthodox Community Church St Petka Incorporated v Bishop Petar (2008) 237 CLR 66 at 93 [69]. (j) Tenthly, in deciding whether, when and on what terms a manager of a protected estate is to be allowed remuneration out of the estate, care needs to be taken not to shift the focus of decision-making from what is in the best interests, and for the benefit, of the protected person to a perceived "right" on the part of any, or any prospective, manager to remuneration. If a manager is to be allowed remuneration, a decision to that effect must be driven by the perspective of the protected person, not the perspective of the manager: Fletcher, Ex parte (1801) 6 Ves Jun 427; 31 ER 1127; Re Walker (1848) 2 Phil 630; 41 ER 1087; Re Westbrooke (1848) 2 Phil 631; 41 ER 1087; G v B (Powell J, 27 May 1992) BC 9201855 at 13. (k) Eleventhly, the primacy given to the protective purpose of the Court's jurisdiction carries with it, as a correlative, the absence in any manager (public or private) of a legal entitlement to be, or to remain, manager of a particular protected estate: Holt v Protective Commissioner (1993) 31 NSWLR 227 at 237F-238F. (l) Twelfthly, a decision about whether a manager should be replaced may need to be approached differently from one made about the identity of an appointment as an initial manager because of a perceived need to identify an acceptable reason (ie, one governed by the purpose of the protective jurisdiction and consideration of the best interests of, and benefits available to, the protected person) for change. Depending on the facts of the particular case this may, but will not necessarily, involve recognition that an applicant for change bears, at least, a forensic onus to establish a case for change: Holt v Protective Commissioner (1993) 31 NSWLR 227 at 237F, 238B-F, 239C-G and 242A-B. (m) Thirteenthly, a manager, or prospective manager, of a protected estate needs to have given thoughtful attention (in the case of a private manager, in consultation with the NSW Trustee and, in the context of the Corporations Act, the Australian Securities and Investments Commission) to the development, and operation, of a plan for management of the protected person's estate: Re L [2000] NSWSC 721 at [11]-[12]; Re McL [2001] NSWSC 280 at [3]-[5]. (n) Fourteenthly, although disputes about the management of a protected estate may at times need to be determined in an adversarial setting, an exercise of protective jurisdiction is not inherently, or necessarily, adversarial in nature. That reality finds expression in the Court's approach to orders for costs in protective list proceedings. The Court ordinarily exercises its discretion, not by reference to a rule that costs follow the event, but having regard to what, in all the circumstances, seems proper: CCR v PS (No 2) (1986) 6 NSWLR 622 at 640. (o) Fifteenthly, part of the role of the Court in its exercise of protective jurisdiction is to give consideration to the manner and form of a decision-making process calculated to ensure that the protective purpose of the jurisdiction is duly served. (p) Sixteenthly, in the context of the current legislative and administrative regime for management of protected estates, the Court will ordinarily require that any substantial decision it may be called upon to make affecting a protected estate, beyond the routine, is made on notice to the NSW Trustee, allowing the NSW Trustee to be heard in an appropriate case and inviting its assistance where necessary. 189Mr KCC impressed the Tribunal as a sincere and honest witness. He is well qualified in commercial matters as disclosed in his curriculum vitae. During the course of the hearing Mr KCC endeavoured to explain to Mr BES that he would act in Mrs HLT's best interests, that he had time to devote to her affairs, and that he hoped, with time, to effect some sort of peaceful resolution to the clear animosity displayed by Mr BES towards Mr GAU, and to modify Mr GAU's views of Mr BES. 190Mr GAU supported Mr KCC's appointment for a period of one year with a review of the order at the end of that time. 191The Tribunal accepts Mr KCC can devote time to Mrs HLT's affairs. He conceded to do so properly would require him to engage accountants. The Tribunal found he would use his best endeavours to act in Mrs HLT's best interests. 192The Tribunal finds any financial manager appointed will need to appoint accountants to investigate Mrs HLT's financial affairs including her interest in the trust and role as governing director of Company A. Because of the evidence before the Tribunal relating to the demand for loan accounts in the Trust on behalf of Mr GAU as executor of Mr FOT's estate, and the pending family provision claim, it is likely an independent solicitor will need to be retained by Mrs HLT's financial manager. She will need representation in the Supreme Court costs proceedings by a guardian at litem. The Tribunal accepts the engagement of such experts could be made by either Mr KCC or the NSW Trustee. 193Mr BES's evidence, both written an oral, demonstrated a hostile, abusive attitude to Mr KCC. Mr BES has made assertions that Mr GAU was improperly withdrawing funds from his mother's account between 2010 until Ms MMR closed the account in March 2012. The Tribunal is satisfied that he does not trust Mr KCC to investigate, or to take any remedial action in respect of such funds, if on investigation, there is substance to his allegations. In these respect we note the table of withdrawals provided by Ms MMR from Mrs HLT's bank account does disclose regular withdrawals, albeit not as asserted by Mr BES of $1,200 each fortnight, but of varying amounts in that range. 194A financial manager will also need to look at the terms and conditions of Mr GAU and Mrs OEU's occupation of property A, and take into account how the funds applied from the proceeds of sale of the Hotel to discharge the mortgage used to purchase this property and property C should be treated. This is likely to be a difficult exercise for Mr KCC who would no doubt be exposed to conflicting positions of Mr BES and Mr GAU on this issue. 195Of more significance is the role Mr KCC would have to undertake as financial manager in respect of property D. Ms MMR asserted Mr BES and Mrs NES had vacated property D shortly prior to the resumed hearing. It is likely the property, which is subject to the lease the validity of which is questionable, will have to be sold. Mrs HLT's furniture may need to be removed from storage, and the circumstances of [Mr BES's son's] acquisition of the motor vehicle investigated. 196The Tribunal was satisfied from the attitude displayed by Mr BES, particularly in closing submissions, that sadly he has no confidence in or respect for Mr KCC. The Tribunal was satisfied from the attitude displayed by Mr BES that it would be extremely difficult for Mr KCC to work with him or to investigate transactions which have involved Mr BES and his family members. 197Weighing the undoubted attributes which Mr KCC would bring to the role, against the disqualifying factors involved a fine balancing of those factors by the Tribunal in exercising its discretion. 198The Tribunal found the following factors supported Mr KCC's appointment:
I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 15 April 2014
Banks
Goodfellow
(1954) 91 CLR 423
(1983) 3 NSWLR 81
(1993) 31 NSWLR 227
(1932) 47 CLR 417
(2005) 63 NSWLR 547
(2008) 237 CLR 66
(1986) 6 NSWLR 622