Gibbons v Wright

The hearing

1. At the end of these Reasons for Decision are lists of the parties to the application and the witnesses who attended the hearing. [Appendix removed for publication.]
2. The hearing was conducted in Sydney. Unfortunately, due to the COVID-19 pandemic a face-to-face hearing was not possible. OZN and Mr Y, general manager at the aged care facility, attended by video conference. LBN, DDN, Ms Z and Ms Mary Falloon, solicitor, as separate representative for OZN, participated by telephone.
3. We were provided with a large volume of material including submissions, statements, correspondence and emails. In the interests of brevity, only the relevant evidence has been referred to below.

Summary of relevant oral evidence

1. OZN said she is happy living in regional NSW and is enjoying living at the aged care facility. However she is hoping to eventually return to the farm. OZN said her husband is visiting regularly. OZN denied she and her husband ever separated, although they slept in separate rooms due to health problems. OZN denied ever discussing the division of the marital assets and said she went to the solicitor in regional NSW to simply obtain information. OZN told us she wants to stay in regional NSW. She said she only went to Sydney to see a new doctor.
2. LBN told us she wants her mother's financial interests to be taken care of. OZN is happy living at the aged care facility and has lots of people to talk to. LBN said her parents separated in 2019 and OZN received the single rate of aged pension after advising Centrelink of the separation. LBN said events of the past have been fabricated by others. There are documents confirming the proposed property settlement. OZN's treating doctors noted she is a poor historian. OZN is now living in regional NSW and reliant upon her husband. OZN discussed divorce with other family members, including her brother. LBN said the Public Guardian arranged OZN's placement at the aged care facility, not DDN as claimed. LBN asserted her mother was coerced into signing the documents in July 2020 and believes her mother is at financial risk. Her father has never managed the couple's accounts. There are a lot of assets that would need to be sold if there was a property settlement. OZN does not own 50% of the farm and is at risk of not receiving her fair share. LBN said her mother appointed her as her guardian and attorney after DDN asked her for a divorce.
3. DDN told us he wants his wife to stay at the aged care facility and he wants to continue to be her attorney. DDN cannot care for his wife at home due to his own health problems. DDN said his wife went to Sydney for medical reasons and there was no talk of them separating. DDN denied he had received a letter from a solicitor regarding a potential family law settlement. DDN said he would prefer that the NSW Trustee and Guardian be appointed if a financial management order was made. DDN told us he purchased the family farm in 1967 with his father. After his father died, DDN was required to transfer a one-quarter share of his father's share to his brother. He gave the other one-quarter share to his wife. DDN said he and OZN were married in 1964 and they moved to the farm in 1967. He agreed with his daughter that the property is valued at around $1.5 million. DDN said he and his wife have a number of joint and separate bank accounts. He said OZN has around $10,000 in her personal account and owns a car valued at around $15,000. DDN said he and his wife receive the single rate of aged pension as they are considered an illness separated couple. DDN said the details of all of OZN's assets have been provided to Centrelink. DDN was unaware his wife was intending to appoint LBN as her attorney and guardian as she did not discuss it with him beforehand. OZN later described that decision as a mistake and said she wanted to change it. OZN attempted to engage a solicitor herself and then later asked him to find a solicitor.
4. Ms Z said her parents have been life partners for 60 years and her father has been doing a fantastic job. Mr and OZN make all decisions together as a partnership. They are only separated due to illness. Ms Z said the NSW Trustee and Guardian should be appointed if a financial management order is made. Ms Z told us she does not have any concerns about her father's financial decisions. To her knowledge, DDN has never advised that he wanted to end the marriage. Ms Z understands her mother wanted information about Ms Z's property settlement. Ms Z said her parents were separated due to medical treatment.
5. Mr Y told us OZN has settled in well at the facility and is enjoying the food. DDN is regarded as his wife's person responsible.

What did the Tribunal have to consider?

1. The Tribunal may, on the application of an interested person, decide to review the making or the operation and effect of a reviewable power of attorney, or not to carry out such a review: Powers of Attorney Act, s 36(1). As a consequence of reviewing the making or operation and effect of a reviewable power of attorney, the Tribunal may decide whether or not to make an order under s 36 of the Powers of Attorney Act (s 36(2)).
2. The Tribunal may make a number of orders relating to the making of a power of attorney including the following:

• An order declaring that OZN did or did not have mental capacity to make a valid power of attorney;
• An order declaring that the power of attorney is invalid (either in whole or in part) if the Tribunal is satisfied: 1. OZN did not have the capacity necessary to make a valid enduring power of attorney; 2. The enduring power of attorney did not comply with the requirements of the Powers of Attorney Act; 3. the enduring power of attorney is invalid for any other reason, for example, dishonesty or undue influence.

1. The Tribunal may make a number of orders relating to the operation and effect of a power of attorney if it is satisfied:

• that it would be in the best interests of OZN to make the order;
• that it would better reflect the wishes of OZN to make the order.

1. If on a review of the enduring power of attorney, the Tribunal decides not to make an order under s 36 of the Powers of Attorney Act, it may, if it considers it appropriate in all of the circumstances to do so, decide to treat the application for review as an application for a financial management order under Pt 3A of the Guardianship Act 1987 (NSW).

Should the Tribunal undertake a review of the enduring power of attorney?

1. In Susan Elizabeth Parker v Margaret Catherine Higgins & Ors [2012] NSWSC 1516, Slattery J stated [at 80]: "On an application for s 36 review such as this the Court must first exercise a discretion under Powers of Attorney Act, s 36(1) to decide whether or not to conduct a s 36 review. In my view the Court does not have to conduct a full review of all documents associated with the operation of the subject power of attorney to do this. Something short of a full review must be able to justify the exercise of the s 36(1) discretion as to whether or not the Court should conduct a full s 36 review. In the circumstances of this case the Court can glean sufficient information to exercise the s 36(1) discretion by undertaking a general survey of what... (a party )...has produced."
2. LBN submitted her mother did not have capacity to execute the enduring power of attorney in July 2020, relying on evidence given by the treating team at the previous hearing and the medical and allied health reports submitted to support the guardianship application.
3. There was uncontested evidence that OZN sustained a stroke in 2018 and has a number of physical disabilities as a result. She requires a high-level of assistance with activities of daily living. LBN advised the treating team at the public hospital that she had observed a decline in her mother's cognition, particularly since late-2019. LBN further advised that her parents had separated in 2019 and OZN was at risk of financial exploitation.
4. LBN provided a letter to her mother from Ms X, solicitor, of a law firm, dated 23 August 2019, to support her application. Ms X confirmed OZN and her daughter, LBN, had recently attended a conference with Ms X. OZN had instructed that on or about 18 July 2019, DDN had advised her that the marriage was over. OZN further advised her husband had arranged for a real estate agent to attend the family farm to provide a market appraisal with a view to selling the property. OZN sought general advice in relation to a property settlement. Ms X said a title search of the family farm showed OZN owns a one-quarter share and DDN owns a three-quarter share. Ms X questioned whether it was feasible for OZN to continue to live at the farm until it was sold due to concerns DDN would not continue to provide adequate care for OZN and "also the ramifications on you of his constant bullying and threatening behaviour". Ms X noted OZN had an appointment on 29 August 2019 to discuss these matters further and also review her will, enduring power of attorney and appointment of enduring guardian.
5. A subsequent letter from Ms X to DDN's solicitors, of another law firm, dated 4 September 2019, said Ms X's firm was acting for OZN. Ms X advised OZN wanted the farm sold and the proceeds to be distributed equally. Ms X asked that DDN's instructions be obtained.
6. OZN appeared to have no recollection of seeking family law advice in 2019. DDN strongly denied he had ever advised his wife that their marriage was over. He also denied they were separated while OZN was living in Sydney, claiming she was seeking medical treatment.
7. OZN was seen by a clinical neuropsychologist, Mr W, prior to executing the enduring power of attorney on 8 July 2020. OZN declined to undergo cognitive testing, but participated in two interviews with Mr W. He concluded the following: "…[OZN] demonstrates poor insight into the full scope of her care needs and she is not likely to recognise the need for appropriate supports and services on discharge…Her reports of being independent with her finances and not requiring any assistance with her medications at home conflicts with the information provided by family. On interview, she presents as somewhat vague with specific details of her medication and financial management. Unfortunately, formal testing of [OZN]'s cognition could not be undertaken given her refusal to participate. On interview, she presents as an unreliable historian regarding basic details of her current admission and recent history, which is suggestive of deficits in memory. Higher-level cognitive difficulties are also indicated by her limited practical problem-solving ability. In my view, [OZN]'s capacity to make informed decisions in relation to her discharge destination/services is compromised and appointment of a substitute decision-maker is recommended to work in her best interests in this area. [OZN] appears somewhat vague regarding specific details of her routine bills and there is indication that her memory is unreliable. Given her presentation in the assessment, together with the issues identified by family, I would have concern regarding [OZN]'s ability to manage her finances without external assistance. As such, she would also benefit from the appointment of a substitute decision-maker to assist her in the area of financial management. There will need to be discussion with the team and family regarding the extent that these areas of substitute decision-making could be managed with the existing signed enduring guardianship and enduring power of attorney, or whether an additional authorise other (accommodation) function is necessary…"
8. A report by Dr U, medical registrar for Dr V, staff specialist, geriatric medicine at the public hospital, dated 24 June 2020, said the following: "[OZN] requires one assist for mobility with a four-wheel walker, and presents an extremely high falls risk. She also requires assistance with all personal instrumental activities of daily living. These include (but are not limited to) showering, toileting, dressing, medication management, and financial management…Both the treating team and the carer (also next-of-kin) are in agreeance that [OZN] requires full-time care…She refused placement into an aged care facility. A cognitive assessment was attempted by our neuropsychologist two separate occasions (29/5/20 and 2/6/20) to determine the extent of her cognitive deficit and elicit [OZN]'s capacity to make decisions regarding accommodation. [OZN] refused to engage completely on both occasions, however from our routine clinical assessment and observation, she demonstrated sufficiently poor insight into the full scope of her care needs. A recommendation was made that she would benefit from a substitute decision-maker for both lifestyle financial decision-making. We conclude that [OZN] does not have the capacity to make a fully-informed decision regarding her discharge destination…"
9. LBN provided a transcript of the Tribunal hearing conducted on 20 July 2020. Dr V gave oral evidence at that hearing that OZN has mixed dementia. Dr V noted OZN has short-term memory problems and her condition fluctuates. Dr V subsequently left the hearing and Dr U was questioned, in Dr V's absence, about OZN's capacity to sign legal documents. In response to a question from the Tribunal, Dr U confirmed the opinion of the treating team was that OZN did not have capacity to sign a legal document such as an appointment of an enduring guardian on 8 July 2020. Dr U said she had advised Dr V that a solicitor had attended the hospital to speak with OZN on 8 July 2020 and Dr V had expressed the view that "whatever was signed would probably not be valid. But that would be left in the hands of the family and the solicitor as it was not a medical matter for [the treating team] to intervene in…"
10. After having regard to the medical and allied health professional evidence before us, the conflict within OZN's family and her vulnerability due to her various health conditions, the Tribunal was satisfied that the interests of OZN required that it undertake a review of the making of the power of attorney.

Should the Tribunal make any orders under s 36 of the Powers of Attorney Act?

1. The Tribunal then proceeded, pursuant to s 36(2) of the Powers of Attorney Act, to consider whether or not to make an order under s 36 of that Act.
2. The enduring power of attorney signed by OZN on 8 July 2020 at the public hospital was witnessed by Mr R, solicitor. The Tribunal was provided with correspondence from Mr R to Ms T, solicitor at regional NSW, dated 12 June and 8 July 2020. The Tribunal notes Ms T is DDN's solicitor. Mr R said he spent 50 minutes with OZN on 12 June 2020 and, although unwell and slow to respond, she appeared to be able to provide competent instructions. OZN provided instructions for a new will, although details about that were redacted from the correspondence. Mr R said he understood from Ms T that OZN was having an assessment and requested that he be advised if the assessment found something different. In his later correspondence, Mr R said OZN had recalled their earlier conversation, was given the opportunity of reading all documents and appeared to understand them. Mr R said a registrar and two other females interrupted his interview with OZN to advise that OZN had undergone testing and that the documents he was dealing with may or may not stand up as a result of those tests. Mr R asked the registrar if she could reveal the results of the tests and she advised she would need the permission of OZN's guardian. Mr R said a hospital social worker met him as he was leaving and repeated the documents may or may not stand up in Court, or words to that effect. Mr R asked if the social worker could provide any more details, and she indicated no.
3. Ms Falloon said she spoke with Mr R on 8 July 2020. Mr R advised he was satisfied that OZN understood what she was doing. He was unable to obtain any medical advice as the treating team declined to provide any information. OZN remembered everything from the first visit when he visited on the second occasion. Mr R was satisfied OZN had capacity. Ms Falloon said it is important to distinguish between legal and clinical opinions; the clinical opinion is not determinative.
4. Ms Falloon told us OZN was emphatic that she wants her husband to make decisions on her behalf when she discussed the application with her prior to the hearing. OZN advised Ms Falloon that DDN had looked after her for 50 years and they make all decisions together.
5. OZN participated fully in the hearing and appeared to have a reasonable understanding of the nature of the proceedings. OZN was at times tangential and repetitive. OZN appeared to recall appointing her husband as her attorney on 8 July 2020 and gave clear and unequivocal evidence that she wants him to continue in that role.
6. Ms Falloon submitted the evidence presents a quandary. OZN clearly wants her husband to act as her attorney and he has been making decisions in accordance with his appointment in OZN's best interests. OZN's respite fees are being paid by direct debit and there are no concerns about the decisions that DDN has made. Ms Falloon submitted there is no need to revoke the enduring power of attorney. However if the Tribunal decided to make a financial management order, Ms Falloon submitted the NSW Trustee and Guardian should be appointed due to the animosity within the family. Ms Falloon submitted DDN is elderly and may require assistance to act as his wife's attorney in the future, although there are others that could provide assistance. Ms Falloon observed DDN and OZN have been married for many years and successfully operated a farming business together. OZN's freedom of decision making should be respected and her views taken into account. The appointment of the NSW Trustee and Guardian would be an unnecessary intrusion into the couple's life. DDN has a good understanding of the couple's financial situation. Ms Falloon submitted that the application should be dismissed.
7. The Tribunal notes there is no test for the capacity to make an enduring power of attorney in the Powers of Attorney Act. Accordingly, the Tribunal must have regard to the common law when determining applications to review the making of an enduring power of attorney. The authoritative statement of the test for capacity is found in the joint judgment of Dixon CJ and Kitto and Taylor JJ in Gibbons v Wright (1954) 91 CLR 423 at 438: "[T]he mental capacity required by the law in respect of any instrument is relative to the particular transaction 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."
8. In Ranclaud v Cabban (1988) NSW ConvR 57, (55-385), Young J furthers this discussion about capacity in the context of making a power of attorney: "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."
9. Therefore, a person has capacity to make an enduring power of attorney if he or she understands both the nature and effect of the document when it is explained to the person. The person must be able to demonstrate his or her understanding by communicating this back to the person who did the explaining.
10. There was conflicting evidence before us about whether or not OZN had capacity to execute the enduring power of attorney on 8 July 2020. We had regard to the oral evidence Dr V provided at the hearing on 20 July 2020 that OZN's condition fluctuates. While we accepted Mr R was satisfied to the requisite standard that OZN understood what she was signing, we note the initial approach to Mr R came from DDN's solicitor in regional NSW. This should have been cause for additional caution given Mr R was made aware OZN had appointed her daughter as her enduring guardian and attorney in 2019, rather than her husband.
11. Importantly, the Law Society of NSW Guidelines for Solicitors Preparing an Enduring Power of Attorney, published December 2003, include the following: 4. CAPACITY TO MAKE AN ENDURING POWER OF ATTORNEY If during the course of taking instructions, the solicitor becomes aware of any doubts about the donor's capacity to make the power of attorney, the solicitor has an obligation to pursue this further before the instrument is executed. In meeting this obligation the following steps must be followed: (a) The solicitor should refer to the Guidelines for Assessing Competence for Granting an Enduring power of attorney (Appendix A) for an understanding of the level of competence required and suggested approaches to questioning the client to explore their level of understanding of explanations provided. (b) Where a solicitor is aware that the donor is the subject of medical care for a condition which may affect mental capacity, or is in hospital, or is in an aged care facility, the solicitor must check this with the donor's doctor or other relevant health care professional and either obtain a report or make a note confirming how they decided that the donor has the mental capacity to execute an enduring power of attorney. (c) In respect of obtaining the doctor's report, this should be raised with the client and explained in terms of protecting the client's best interests to ensure that the power of attorney is validly made. After obtaining the client's consent, the solicitor should contact their client's doctor or health professional for information about their mental capacity. The client's consent should cover 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...
12. We were troubled Mr R did not contact the treating team before he met with OZN or take further steps to obtain the results of cognitive assessments conducted at the public hospital prior to OZN signing the enduring power of attorney, enduring guardianship and apparently her new will. Mr R may have come to a different conclusion about OZN's capacity to execute legal documents if he had been given access to her medical records. It is also regrettable that LBN was apparently not contacted by the treating team to seek permission to release the results of the cognitive assessments to Mr R after it became evident he was at the hospital to facilitate the execution of documents. In our view, the circumstances surrounding OZN signing legal documents on 8 July 2020, apparently including her new will, do not represent best practice.
13. We preferred the evidence from LBN regarding her parents' separation in 2019. That evidence was supported by independent and credible evidence from other sources, including correspondence from Ms X and emails from OZN to her daughter. We were persuaded that OZN moved to Sydney in September 2019 after separating from her husband, rather than to seek medical attention as claimed. She sought advice about a family law property settlement in August 2019 and received the single rate of aged pension due to her changed marital status. OZN's emails indicate she was suspicious that her husband may have been having an affair. OZN has either forgotten those events or prefers not to recall them. We did not find the evidence of DDN or Ms Z regarding the separation to be credible. Ms Z's explanation that her mother was likely seeking family law evidence on her behalf was entirely unconvincing. Nor do we accept DDN's evidence that his solicitors had failed to advise him of the letter from Ms X, dated 4 September 2019, regarding the couple's separation and the proposed sale of the family farm.
14. Regardless, Mr and OZN have evidently now reconciled, despite their physical separation due to OZN's care needs. OZN clearly wants her husband to make decisions on her behalf, including to manage her finances. There was no evidence before us to suggest that OZN's needs are not being met or that DDN is making decisions as attorney that are not in his wife's best interests. Although the enduring power of attorney was signed relatively recently, there was no evidence to support LBN's concerns that her mother's funds may have been mismanaged or her savings dissipated. DDN was able to explain the history of the ownership arrangements of the family farm and had a good understanding of his wife's other assets. He supports the decision made by the Public Guardian for OZN to live in a residential aged care facility as he can no longer provide care to his wife at home. We accepted DDN wants his wife to remain in regional NSW so he can maintain regular contact.
15. The evidence before us is that the arrangements put in place by OZN in July 2020 largely reflect the long-standing informal arrangements in place prior to the appointment of her daughter as her attorney in August 2019. DDN and OZN have been married for many years and, Ms Falloon noted, they successfully ran a family farm together. As expected, their assets are closely intertwined. We were satisfied on the basis of the available evidence that DDN is making decisions in his wife's best interests and there is no reason for those arrangements to be changed. We concluded that making a financial management order would likely cause OZN considerable distress and, in our view, is not warranted. The Tribunal therefore decided not to make an order under s 36(3) of the Powers of Attorney Act and to dismiss the application made by LBN.

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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: 03 May 2022