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[2008] WASAT 29
State Administrative Tribunal (WA)
2008-02-11
Mr P
Original judgment source is linked above.
Guardianship and Administration Act 1990 (WA) - Enduring power of attorney - Application for intervention under s 109(1)(a) and s 109(1)(b) where donor deceased - Whether Tribunal has jurisdiction to make orders where donor is deceased - Whether Tribunal has jurisdiction to make orders where donor is capable
Protection of Personal and Property Rights Act 1988 (NZ), s 107(2)
Determination that Tribunal has jurisdiction to make orders for intervention in enduring power of attorney where donor has died
Determination that Tribunal has jurisdiction to make orders for intervention in enduring power of attorney where donor is capable
1 The son of a donor of an enduring power of attorney applied to the Tribunal for orders for accounts of transactions allegedly undertaken by the donee under the power. The donor died in 2006, and it had not been established that he lacked legal capacity at any stage during his lifetime.
2 The Tribunal initially established to deal with the application referred two questions of law to the President for determination:
3 The President determined both questions in the affirmative. The matter was remitted to the Tribunal as originally constituted for determination of the initial application.
4 Two questions have been referred to the President of the State Administrative Tribunal (the Tribunal) pursuant to s 59(4) of the State Administrative Tribunal Act 2004 (WA) for determination, namely:
5 KS executed an enduring power of attorney in 2004 by which he appointed his son-in-law GC the donee. KS died in October 2006.
6 Probate of KS's will was granted to KS's executors on 26 February 2007.
7 The applicant GS, who is KS's son, initiated proceedings in the Supreme Court of Western Australia under the Inheritance (Family and Dependants Provision) Act 1972 (WA) and also challenged the administration of his father's will. He asserts that the schedule of assets submitted for probate did not properly reflect the value of the estate prior to his father's death.
8 In proceedings in this Tribunal the applicant seeks orders under s 109 of the GA Act for the filing and audit of accounts for transactions allegedly undertaken by GC as donee under the enduring power of attorney during the lifetime of KS.
9 In response the donee says KS maintained legal capacity until the time of his death and that he, as donee, has not acted under the enduring power of attorney at any time. However, this factual claim is challenged by the applicant who asserts that GC acted under the enduring power of attorney to transfer property of KS on 25 March 2006, prior to KS's death.
10 The ability to make an enduring power of attorney is now a common feature of statutory law in all Australian states and territories.
11 The ability for a person to make a general power of attorney by deed has long been available under the general law. A general power of attorney is typically used in commercial transactions to give a person specific authority in financial matters. A general power of attorney does not usually facilitate the donee of the power of attorney making personal or health decisions. Moreover, a general power of attorney ceases to operate when the donor loses legal capacity.
12 To this end, typically, an enduring power of attorney, which is created by statute, builds on the general power of attorney by authorising the continuance of a power of attorney in the event that the donor of the power loses the legal capacity themselves to make decisions.
13 Accordingly, an enduring power of attorney is a particular sort of power of attorney recognised and regulated by statute by reference to a general power of attorney. While the relevant statutes in the various Australian jurisdictions have much in common it is necessary to consider closely the terms of each statute to understand how it operates in the particular jurisdiction in question. In Western Australia, enduring powers of attorney are recognised and regulated by the provisions of the GA Act.
14 Section 102 of the GA Act defines an enduring power of attorney as a power of attorney created under s 104 or recognised by the State Administrative Tribunal under s 104A(2). The latter definition means the Tribunal can recognise an enduring power of attorney made outside Western Australia.
15 Section 104 of the GA Act specifies how an enduring power of attorney is created, including the requirements that:
16 Section 105 of the GA Act makes it clear that notwithstanding any rule of law to the contrary, or anything in the GA Act, an enduring power of attorney that is in force is not affected by the subsequent legal incapacity of the donor of the power.
17 Section 107 of the GA Act specifies the obligations of a donee, which are:
18 Section 108 of the GA Act recognises that the Tribunal may make a statutory administration order in respect of a person's estate notwithstanding the existence of an enduring power of attorney, and provides:
Where it makes an administration order or an order under section 65 or 66 in respect of the estate of the donor of an enduring power of attorney -
(a) created under section 104, the State Administrative Tribunal may revoke or vary the power; or
(b) recognized by the State Administrative Tribunal under section 104A(2), the Tribunal may revoke that recognition.
Despite subsection (1), where the State Administrative Tribunal makes an order referred to in that subsection and the continued operation of an enduring power of attorney would be inconsistent with the functions of the administrator or person acting under section 65 or 66, the Tribunal -
(a) in the case of an enduring power of attorney created under section 104, shall revoke the power or vary it to remove the inconsistency; or
(b) in the case of an enduring power of attorney recognized by the Tribunal under section 104A(2), shall revoke that recognition.
Subject to subsection (1), where an administrator of the estate or of part of the estate of the donor of an enduring power of attorney is appointed -
(a) the donee of the power is accountable to the administrator as if the administrator were the donor of the power; and
(b) the administrator has the same power to vary or revoke the power as the donor would have if he were of full legal capacity.
In relation to an enduring power of attorney recognized by the State Administrative Tribunal under section 104A(2) -
(a) the operation of subsection (2)(a) is limited to the donor's estate within Western Australia; and
(b) subsection (2)(b) does not apply but the administrator may apply to the Tribunal to revoke recognition of the enduring power of attorney.
Section 41(1) and (3) apply, with all necessary changes, to an application under subsection (3)(b) as if it were an application for an administration order."
19 Section 109 of the GA Act sets out the power of the Tribunal otherwise to intervene in relation to an enduring power of attorney on application in the following circumstances:
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.
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.
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.
An order under this section may be made subject to such terms and conditions as the State Administrative Tribunal thinks fit.
In relation to an enduring power of attorney recognized by the State Administrative Tribunal under section 104A, an order under this section is limited to the donor's estate within Western Australia."
Question 1: Does the Tribunal have jurisdiction to make orders under s 109 of the GA Act for intervention where the donor has died?
20 There is no doubt that the donee of an enduring power of attorney is unable to exercise the powers created by an enduring power of attorney once the donor has died.
21 The whole purpose of an enduring power of attorney is to permit a person to act on behalf of the donor during the donor's lifetime, even where they lose legal capacity.
22 This intent may be drawn from a reading of the whole of Pt 9 of the GA Act. It also flows from the clear wording of Form 1 'Enduring Power of Attorney' set out in Sch 3 of the GA Act. Clause 2 of Form 1 is in these terms:
"I authorise my attorney to do on my behalf anything that I can lawfully do by an attorney."
Once a person has passed away they cannot do anything and so no other person can do anything on their behalf.
23 Once the donor of the power of attorney dies it is necessary for either an executor or a trustee appointed by the will of the deceased, if there is a will, to seek probate of the will and to act lawfully in accordance with the terms of the will; or, if there is no will, for a person to apply for letters of administration under the Administration Act 1903 (WA) to act in relation to the estate of the deceased.
24 The position is the same where the donor of a general power of attorney dies.
25 While the donor of an enduring power of attorney is alive, and the enduring power of attorney is operational, the donee must meet the obligations specified in s 107 of the GA Act. Those obligations include that set out in s 107(1)(b) of the GA Act, to keep and preserve accurate records and accounts of all dealings and transactions made under the power.
26 The Parliament has given the Tribunal a general supervisory jurisdiction in respect of enduring powers of attorney. As noted earlier, under s 108(1) of the GA Act, the Tribunal can revoke or vary the enduring power of attorney if it decides to grant an administration order in respect of a person's estate.
27 Under s 109(1)(a) and s 109(1)(b) of the GA Act, amongst other things, the Tribunal, on the application of a person who has a proper interest in the matter, can order the donee of the 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; and require such records and accounts to be audited.
28 The first question that arises for determination in the current proceedings in the Tribunal is whether, once a donor has died, the Tribunal can make an order of the kind contemplated by s 109(1)(a) and s 109(1)(b) of the GA Act.
29 There is nothing in Pt 9 of the GA Act, or elsewhere, that expressly says that the Tribunal loses the power to make an order under s 109(1)(a) or s 109(1)(b) of the GA Act if the donor of the enduring power of attorney has died.
30 Indeed, in my view, it would be surprising if there were such an express power because the Tribunal would then lose the responsibility of properly supervising the earlier conduct of a donee under a power of attorney that occurred during the lifetime of the donor.
31 I can see no reason why, in an appropriate case, the Tribunal should not be able to make an order of the kind contemplated by s 109(1)(a) or s 109(1)(b) of the GA Act, on an application made by a person, with a proper interest in a matter, following the death of a donor.
32 In that regard, I do not consider that the reference in s 109(1)(a) to the power of the Tribunal to make an order in respect of "the donee of an enduring power of attorney" is confined to the donee of an enduring power of attorney which is still operative at the date of the making of the order. It seems to me that, having regard to the context in which these words appear in s 109(1)(a) and having regard to the general intent of the Parliament that may be drawn from Pt 9 of the GA Act concerning the Tribunal's supervisory role, in respect of the conduct of donees under enduring powers of attorney, the reference includes a person who, at any material time during the lifetime of a donor, completed any transactions under an enduring power of attorney. In other words, I do not consider that the relevant words in s 109(1)(a) should be read as if the words "which is still operative" appeared after the words "the donee of an enduring power of attorney".
33 I consider this to be so even though it is clear that the power of the Tribunal to make other orders contemplated by s 109 would be redundant following the death of a donor. For example, there would be no legal efficacy in any order purporting to revoke or vary the terms of an enduring power of attorney or to appoint a substitute donee of the power, under s 109(1)(c), where the donor is deceased. Similarly, if the donee has passed away the Tribunal would lack the power to make directions as to matters connected to the exercise of the power on the application of a donee under s 109(2).
34 However, in my view, even though the donor of an enduring power of attorney may have passed away, there may, in appropriate circumstances, be a proper reason established to justify the making of an order requiring the donee of an enduring power of attorney to account for his or her actions under the enduring power of attorney during the earlier lifetime of the donor, under s 109(1)(a) or s 109(1)(b) of the GA Act.
35 Any such order made could only require the relevant accounting or audit and would not have any other remedial effect.
36 In these circumstances, I see no good reason why the operation of s 109(1)(a) and s 109(1)(b) should be limited to an application made during the lifetime of the donor of an enduring power of attorney.
37 In my opinion, it is open to the Tribunal, in appropriate circumstances, to make an order under s 109(1)(a) or s 109(1)(b) of the GA Act, notwithstanding that at the time of consideration of the application by the Tribunal, the donor of the enduring power of attorney in question is deceased.
Question 2: Does the Tribunal have jurisdiction to make orders under s 109 of the GA Act for intervention in an enduring power of attorney where the donor is capable?
38 As noted earlier, an enduring power of attorney for the purposes of Pt 9 of the GA Act is one created under s 104 or recognised by the Tribunal under s 104A(2).
39 In essence, leaving aside recognition of enduring powers of attorney made outside the state, an enduring power of attorney is one which is created by an instrument that is substantially in the form of Form 1 in Sch 3, as in this case.
40 The requirement of s 104 and the Form 1 'Enduring Power of Attorney' is that the donor must declare that the power of attorney:
will continue in force notwithstanding their subsequent legal incapacity; or
will be in force only during any period when a declaration by the Tribunal under s 106 that the donor does not have legal capacity is in force. (see cl 4 of Form 1 of Sch 3 and s 104(2))
41 Accordingly, if the first option is adopted, as here, then the enduring power of attorney when made will immediately operate and continue in force even if the donor suffers legal incapacity.
42 It goes without saying of course that if a donor retains legal capacity they may at any time decide to terminate the enduring power of attorney just as they may terminate a general power of attorney under the general law. Nothing in the GA Act says that once made an enduring power of attorney cannot be revoked by the donor.
43 However, as also noted earlier, the GA Act contains provisions which enable the Tribunal to revoke or vary an enduring power of attorney under s 108 upon making an administration order, or to intervene under s 109. Ordinarily it may be expected that the Tribunal would only exercise these powers if a question relating to the legal incapacity of the donor arose.
44 Obviously, the s 108 powers can only be exercised if the Tribunal decides to make an administration order in respect of a donor's estate. An administration order can only be made if a donor generally speaking has lost legal capacity.
45 The question now raised, however, is raised in the context of s 109. In this particular case, the question asked is asked on the basis that the donor did not lack legal capacity at any relevant time prior to his death. In those circumstances, does the Tribunal have jurisdiction to make an order under s 109(1)(a) or s 109(1)(b) of the GA Act, if at the time of relevant transactions the donor, with full capacity, could have queried any transactions of their own accord?
46 In my view, while the statutory provisions dealing with enduring powers of attorney appear in the GA Act, an Act which is largely to do with the protection of vulnerable people, that is to say, people who lack capacity to make decisions, I see no particular reason why the operation of s 109 of the GA Act should be so limited in relation to an enduring power of attorney.
47 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.
48 Accordingly, I see no good reason why the Tribunal should be deprived of the jurisdiction to make an order under s 109(1)(a) or s 109(1)(b) of the GA Act, just because the donor of the power at relevant times prior to their death retained legal capacity.
49 Just because a donor of a power retains legal capacity does not necessarily mean that the donor is aware of all of the conduct of a donee under an enduring power of attorney. Therefore, should the circumstances require it, the Tribunal may consider making accounting orders against a donee, even at the instance of a donor with full legal capacity.
50 In this regard, it should be noted that there is nothing in the usual Form 1 'Enduring Power of Attorney' or in the general law concerning general powers of attorney that immunises a donee against usual forms of action. A power of attorney is recognised as a formal agency relationship: Parkin v Williams [1985] NZCA 112; [1986] 1 NZLR 294 at 299. 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.
51 These general principles pertaining to a general power of attorney are equally applicable, in my view, to a statutory enduring power of attorney. As noted earlier, by statute the Parliament has simply recognised that a general power of attorney may endure the loss of legal capacity of a donor, which would otherwise terminate the operation of a general power of attorney under the general law.
52 It has long been recognised that a power of attorney, however widely expressed, will not authorise the donee to prefer their own interests over the donor. For example, in Tobin v Broadbent [1947] HCA 46; (1947) 75 CLR 378 at 401, Dixon J stated:
"Prima facie, a power, however widely its general words may be expressed, should not be construed as authorizing the attorney to deal with the property of his principal for the attorney's own benefit. Something more specific and quite unambiguous is needed to justify such an interpretation".
See also Latham CJ at 390 391 and Starke J at 398. See also Powell v Thompson [1991] 1 NZLR 597 at 605.
53 Where a donee abuses the authority given by the donor in the power of attorney, by preferring their own interests, the courts will usually hold the donor to the transaction where it was within the donee's ostensible authority and the third party had no actual or constructive knowledge of the donee's abuse of authority. See generally Hambro v Burnand [1904] 2 KB 10 at 26; Bryant, Powis & Bryant Ltd v La Banque du Peuple [1893] AC 170; and Powell v Thompson.
54 Nonetheless, even where the donor is bound by the transaction in such circumstances, the donee will remain accountable to the donor for the abuse of authority.
55 There is also a suggestion that, even if the donee has acted outside the authority and for their own purposes, the transaction may be seen as ratified by the donor unless the donor acts reasonably quickly to repudiate the action as soon as it is discovered: Scots Church Adelaide Inc v Fead [1951] SASR 41 at 52.
56 So far as an enduring power of attorney is concerned, it has been suggested that the fiduciary duty to prefer the principal's interest should be tempered where "the donee may be in a familial relationship to the donor and may also require support": B Collier and S Lindsay, Powers of Attorney in Australia and New Zealand (Sydney, 1992) at 142. This situation has been recognised at least in New Zealand where s 107(2), Protection of Personal and Property Rights Act 1988, and in Queensland where s 88, Power of Attorney Act 1998, provide that a donee of a power of attorney may give relatives gifts or donate to charities. This provision does not appear to have been replicated in other Australian legislation.
57 This account of circumstances in which a donee may be found liable or accountable to a donor under a general power of attorney, which is equally applicable to the conduct of a donee under an enduring power of attorney, serves to emphasise that, just because a donor may retain full legal capacity at all material times while a donee acts under a power of attorney does not mean that, in appropriate circumstances, a donee may not be considered liable to a donor at law or in equity.
58 Accordingly, in my view, there may well be circumstances during the lifetime of a donor in which a person with a proper interest (including the donor themself) might make an application to the Tribunal for orders pursuant to s 109(1)(a) or s 109(1)(b) of the GA Act.
59 Equally, I can see no reason why, following the death of a donor who retained legal capacity throughout their lifetime, a person with a proper interest in the matter may not apply for orders under s 109(1)(a) and s 109(1)(b) of the GA Act and the Tribunal may make such orders, if the circumstances require it.
60 In these circumstances the answers to the questions referred to the President of the State Administrative Tribunal are as follows:
I certify that this and the preceding [60] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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(1947) 75 CLR 378