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[2010] WASAT 91
General information, not legal advice.
State Administrative Tribunal (WA)
2010-06-30
Original judgment source is linked above.
Enduring power of attorney - Tribunal has a general supervisory jurisdiction over the conduct of attorneys - Jurisdiction extends to deceased and capable donors - 'In connection with the power' of wide import - Discretion to order that an audit be conducted of the attorney's transactions - Discretion to be exercised when satisfied something requires an inquiry - The scope of the inquiry is to be determined by the expected utility to be derived from it - Order made for an audit to be conducted
Butler v St John of God Health Care Inc [2008] WASCA 174
Claremont Petroleum NL v Cummings and Another No SAG 44 of 1991 [1992] FCA 446; (1992) 110 ALR 239
Hall v Poolman [2009] NSWCA 64
Leslie v Hennessy [2001] FCA 371
Macchia v Nilant [2001] FCA 7
McCully v Whangamata Marina Society Inc and Anor [2006] NZCA 209 (11 August 2006)
Onus v Alcoa Australia [1981] HCA 50; (1981) 149 CLR 27
Re Alafaci; Registrar in Bankruptcy v Hardwick (1976) 9 ALR 262
Re SS; Ex parte RA [2008] WASAT 218
Taciak v Commissioner of Australian Federal Police [1995] FCA 1481; (1995) 131 ALR 319
Turner v Official Trustee in Bankruptcy (unreported [1999] FCA 1817, 27 November 1998)
1 In 1999, a woman gave her granddaughter authority to operate her bank account. In 2004, she made an enduring power of attorney appointing her granddaughter as her attorney. The enduring power of attorney was not subject to any conditions or restrictions.
2 The woman died in 2008 and her estate was distributed according to her will: 50% to her daughter, and the balance equally between her three sons.
3 One of her sons later questioned the value of the woman's estate and applied to the Tribunal for an audit of the dealings and transactions undertaken by the granddaughter as the woman's attorney.
4 The son said that there were numerous transactions on the bank account that were not for the woman and alleged that the granddaughter had made most of the transactions for her own benefit.
5 The granddaughter said that the transactions she made on the woman's bank account were made using the bank authority and that the enduring power of attorney was used only to sell the woman's property and to release funds to pay for the woman's entry into an aged care facility. She also said that the woman had continued to make her own transactions and had given access to her bank account to her daughter.
6 The granddaughter said that contrary to her frugal ways the woman had decided to assist her daughter financially and to do as much as she was able to do in the last years of her life. The son disputed that the woman had changed in this way.
7 In an earlier decision of the Tribunal it had been decided that the legislation governing enduring powers of attorney had given the Tribunal a general supervisory jurisdiction over the conduct of attorneys. This jurisdiction was available to the Tribunal even if the donor of the enduring power of attorney had died or if the donor was or had been of legal capacity.
8 The Tribunal decided that an audit should be conducted on certain dealings and transactions undertaken by the granddaughter as attorney. It decided that the enduring power of attorney included the authority to operate any bank account.
9 The Tribunal did not accept the granddaughter's argument that the bank authority covered the bank transactions. It decided that the provisions of the legislation should be given a broad interpretation, in particular that the phrase 'in connection with the power' had a wide meaning which included all of the transactions undertaken by the granddaughter on the woman's bank account.
10 An application has been made under the Guardianship and Administration Act 1990 (WA) (GA Act) in respect of the financial affairs of the late EW.
11 EW had four children, three sons and a daughter.
12 The application is made by BW (applicant), one of the sons of EW. The applicant seeks an order requiring an audit of the records and accounts required to be kept by the donee of an enduring power of attorney executed by EW on 22 July 2004, around the time she began to reside in an aged care hostel.
13 The donee of the enduring power of attorney was KE, a granddaughter of EW (granddaughter).
15 The application is made under s 109(1)(b) of the GA Act. Section 109 relevantly provides:
(1) A person who has, in the opinion of the State Administrative Tribunal, a proper interest in the matter may apply to the Tribunal for an order
(a) requiring the donee of an enduring power of attorney to file with the Tribunal and serve on the applicant a copy of all records and accounts kept by the donee of dealings and transactions made by him in connection with the power;
(b) requiring such records and accounts to be audited by an auditor appointed by the Tribunal and requiring a copy of the report of the auditor to be furnished to the Tribunal and the applicant for the order; or
(c) revoking or varying the terms of an enduring power of attorney, appointing a substitute donee of the power or confirming that a person appointed to be the substitute donee of the power has become the donee.
(2) The donee of an enduring power of attorney may apply to the State Administrative Tribunal
(a) for an order referred to in subsection (1)(c); or
(b) for directions as to matters connected with the exercise of the power or the construction of its terms.
(3) The State Administrative Tribunal may, upon an application under this section or upon receiving a report of a donee's bankruptcy under section 107(1)(d)
(a) make an order referred to in subsection (1) or (2); or
(b) make such other order as to the exercise of the power or the construction of its terms as the Tribunal thinks fit.
(4) An order under this section may be made subject to such terms and conditions as the State Administrative Tribunal thinks fit.
...
16 The statutory obligations of a donee under an enduring power of attorney are contained in s 107 of the GA Act which provides:
(1) The donee of an enduring power of attorney
(a) shall exercise his powers as attorney with reasonable diligence to protect the interests of the donor and, if he fails to do so, he is liable to the donor for any loss occasioned by the failure;
(b) shall keep and preserve accurate records and accounts of all dealings and transactions made under the power;
(c) subject to section 109(2), may not renounce a power during any period of legal incapacity of the donor; and
(d) shall, if the donee becomes bankrupt, report that bankruptcy to the State Administrative Tribunal.
17 In a decision which considered the scope of s 109(1)(a) and s 109(1)(b) of the GA Act, Barker J as the then President of the Tribunal, decided that Parliament has given the Tribunal a general supervisory jurisdiction in respect of the conduct of donees of enduring powers of attorney (KS [2008] WASAT 29 at [26] and [47]).
18 He found that the jurisdiction of the Tribunal is enlivened even if the donor is deceased or has legal capacity, given that an attorney (donee) remains accountable to the donor for the dealings and transactions undertaken in connection with the power conferred by the enduring power of attorney: KS at [31] [37] and [47] [59].
20 At the outset, s 109 of the GA Act requires the Tribunal to form a view as to whether the applicant has a 'proper interest' in the matter. The GA Act qualifies the range of people that may bring an application under s 109 although the term 'proper interest' is not defined.
21 There has been little judicial commentary on the meaning of 'proper interest'. The starting point is that for the purposes of s 109 of the GA Act, the applicant has a proper interest in the conduct of the attorney in the operation of the enduring power of attorney.
22 KAM Pitt QC, Chairman of the Resource Management and Planning Appeal Tribunal of Tasmania, in considering the meaning of 'proper interest' in a planning context, found assistance in the meaning of 'special interest' given by Stephen J in Onus v Alcoa Australia [1981] HCA 50; (1981) 149 CLR 27.
The distinction between this case and the ACF case is not to be found in any ready rule of thumb, capable of mechanical application; the criterion of 'special interest' supplies no such rule. As the law now stands it seems rather to involve in each case a curial assessment of the importance of the concern which plaintiff has with particular subject matter and the closeness of that plaintiff's relationship to that subject matter. (cited in R Browne obo M Guy B Heckinger and GM Robb v Tasman Council, T Cromer, Cowley Builders Pty Ltd & In-Seon Pty Ltd [1996] TASRMPAT 167 (18 July 1996) at page [4])
24 A recent decision of the Court of Appeal of New Zealand concerned the meaning of 'genuine or proper interest' under r 66(9) of the High Court rules (NZ) in a situation where a member of Parliament made a request to search a Court file containing documents relating to a civil litigation reviewing a decision of the Minister for Conservation McCully v Whangamata Marina Society Inc and Anor [2006] NZCA 209 (11 August 2006) (McCully).
25 In the judgment of the Court delivered by Hammond J, reference was made to a number of High Court (NZ) cases where the term 'genuine or proper interest' had been considered. For the purposes of the application before the Tribunal, it is instructive to cite the following:
... the words 'genuine and proper' (which are not defined in the rules) must have their ordinary meaning, of 'authentic or bona fide'. The requisite interest has connotations of 'appropriateness, relevant appropriateness in the circumstances.' (Anderson J in Currie v YMCA of Hamilton Inc (1989) 2 PRNZ 343 (HC) cited in McCully at par [30])
... genuine interest means a real, true and solidly based interest whereas proper interest involves an interest which is lawful, respectable, and worthy (Williamson J in Re Fourth Estate Periodicals Ltd (1989) 3 PRNZ 189 HC cited in McCully at para [31])
26 In finding in favour of the appellant, the Court concluded that, although not conclusive, a number of categories had been established in the authorities to determine 'genuine or proper interest'. Such an interest could exist where there was a recognised legal basis for an interest; where there may be a public interest and where a person is embroiled in 'collateral court proceedings'. The appellant was found to have a 'real interest' by virtue of his position as a member of Parliament and because his interest was not 'frivolous or vexatious or merely prurient' (McCully at para [43] and [46]).
27 Although ultimately to be decided on a case by case basis, the above authorities provide some guidance on how the words 'proper interest' may be interpreted for the purposes of s 109 of the GA Act. Given the Tribunal's general supervisory role in the conduct of enduring powers of attorney, it is our view that the qualification intended by 'proper interest' should not be restrictively applied.
28 The applicant is the son of the late donor and a beneficiary under her will. He alleges that a significant amount of money was misappropriated during the period the enduring power of attorney was in force from its execution on 22 July 2004 to the death of EW on 29 March 2008. We are satisfied that the application is not 'frivolous or vexatious or merely prurient' and that the applicant's interest is established as a 'proper interest' by virtue of his relationship to the donor, his interest in her estate and, because of the allegations made, a public interest in ensuring that attorneys under enduring powers of attorney fulfil their obligations.
29 It is common ground that EW did not suffer from a mental or cognitive impairment prior to her death. She was however, physically impaired such that she resided in a nursing home and relied upon people to do things for her from time to time.
30 It is also agreed that EW granted the granddaughter documented authority to operate on her bank account and executed an enduring power of attorney in favour of the granddaughter on 22 July 2004.
31 On 22 March 1999, by way of a bank 'Notice of Authority', EW authorised the granddaughter to operate her account(s) with the bank (bank authority). The bank authority was to operate severally such that EW and the granddaughter could act on the account separately. The authority gave the granddaughter wide powers in respect to the relationship EW had with her bank; relevantly the granddaughter was able to draw cheques, overdraw the accounts to the extent authorised by the bank and make periodical payments.
32 On 22 July 2004, EW executed an enduring power of attorney (EPA) solely in favour of the granddaughter. The document is before the Tribunal and it was not subject to any conditions or restrictions. It authorised the granddaughter to do on behalf of EW anything that she could lawfully do by an attorney. The EPA was to continue in force notwithstanding EW's subsequent legal incapacity.
33 The granddaughter was appointed the executor of the estate of EW in a will dated 11 May 2004. As noted, EW died on 29 March 2008. In June 2008, at the time of its distribution, the estate of EW was valued at $111,095.76. After some specific bequests, it was distributed, according to the will, 50% to MB (daughter) and the balance equally between the three sons of EW, of whom the applicant is one.
34 The applicant alleges that EW's estate, over the period in which the granddaughter exercised authority (either the bank authority or the EPA), was misappropriated of approximately $100,000.
35 The applicant states that in June 2008, when he received his share of the distribution of EW's estate, he questioned the size of the estate and asked the daughter whether she was aware of any unusual transactions. The applicant states that the daughter said that she was not aware of such payments apart from some financial assistance that EW gave her when she was ill.
36 The applicant identifies bank transactions which he classifies in the following way: cheque payments, internet online banking, cash withdrawals (automatic teller machine), withdrawals by EFTPOS (point of sale transactions) and branch staff assisted transactions.
37 The applicant alleges that many of the transactions made on the bank account were not made for the benefit of EW. He put it this way in a letter dated 22 September 2009 to the granddaughter's solicitor:
I would like to take this opportunity to give you my estimate of the quantum of the shortfall that I believe arises from inappropriate transactions on my mother's bank account during her stay at the [aged care hostel]. Immediately following the payment of $115 000 to the [aged care hostel] my mother's bank account had a balance of $109,080.52. Interest on this amount, at a conservative rate of 5% per annum, amounts to $5,454 or $105 per week. As all of my mother's day to day needs were met by [the aged care hostel] she did not have to cater for her other needs. The amount she retained from her pension, plus interest on the principal, would have easily covered her expenses. My contention is that approximately $109,080.52, or more, should have been in my mother's account when she passed away. The amount was $21,477.48. It is obvious to me that my mother's bank account has been used by [the granddaughter] for her own benefit, without the approval or knowledge of my mother.
38 The applicant submits that the transactions could not have been approved by EW given the high volume and the type of transactions made and because the bank statements were readdressed to the granddaughter from June or July 2004 which he says meant that EW did not see them. The applicant submits that this is why the bank statements were redirected.
39 The applicant states that according to the daughter, she had only limited access to the bank account of EW so that most of the transactions must have been made by the granddaughter. He submits that, in any case, the granddaughter would have been aware of any transactions made by the daughter given that she received the bank statements each month.
40 The transactions which the applicant says require explanation are cheque payments from December 2005 to February 2008 totalling $11,779.26; internet online banking from January 2004 to March 2008 totalling $28,440.24; cash withdrawals from January 2004 to March 2008 totalling $49,040.00; EFTPOS withdrawals from December 2003 to March 2008 $41,605.85 and branch staff assisted transactions from May 2004 to July 2007 (excluding the $115,500.00 paid to the aged care hostel) totalling $2,858.64.
41 In respect to the cheque payments, the initial position of the applicant is that he had no details of these transactions. Whilst much detail has been provided by the granddaughter (see the evidence of the granddaughter below) the applicant has residual concerns relating to payments in 2004 and 2006 of $5,000 both of which are reported by the granddaughter as being a gift to the daughter of EW to assist in the purchase of a motor vehicle. The applicant says that EW did not assist the daughter with the purchase of two motor vehicles. The applicant also questions a payment of $814.44. allegedly made in March 2007 to the aged care hostel but about which the hostel has no record. Finally the applicant questions a payment to St John's Ambulance when he says that EW was entitled to free ambulance services.
42 In respect to the internet online banking the applicant alleges that the granddaughter is unable to account for withdrawals of about $7,100 comprising many transactions of between $100 to $1,000. He further submits that the daughter said in her evidence that she did not have access to online banking (see the daughter's evidence below) and therefore the granddaughter must have made these unexplained transactions.
43 In respect to the cash withdrawals (automatic teller machines) and EFTPOS transactions, the applicant states that they number in excess of 500 but that the granddaughter has indentified only six of those having been made by herself.
44 A list of the cash withdrawals shows that one in July 2005 was made in Margaret River in the south west of the State and another in October 2006 was made in New South Wales. Many of the transactions took place in the suburbs of Leeming, Armadale and Bull Creek. The aged care hostel in which EW lived is in Hamilton Hill. The list of EFTPOS transactions shows many to have been made in retail outlets such as Coles, Target, KMart and Woolworths. Purchases were made at service stations and in Kalgoorlie, Busselton, Mt Barker and Denmark in the south west of the State. Purchases were made at liquor outlets.
45 The applicant submits that the enduring power of attorney executed by EW is a superior instrument to the bank authority and was the authority used by the granddaughter to undertake all transactions subsequent to its execution. He disputes the contention of the granddaughter that the EPA was executed for the sole purpose of disposing of EW's property. He submits that the effort involved in arranging for the EPA would have been no less than that required for EW to sign the sale documents for her property. The applicant submits that the granddaughter intended to use the EPA to give her full control of the financial affairs of EW.
46 The applicant states that EW was a very hardworking and frugal person throughout her life. He does not believe that she would have allowed her finances to have been eroded to the extent that they were in the last four or five years of her life. He says that he did not begrudge EW helping the daughter when she was ill but that the daughter had made a recovery by the time the EPA was executed by EW.
47 The applicant states that EW had a close relationship with all her children; he would visit her from Sydney at least twice a year and make weekly telephone contact; the son, DW visited weekly and the other son, MW, would visit when farming commitments allowed and was also in regular telephone contact with EW. The applicant disputes that the daughter visited EW daily. He says he would speak to EW on the telephone and she would mention the long time since she had last seen the daughter.
48 In response to the applicant's allegations, the granddaughter makes four main points: firstly that the EPA was used only to sell EW's property so as to release funds to enable EW to pay for her entry into the aged care facility; secondly that the bank authority was used for all the bank transactions; thirdly that EW directed and approved the transactions that were made and in particular that she wanted to assist her daughter financially; and lastly that the daughter also had access to EW's bank account.
49 The granddaughter states that when EW could no longer live in her home because of her increased care needs, she moved temporarily into a nursing home to await further permanent placement into an appropriate aged care facility. It was understood that her property would need to be sold and to that end the social work staff at the nursing home arranged for EW to execute an enduring power of attorney. The staff organised the relevant witnesses and the granddaughter subsequently signed the acceptance.
50 The granddaughter says that EW '... just didn't want to worry about having the hassle of signing papers...she was capable but she didn't want to'. T:[8], [25.11.09]. Using the authority of the EPA, the granddaughter signed the offer and acceptance for the sale of the property and, it would appear, the transfer of land to effect settlement. The net proceeds of sale, $208,011.83, were deposited in the bank account of EW on 29 September 2004. The granddaughter states that the EPA was never lodged with EW's bank because the bank authority was already in place.
51 With regard to the bank authority, the granddaughter says that it was used for transactions prior to the EPA and subsequent transactions were also made on that authority. The EPA did not affect the operation of the bank authority which had been made earlier and had not been revoked. The granddaughter states that EW had not lost capacity and the EPA had not been presented to the bank as an instrument of authority that the bank should recognise.
52 The granddaughter submits that EW and the daughter enjoyed a close relationship and that the daughter was EW's constant companion for the final 10 years of her life, visiting her every day. (EW is said to have moved to Western Australia in 1998 after the death of her husband principally to be with the daughter). The daughter was diagnosed with cancer in 2002 for which she underwent surgery and radiation treatment. At the time, EW suggested that the daughter sell her property and live with her. The daughter had declined but accepted EW's offer to pay her monthly bills, including mortgage payments.
53 The granddaughter accepts that EW may have been cautious with her finances in earlier years but submits that she was intent on assisting the daughter financially during her lifetime. She used to help the daughter with her day to day expenses. The granddaughter contends that this view is supported by the provisions of the will of EW in which she gave fifty per cent of her estate to the daughter and the balance between her three sons. The granddaughter adds that EW used to refer to the aged care facility as 'God's waiting room' and that she had decided to enjoy what time she had left.
54 The granddaughter further contends that EW had little contact with her sons in the last ten years of her life.
55 The granddaughter states that the bank statements were redirected to her home address because EW did not want anyone, including her sons, to have knowledge about her financial affairs. (The granddaughter states that EW told her that she had once caught one of her sons going through her papers). The bank statements were redirected when EW was still living at home but before the execution of the EPA. Once EW moved into the aged care facility, her bills were also sent to the granddaughter's address. The granddaughter says that she would show the bank statements to EW each month and that EW was fully aware of each transaction.
56 The granddaughter accepts that she made the cheque payments identified by the applicant. In respect to the cheque payments which remain of concern, the granddaughter states that the payment of $5,000 in August 2006 was made to a motor vehicle dealership and was for the daughter's vehicle; the payment of $5,000 on 15 July 2004 was made by EW quite separately to that for the motor vehicle and was made prior to the execution of the EPA. The payment in March 2007 for $814.44 and represented as having been made to the aged care facility, the granddaughter agrees is incorrect. She says the cheque butt was blank and she presumed what the payment was for. At the time of the hearing she had sought further details from the bank. The granddaughter accepts that the payment to St John Ambulance for membership fees was unnecessary but says she was busy with her young family and would generally accept the bills that she received as being correct.
57 The granddaughter states that in respect of the internet online banking transactions, one payment on 13 August 2008 for $500 was for her benefit. She identifies a number of payments that she says were for the benefit of the daughter including payments for rates and taxes, telephone, credit cards and payment to a health fund. She states that the daughter had access to EW's bank account through the internet.
58 In respect to the cash withdrawals (automatic teller machines) the granddaughter states that four withdrawals from the bank's Perth office totalling $380 were made by her. She states that only two EFTPOS transactions were made by her, one for a liquor store transaction in December 2005 for $52.99 and the other in May 2007 to a retailer of auto parts and supplies for $92.82. As regards the locations at which the cash withdrawals were made, the granddaughter says that she lived for a time in Armadale and this might explain some of the withdrawals from that location. She states that EW and her daughter would have visited her from time to time and they all would have gone shopping in Armadale.
59 The granddaughter states that the branch staff assisted transactions were made at the request of EW.
60 The granddaughter states that EW had ongoing access to her bank account through a 'keycard' operable by using a 'pin' number. The daughter also had access to the account with the consent of EW.
61 In identifying the bank transactions undertaken by her on behalf of EW, the granddaughter states that she cannot account for the other transactions she says must have been carried out by EW herself when she was with the daughter or by the daughter with EW's consent. The daughter took EW on shopping trips and more extended trips, including Margaret River and Denmark in the south west of the State. The daughter would use her motor vehicle on these trips and EW would pay for the fuel costs.
62 The daughter gave evidence by telephone at a directions hearing held on 15 September 2009 at which she said she had occasional (but not often) access to the bank account of EW. When asked whether she had access rights to the account she responded 'I don't think so; no I didn't'. At the directions hearing the daughter also said that she did not have online access to EW's bank account.
63 The daughter, who at the time was travelling around Australia, was not called by either party to give evidence at the hearing on 25 November 2009. Counsel for the granddaughter said:
There was an issue that arose, and if you recall [the daughter] attended this meeting by telephone linkup. I've since spoken to her about that. What was asked of her on the phone was...'Did you ever use the Internet online banking?' Her answer was, "No, I didn't." But I've since spoken to her about that and she said that what happened was she was on her mobile phone somewhere in New South Wales, there was a conversation going on in this room between those of us who were present. We'd had a general discussion about the Internet, the fact that there needed to be a password or something along those lines
....
There was a question put before that as to whether [EW] operated the banking account herself or knew about those transactions. [The daughter] understood that she was being asked whether she operated that Internet banking account without [EW] being aware of what the transaction was for, and she answered, "No, I didn't." [The daughter] has told me she did operate that account but she didn't there's nothing written down when she's used it; whereas when [the granddaughter] has used it she invariably has written down exactly what that transaction is for .... That's just a really unfortunate - just to corroborate [the daughter's] version, in my letter that I wrote to the applicant's solicitors back in June - so before any of these events - I did specify there that [the daughter] also had access to that Internet online banking account...T:[14], [25.11.09].
64 In a statutory declaration by MJ, a son of EW, he states that in a telephone conversation with EW in 2006 she expressed a concern that the daughter was requesting money whilst overseas. EW is reported to have said that she was not going to advance any funds to the daughter. MJ goes on to state that in his experience EW would not give away or lend her money indiscriminately.
65 DW, another son of EW states in a written submission that he visited EW on a weekly basis from the time she entered the aged care facility. He recounts that on one particular visit in the latter half of 2006, EW was very upset because she did not have enough cash to attend a craft fair. On contacting the daughter he was told that the granddaughter kept EW's 'keycard' in a locked safe. The daughter is reported to have added that EW was being 'silly' and that she was always difficult when the daughter went away.
66 AW, daughterinlaw of EW, states in a written statement that on two occasions in 2005 EW telephoned her at work expressing concerns about her finances. In the first contact in March 2005 EW is reported to have been distressed that she did not know what was happening with her money and that her bank account balance should have been larger than that shown on the bank statement. AW says that she did not pursue the matter, other than to suggest to EW that she speak with the granddaughter, because she knew that EW trusted the granddaughter implicitly. In the second contact, shortly thereafter, EW said that her daughter had telephoned her from overseas asking her to forward funds of $5,000 to cover the cost of motor vehicle repairs to a hire car company after being involved in an accident. EW is reported to have told AW that she would not provide those funds.
67 Counsel for the granddaughter submits that the extent to which an order requiring records and accounts to be audited might say anything useful, depends in part on what transactions are found to be caught within the authority of the EPA. We accept that submission.
68 An enduring power of attorney is a creature of statute. Its reference is to a general power of attorney with an additional feature that provides for the continuance of the power of attorney subsequent to the donor losing legal capacity to make decisions for themselves KS at para [11] [13]. In addition to the common law obligations, s 107 of the GA Act sets out the statutory obligations of an attorney which are to exercise the power of attorney with reasonable diligence to protect the interests of the donor, and if he or she fails to do so, be liable to the donor for any loss or occasional failure; to keep and preserve accurate records and accounts of all dealings and transactions made under the power; not to renounce a power during any period of legal incapacity of the donor; and if he or she becomes bankrupt, to report that bankruptcy to the Tribunal.
69 It is argued by the granddaughter that the EPA was only used for the sale of EW's property and that it was executed for that purpose alone. All the bank transactions undertaken by the granddaughter are said to have been made under the bank authority given by EW some years earlier and never revoked.
70 In summary, the case for the granddaughter rests on the following foundation: the status of the bank authority relative to the EPA and a narrow reading of the words 'in connection with' when considered against the impugned bank transactions.
71 We accept that the bank authority which is in the nature of an agency between EW as principal and the granddaughter as agent was not revoked at any time by EW. We accept also that the EPA was not lodged with EW's bank.
72 It is common ground that EW remained capable of making her own decisions until the time of her death; the applicant says only that EW's funds were misappropriated without her knowledge.
73 There are no restrictions or conditions on the EPA executed by EW which might give voice to her intent that the EPA was made for one transaction only, that being the sale of her property. On its face the EPA gives the granddaughter authority to do anything that EW could lawfully do as an attorney. This is an authority which is wider than a bank authority; the former is with the world at large whereas the latter is confined to a direction to EW's bank that it should accept the authority of the granddaughter to operate the bank account on certain transactions. As Barker J said in KS at para [50]:
... The donor may grant the donee a general power to do any act, or may confine the donee's authority by only allowing authority to do certain acts. Where the donor grants a general power to act, the donee may do any act the donor could, excluding any act which requires personal skill or discretion which is imposed on the donor personally: R v Burchill and Salway; Ex parte Kretschmar [1947] S R Qld 249 at 253
74 The fact that an attorney would usually act only at the direction of a capable donor does not diminish the authority of the attorney.
75 We find that when EW executed the EPA on 22 July 2004, the authority she gave to the granddaughter included the authority to operate any bank account. This was the case whatever the understanding of EW and the granddaughter at the time; the fact is that EW gave the granddaughter authority to do any act she could do herself subject to the exclusion stated in KS.
76 The question that follows in respect to the application before us is what transactions were actually captured by the EPA, or in the words of the GA Act, what were the '... dealings and transactions made by [the attorney] in connection with the power' (s 109(1)(a)).
77 Counsel for the granddaughter submits that in their ordinary meaning the words 'in connection with' infer a causal relationship between one thing and another. The only direct casual relationship that is said to exist in respect to the EPA is that specifically related to the sale of EW's property (the signing of the contract of sale and transfer document and the collection of the sale proceeds). In submitting the need for a casual relationship counsel for the granddaughter seeks to distinguish the reasoning in Butler v St John of God Health Care Inc [2008] WASCA 174 (Butler) discussed in Re SS; Ex parte RA [2008] WASAT 218 at para [76].
78 Butler concerned the scope of the terms of a deed of release some of which were referenced 'in connection with' certain claims or actions. Newnes AJA held at [37] and [38] that the meaning of 'in connection with' (and 'in respect of'; 'arising out of') depend on their particular context but that in their ordinary meaning each of the expressions is of wide connotation. The words 'in connection with' suggest a relationship but one that is not necessarily causal in nature.
79 Counsel for the granddaughter submits that the wide meaning given in Butler may be necessary in commercial matters, for example, to prevent a party attempting to circumvent the terms of a deed, but that a different approach might be called for in the statutory context. We agree that the statutory context is critical (the 'particular context') however, with respect, we do not agree that this necessarily implies a narrow reading.
80 Wilcox J put it this way in Claremont Petroleum NL v Cummings and Another No SAG 44 of 1991 [1992] FCA 446; (1992) 110 ALR 239 (Claremont Petroleum NL) at 280 (His Honour's reasoning supported in the later decision of Butler):
The phrase 'in connection with' is one of wide import, as I had occasion to observe in a different context in Our Town FM Pty Ltd v Australian Broadcasting Tribunal [1987] FCA 301; (1987) 16 FCR 465 at 47980; [1987] FCA 301; 77 ALR 577 at 591 2:
The words 'in connection with' ... do not necessarily require a casual relationship between the two things: see Commissioner for Superannuation v Miller [1985] FCA 445; (1985) 8 FCR 153 at [154], [160], [163]; [1985] FCA 445; 63 ALR 237 at 238, [244] and [247]. They may be used to described [sic] a relationship with a contemplated future event: see Koppen v Commissioner for Community Relations (1986) ALR 215 11 FCR 360 at 364, Johnson v Johnson [1952] P47 at 50-1. In the latter case the United Kingdom Court of Appeal applied a decision of the British Columbia Court of Appeal: Re Nanaimo Community Hotel Ltd [1945] 3 DLR 225, in which the question was whether a particular court, which was given 'jurisdiction to hear and determine all questions that may arise in connection with any assessment made under this Act', had jurisdiction to deal with a matter which preceded the issue of an assessment. The trial judge held that it did, that the phrase 'in connection with' covered matters leading up to, or which might lead up to an assessment. He said: ...
One of the very generally accepted meanings of 'connection' is 'relation' between things one of which is bound up with or involved in another; or again 'having to do with'. The words include matters occurring prior to as well as subsequent to or consequent upon so long as they are related to the principle thing. The phrase 'having to do with' perhaps gives as good a suggestion of the meaning as could be had. This statement was upheld on appeal.
81 We adopt the reasoning in Claremont Petroleum NL and Butler. A broad reading of 'in connection with' is consistent with the general supervisory role of the Tribunal in the conduct of attorneys of enduring powers of attorney and can include a temporal relationship between the execution of an enduring power of attorney and the subsequent transactions made on behalf of the donor by the attorney.
82 We are reinforced in our view by the authorities that have deliberated on how the statutory context might be determined when considering phrases which broaden the scope of a particular provision.
83 In Taciak v Commissioner of Australian Federal Police [1995] FCA 1481; (1995) 131 ALR 319, the words "connected with" were considered in the context of the use of lawfully obtained intercept material (s 5 of the Telecommunications (Interception) Act 1979 (Cth). Sackville J found that words 'connected with' expanded the scope of the definition of which it is a part:
... 'permitted purpose' ... a purpose connected with ... an investigation of, or an inquiry into ...
84 but not to the extent where it would render redundant other provisions specifically authorising the use of intercept information. He said at 328:
The question remains in a particular case what kind of relationship will suffice to establish the connection contemplated by the statute. This requires, to use the language in Pozzolanic, at FCR 289, a 'value judgment about the range of the Act'.
The value judgment required is more likely to depend on the statutory context than on dictionary definitions.
85 The 'value judgment' referred to by Sackville J as it applies to s 109 of the GA Act is clearly stated in KS at [47]. To reiterate:
In my view, Parliament has recognised through s 109 that the Tribunal should exercise a general supervisory jurisdiction in respect of the conduct of donees of enduring powers of attorney, if circumstances require it. [47]
86 In our view, the role given to the Tribunal by Parliament would be undermined were it narrowly interpreted in the way suggested by counsel for the granddaughter. Once an enduring power of attorney is executed in an unrestricted way then the dealings and transactions made for the donor by the person in whose favour the authority is given, are made 'in connection with the power' and must come within the supervisory ambit of the Tribunal by way of s 109 of the GA Act.
87 In the case of EW this has the affect of capturing all of the transactions undertaken by the granddaughter for EW from the date of the execution of the EPA on 22 July 2004 to EW's death, given that the EPA was not revoked and our finding that the EPA included the authority to operate the bank account of EW.
88 A further question must be considered: does the authority conferred on an attorney by an unrestricted enduring power of attorney capture any other transactions made in respect of the donor's estate? If other transactions are captured then they too must fall within the scope of the words 'in connection with' so as to potentially enliven the Tribunal's general supervisory role under s 109 of the GA Act.
89 It seems to us that the answer to this question depends fundamentally on the capacity of the donor during the operation of the enduring power of attorney. If the donor becomes incapable at a time after the execution of an enduring power of attorney then the attorney, if unrestricted in his or her authority, assumes full control over the donor's financial affairs. This view is supported by the statutory obligation of an attorney not to renounce the power during a period of incapacity of the donor (s 107(1)(c) of the GA Act). All other authorities such as those that are in the nature of general powers of attorney cease to operate (KS at [11]). The point at which full control is taken will need to be determined on a case by case basis; for example, when does an attorney take control after the donor has been diagnosed with a progressive condition such as dementia?
90 In the case of a donor who does not lose capacity during the operation of an enduring power of attorney, the control (and responsibility) of an attorney must be less than full control because the donor remains capable of undertaking transactions in his or her own right and of conferring authority on other persons to act on his or her behalf. The supervisory role of the Tribunal cannot extend to transactions or dealings made by the capable donor or, generally speaking, by a person other than the attorney. Section 109 of the GA Act is enlivened only in respect to dealings and transactions made by the attorney in connection with the power.
91 We would accept that the transactions made by a delegate of an attorney would be made 'in connection with the power'. Any delegation is subject to the rule against delegation which states that an agent (such as an attorney) may not delegate his or her authority to act on behalf of his or her principal except with the express or implied authority of the principal. (S Fisher 'Agency Law' (2000) Butterworths [5.1.3] [5.2.1].
92 In the case before us the question of delegation was not put by the applicant and we are satisfied that there is no evidence to indicate that EW gave such authority to the granddaughter, for instance to allow the daughter to act as the granddaughter's subagent.
93 We conclude therefore that the dealings and transactions captured by the application are the ones made by the granddaughter from the date of execution of the EPA on 22 July 2004 until the death of EW on 29 March 2008.
How should the Tribunal exercise its discretion under s 109(1)(b)?
94 The Tribunal should exercise its supervisory authority (the discretion to require records and accounts to be filed and audited), '... if circumstances require it' (KS at [47]). When would that be? It is clearly not sufficient that an order be made simply upon the making of an application by a person with a proper interest. To do so would obviate the discretion available to the Tribunal. An enduring power of attorney is an essentially private agreement between the donor and donee, and the transactions undertaken pursuant to that agreement should not be scrutinised unless there is reason to do so. That said, the threshold for making an order under s 109 of the GA Act should not be set so high as to compromise the general supervisory role given to the Tribunal in the conduct of attorneys. This is particularly so as attorneys are required to keep and preserve accurate records and accounts of the dealings and transactions made by them (s 107(1)(b) of the GA Act).
95 We have found some assistance in our response to this question in the judicial consideration given to the supervision of trustees and liquidators.
96 In Macchia v Nilant [2001] FCA 7 (12 January 2001) (Macchia), French J (as His Honour then was), considered the circumstances in which an inquiry into the conduct of a trustee might take place under s 179 of the Bankruptcy Act 1966. Of interest in comparing the scope of s 179 as against s 109 of the GA Act, is the finding that s 179 does not provide a statutory mechanism for pursuing claims for damages [44], (this too is not a remedy available under the GA Act; an order under s 109 can only require the relevant accounting or audit and does not have any other remedial effect (KS at [35]).
97 In the decision not to hold an inquiry into the conduct of the trustee, French J referred to Re Alafaci; Registrar in Bankruptcy v Hardwick (1976) 9 ALR 262 (Re Alafaci) and Turner v Official Trustee in Bankruptcy (unreported [1999] FCA 1817, 27 November 1998) (Turner), the reasoning of the latter he applied to his decision.
98 What is first required is a consideration of whether on the grounds and facts before it, a case has been made for an inquiry (Macchia at [49] citing Re Alafaci at 268). This involves a broad discretion to decide whether there are sufficient grounds to make an inquiry appropriate (Macchia at [49] citing Turner at 173). French J goes on to say at [50]:
S 179 operates in aid of the Court's supervision of trustees who are its officers. That operation, however, is subject to restraint against undue interference and to discretionary considerations including the practical benefit likely to be derived from the conduct of any inquiry ... the discretion to determine the utility of an inquiry and its likely outcomes ...
99 Observing the similarity between the law governing the supervision of liquidators (Corporation Act 2001 (Cth)) and trustees (Bankruptcy Act 1966 Cth)) and in so doing referring to the decision in Macchia, the New South Wales Court of Appeal in Hall v Poolman [2009] NSWCA 64 (31 March 2009) (Hall) cited with approval the decision of the Full Court of the Federal Court in Leslie v Hennessy [2001] FCA 371. Quoting at [58] from the judgment of Ryan, Dowsett and Hely JJ at [6]:
[6]...[W]e believe that both Young J [in Burns Philp Investments (No 2) case] and Drummond J were describing something less formal than a prima facie case according to some evidential burden of proof. Their Honours both meant only that an applicant must show a sufficient basis for making an order, that there is something which requires inquiry. The Court then has a discretion which it must exercise. Many factors will be relevant to that exercise. They include the strength and nature of the allegations, any answers offered by the liquidator, other available remedies, the stage to which the liquidation has progressed, the likely amounts of money involved, the availability of funds to pay for any inquiry, the likely benefit to be derived from it and the legitimate 'interest' of the applicant in the outcome. (Emphasis added)
100 The context of the decision as to whether to conduct an inquiry into the conduct of a liquidator was stated by the Court in Hall at [61] to be derived from the 'statutory supervisory jurisdiction in respect of liquidators of all kinds'.
101 Using the language of the authorities as a guide and with reference to the general supervisory role of the Tribunal in respect of the conduct of donees of enduring powers of attorney, is there in the case before us something which requires an inquiry, and is there a sufficient basis for making an order for an audit of the records and accounts kept by the granddaughter of dealings and transactions made by her as attorney for EW?
102 The applicant alleges that the granddaughter, whilst the attorney for EW, misappropriated her estate of a substantial sum of money. The granddaughter has provided an explanation for most of the transactions she says she made and submits that she cannot be held responsible for the transactions allegedly made by EW or the daughter. In response to the granddaughter the applicant says that the transactions she has ascribed to others (or at least the majority of those transactions) were made by her for her own benefit.
103 The matter before us is therefore not simply one where there is an agreed set of dealings and transactions undertaken by the granddaughter as attorney for EW, and which is subject to the exercise of the Tribunal's discretion under s 109(1)(b) of the GA Act. The transactions themselves are not agreed.
104 There is a problem with the daughter's evidence. She attended a directions hearing but not the final hearing even though the granddaughter had indicated at the directions hearing that she would be called to give evidence. The problem is that although we accept that the daughter made transactions on the bank account of EW we cannot, with any degree of certainty, determine the level of activity.
105 This uncertainty has had an impact on our ultimate determination of the application.
106 We are satisfied that many of the transactions identified by the applicant, particularly those EFTPOS (point of sale) transactions, show expenditure which on its face do not appear be the type of purchases made for the needs of a person in a nursing home. We also find that there is expenditure, for example at liquor outlets, which would raise a reasonable suspicion (at least a suspicion demanding further inquiry) that it was not made for EW.
107 The granddaughter's explanation is that EW went against her frugal nature to enjoy what time she had left and to provide for the daughter's needs. EW considered her residency in the nursing home to be the end point of her life ('God's waiting room') and her actions were consistent with her earlier support for the daughter who cared for her intensely whilst in the nursing home. The granddaughter submits that the will of EW, which was executed only two months before the EPA, supports the special relationship EW had with the daughter.
108 The applicant disputes the existence of a special relationship and says that all of the children had a close relationship with EW when she went into the nursing home. He does not accept that that it was in EW's nature to change her frugal ways. This view is supported by what the other siblings and the daughterinlaw say about EW's expressed concerns at the financial demands of the daughter.
109 We accept that the applicant is genuine in the concerns he has raised in his application. We query the time taken to make the application to the Tribunal (the estate of EW was distributed in June 2008) and also the extent of the concerns reported to have been expressed by EW. She is said to have made discrete statements about the state of her finances and the demands of her daughter in 2005 and 2006. If, as the applicant states, the children (not just the daughter) were in regular contact with EW, and if she was concerned for her finances, it would not have been unreasonable to have expected her to voice her anxiety more often, or for the sons or daughter in law to have done more about the concerns she did express.
110 We accept that the explanation of the granddaughter is not inherently implausible; however as with the applicant, we are concerned by the volume and type of expenditure made. We are also concerned by the apparent lack of understanding on the granddaughter's part of the responsibility of an attorney under an enduring power of attorney. We note for example her evidence that an internet transaction of $500 was made for her benefit, potentially a breach of the 'self-dealing' rule which is the duty of an agent not to place themselves in a position where their duty conflicts with their interests (S Fisher at [7.4.1]). We make no finding on this matter (the rule can be relaxed if the donor consents to the transaction, for example), but simply say that it underscores the profound duties (both statutory and common law duties) that a person accepts when agreeing to become an attorney.
111 We are, on balance, satisfied that there is enough in the volume and nature of transactions undertaken on the bank account of EW such that there is 'something which requires inquiry'. The allegation of misappropriation by the applicant is serious and warrants an investigation, despite the period of time between the distribution of the estate of EW and the making of the application to the Tribunal.
112 Importantly there will be funds available to pay for the inquiry as the applicant has undertaken to pay for the audit.
113 The scope of the audit is to be determined by the expected utility to be derived from it (Macchia at [50]).
114 A benefit of the audit will be the determination, to the extent possible, of the transactions undertaken by the granddaughter and so to settle a question raised by the application and not resolved at the hearing. The audit will also, to the extent possible, determine what supporting documentation exists for those transactions as is required to be kept by the granddaughter as attorney (s 107(1)(b) of the GA Act).
115 The audit and the report of the auditor will be the only remedial effect of the application (KS at [35]).
116 We have decided that the audit should include the sale of EW's property and the following transactions on her bank (deeming) account; the cheque payments, the internet online banking, the EFTPOS transactions and the bank assisted transactions. We have not included the cash withdrawals as we do not consider they can be ascribed to any particular person given they are transacted anonymously. The only information able to be obtained for the cash transactions are the locations where the transactions occurred. This is already available on the bank statements and nothing further would be gained by an audit (verification process) of those transactions.
(a) The sale of [EW]'s property, including the offer and acceptance, transfer of land and settlement;
(b) The bank account of [EW] with Westpac for the transactions identified by the applicant as cheque payments; internet online banking; EFTPOS and branch staff assisted transactions.
I certify that this and the preceding [117] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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(1985) 8 FCR 153
(1976) 9 ALR 262
(1992) 110 ALR 239
(1981) 149 CLR 27
(1995) 131 ALR 319
(1987) 16 FCR 465