[1984] HCA 36
Protective Commissioner v D (2004) 60 NSWLR 513
Source
Original judgment source is linked above.
Catchwords
[1984] HCA 36
Protective Commissioner v D (2004) 60 NSWLR 513
Judgment (2 paragraphs)
[1]
Judgment
HER HONOUR: This is an application by summons filed on 15 July 2020, brought by the plaintiff (Wayne Cecil Forwood) who is a beneficiary of his late mother's estate; his late mother being the late Bertha Winifred Forwood who died on 9 July 2010 at the age of 76. Probate of the last will of the deceased was granted to the New South Wales Trustee and Guardian on 8 October 2010. I have read on this application two affidavits affirmed by Wayne Cecil Forwood (those being affidavits affirmed on 24 June 2020 and 7 October 2020), as well as affidavits from two of his three siblings, Bronwyn Daphne Rae (affidavit affirmed 1 July 2020), and Raymond John Edward Forwood (affidavit affirmed 5 July 2020).
Briefly by way of background, under the deceased's will dated 27 October 2006, the deceased left a legacy of $1,000 to her daughter, Karen Maria Irene Ledgerwood, no gift to her daughter Bronwyn Daphne Rae, and the balance of her estate was divided equally between her two sons, Raymond and Wayne. The property disclosed in the inventory of property attached to the application for probate consisted of a home at Seven Hills and a small amount of money. The property passed by transmission to Raymond and Wayne as tenants in common in equal shares on 28 November 2011, and the estate was otherwise administered.
Wayne has deposed that his brother, Raymond, who has a number of medical conditions, had lived in the property since 1968 with his mother; and, after his mother's death on 9 July 2010, Wayne agreed to Raymond's wish to continue living in the property. Raymond did so until he was hospitalised in mid-2018. Raymond was discharged to a nursing home in December 2018 and continues to live there, but plans to leave for accommodation in an NDIS approved group home in the immediate future. Wayne has been appointed as an enduring attorney for Raymond pursuant to an enduring power of attorney executed on 9 April 2018.
Although Raymond has not had a formal diagnosis of cognitive impairment, he has a history of inability to manage his own financial affairs in his own best interests. Wayne has deposed that he has had active management of Raymond's finances from the time Raymond was hospitalised in mid-2018 and since Raymond has been in the nursing home.
The present application has been brought for advice and direction of the Court pursuant to s 38 of the Powers of Attorney Act 2003 (NSW) (Powers of Attorney Act) seeking advice as to whether, in the circumstances of this case, distribution of funds from the estate of the deceased, as between Wayne, Raymond and Bronwyn on the basis agreed between them is appropriate; and if so, for the approval of the Court for such distribution pursuant to s 38(2)(b) of the Powers of Attorney Act.
Section 38 of the Powers of Attorney Act provides that:
38 Advice or directions concerning reviewable powers of attorney
(1) An attorney under a reviewable power of attorney may apply for advice or direction by a review tribunal on any matter relating to the scope of the attorney's appointment or the exercise of any function by the attorney under a reviewable power of attorney.
(2) In determining any such application, a review tribunal may decide to:
(a) approve or disapprove of any act proposed to be done by the attorney, or
(b) give such advice or direction as it considers appropriate, or
(c) vary the effect of the enduring power of attorney or make any other order it could make in an application under section 36.
(3) No proceedings lie against an attorney under a reviewable power of attorney for or on account of any act, matter or thing done or omitted to be done by the attorney in good faith and in accordance with any approval, advice or direction given under this section.
With the application has been submitted a memorandum of opinion from counsel, for the assistance of the Court having regard to decisions in Application of Gnitekram Marketing Pty Ltd [2010] NSWSC 1328 and Re Estate of Late Cho‑Poon [2013] NSWSC 844. The application for judicial advice is brought by way of more abundant caution in circumstances where, as enduring attorney for Raymond, Wayne has obligations towards his brother and a fiduciary duty to act in the best interests of his brother (see for example Chan v Zacharia (1984) 154 CLR 178; [1984] HCA 36, and particularly what was said by Deane J at 198-199).
The application has been brought to ensure that there can be no argument that Wayne has acted wrongfully in his duties as an enduring attorney for Raymond, even though the circumstances in which the proposed distribution of funds are to be made, on one view of things, are to Wayne's disadvantage.
The agreement that Wayne, Raymond and Bronwyn have reached is that the proceeds of sale of their late mother's home be divided equally between them, after payment of capital gains tax (which, I interpose to note, Wayne would accrue by reference to the fact that he permitted Raymond to continue to remain in the home as his principal place of residence for a lengthy period after his mother's death), a deduction of $5,000 to cover the cleaning work done by Wayne prior to the sale of the property, and the costs of the present application.
Each of Raymond and Bronwyn has, as I have said, affirmed affidavits in which they have deposed to their agreement to such a distribution, and in particular, to having had an opportunity to obtain independent advice in relation to the proposed arrangement.
The explanation for the fact that there is no legacy in respect of the other sibling (Karen), who is not a party to the application, is that Karen has not been close to the family for some years.
While Wayne has deposed that although he is on good terms with Karen, it is his understanding from a recent conversation with her that she has not been in contact with other family members for many years and does not presently wish to resume those relationships. She received a legacy of $1,000 under the will, and there has been no application for family provision made by her in the time since her mother's death. Any such application would, of course, would be well out of time at this stage, and would require leave.
In the circumstances, I am satisfied that the arrangement is an appropriate arrangement. The fact that Wayne permitted his brother to live in the property for many years rent free rather than insisting on selling the property soon after the death of the deceased is a relevant factor as is the fact that he has stored Raymond's belongings worth about $10,000 in a storage shed at his own expense since Raymond went into hospital in mid‑2018 (and subsequently the nursing home). It is noted that Wayne and his sister Bronwyn have provided Raymond with considerable support over the years, as set out in their respective affidavits.
A three‑way split of the proceeds of sale accords with each of their wishes. The reasons for each to have reached that agreement are set out in the memorandum of opinion of counsel. Those may be summarised as being that, but for the forbearance of Wayne, the property could have been sold at an earlier time, but to do so would have deprived Raymond of his home at a time that his health was fragile. Because of this forbearance by Wayne, it would be reasonable to split the liability for capital gains tax equally three ways. As Wayne undertook the substantial clean‑up required to return the property to a reasonable state, it is appropriate he receive some recompense for that work. Further, a three‑way split recognises that Bronwyn was close to her mother and contributed to her mother's welfare and that of her brothers in various ways over many years. The reason that there was no legacy made for Bronwyn in the will was that at that stage she was a public housing tenant, but I am told that she is now in employment.
It is submitted, and I accept, that the proposed distribution is in the interests of Raymond because it appropriately recognises the strength of his relationships with his family and their support for him over the years from the time his health declined, and that it also appropriately recognises the strength of the relationship between Bronwyn and her late mother. It is noted that the appropriateness of recognising gratuitous services provided to an incapable person has been recognised in the past (see Protective Commissioner v D (2004) 60 NSWLR 513; [2004] NSWCA 216 at [149]-[179], per McColl JA, Mason P and Giles JA agreeing), and that, although Raymond has not been declared to be an incapable person, it is, in the circumstances set out in the affidavits relied upon by the plaintiff, appropriate to recognise the gratuitous services and care provided to Raymond by his brother and sister.
Reference is also made in the submissions to s 85 of the Trustee Act 1925 (NSW) (Trustee Act) which provides that:
85 Excusable breaches of trust
(1) Where a trustee is or may be personally liable for any breach of trust, the Court may relieve the trustee either wholly or partly from personal liability for the breach.
(2) The relief may not be given unless it appears to the Court that the trustee has acted honestly and reasonably, and ought fairly to be excused for the breach of trust and for omitting to obtain the direction of the Court in the matter in which the trustee committed the breach.
It is submitted that, whether or not Wayne is a trustee in a strict sense, there is a fiduciary obligation attaching to the exercise of an enduring power of attorney that requires Wayne to approach the Court for orders analogous to those that could be made under s 85 of the Trustee Act, and I refer thereto C v W (No 2) [2016] NSWSC 945 at [22]-[25], [31]-[34], and [44]-[47], per Lindsay J.
The proceeds of sale are presently held in the solicitor's account pending distribution. I am satisfied that the proposed agreement for distribution of the net proceeds of sale of the property that has been reached between Wayne, Raymond and Bronwyn is in the best interests of Raymond because it appropriately reflects the accommodations made by Wayne for Raymond's benefit over the years, the gratuitous services provided to him by both Wayne and Bronwyn, and the strength of Raymond's relationship with his two siblings. I accept that it is fair and reasonable in all the circumstances and I note that it has the consent of each of the siblings affected thereby. I have pointed also, as previously noted, to the fact that each of Raymond and Bronwyn has had a reasonable opportunity to seek independent legal advice in relation to the proposed arrangements.
In those circumstances, I make the following orders:
1. In the circumstances of this case, as outlined in the affidavits of each of Mr Wayne Cecil Forwood (affirmed 24 June 2020, and affirmed 7 October 2020), of Mr Raymond John Edward Forwood (affirmed 5 July 2020), and of Ms Bronwyn Daphne Rae (affirmed 1 July 2020), and having taken into account the memorandum of opinion of counsel dated 8 October 2020, it is in order for the net proceeds of sale of the property, being Lot 6 in Deposited Plan 235539 in the Parish of Prospect, County of Cumberland, and bearing a Title Reference of 6/235539 (known as 35 Johnson Avenue, Seven Hills), being $530,330.86, be paid in equal shares to each of Raymond John Edward Forwood, Wayne Cecil Forwood and Bronwyn Daphne Rae after the following deductions:
1. Payment of $5,000 to Wayne Cecil Forwood for the cleaning of the property prior to its sale on 6 August 2019;
2. Payment of capital gains tax to the Australian Taxation Office, and;
3. Payment of the costs of this application to the Supreme Court.
1. Costs of this application be paid from the net proceeds of sale of the property.
[2]
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Decision last updated: 14 October 2020