21Dr Hughes has not accounted to his mother or her tutor for this or any part of this amount.
22There is a good argument that at common law a person who is given a power of attorney cannot give money away and, in particular, cannot give money to himself or herself as Young J observed in Re R [2000] NSWSC 886 at [39]. His Honour said:
"Indeed cases like Re W show that there is a good argument that a person who is given a power of attorney cannot give money away, and in particular cannot give money to themselves."
23In In re W (Enduring Power of Attorney) [2000] Ch 343 it was held that the power of an attorney to make gifts of the donor's property is extremely limited and without the authorisation of the court does not extend to the making of gifts as part of inheritance tax planning.
24The power of attorney provides at par 3:
"In the exercise of the authority conferred on my Attorney by Section 163B of the Conveyancing Act, 1919, my Attorney is authorised to execute an assurance or other document, or do any other act whereby a benefit is conferred on my Attorney."
25The power of attorney granted to Dr Hughes is in the form in Sch 7 to the Conveyancing Act 1919 save that it has one additional paragraph. It is, therefore, to the effect of the form in Sch 7.
26Section 163B(1) is in the following terms:
"Subject to this section, an instrument (whether or not under seal) in or to the effect of the form in Schedule 7 confers on the attorney thereby appointed authority to do on behalf of the person executing the instrument anything the person executing the instrument may lawfully authorise an attorney to do".
27Significantly, s 163B(2)(b) provides:
"The authority conferred by an instrument referred to in subsection (1) does not include:
...
(b) unless it is expressly conferred by the instrument-authority to execute an assurance or other document, or do any other act, as a result of which a benefit would be conferred on the attorney appointed by the instrument."
28In Sweeney v Howard [2007] NSWSC 852 at [56], Windeyer J took the view that a power of attorney executed under s 163B did not confer authority on the attorney to pay his or her own debt with the principal's cheque.
29That proposition was followed by Austin J in Spina v Conran Associates Pty Ltd; Spina v M & V Endurance Pty Ltd [2008] NSWSC 326. His Honour dealt with a claim on behalf of Ms Spina to set aside mortgages secured on property owned by her. The mortgages had been signed by her son pursuant to a power of attorney which included wording identical to par 3 of the power of attorney in this matter. The money borrowed under the mortgages was used in a business conducted by the son. His company was in liquidation and he had died.
30Austin J cited what Dixon J had said in Tobin v Broadbent [1947] HCA 46; (1947) 75 CLR 378 at 401:
"But the cardinal fact of the transaction which it is sought to bring within the power is that the loan was made to Hodgetts, the donee of the power, and not to either of the Tobins, the principals. Hodgetts was the borrower, the loan was for himself, he did not contract it as an agent but he gave the lender his principals' property as security. The question is, therefore, whether the power of attorney extended to authorising Hodgetts to give a security over his constituents' shares for his own debt, not simply whether it authorized him to give a security. You cannot sever the giving of the security from the indebtedness secured. A transaction of security is unintelligible without an identification of the obligation secured. This is not the case of an agent misapplying moneys borrowed in his principal's name on the security of his assets pursuant to an authority covering the borrowing of money on the principal's behalf. If a transaction is ostensibly on the principal's behalf and is of a description that falls within the authority, it is nothing to the point that the agent's purpose was to act for his own benefit and to defraud the principal, that is, unless the opposite party to the transaction had notice.
But here the transaction was the attorney's own, both in form and substance, and the only incident of it concerning the constituents was when the latter's property was drawn in as a support for the loan. 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. "The primary object of a power of attorney is to enable the attorney to act in the management of his principal's affairs. An attorney cannot, in the absence of a clear power so to do, make presents to himself or to others of his principal's property." Per Russell J. , Reckitt v. Barnett Pembroke and Slater Ltd. (1) a judgment approved in the House of Lords (2). In my opinion, the words of the powers of attorney do not in themselves suffice to confer authority upon Hodgetts to secure a borrowing of his own by a deposit of the plaintiffs' scrip. Such a transaction is in itself beyond the limits of the power."
31Austin J concluded that the power of attorney did not confer authority on Ms Spina's son to execute the mortgage. Having quoted what Dixon J said in Tobin , his Honour said:
"82 It seems to me unlikely that the legislature would have intended to overturn this strongly expressed and persuasive approach to the interpretation of powers of attorney that are alleged to permit benefits to be conferred on the attorney. On its proper construction, s 163B does not purport to do so. Subsection (1) says that the attorney has the authority to do "on behalf of the person executing the instrument" anything that the person may lawfully authorise an attorney to do. That language echoes the observation of Russell J that the primary object of the power of attorney is to enable the attorney to act in the management of his principal's affairs. It also reflects the observation of Dixon J, distinguishing the case before him from a case where security is granted pursuant to an authority covering the borrowing of money on the principal's behalf . In my view the language of subsection (1) preserves the reasoning in the cases rather than overriding it. Therefore subsection (1) authorises the use of the power within the scope of the attorney's fiduciary agency, but it does not authorise the power to be used inconsistently with fiduciary duty.
83 Then subsection (2) makes it expressly clear that the general authority conferred by subsection (1) does not extend to action that results in a benefit for the attorney, unless the authority to do so is expressly conferred by the instrument. That is, again, consistent with Dixon J's reasoning. Subsection (2) permits the power of attorney, by express language, to authorise acts that result in a benefit to the attorney, but it does not permit the power of attorney to abrogate the fiduciary limitation implied by subsection (1).
84 My conclusion is that the plaintiff's power of attorney did not confer express actual authority on Michael to execute the mortgage and other supporting documents for the Conran Associates loan and the M & V Endurance loan."
32The same power of attorney came before Hammerschlag J in Angelina Spina v Permanent Custodians Limited [2008] NSWSC 561 concerning another mortgage that was executed by Ms Spina's son pursuant to which he or his business received funds in the order of $400,000.
33The contention for Ms Spina, as in Conran , was that Ms Spina was not bound by the mortgage contracts because her son acted beyond the authority conferred on him under the power of attorney. His Honour said at [149]:
"As a matter of language a person may lawfully authorise another to do something on his or her behalf which is entirely inimical to the first person's interests or entirely in the second's."
34His Honour went on to say about Austin J's resolution in Conran :
"154 The only limitation which s 163B(1) imposes on the agent's authority is that the principal cannot authorise the agent to do what the principal could not lawfully do or what the law would restrict the principal from authorising the agent to do on the principal's behalf.
155 The limitation which his Honour placed on the words blurs the distinction between the extent (or lack) of authority and the abuse of it."
35Significantly, Hammerschlag J later said:
"181 My conclusion says nothing of the fiduciary obligations which would have bound Michael to act in a particular way with respect to his mother when exercising the power she conferred upon him, nor derogates from what might have been a breach by Michael of those obligations.
182 But the plaintiff's case is not that Michael breached his fiduciary duty to her in doing what he did. Her case is that he had no power vis- -vis the defendant to bind her to the contracts".
36In this case the plaintiff does not seek to set aside the contract or transfer by which her property at Katoomba was sold. Her claim is against her attorney. She pleads in par 23 and par 24 of the statement of claim that her son was in breach of the fiduciary duties that he otherwise owed to her pursuant to the power of attorney.
37Lindgren AJ in Rayner & Ors v N J Sheaffe Pty Limited & Ors [2010] NSWSC 810 at [154] found it unnecessary to consider the difference of opinion between Austin J and Hammerschlag J. I am in the same position although I must say that I prefer the approach taken by Austin J. My reasoning to that conclusion must await another day.
38In Re R at [41] Young J highlighted the difference between a donor of a power of attorney claiming against a third party that the donee of the power was not authorised to conclude the transaction with the third party and the donor claiming against the donee that the donee was in breach of fiduciary duty:
"The fallacy of that argument is that one has to distinguish carefully between two questions; (a) is the donee of the power of attorney authorised so that as between the donee and a third party the donor would be bound by a transaction? and (b) as between the donor and the donee, is the donee accountable for what he or she has done?"
39Mrs Hughes is in the latter category. Dr Hughes is in breach of his fiduciary duty under the power of attorney and his mother has made out her entitlement to the declaration and order for payment.
40The court declares that the Defendant holds the sum of $293,510.14 on trust for the Plaintiff. Judgment is entered for the plaintiff for $293,510.14. The defendant is ordered to pay the plaintiff's costs.