Downie v Langham

[2017] NSWSC 113

Supreme Court

New South Wales

Medium Neutral Citation:	Downie v Langham [2017] NSWSC 113
Hearing dates:	13 February 2017
Decision date:	13 February 2017
Jurisdiction:	Equity
Before:	White J
Decision:	Refer to para [13] of judgment.
Catchwords:	EQUITY - equitable remedies - accounts and inquiries – whether defendant in capacity as attorney of deceased should be ordered to account to deceased’s estate – whether attorney acting under power of attorney after the principal has become incapable has obligation to account – inability of attorney to account for expenditure will not necessarily require attorney to pay moneys to estate – defendant concedes that estate moneys were spent for defendant’s own benefit – account of expenditure ordered
Legislation Cited:	Powers of Attorney Act 2003 (NSW)
Cases Cited:	Taheri v Vitek (2014) 87 NSWLR 403; [2014] NSWCA 209 C v W (No 2) [2016] NSWSC 945 Countess of Bective v Federal Commissioner of Taxation (1932) 47 CLR 417; [1932] HCA 22 Brown v Smith (1878) 10 Ch D 377 Woodward v Woodward [2015] NSWSC 1793
Category:	Procedural and other rulings
Parties:	Rodney Downie (Plaintiff) Dianne Langham (Defendant)
Representation:	Counsel: A Hill (Plaintiff) In person (Defendant)   Solicitors: Armstrongs Solicitors (Plaintiff) n/a (Defendant)
File Number(s):	2016/250318

Judgment

1. HIS HONOUR: This is an application for an order that the defendant provide an account. It relates to the affairs of the late Mrs Gwen Downie who died on 27 February 2014. The plaintiff is a son of the late Mrs Downie and is the administrator of her estate. The defendant is Mrs Downie's niece.

2. On 5 January 2010, Mrs Downie appointed the defendant as her attorney pursuant to a general (enduring) power of attorney executed in accordance with the Powers of Attorney Act 2003 (NSW). One of the conditions of the power was that the power was subject to no conditions or limitations save that the attorney must at all times act for the principal's benefit. The power of attorney was thus in quite different terms from that considered by the Court of Appeal in Taheri v Vitek (2014) 87 NSWLR 403; [2014] NSWCA 209.

3. After the plaintiff obtained the grant of letters of administration with the will annexed, his solicitor called on the defendant to explain various withdrawals from bank accounts of the late Mrs Downie, including some that were made after her death.

4. In response, on 1 December 2015, the defendant wrote a letter in which, amongst other things, she stated that she had not received a benefit from her aunt's accounts and had taken out-of-pocket expenses from the accounts as they came to hand. She said she did not have copies of the accounts, nor receipts, and explained in some detail her care for and attendances on her aunt, particularly during the last years of her aunt's life. She provided some explanation as to purchases made for Mrs Downie's benefit and also explained in general terms the kinds of expenses that she incurred in visiting Mrs Downie when Mrs Downie was in a retirement village or nursing home. In this respect the notes of the Avondale Retirement Village include a notation that the defendant visited weekly and that Mrs Downie was estranged from her four children.

5. The plaintiff was not satisfied with the response and purportedly required Mrs Langham to account for particular entries on the bank accounts which had been noted with an asterisk, stating that in respect of each of those entries Mrs Langham would be required to identify to whom the amount was paid, the purpose for which the amount was paid or applied, and to vouch for each item of expenditure by attaching the original receipt or other document supporting the transaction. The defendant responded by reminding the solicitor that she had already advised that she did not have receipts for the money spent from the accounts.

6. The plaintiff points to a number of matters from which he says it can be inferred that moneys were applied by the defendant, not for the benefit of the deceased, Mrs Downie, but for the defendant's own benefit. These include a payment of $3,714.45 shortly after the grant of the power of attorney to Summit Bathrooms for work apparently done to the defendant's own property, as well as cash withdrawals sometimes in amounts of between $500 and $1,000 made over quite short periods of time.

7. The defendant, who has represented herself, did not make an affidavit in response to the plaintiff's evidence. In her oral submissions this morning the defendant admitted that she spent moneys out of the deceased's bank accounts that she should not have, but said that the totals in question did not come to anything like the sum of $120,000 for which the plaintiff seeks an explanation, but, as I understood her submission, may have been in the order of $41,000 or $43,000. The defendant has not produced any document to explain how she comes up with that figure.

8. The question as to whether an attorney in these circumstances should be required to provide an account is not a straightforward issue. Whilst it can be said that generally because the relationship between principal and attorney under power is that of principal and agent, where the agent is required to act for the principal's benefit, it should follow that money that comes into the attorney's hands must be applied exclusively for the benefit of the principal, and the principal can be required upon to account. However, as Lindsay J explained in C v W (No 2) [2016] NSWSC 945, there are attorneys and attorneys. An attorney who acts under an enduring power of attorney after the principal has become incapable, undoubtedly stands in a fiduciary relationship with the principal. But that is not a relationship of trustee and beneficiary and the law does not always impose an obligation on such a person to account.

9. The principles expounded by Dixon J in Countess of Bective v Federal Commissioner of Taxation (1932) 47 CLR 417; [1932] HCA 22 at 420-421 and 422-423, and in Brown v Smith (1878) 10 Ch D 377, may well mean that no account from an attorney should be required. Moreover, even where an account is required, it will not necessarily follow that an attorney who is unable to give an account of particular items of expenditure, because, for example, receipts may not have been kept, will necessarily be required to account to the principal or the principal's estate for such expenditure.

10. But in the present case the defendant, as I understand her submissions, accepts that she did spend money for her own benefit that she should not have spent. It does seem that there will be some money payable by her to the estate. If that did not appear, then that would be a ground in itself for not imposing an obligation to account (Woodward v Woodward [2015] NSWSC 1793 at [9]). But in this case there were numerous withdrawals, some of which at least could be classified as being substantial, from which it can be inferred, at least in the light of the defendant's admission, that the moneys were not applied for the deceased's benefit.

11. It follows that an account should be ordered. As I have said, it will not necessarily follow that the defendant will be required to pay moneys to the estate if she is unable to identify how particular withdrawals were applied. Nonetheless, she should make an affidavit on oath or affirmation that, to the best of her ability, will state how the moneys withdrawn from the accounts were applied. That will require her to prepare a list of the items which are asterisked on the bank statements which are an exhibit to the plaintiff's affidavit and to say, as best she can, how the moneys withdrawn were applied.

12. Particularly as the defendant is self-represented, I would add that her affidavit can also include any matters in relation to things which she has done for the deceased on the basis of which she might be entitled to claim an allowance, or to claim relief, in what Lindsay J has said in C v W (No 2) is the inherent jurisdiction of the Court analogous to relief available to a trustee, to be excused from breaches of trust if the trustee, or in this case fiduciary, has acted honestly and reasonably and ought fairly to be excused.

13. For these reasons I make the following orders:

1. Order that the defendant provide an account on oath or affirmation of the moneys received and disbursed by her or by any other person on her behalf from the bank accounts of the late Gwen Downie as identified by asterisk in the accounts of the late Gwen Downie which are ex RGD1 to the affidavit of Rodney Graham Downie dated 20 September 2016.

2. Order that costs of the application to date be reserved.

3. Order that the account referred to in order 1 be filed and served by the defendant by 13 March 2017.

4. Stand over to the Registrar’s list on 23 March 2017 at 9.30am.

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Decision last updated: 22 February 2017