The late HKE died on 28 September 2020. He had five children who are JYK, Mr Z, Mr Y, BAK and GZK.
On 20 July 2020 the Tribunal received an application from BAK seeking a guardianship order for HKE and an application seeking the review of the making and of the operation and effect of an enduring power of attorney made by the late HKE on 22 July 2016 appointing himself and GZK as the attorneys.
On 19 August 2020 Michael Osborne, on behalf of GZK provided a copy of an enduring power of attorney made by HKE (made by way of a Deed) and dated "January 2013" and witnessed on 19 January 2013. The Tribunal was also provided with copies of an enduring power of attorney dated 19 July 2016 appointing BAK as the attorney and a copy of a revocation of that appointment dated 10 September 2019 as well as an enduring power of attorney (made by way of a Deed) dated 9 September 2019 appointing GZK as the attorney.
On 20 August 2020 the Tribunal heard and dismissed the application for guardianship and adjourned the hearing of the application to review the enduring powers of attorney and issued directions requiring the applicant to clarify which specific instrument he sought to be reviewed.
On 11 September 2020 the Tribunal issued further Directions including:
1. HKE was to be separately represented.
2. BAK, JYK and GZK were allowed to be legally represented.
3. GZK was to provide all bank statements in HKE's name, whether solely or jointly owned including the statements of any bank accounts that have been closed that are within his possession and control for the period 19 January 2013 to 11 September 2020.
4. GZK to provide the income tax return for the financial years 2013 to date in addition to Notices of Assessment for the same periods.
5. GZK to provide all financial statements for any trust or other legal entity in which HKE has an interest including but not limited to the HKE Trust for the years 2013 to date to the extent that such documents are within his possession and control
6. GZK to provide a schedule of properties in which HKE has or has had an interest including information on the current location of the original certificate of title for each of these properties.
Following the death of HKE the matter was again listed for Directions on 26 November 2020 at which time the Tribunal made Directions to the following effect:
1. Noting that the applicant sought review of the enduring powers of attorney made by HKE on 19 January 2013 and 9 September 2019 each appointing GZK as the attorney.
2. Requiring the parties to file submissions as to whether the application should be dismissed as misconceived or for any other reason. The Tribunal indicated that the Tribunal would consider the matter on the papers and determine whether the matter should be dismissed or listed for further directions or substantive hearing and if the matter is to be listed, the Tribunal would advise of a listing date.
On 4 December 2020 the Tribunal received correspondence from Mark Streeter, solicitor, indicating that as HKE was deceased, he would not be appearing as HKE's separate representative.
Submissions in response to the direction noted above were provided by JYK, and on behalf of GZK.
The Tribunal considered the submissions provided and on 7 April 2021 the Tribunal issued an order indicating that the matter was to be heard on 20 May 2020.
On 20 May 2021 the Tribunal adjourned the hearing on the basis that Ms Barca had not been provided with sufficient notice of the hearing.
The hearing on 1 July 2021 was the hearing adjourned from 20 May 2021.
[2]
The hearing
Due to restrictions necessitated by the COVID-19 pandemic the Tribunal's hearings are currently being conducted by way of telephone and, where possible, video communication.
At the end of these Reasons for Decision is a list of witnesses who participated in the hearing. [Appendix removed for publication.]
[3]
The Applicable Law
The Tribunal's review of an enduring power of attorney is governed by s 36 of the Powers of Attorney Act 2003 (NSW) which includes the following provisions:
36 Interested persons may apply for review
(1) Tribunal may review making or operation and effect of power. 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.
(2) As a consequence of reviewing the making, revocation or operation and effect of a reviewable power of attorney, a review tribunal may decide whether or not to make an order under this section.
(3) Orders relating to making of power of attorney A review tribunal may make either or both of the following orders with respect to the making of a power of attorney:
(a) an order declaring that the principal did or did not have mental capacity to make a valid power of attorney,
(b) an order declaring that the power of attorney is invalid (either in whole or in part) if the tribunal is satisfied:
(i) the principal did not have the capacity necessary to make it, or
(ii) the power of attorney did not comply with the other requirements of this Act applicable to it, or
(iii) the power of attorney is invalid for any other reason, for example, the principal was induced to make it by dishonesty or undue influence.
(3A) Orders relating to revocation of power of attorney A review tribunal may make either or both of the following orders with respect to the revocation of a power of attorney:
(a) an order declaring that the principal did or did not have mental capacity to revoke a power of attorney,
(b) an order declaring that the power of attorney remains valid (either in whole or in part) if the tribunal is satisfied:
(i) the principal did not have the capacity necessary to revoke it, or
(ii) the revocation is invalid for any other reason, for example, the principal was induced to make the revocation by dishonesty or undue influence.
(4) Orders relating to operation and effect of power 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:
(a) an order varying a term of, or a power conferred by, the power of attorney,
(b) an order removing a person from office as an attorney,
(c) 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,
(d) 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,
(e) an order directing or requiring any one or more of the following:
(i) that an attorney furnish accounts and other information to the tribunal or to a person nominated by the tribunal,
(ii) 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,
(iii) 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,
(iv) that the attorney submit a plan of financial management to the tribunal for approval,
(f) an order revoking all or part of the power of attorney,
(g) such other orders as the review tribunal thinks fit.
(5) Orders relating to mental capacity of principal A review tribunal may make an order relating to the operation and effect of a power of attorney declaring that the principal lacked or lacks capacity because of mental incapacity at a specified time or during a specified period or for the time being. An enduring power of attorney can not be lawfully revoked by the principal while the principal is declared to be incapable by such an order.
(6) Effect of order declaring mental incapacity for the time being If a review tribunal makes an order under this section declaring that a principal under a reviewable power of attorney lacks capacity through mental incapacity for the time being, the principal is to be taken, for the purposes of the operation of the power of attorney, to lack such capacity for such period (if any) specified in the order or until further order of the tribunal.
(7) Orders may be subject to terms and conditions An order made under this section may be made subject to such terms and conditions as the review tribunal thinks fit.
(8) Further orders relating to accounts and information If a review tribunal makes an order under this section directing an attorney to furnish accounts or other information, the tribunal may decide to make further orders for:
(a) limiting the disclosure of accounts or other information by the attorney, and
(b) inquiry and report on the conduct of the attorney.
…
It is well established law that the death of principal terminates the enduring power of attorney.
The Tribunal has previously considered whether it should review an enduring power of attorney once the principal has died (see UQH [2014] NSWCATGD 37, KBX [2015] NSWCATGD 2, DPT [2015] NSWCATGD 3). The Tribunal has been satisfied that it has the jurisdiction to review the operation and effect of an enduring power of attorney where the principal is deceased and to make orders under s 36(4)(e) of the Powers of Attorney Act if to do so would reflect the wishes of the principal prior to his or her death.
[4]
Does BAK have standing to make the application?
A person may apply for an enduring power of attorney to be reviewed if he or she is:
1. an attorney (including an attorney whose appointment has been purportedly revoked),
2. the principal,
3. any person who is:
1. a guardian of the principal (whether under the Guardianship Act 1987 (NSW) or any other Act or law), or
2. an enduring guardian of the principal under the Guardianship Act,
1. any other person who, in the opinion of the review tribunal, has a proper interest in the proceedings or a genuine concern for the welfare of the principal.
On behalf of GZK, Mr Osborne submitted that BAK lacked standing on the basis that he had been an attorney appointed by HKE under the 2016 enduring power of attorney and some of the matters raised by BAK related to affairs between then and the 2019 appointment of GZK.
We were satisfied that as a person previously appointed as an attorney under an enduring power of attorney and as the son of the late HKE, BAK has standing to bring the application.
[5]
Should the Tribunal conduct a review of the making of the enduring powers of attorney?
JYK submitted that HKE lacked the capacity to make the enduring power of attorney in 2019 and also questioned his capacity to make the 2013 appointment.
At the hearing BAK asked the Tribunal to accept the submissions of JYK as his. Ms Barca indicated on behalf of JYK and BAK that they were not seeking any orders regarding the making of the enduring powers of attorney as there would be no utility in an order regarding the validity of the enduring powers of attorney that were terminated by the death of HKE.
On behalf of GZK, Mr Osborne agreed that there was no utility in an order regarding the making of the enduring powers of attorney.
If we were to embark on a review of making of a power of attorney, we would be empowered to make orders about their validity, including that they were invalid. However they are now terminated since the death of the late HKE. In our view there is no utility in making an order about the invalidity of the terminated appointments. Accordingly, we decided not to review the making of the enduring powers of attorney.
[6]
Should the Tribunal review the operation and effect of the enduring powers of attorney?
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."
In accordance with the comments of Slattery J as cited above, we reviewed the evidence and submissions provided.
JYK stated in a submission that for 30 years GZK had lived with HKE in his property at Inner-City Sydney and that from early 2015 she and her three daughters also lived at that house.
During the hearing and in submission by and on their behalf, BAK and JYK submitted that there have been a number of dealings with HKE's estate by which GZK has benefitted himself at the expense of HKE. These include allegations that GZK has:
1. used HKE's funds for the maintenance of his own beach house;
2. from November 2012, redirected rental income amounting to $313,000 from HKE's properties to himself;
3. leased shipping containers on HKE's West Sydney property without including the income from the leases in HKE's estate;
4. transferred HKE's funds to his own accounts, used HKE's funds for his own purposes and made a number of unexplained cash withdrawals from HKE's bank accounts;
5. opened a number of new bank accounts for HKE, for the purposes of concealing his misappropriation of HKE's funds;
6. colluded in BAK accessing HKE's funds.
A letter dated 16 November 2020 from Osborne's lawyers provides the following documents in response to the Tribunal's Directions made on 11 September 2020:
1. Tax returns from 2014 to 2020
2. Bank statements from 2013 that include:
1. Bank AB statements:
1. Account ending in [Number removed for publication.] in the name of HKE and GZK from 2013 to December 2018 (incomplete set)
2. Account ending in [Number removed for publication.] in the name of GZK and HKE from November 2018 to September 2019 when the account was closed
3. Account ending in [Number removed for publication.] in the name of HKE and GZK from September 2019 to 6 January 2020 when it was closed
4. Account ending in [Number removed for publication.] from January 2020 to February 2020
5. Account ending in [Number removed for publication.] from September 2019 to January 2020
6. Account ending in [Number removed for publication.] from September 2019 to 6 January 2020
1. Bank CD statements:
1. Account ending in [Number removed for publication.] from February 2020 to September 2020
2. Account ending in [Number removed for publication.] from December 2019 to June 2020
1. Bank EF statements
1. Account ending in [Number removed for publication.] from November 2019 to May 2020
1. A list of the real estate owned by HKE
On 25 November 2020 a letter from Osborne's lawyers includes a summary of income and expenditure for the period July 2014 to June 2020. On behalf of GZK it is submitted he contributed labour, materials and money to the improvement of the value of the real property. The summary includes the following information:
1. Income derived from HKE's rental properties excluding income from "[the West Sydney property]" ("$1000 per annum and offset by expenditure exceeding that amount") and income from a restaurant at "[Removed for publication.] which was paid to [BAK]" and including income from the Inner-City Sydney property that was paid to GZK
2. Usage of surplus funds and details of a "shortfall" which GZK made up by contributing $123,773
3. Gifts to Mr Y
4. Payments to JYK
JYK submitted that the accounts and records provided on behalf of GZK were inadequate for the following reasons:
1. Some bank account documents are incomplete or inadequate as they show only transaction print-outs and not details of the accounts.
2. A sum of $68,450 in ATM withdrawals is not accounted for and $169,368.92 in transfers to third parties not accounted for.
3. There was an increase of 242% in HKE's outgoings after GZK took over as the attorney. The outgoings are not particularised and no evidence is provided for the expenditure of funds.
4. There are no income and expenditure statements from the real estate agent and there is a lack of evidence in support of the income and expenditure summary provided
On behalf of GZK it was submitted:
1. During the lifetime of HKE including prior to the powers of attorney in question, family members benefitted from HKE's estate. This include Mr Z occupying commercial premises at the Inner-City Sydney property rent-free from about 2000 to 2012, GZK receiving income from the Inner-City Sydney properties from 2012, BAK receiving income from the restaurant at the Inner-City Sydney property from late 2013.
2. There are no allegations HKE's funds have been used to benefit people outside of his family.
3. The relationship between HKE and GZK was particularly close as evidenced by the fact that GZK lived at HKE's home for most of his life and continuously for 30 years before the death of HKE, GZK and HKE worked together in the construction industry and GZK was the primary carer of HKE in the final years of his life. HKE twice appointed GZK as his attorney, executed a discretionary trust deed in 2015 with GZK as the trustee and named GZK as executor of his will in his wills made in July 2014 and April 2015.
4. HKE conferred special trust in GZK and the power of attorney was used to confer benefits on HKE's family members. For these reasons the Tribunal would not be satisfied that making an order under s 36(4) of the Powers of Attorney Act would better reflect the wishes of HKE.
5. GZK has provided financial records and summaries and there is no utility in making an order under s 36(4)(e) of the Powers of Attorney Act.
In her submissions JYK:
1. denied that there was special relationship of trust between HKE and GZK and that GZK was the primary carer of HKE in his later years;
2. said that the funds provided to her were for household expenses;
3. submitted that HKE would have wanted his affairs examined if he had known that his funds were depleted to such an extent that he could not afford the care that he needed;
4. submitted that the Tribunal should make orders out of its responsibility to act in accordance with the welfare and best interests of a person with disability.
As is indicated above, this Tribunal has previously been satisfied that following the death of a principal, the Tribunal may review the operation and effect of an enduring power of attorney, and make orders under s 36(4)(e) of the Powers of Attorney Act if to do so would reflect the wishes of the principal prior to his or her death. We adopt the reasoning and conclusion of the Tribunal in the matters of UQH [2014] NSWCATGD 37, KBX [2015] NSWCATGD 2, DPT [2015] NSWCATGD 3).
Section 36(4)(e) of the Powers of Attorney Act provides that the Tribunal can make 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,
Since HKE is now deceased there was no utility in making an order under s 36(4)(e)(iv) of the Powers of Attorney Act.
We considered whether we should make an order under the remaining provisions of s 36(4)(e) of the Powers of Attorney Act.
Firstly, we considered whether making such an order would be in accordance with the wishes of HKE when he was alive. We considered the evidence on this point was equivocal for the following reasons:
1. On the one part, the submissions before us were to the effect that over many years a number of family members have benefitted from the estate of the late HKE.
2. We considered that if it was HKE's practice to gift large sums from his estate to his children then it is likely that he would not have wished for a close accounting of his affairs that was for the purpose of investigating such gifts.
3. However, on the other part we took into account the evidence of JYK that HKE would have benefitted from increased levels of care prior to his death and that due to the depletion of his assets he could not afford that care.
Whilst we considered this to be a finely balanced issue, we were satisfied on balance that if we were to embark on a review of the operation and effect of the enduring powers of attorney it might be possible to ascertain with greater certainty what HKE's wishes would have been in this regard.
In the matter of DPT [2015] NSWCATGD 3, the Tribunal formed the view that a number of the transactions warranted scrutiny including that the attorneys had taken benefits from the estate. The Tribunal went on the decide if it should make an order following its findings in this regard. The Tribunal decided to make no order. Noting that it is the duty of the executor(s) of the estate to take steps to recover moneys owing to the estate, the Tribunal said:
"34 If there is disagreement or justifiable contentions that the executors are not able to make unconflicted investigations and decisions about the estate, action can be taken by the beneficiaries, and indeed by the executors, in the Supreme Court seeking the determination of these matters. The Supreme Court has jurisdiction to make a wide range of orders in relation to the administration of estates, whereas this Tribunal's jurisdiction is limited to the powers conferred under the POA Act."
35 Having regard to these matters, the Tribunal determined not to make any orders under s 36(4)(a) of the POA Act. First, the appropriate mechanism is for disputes in respect of the estate to be resolved by the executors, failing which by the Supreme Court, given in its broader powers to resolve disputes, particularly disputes in relation to the administration of estates. Secondly, it is not clear that an accounting under s 36(4)(a) would have resolved the critical issues in dispute."
We considered whether, if we formed the view that HKE would have wanted the actions that could be ordered under s 34(4)(e) of the Powers of Attorney Act, there was any utility in making such orders. We decided that there was no utility for the following reasons:
1. Section 36 of the Civil and Administrative Tribunal Act 2013 (NSW) provides that a guiding principle to be applied to practice and procedure is to facilitate the just, quick and cheap resolution of the real issues in the proceedings.
2. The application was made when the late HKE was alive. In our view, the real issue before the Tribunal was administration of HKE's estate under the enduring powers of attorney. However, now that HKE's estate is that of a deceased person, any concerns about the depletion of that estate are matters to be addressed in an appropriate jurisdiction, such as the Supreme Court and not in this Tribunal.
3. The attorney had provided a number of documents related to HKE's financial affairs and JYK's evidence indicated that she has closely analysed those documents. Whilst JYK raised a number of issues about the sufficiency of those accounts, there was no evidence that there are further or better records to be provided.
4. If legal action were taken in an appropriate jurisdiction an application for preliminary discovery might yield further documents. In our view it is not the function of this Tribunal to make orders in the stead of any such order.
5. Section 36(8)(b) of the Civil and Administrative Tribunal Act allows that, having ordered the furnishing of accounts, the Tribunal could make further orders for inquiry and report on the conduct of the attorney. As is indicated in the matters of UQH [2014] NSWCATGD 37, KBX [2015] NSWCATGD 2, DPT [2015] NSWCATGD 3, since the death of HKE, no other order could follow on from such an order. In our view, such an order would not remedy any deficiency in the management of HKE's estate when he was alive. For this reason, we consider it of no utility to make such an order.
6. It was urged on behalf of JYK that the Tribunal should make a finding about the conduct of GZK because it has a responsibility to act in accordance with the welfare and best interests of a person with a disability. However, as noted in the Tribunal is unable to act in accordance with the best interests or welfare of a deceased principal.
7. Noting that the Tribunal in the matter of DPT had embarked on a review of the enduring power of attorney and then proceeded to make no orders, having conducted an overview of the evidence we were of the view that for the reasons set out in DPT we would also decide not to make any orders even if we determined that there were matters of concern. Accordingly, we were satisfied that it was not in accordance with the principle set out in s 36 of the Civil and Administrative Tribunal Act to embark on a review that would in all likelihood not result in an order by this Tribunal.
Having reached the conclusions noted in the preceding sub-paragraphs we declined to review the operation and effect of the enduring powers of attorney and, as noted above, we also declined to review the making of the enduring powers of attorney.
[7]
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
[8]
Amendments
13 March 2023 - Catchwords amended
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Decision last updated: 13 March 2023