Urquhart v Lanham

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

1 HIS HONOUR: I am presently deciding two motions, one filed by the third defendant on 13 December 2001, the second filed by the first defendant on 20 December 2001. Both motions seek orders that the statement of claim be struck out. 2 Since the motions were filed, the plaintiffs have filed an amended statement of claim. There are extensive alterations made in this document. Nevertheless, the moving defendants seek the same order with respect to the amended document. 3 The gravamen of the claim is that the plaintiffs were the duly appointed attorneys under an enduring power of attorney. They say that the third defendant when of incapacity was effectually captured by the first defendant, and removed from Port Macquarie to Tugun, Queensland by her. The first defendant then used the third defendant's funds to buy a property at Tugun in her own name and had the third defendant execute a revocation of the power in favour of the plaintiffs and replace it with a power in favour of herself. 4 The plaintiffs pray for a declaration that their power of attorney remains in force, a declaration that the first defendant holds the Tugun property on trust for the third defendant and that the third defendant be declared incapable of managing his affairs and for a manager to be appointed. 5 Mr Rares SC who appeared with Mrs Gilmour for the third defendant submitted that the proceedings should be struck out as vexatious and oppressive. He said, in essence, that his client was a 91 year old man who was living happily in Tugun with his relations and who did not want to be harassed by proceedings, particularly proceedings in New South Wales. 6 Mr Blackburn-Hart who appeared for the first defendant submitted that, so far as the claims made by the plaintiffs as the alleged attorneys of the third defendant were concerned, they were bad as the status of an attorney gives no locus standi to mount proceedings against the donor of the power. 7 Mr Blackburn-Hart made the running on the principal submission as to locus. Mr Rares SC joined in with those submissions. However he concentrated on the oppression point and further submitted that the declaratory proceedings were of no utility. As far as the declaration of incapacity was concerned, that question should be heard, if heard at all, before the Guardianship Board of Queensland. 8 The first defendant has now admitted that she holds the Tugun property on trust for the third defendant absolutely. 9 Before dealing with the submissions, I should note that the proceedings have been provisionally fixed for hearing before Bryson J on 8-12 April 2002. However, there must be real doubt as to whether the case can now be made ready by 8 April. A challenge to the retainer of the third defendant's solicitors is to be heard with the main proceedings. 10 I should also note that earlier in the interlocutory proceedings, Barrett J ordered that the third defendant submit himself for medical examination. This decision was upset on appeal, the Court of Appeal ruling that, in the circumstances, it would be unjust to require such an examination (see Angliss v Urquhart [2001] NSWCA 441). 11 Although the motions involve some pleading points to be decided as a matter of law, I was also asked to receive and did read some affidavit evidence from the third defendant's housekeeper and a Gold Coast psychiatrist. The plaintiffs made the point that it was significant that there have been no affidavits filed by the defendants nor have they ever filed a defence. 12 During argument, I suggested that a practical solution to the problem might be to sit in Tweed Heads, which is about 90 kilometres closer to Tugun than is Brisbane. However, the parties were not going to let commonsense invade their legal arguments. 13 I consider it appropriate to deal with the submissions under the following heads:

Have the plaintiffs, insofar as they mount their action as attorneys for the third defendant, locus standi to do so?

Have the declaratory proceedings generally any utility?

What relevance has the fact that the third defendant now lives in Queensland and most of his property is situated in that State?

Is it oppressive for these proceedings to continue?

Can the plaintiffs proceed in the absence of the third executor of their mother's estate?

Should the application to declare the third defendant incapable proceed?

8. What orders should be made on the motions? 14 Question 1. There is surprising little authority on this point. Thus it must be approached from first principles. 15 As counsel for the defendants have submitted, a power of attorney confers no interest in property, it merely confers authority, Gibbons v Wright (1954) 91 CLR 423, 444; Farwell on Powers (Stevens & Sons, London, 1874) at p 1. 16 There is clear authority for the proposition that where an attorney has decided to bring action under the authority given to him or her by a power of attorney, the action must be brought in the principal's name, Campbell v Pye (1954) 54 SR (NSW) 308 and see Jones v Gurney [1913] WN (Eng) 72 and see Gray v Pearson (1870) LR 5 CP 568 and Spellson v George (1987) 11 NSWLR 300, 313. 17 There are some older authorities which seem to permit action in the agent's name. Many of these can be distinguished on their facts. However, insofar as they suggest that an attorney can sue in his or her own name, they are no longer good law, see Bowstead & Reynolds on Agency 16th ed (Sweet & Maxwell, London 1996) at p 555. 18 It was submitted that the position has changed because of the enactment of s 159 of the Conveyancing Act 1919, added by amendment by Act 147 of 1997. However, a similar provision appeared in the Conveyancing Act from 1920. It has never been suggested that the section applies to actions in court by an attorney, nor, apparently, was that argument even raised in Campbell v Pye. There is no validity in the submission. 19 Even if I had not reached the view that Campbell v Pye still states the law, it is clear that a donee as purported agent for the donor cannot sue the donor. Otherwise we would have the same person on both sides of the record which is impermissible: Perpetual Trustee Co Ltd v Attorney-General (1937) 54 WN (NSW) 95, 96. 20 Paragraphs 22A, 29A and 35A of the amended statement of claim plead "The plaintiffs, as the validly appointed attorneys of the third defendant, seek to avoid the instrument pleaded in paragraph …". 21 This cannot stand. The only procedural way that such an allegation may be made is to sue in the name of the donor and then withstand a challenge to the retainer by the defendants. 22 Likewise allegations that the subsequent alleged powers of attorney etc are void can only be tried in an action in which a party to the deed is the plaintiff. 23 An alternative way of trying the issue may be for the plaintiff to seek a declaration as against the third defendant that their power of attorney remains valid. This is claimed in prayer 39 and should stand, as should the corresponding prayer 17. 24 Mr Blackburn-Hart cited my decision in Ranclaud v Cabban (1988) NSW Conv R 55-385. That was a case which raised similar issues to those currently before the court. However, the plaintiff was the alleged incapable person who was seeking to restrain the donee of a power of attorney from functioning under that power and the issue was tried on a challenge to retainer. I found that the plaintiff lacked capacity and so the challenge to the retainer was made out. That case shows the approved way of trying this type of issue. 25 Rosenthal v The Sir Moses Montefiore Jewish Home (Young J, 26 May 1995) is a similar case. Again the plaintiffs were the alleged incapable person and her most recently chosen attorney and the defendants were representing a previous attorney who claimed his power to act continued. 26 It follows that prayers 3-14, 18-36, 40-47 and the corresponding allegations of fact should be struck out. This leaves prayers 1 and 2A, which will be considered under Question 7, prayers 17 and 39 and their associated facts and prayers 47A-47D which will be considered in Question 6. 27 Question 2. In view of my answer to Question 1, I can be relatively brief in my treatment of this question. It is axiomatic that a court will not, in its discretion, make a declaration where there is no utility in so doing; see eg Mikaelian v CSIRO (1999) 163 ALR 172, 191. However, utility in this context means that the declaration is of some value to the plaintiffs, not necessarily pecuniary value; see Young on Declarations, 2nd ed (Butterworths, Sydney, 1984) at para [704]. It is of utility for an agent or attorney to know whether his or her authority is still in place or has been revoked. This is merely a subset of the cases where a declaration is made as to whether a contract is or is not in existence; see eg Hargreaves v Dukes [1931] NZLR 1143. 28 I examined the cases in this area in Rosenthal's case. There is no need to repeat them here. 29 It is more difficult to see the utility of a declaration that a contract between a third party and a fourth party is valid including the question whether the fourth party is authorised to act for the third party. I can see some circumstances where such a declaration would be of utility, such as the case where a multi million dollar deal was being signed off by a purported agent for the other contracting party and there were reasonable grounds to suspect the validity of the purported agent's authority. I believe that this sort of question should usually go to trial. I would not be prepared to strike out any part of the amended statement of claim under this head. 30 Question 3. Apart from the question of a convenient venue, I cannot see any relevance in this fact. On the plaintiffs' case, an unauthorised person removed the third defendant from this State, caused his property to be sold and then invested the proceeds in real property in Queensland. I cannot see any jurisdictional factor which would affect this court's power to hear and determine the proceedings. Appearances have been filed for the defendants. 31 I will deal with the effect of the Queensland factor on the application under s 13 of the Protected Estates Act 1983 under my answer to Question 6. 32 Question 4. Normally, if proceedings are competently commenced in a court, the plaintiffs are entitled to have them determined. This may be worrying for defendants who may hope that the proceedings will just go away, but that feeling has no relevance. 33 However, Mr Rares SC says that the present proceedings are in a special position because of the age of his client and the inutility of gaining orders which will really only have effect after his death. 34 A court will not allow itself to be the vehicle for oppression: Hunter v Chief Constable of West Midlands Police [1982] AC 529, 536. As Lord Diplock there said, the circumstances in which abuse of process or oppression may arise will be varied. 35 In Walton v Gardiner (1993) 177 CLR 378, 393, three justices of the High Court gave a series of examples of oppression viz: (1) where proceedings are foredoomed to fail; 2) were the court is clearly an inappropriate forum to hear them; (3) where a party is seeking to relitigate a matter that has already been decided; (4) where to allow the proceedings to continue would be so unfair to a party that it would bring the administration of justice into disrepute 36 However, in assessing oppression for this purpose, a court does not conduct a mini trial into the merits of the case: if a case is said to be one which is "foredoomed to fail", the court will hear argument as to why this is so, but it does not evaluate factual evidence, cf Jackamarra v Krakouer (1998) 195 CLR 516. 37 I do not see any factors in the part of the case which remains as would make it oppressive so that the case should be stayed or even stayed as against the third defendant. I would consider that the third defendant is a proper and interested party in the whole proceedings. 38 Question 5. It was submitted that where executors are suing, all must join as plaintiffs (or at least they must all be parties to the suit). In the present case, the plaintiffs claim that they are two of the three executors of the late Beverley Ann Angliss and plead that the third executor has consented to them bringing the action and consents to certain orders. 39 The objection is well founded. Under the Supreme Court Rules, all persons entitled to a joint right must be parties to the suit. However, what remains of the suit affects only the plaintiffs' personal interest as duly appointed agents (as they claim) of the third defendant and not their rights as executors. It is thus otiose to pursue the point. 40 Question 6 There is no restriction on who may promote an application to the Court to declare a person incapable under s 13 of the Protected Estates Act 1983. The plaintiffs have as much right to do this as anyone else. 41 Nor is it an objection to such an application that the alleged incapable person is outside New South Wales provided he has property in New South Wales: MS v ES [1983] 3 NSWLR 199. One presumes that a person has property in the State unless the contrary is demonstrated. There is no material to suggest that the third defendant does not have some property in this State. The furthest that Mr Rares SC's submissions go is that "almost all (the third defendant's) assets are outside New South Wales." 42 Even if the third defendant had no current property in the State, his alleged abduction from the State and the sale of his property in this State without proper authority (as alleged by the plaintiffs) would support the jurisdiction. If this were not so, the first defendant would be able (if the facts were established at trial) to effectuate what up to last century would be the unpardonable crime of Praemunire. 43 Mr Rares SC cites cases like MS v ES at p 203 and my decision in Re R [2000] NSWSC 886 [37] that the court only exercises its jurisdiction under the section for the benefit of the alleged incapable person. This cannot be gainsaid. 44 However, at present, the court has serious allegations against the first defendant. She has not deigned to give evidence. The defendants' camp has been so full of technical objections to the suit that suspicion is engendered, and that all the court really has is senior counsel's continued assertions that the third defendant is happy. 45 If there were in fact proceedings before an appropriate Queensland court or tribunal, it may be that this court would not exercise its jurisdiction. However, it will not stay its hand merely because the first defendant says that there are Queensland tribunals and courts to decide the question in issue, if she does not approach those bodies. 46 Likewise, if there was some appropriate evidence to back up Mr Rares SC's continued assertion, the court might take a different view. 47 However, in the present state of the proceedings, they should continue. 48 Question 7. Prayer 1 seeks an order that the first defendant transfer the Tugun property to the third defendant. The trust is now admitted, the third defendant appears to say that he does not want the transfer. It seems to me that the issue should only be permitted after the question of incapacity is decided. It should be struck out as a separate prayer. 49 Prayer 2A seeks accounts. Again this may be premature until it is established, if it ever is, that the third defendant is incapable. Even then, because of the principle in Bective (Countess) v Commissioner of Taxation (1932) 47 CLR 417, the carers for the third defendant may not be fully accountable in the ordinary sense. 50 Question 8. The portions of the statement of claim should be struck out in accordance with these reasons. The plaintiffs should have leave to amend generally within 21 days. The defendants will then have 21 days to file their defence. The proceedings are already listed before Bryson J on 8 March in his expedition list for review. That appointment should remain as it may well be that his Honour will consider that the proposed hearing on 8 April might not be able to proceed. 51 I will reserve costs of the motions.

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