DD
[2007] WASAT 192
•24 JULY 2007
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
STREAM: HUMAN RIGHTS
ACT: GUARDIANSHIP AND ADMINISTRATION ACT 1990 (WA)
CITATION: DD [2007] WASAT 192
MEMBER: MS F CHILD (MEMBER)
HEARD: 18 MAY 20007
DELIVERED : 24 JULY 2007
FILE NO/S: GAA 677 of 2005
BETWEEN: DD
Represented Person
Catchwords:
Guardianship and administration - Enduring power of attorney - Application by attorneys seeking authority to make gifts from the estate of the donor
Legislation:
Guardianship and Administration Act 1990 (WA), s 47, s 71(5), s 72(3), s 72(3)(a), s 74, s 104, s 105, s 107, s 109, s 109(2)(b)
State Administrative Tribunal Act 2004 (WA), s 76
Result:
Application dismissed
Category: B
Representation:
Counsel:
Represented Person : N/A
Solicitors:
Represented Person : N/A
Case(s) referred to in decision(s):
Re the Full Board of the Guardianship and Administration Board [2003] WASCA 268
REASONS FOR DECISION OF THE TRIBUNAL:
Summary of Tribunal's decision
The daughters of an elderly woman suffering from dementia applied as the donees of her enduring power of attorney to the State Administrative Tribunal for authority to make a gift from the estate of their mother to themselves and their brother.
The daughters had been appointed donees under an enduring power of attorney executed in 2001 when the woman was capable of doing so. The daughters were concerned about the proposal to make the gift and sought direction from the Tribunal.
The woman was the resident of a nursing home. She had a substantial estate with a value of over $2 million. Her dementia meant that she could not now indicate her wishes or give directions in relation to her estate. She was reliant on her donees to manage her estate on her behalf.
As the donees of her enduring power of attorney, her daughters had fiduciary obligations to their mother arising from their acceptance of the role as donees.
In light of the protective nature of the Guardianship and Administration Act 1990 (WA) under which the enduring power of attorney had been created and the obligations owed by the donees, the Tribunal determined that it was not appropriate for the Tribunal to authorise a gift from the estate under the application made for directions. This was a matter for the donees to determine for themselves, having regard to the obligations they owed to the donor.
The application was dismissed.
Reasons for decision
These reasons relate to an application by the daughters of DD for authority to make gifts from their mother's estate to themselves and to their brother. The hearing of the application was in May 2007, and attended by the donees and their brother who spoke in support of the application. The decision was reserved. Written reasons for the decision are now published pursuant to s 76 of the State Administrative Tribunal Act2004.
The applicant daughters (the donees) are attorneys for DD (the donor) pursuant to an enduring power of attorney executed on 26 April 2001 by which the donor appointed them as joint attorneys and in substitution on the death of either attorney, their brother AD. The enduring power of attorney, on its face, complies with the requirements of s 104 of the Guardianship and Administration Act 1990 (WA) (GA Act).
The medical evidence before the Tribunal confirms that the donor has moderately advanced dementia and is described by her general practitioner as being incapable of making reasonable decisions in relation to her financial affairs.
The application
The application by the donees is brought under s 109(2)(b) of the GA Act which provides that the donee of an enduring power of attorney may apply to the State Administrative Tribunal for directions as to matters connected with the exercise of the power or the construction of its terms.
The donees seek an authority to make gifts totalling $600 000 from the estate of the donor, $200 000 each to the donees and their brother.
Background
The enduring power of attorney executed by the donor provides that it come into force on its execution. The power authorises the donees to do anything on behalf of the donor that she could lawfully do by an attorney and is not subject to any conditions or restrictions.
The enduring power of attorney has been registered with Landgate and has been acted on by the donees; most recently in relation to the sale of property in December 2006.
Following the sale of the home of the donor, the donees were advised that the financial affairs of persons in the circumstances of the donor could be arranged to reduce taxation liability by making gifts from the estate of that person. The amount proposed to be gifted was in the amount of $600 000; $200 000 to each of the children of the donor.
The donees express concern about the appropriateness of the gifts proposed and state that they believe it to be more respectful to seek advice from the Tribunal as to whether this is an appropriate action to take. They state they think it to be safer to have the authority of the Tribunal before gifts are made. One daughter expresses her reservations about the proposal in that her mother is still alive and her Will not in effect.
The donor has a significant estate and is not entitled to a pension. She pays provisional tax of some $30 000 per annum.
Both donees and their brother agree that their father, who had been the main financial manager for the couple prior to his death, would have wanted to minimise the tax liability.
The donees advise that their mother, in the past, has made gifts to her children. Specifically, she gave each one money she had received from her sister's deceased estate totalling $30 000.
Because of her dementia, the donees note that their mother can no longer give her views about the proposed gifts. She is not able to contribute to decisions in matters of any complexity and she is dependant on others for the management of her financial affairs and for her personal care.
The view of the donees is that the gifts proposed are unlikely to have an impact on the donor's financial security given the size of her estate but that if she had needs in the future which could not be met from her estate all her children would ensure that those needs would be met.
The legislation
Part 9 of the GA Act deals with enduring powers of attorney. As noted above, the donor's enduring power of attorney was executed in 2001 and complies with the provisions of s 104 of the GA Act.
Section 105 of the GA Act provides that an enduring power of attorney in force is not affected by the subsequent legal incapacity of the donor and further that an act done by the donee during a period of incapacity of the donor is as effective as if the donor were of full legal capacity.
Section 107 sets out the obligations of donees:
"(1)The donee of an enduring power of attorney —
(a)shall exercise his powers as attorney with reasonable diligence to protect the interests of the donor and, if he fails to do so, he is liable to the donor for any loss occasioned by the failure;
(b)shall keep and preserve accurate records and accounts of all dealings and transactions made under the power;
(c)subject to section 109(2), may not renounce a power during any period of legal incapacity of the donor; and
(d)shall, if the donee becomes bankrupt, report that bankruptcy to the State Administrative Tribunal.
Penalty applicable to paragraph (b): $2 000."
Section 109 of the GA Act provides for intervention by the Tribunal by orders on an application by a person with a proper interest or on application by the donee.
The present application under s 109(2)(b) is for direction to the donees.
There is nothing in Part 9 of the GA Act which expressly precludes a donee making gifts from the estate.
Gifting is dealt with elsewhere in the GA Act. An administrator appointed by the Tribunal to manage the affairs of an incapable person, shall not make a gift without the express authority of the Tribunal (s 72(3)(a)).
The exercise of the discretion by the Tribunal under s 72(3) to authorise gifts is subject to s 71(5) which provides that the Tribunal may take a "liberal view" of the best interests of the represented person to empower an administrator to make a gift.
This discretion is generally exercised to give effect to the past practice of a person now subject to an administration order to enable an administrator to make periodic gifts on behalf of that person, for example, for birthdays and at Christmas. This is seen as consistent with the wishes of the represented person, as expressed through that person's past practice and as an aspect of their participation in the life of the community, both relevant considerations in meeting the obligations of the Tribunal to act in the best interests of that person. In some cases, larger "one‑off" gifts have been authorised for particular purposes, but generally not in the amount proposed here as a proportion of the estate.
In contrast to the order sought in the application, for a direction under s 109(2)(b), an authorisation by the Tribunal of gifting by an administrator under s 72(3) is permission for something that would otherwise be impermissible: not a direction that gifting occur. The administrator given such an authority must exercise her or his judgment at any given time whether to make the permitted gift. A direction by the Tribunal under the GA Act may be given to a guardian and administrator on application: see s 47 and s 74 respectively. When such a direction is made, the guardian or administrator "shall comply with any direction given". As such, a direction given in these circumstances is mandatory.
Having said that, the question is whether the Tribunal should make a direction under s 109(2)(b) of the GA Act to direct the donees in respect of the proposed gifts as a matter connected with the exercise of the power.
It is accepted that the proposal to make gifts from the estate is a matter connected with the exercise of the power and so comes within the ambit of s 109(2)(b).
Whether the Tribunal should make the order sought must be considered in light of the obligations owed by the donees of the power to the donor and intention of the legislation under which the enduring power of attorney was created.
Obligations owed by the donees
As set out above, the donees accepted obligations under the GA Act on their appointment in that role. The donees are in what is described as a fiduciary relationship to the donor.
A fiduciary is "simply someone who undertakes to act for or on behalf of another in some particular matter or matters" (Finn, PD Fiduciary Obligations Law Book Company, Sydney, 1977).
The principle that a fiduciary cannot profit from the position or allow her interest to conflict with her duty is described in various authorities as an "inflexible rule" or a "fundamental rule". As the author of the text cited above notes, the objective of such a rule is to ensure that the fiduciary who has undertaken to act for another does not allow personal interest to "sway him from the proper performance of that undertaking," the second is to prevent a person from "actually misusing the position" [at 464].
Because of their appointment as her donees through the enduring power of attorney and since she has now lost capacity, her inability to revoke the power or to direct them, the donor's reliance and dependence on them reinforces their fiduciary obligations to her.
The statutory obligations of a donee in s 107 to a donor who has lost capacity expressly address this relationship of dependence; a donee cannot renounce a power during any period of incapacity of the donor without an order of the Tribunal.
The protective intention of the Guardianship and Administration Act
In considering whether the Tribunal should make the order, the Tribunal also considered the overall intent of the GA Act. The comments made by His Honour, EM Heenan J, in Re the Full Board of the Guardianship and Administration Board [2003] WASCA 268 when considering other provisions of the GA Act explain this intention:
" ... From this, and an examination of the entire Act, it is obvious that the legislation is designed for the protection of adult persons whose faculties may be impaired, for any reason, and who are therefore in need of protection and assistance so as to ensure that their financial affairs and other welfare is not jeopardised by improvident, or ill‑considered personal decisions or action, or by unscrupulous or ill‑advised influence of relatives, friends and others who may deliberately or inadvertently exploit the vulnerability of the person in need of assistance and protection.
These ends can be achieved, when it comes to dealings with the property and financial affairs of the person in need of assistance, by ensuring that any financial, property or commercial transactions which would, or might, jeopardise the financial security or interests of the disabled person, are only effective when performed by a properly appointed administrator and with the Board's consent. The emphasis is on conserving the property and financial resources of the disabled person to ensure that they are available for his or her own needs, welfare and enjoyment and are not dissipated. These seem to be the primary objectives of the legislation and all the provisions of the Act can be seen to have meaning and effect as leading towards the achievement of those purposes. In the main, these will be accomplished by conserving the resources and property of the person under administration for use to his or her own advantage or, in cases where expenditure or imminent disposition of property are necessary or advantageous, by scrutinising the transaction to see that it is justifiable or provident having regard to all the circumstances, bearing always in mind the continuing and future needs of the person whose estate is under administration."
Although the donor's affairs are not under administration, the protective intent of the legislation is said to apply to all its provisions.
In considering the issues raised, the Tribunal does not consider that the donees are in any way unscrupulous or ill advised. All her children appear to the Tribunal to be devoted to their mother and the donees bring this application for directions following professional advice that this will reduce the donor's taxation liability and because they have concerns about the appropriateness of making the gifts.
Reasons
In light of the protective intent of the GA Act, the legislation under which the enduring power of attorney was executed, and the fiduciary obligations owed to her by the donees as a consequence of taking on that role it is not appropriate for the Tribunal to direct the donees to make a gift from the donor's estate.
The primary concern of the Tribunal in the performance of all of its functions is the best interests of the donor as a person in respect of whom an application is made. Dispositions from the estate of the amount proposed could not be said to be in her best interests even allowing for the reduction in her taxation liability.
Since the donor cannot consent to or direct the donees in relation to the gifts, they are bound by their statutory obligations to act with reasonable diligence to protect her interests.
Whether or not the donees make the gifts proposed is a matter for the exercise of the judgment of the donees themselves as to whether they consider it is consistent with the fiduciary obligations they owe the donor.
The donees are jointly appointed; each will have to agree in relation to transactions undertaken in connection with the power.
For the reasons above, the application is dismissed.
Orders
1.The application is dismissed.
I certify that this and the preceding [47] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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MS F CHILD, MEMBER
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