KNE died on 17 March 2022 at the age of 90. At the time of her death she lived in an aged care facility in regional NSW. KNE had seven children being EDN, Mr Z, Mr Y, NTN, OKN, and Ms X. KNE's daughter, Ms W, pre-deceased her.
On 25 July 2017 KNE executed an enduring guardianship appointment and an enduring power of attorney appointing OKN and EDN as her guardians and attorneys to act jointly and severally (the 2017 instruments).
On 9 July 2021 KNE revoked OKN's appointment as her enduring guardian and attorney. On the same date she made another enduring power of attorney and an enduring guardianship appointment. These instruments appointed EDN and NTN as her attorneys and enduring guardians to act jointly and severally.
OKN has made an application to review the enduring power of attorney executed by KNE dated 9 July 2021 (the EPoA).
As this hearing involved multiple members of the same family, for clarity but with no disrespect intended, we have referred to KNE's children by their first names throughout these reasons.
[2]
Statutory framework and issues for determination
Section 36(1) of the Powers of Attorney Act 2003 (NSW) (the PoA Act) provides as follows:
A review Tribunal may, on the application of an interested person, decide to review the making, revocation or the operation and effect of a reviewable power of attorney or not to carry out such a review.
KNE [2022] NSWCATGD 22 | Case summary | Zoe
In reviewing the making of a power of attorney, the Tribunal may make the orders set out in s 36(3) of the PoA Act, including orders that the power of attorney is invalid. In reviewing the operation and effect of a power of attorney, the Tribunal may make orders as provided under s 36(4) of the PoA Act as follows:
A review Tribunal may, if satisfied that it would be in the best interests of the principal to do so or that it would better reflect the wishes of the principal, make any one or more of the following orders relating to the operation and effect of a power of attorney:
1. an order varying a term of, or a power conferred by, the power of attorney,
2. an order removing a person from office as an attorney,
3. an order appointing a substitute attorney to replace an attorney who has been removed from office by a review Tribunal or who otherwise vacates the office,
4. an order reinstating a power of attorney that has lapsed by reason of any vacancy in the office of an attorney and appointing a substitute attorney to replace the attorney who vacated office,
5. an order directing or requiring any one or more of the following:
1. that an attorney furnish accounts and other information to the Tribunal or to a person nominated by the Tribunal,
2. that an attorney lodge with the Tribunal a copy of all records and accounts kept by the attorney of dealings and transactions made by the attorney under the power,
3. that those records and accounts be audited by an auditor appointed by the Tribunal and that a copy of the report of the auditor be furnished to the Tribunal,
4. that the attorney submit a plan of financial management to the Tribunal for approval,
1. an order revoking all or part of the power of attorney,
2. such other orders as the review Tribunal thinks fit.
As noted by the Tribunal in UQH [2014] NSWCATGD 37 at [17], it is well-established law that the death of the principal of a power of attorney terminates the power. There was no dispute that the EPoA ceased to have operative effect from 17 March 2022.
The issues for determination were: first, whether the Tribunal had power to review the EPoA of KNE given she has passed away; secondly, if there was power to review the instrument, whether the Tribunal should conduct such a review and; thirdly, if the Tribunal were to conduct a review what orders should be made.
[3]
Overview of evidence and submissions
OKN's evidence and the main issues of concern which led to his application can be summarised as follows:
1. He does not believe his mother had capacity to revoke the 2017 instruments on 9 July 2021 and make the EPoA. He says his mother has been admitted to hospital on 30 June 2021. He believes her blood sugar levels were unstable and she was on the pain relief medication Tramadol which he says would have affected her cognitive capacity. He says there was a relationship of 'interdependence' between KNE and her General Practitioner at the time, Dr V, noting she had a weekly appointment with him.
2. He asserts that KNE was 'coerced' to revoke the 2017 instrument and to make the EPoA. He believes EDN and NTN put pressure on KNE at the time. OKN denies that he had been putting pressure on KNE for him to manage her financial affairs.
3. KNE's home in regional NSW was offered to KNE's children to purchase by EDN on 8 December 2021. KNE had by that stage entered residential aged care. OKN believes the offer to purchase was made to 'mitigate the potential of the contesting of Mum's last will and testament due to her changing this' from previous wills which left the property solely to OKN.
4. OKN submits that it is appropriate for the Tribunal to review the operation and effect of his mother's EPOA because he believes that EDN and NTN as KNE's attorneys exposed her estate to unnecessary costs due to contractual agreements entered unwisely just prior to KNE's death
EDN and NTN's positions were broadly aligned. They say that they acted appropriately at all times in their dealings with KNE's estate.
They drew our attention to a number of matters which they say are relevant to our consideration as follows:
1. KNE asked NTN to take over the role of her attorney from OKN which is why the EPoA was made in 2017 by KNE. NTN and EDN say KNE expressed concern to them about OKN trying to take over her financial affairs and various other actions by OKN.
2. The sale of KNE's property was done appropriately and with KNE's interests in mind. They engaged real estate agents and a valuer to obtain market appraisals and a valuation of the property. Copies of those were in evidence. These indicated the property was worth between $375,000 to $430,000.
3. At KNE's request the property was offered to OKN and other family members prior to being placed on the open market. OKN initially expressed interest but then sent an e-mail on 15 December 2021, a copy of which was in evidence, saying that he had decided not to proceed to purchase as he was concerned about the costs, amongst other things, of addressing plumbing and electrical work required on the property.
4. The property was eventually sold for $448,000. EDN and NTN entered into a contract using their authority under the EPoA on 9 February 2022. This is confirmed in a letter dated 14 April 2022 from Mr U, the Solicitor who acted on the sale and is now acting in relation to the Probate application for KNE's estate. However prior to completion of the sale, KNE died on 17 March 2022. As their appointment as attorneys ceased on her death, the sale could not be completed. Probate of KNE's Will was sought so that completion of the sale could occur.
We note that a copy of KNE's Will dated 26 March 2019 was in evidence. The Will of KNE appointed each of her sons, EDN, NTN, Mr Y, Mr Z and OKN as her executors. A number of bequests of items of property and cash are set out in the will and the residue of the estate is to be divided equally amongst KNE's sons.
[4]
Consideration and findings
The issue of whether this Tribunal has power to review an enduring power of attorney after the principal had passed away was considered in UQH [2014] NSWCATGD 37.
In that case, one of the children of Mr UQH made an application to review an enduring power of attorney made by Mr UQH prior to his death. Mr UQH passed away before the application was filed. There were disputes between the applicant and Mr UQH's attorneys, two of his other children, about the administration of his finances and the administration of his estate. The Tribunal held that it would have jurisdiction to review an enduring power of attorney under the PoA Act even if the principal had passed away prior to the hearing. The Tribunal also found that, given the nature of the relief under s 36(4) of the PoA Act, the Tribunal could only make orders that would have practical utility. The Tribunal recognised its general supervisory role in relation to enduring powers of attorney but noted it could only make orders under s 36(4) of the PoA Act if it was satisfied about the threshold matters required to enliven the discretion.
Under s 34(6) of the PoA Act, the Tribunal may make orders in respect of an enduring power of attorney if it is satisfied it would be in the best interests of the principal to make the orders or that it would better reflect the principal's wishes. Once the principal has died the Tribunal cannot make any orders based on best interests.
However the discretion under s 36(4) of the PoA Act could be exercised if the orders would better reflect the wishes of the principal. In UQH, the Tribunal found that the Tribunal must be able to take into account the principal's wishes at the time of the execution of the power of attorney and indeed any time after until the death of the principal. The Tribunal in relevant circumstances, could make an order under s 36(4) of the PoA Act if it was satisfied that the order would better reflect the principal's wishes prior to their death.
A principal who has granted a power of attorney to another would wish authority under that power to be exercised appropriately. If the attorney abused the power or improperly took benefits for themselves or others to the detriment of the principal, or ultimately to the beneficiaries of the estate of the principal, it may be appropriate for the Tribunal to review a power of attorney and make orders under, for instance, s 36(4)(e) of the PoA Act. Arguably, it would better reflect the wishes of the principal for the assets, and ultimately their estate, not to be dissipated or transferred to the benefit of the attorney or another. A principal who executes a Will setting out their wishes as to how their estate is to be distributed would have an interest in ensuring their wishes could be given effect and not circumvented by the dissipation of their assets before their death, other than for their benefit.
Accordingly, we are of the view that the Tribunal is empowered to review the enduring power of attorney of KNE even though she had passed away prior to the hearing and prior to the application being filed. However, the critical issue is whether the Tribunal should review the power of attorney and, if in conducting the review, it should make any orders under s 36(4) of the PoA Act.
Section 36(1) of the PoA Act gives the Tribunal a discretion to review an enduring power of attorney. The discretion is unfettered although, as already noted, the orders that can be made by the Tribunal are circumscribed by s 36(4) of the PoA Act. We consider that OKN's application and written material raised issues of significant concern to OKN and matters of some controversy which warranted us conducting the review. However having conducted the review, we decided not to make any orders under s 36(4) of the PoA Act.
Our analysis of the evidence and our grounds for reaching that decision are as follows:
1. On the face of the EPoA the instrument was validly made. There is a presumption that a principal has capacity to make the appointment unless that presumption is displaced by cogent and compelling evidence. A Solicitor has certified under s 19 of the PoA Act that he explained the effect of the instrument to KNE and was satisfied that she appeared to understand the nature and effect of instrument. The instrument provides that it takes effect once the two attorneys have signed which they both did on 9 July 2021. Apart from OKN's assertions there was no persuasive objective evidence that supports his view that KNE did not have capacity or was coerced into signing the instrument such as to warrant a full review of the making of the EPoA.
2. An attorney is in a fiduciary relationship with the person whose affairs they manage. An attorney must act in the best interests of the principal and must not obtain a personal benefit other than specifically provided for in the executed enduring power of attorney: PoA Act, s 12(1). However, there was a lack of evidence to indicate that either NTN or EDN, in their role as KNE's attorney, acted in breach of their fiduciary obligations while KNE was alive. At a prima facie level, there is no evidence of financial mismanagement or maladministration by either attorney.
3. OKN himself acknowledges at [15] of his statement of 25 May 2022 to the Tribunal, that the appropriate mechanism is for disputes about the estate to be resolved by the executors. He goes on to say that it is not clear that an accounting under s 36(4)(a) of the PoA Act would resolve the critical issues in dispute. OKN's contention is that the critical issue is whether the attorneys exposed the estate to unnecessary costs in entering into the contract for the sale of land and whether the property was sold at an undervalue.
4. Aside from OKN's bare assertion that the estate 'may' have been exposed to unnecessary costs there was no cogent evidence to support that view. Further, there was no compelling evidence apart from OKN's assertion that KNE's property was sold at an undervalue by the attorneys. Indeed the evidence that was available in the form of independent market appraisals and a valuation indicated that the property was sold for significantly more than the upper end of the range of estimated values obtained of the property. OKN did not provide independent evidence from a real estate agent of the value of KNE's property which was contrary to the estimates obtained by EDN and NTN.
5. OKN conceded that as one of the executors of his mother's estate he has now agreed to the sale of KNE's property being completed at the sale price agreed by NTN and EDN prior to KNE's death. In these circumstances it is difficult to see any practical utility in conducting a full review of the EPoA. Any disputes about the terms of the Will or actions of other executors of the estate are not matters for this Tribunal and are within the jurisdiction of the Supreme Court.
6. Orders under s 36 of the PoA Act which are sought by OKN are broad reaching in their effect and scope and not often granted except where there is clear justification for them. We are not satisfied in this matter that there is clear justification for such orders. Nor are we satisfied that any orders we could make would better reflect KNE's wishes.
For these reasons we are not persuaded that is appropriate to make any orders pursuant to s 36(4) of the PoA Act.
Accordingly, the application for review of the EPoA was dismissed.
[5]
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
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Decision last updated: 13 March 2023