DW and JM
[2006] WASAT 366
•15 DECEMBER 2006
DW and JM [2006] WASAT 366
| STATE ADMINISTRATIVE TRIBUNAL | Citation No: | [2006] WASAT 366 | |
| GUARDIANSHIP AND ADMINISTRATION ACT 1990 (WA) | |||
| Case No: | GAA:1710/2006 | 12 SEPTEMBER 2006 | |
| Coram: | MR J MANSVELD (MEMBER) | 14/12/06 | |
| 13 | Judgment Part: | 1 of 1 | |
| Result: | The application is dismissed | ||
| B | |||
| PDF Version |
| Parties: | DW JM |
Catchwords: | Guardianship Administration Enduring power of attorney Fiduciary duties Obligations of an attorney Gifting by an attorney under an enduring power of attorney Attorney seeking directions |
Legislation: | Guardianship and Administration Act 1990 (WA), s 4(2), s 4(2)(a), s 65, s 66, s 71(5), s 72(3), s 72(3)(a), s 80, s 104, s 104A, s 105, s 106, s 107, s 108, s 109, s 109(2)(b), Pt 9 |
Case References: | CMB, Re [2004] QGAAT 20 (27 May 2004) Re The Full Board of the Guardianship and Administration Board [2003] WASCA 268 Review of Administration Order in respect of Mrs M (Unreported decision delivered 13 June 2000) Smith v Glegg [2004] QSC 443 Greenland & Anor v Intellectually Disabled Citizens Council of Queensland & Anor [2000] QSC 84 Powell v Thompson [1991] 1 NZLR 597 |
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL STREAM : HUMAN RIGHTS ACT : GUARDIANSHIP AND ADMINISTRATION ACT 1990 (WA) CITATION : DW and JM [2006] WASAT 366 MEMBER : MR J MANSVELD (MEMBER) HEARD : 12 SEPTEMBER 2006 DELIVERED : 15 DECEMBER 2006 FILE NO/S : GAA 1710 of 2006 BETWEEN : DW
- Represented Person
AND
JM
Applicant
Catchwords:
Guardianship - Administration - Enduring power of attorney - Fiduciary duties - Obligations of an attorney - Gifting by an attorney under an enduring power of attorney - Attorney seeking directions
Legislation:
Guardianship and Administration Act 1990 (WA), s 4(2), s 4(2)(a), s 65, s 66, s 71(5), s 72(3), s 72(3)(a), s 80, s 104, s 104A, s 105, s 106, s 107, s 108, s 109, s 109(2)(b), Pt 9
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Result:
The application is dismissed
Category: B
Representation:
Counsel:
Represented Person : No appearance
Applicant : Self-represented
Solicitors:
Represented Person : No appearance
Applicant : Self-represented
Case(s) referred to in decision(s):
CMB, Re [2004] QGAAT 20 (27 May 2004)
Re The Full Board of the Guardianship and Administration Board [2003] WASCA 268
Review of Administration Order in respect of Mrs M (Unreported decision delivered 13 June 2000)
Smith v Glegg [2004] QSC 443
Case(s) also cited:
Greenland & Anor v Intellectually Disabled Citizens Council of Queensland & Anor [2000] QSC 84
Powell v Thompson [1991] 1 NZLR 597
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Summary of Tribunal's decision
1 A daughter of an elderly woman had been appointed the woman's attorney under an enduring power of attorney.
2 The daughter as attorney proposed that she gift from her mother's estate a sum of money to the woman's other children and the children of a deceased son of the donor. The attorney was not intending to benefit from the gift herself.
3 The daughter was concerned that as attorney she did not have the authority to make the gifts and sought directions from the Tribunal.
4 The elderly woman suffered from dementia and was a resident in a nursing home. She was bed bound. Her care needs were entirely met by the nursing home and after all necessary expenditure was incurred she retained an annual surplus that was suggested as the proposed gift. Her estate was made up of cash and a share portfolio and was valued at nearly $200 000.
5 As attorney, the daughter had a fiduciary duty to her mother. The enduring power of attorney established an agency between the mother as principal and daughter as attorney. The daughter was bound to avoid conflicts of interests and not profit from her position.
6 The Tribunal decided that the legislation and case law which applied to administrators appointed by the Tribunal when gifting was proposed, was useful as a guide to attorneys in their decisions about gifting.
7 The Tribunal decided that in general it was not appropriate for attorneys to be directed about gifting and in this case came to a view that the elderly woman's estate was not in need of protection. The application was therefore dismissed.
Background
8 These reasons relate to an application by JM, daughter of DW, for directions to make gifts from her mother's estate.
9 JM is attorney for DW under an enduring power of attorney executed on 6 March 1998.
10 The relevant legislation is the Guardianship and Administration Act 1990 (WA) (GA Act). JM is seeking directions from the Tribunal
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- pursuant to s 109(2)(b) of the GA Act, in respect of the gifts she proposes to make.
11 DW is 103 years of age and a resident of a nursing home. She is diagnosed with moderate dementia and has been assessed by her general practitioner as no longer capable of making reasonable decisions in relation to her financial affairs (report of Dr WH dated 24 August 2006).
The application
12 According to the applicant, the value of DW's estate at 5 September 2006 was $190 182 comprising a portfolio of shares and a bank account. Her annual income is estimated to exceed her expenditure by $9286 and this surplus is expected to be generated each year. DW is reported to be confined to bed and her most significant expense is that of nursing home fees.
13 The applicant is seeking a direction from the Tribunal authorising her to gift cash amounts of up to $3000 per annum to each of three of the four surviving children of DW plus an equal amount to be shared equally by the two children of the deceased son. The attorney is not intending to benefit from the gift herself.
14 In a written submission to the Tribunal, the applicant states that the proposed beneficiaries of the gifts are also beneficiaries in the will of DW "… and the proportions are the same. Myself the donee being excluded".
15 The applicant further states in her submission that prior to DW's mental capacity diminishing "… she mentioned on occasions that she would have liked to have helped all her children in the past. If she was able to make those sort [sic] of decisions today I am certain she would arrive at the same conclusion I have".
Hearing
16 JM attended the hearing with her friend, EE. JM says that it is her understanding that she does not have the authority to make gifts from her mother's estate under the enduring power of attorney and she is seeking the approval of the Tribunal to make the gifts mentioned in her application.
The relevant law
17 The GA Act is essentially protective in its nature and intent.
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18 Heenan J said in the decision of the Full Court of the Supreme Court in Re The Full Board of the Guardianship and Administration Board [2003] WASCA 268 [at para 43 and 44]:
"… the Guardianship and Administration Act is intended to 'provide for the guardianship of adults who need assistance in their personal affairs, for the administration of the estates of persons who need assistance in their financial affairs ... and to make provision for a power of attorney to operate after the donor has ceased to have legal capacity, and for connected purposes' (see the long title to the Act). 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".
"… 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".
19 In financial matters, the ultimate protection afforded a person under the GA Act is to have an administrator appointed to manage their affairs and to have that management scrutinized by the Public Trustee (see s 80).
20 The GA Act recognizes, however, the right of a competent person to plan for a different form of management of their estate in the event of them becoming incompetent and that is by way of the execution of an enduring power of attorney. The existence of such an instrument does not preclude the later appointment of an administrator by the Tribunal but in the first instance provides for the ongoing management of an incompetent person's estate without intervention by the State.
21 Pt 9 of the GA Act deals with enduring powers of attorney. Section 104 sets out what form an enduring power of attorney must take
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- and that the instrument must be executed in a certain way to be effective. This includes the election by the donor for the instrument to begin to operate on execution and acceptance or only upon a declaration of legal incapacity made by the Tribunal; s 104A allows for recognition of enduring powers of attorney created in other jurisdictions; s 105 provides for the enduring power of attorney to survive a person's incapacity, unlike ordinary powers of attorney which lapse on incapacity; s 106 provides for the Tribunal to declare that a person does not have legal capacity and to allow the enduring power of attorney to come into force; s 107 provides for the obligations of an attorney (see below); the provisions of s 108 allow the Tribunal to revoke or vary the enduring power of attorney on the making of an order for administration or when an order is made under s 65 or s 66 of the GA Act; s 108 also provides for the attorney to be accountable to any appointed administrator who can vary or revoke the instrument; s 109 provides for Tribunal intervention into the operation of an enduring power of attorney upon application by a person considered to have a "proper interest".
22 The question before me is this: can an attorney make gifts from the estate of an incapable donor and if so must it require the approval of the Tribunal.
23 In respect of the estate of DW, the answer lies in an exploration of the authority of the attorney and the duties she owes DW as her principal.
24 An enduring power of attorney creates an agency between the donor (principal) and donee (attorney) (Fisher, S Agency Law Butterworths, 2000:221).
"Agency is primarily concerned with the voluntary devolution of authority from the principal to the agent, and the acceptance by the agent of authority to execute the mandate." (Agency Law:42)
25 In the case of DW, she, whilst competent, executed an enduring power of attorney on 6 March 1998 appointing the applicant as her sole attorney. She chose that the power was to become effective immediately upon execution and she authorised her attorney "... to do on my behalf anything that I can lawfully do by an attorney". The instrument is subject to the condition or restriction that "the authority may be revoked by me any time I am legally capable of acting".
26 The extent of the authority of the applicant is contained within the enduring power of attorney document. There is no prohibition to gifting
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- on the face of the document except that the attorney is restricted in her authority to anything that can lawfully be done by an attorney. What an attorney can lawfully do is bound up with the duties that an attorney has to her principal. This has both legislative and common law components.
27 In respect of the legislation, s 107 of the GA Act reads:
"107. Obligations of donee
(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.
(2) In relation to an enduring power of attorney recognized by the State Administrative Tribunal under section 104A(2), subsection (1)(a) and (b) only apply to the donor's estate within Western Australia and subsection (1)(c) does not apply."
28 Section 107 must be read in the context of the overall protective intent of the GA Act discussed earlier in these reasons. The circumstances of DW are now that she is incapable of instructing her attorney or revoking or varying the enduring power of attorney. She is entirely dependent on her attorney to act in her best interests without the scrutiny that comes with the appointment of an administrator. While there is no reason to doubt that the applicant is acting in DW's best interests, it is arguable that the Tribunal must elevate the notion of protection to account for those situations where the donor has become incapable and is inherently vulnerable to the actions of others. This is not inconsistent
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- with the primary concern of the Tribunal, that being the best interests of the person (s 4(2)(a) of the GA Act).
29 In the common law, the duties of an agent, which appear to be encapsulated in s 107 of the GA Act, are informed by the fact that an agent is a fiduciary of the principal (Agency Law:92).
"Fiduciary: A person who is under an obligation to act in another's best interests to the exclusion of the fiduciary's own interest. A fiduciary cannot use his or her position, knowledge or opportunity to the fiduciary's own advantage, or have a personal interest in, or inconsistent engagement with, a third party, unless fully informed and free consent is given. In acting for or in the interests of the other, the fiduciary acts in a representative capacity."(Australian Legal Dictionary Butterworths, 1997:471)
"An agent has a duty of loyalty to his or her principal, must avoid conflicts of interest and not profit from the position as agent without the fully informed consent of the principal." (Agency Law:107)
30 This issue was addressed in Smith v Glegg [2004] QSC 443. In that case the attorney applied the proceeds of the donor's house to her own benefit. McMurdo J said at [61]:
"… the defendant correctly concedes that she owed to the plaintiff fiduciary duties. The plaintiff was totally dependent upon her assistance, and specifically upon her exercise in good faith of her very extensive powers under the power of attorney. That required the defendant to avoid any dealing or transaction by which her own interest could conflict with her duty to the plaintiff. A critical part of her responsibilities as an attorney was her management of the plaintiff's money and property. If the defendant was to be free to accept a gift of the plaintiff's only substantial asset, then her interest in maximising the value of what she would receive would conflict with her duty to manage and apply the plaintiff's property only for the support, health and comfort of the plaintiff, even if that involved some substantial expenditure."
31 It is the case that an administrator appointed under the GA Act is also in a fiduciary position in respect of the person for whom the appointment has been made. The matter of gifting in the circumstances of
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- an administration order is dealt with legislatively. Under s 72(3)(a) an administrator can only make a payment or disposition of a charitable, benevolent or ex gratia nature from the estate of a represented person with the authority of the Tribunal. There is therefore legislative recognition that the disposition of a person's estate requires objective assessment of the extent to which a disposition might adversely affect the person's estate and be contrary to his or her best interests. How this has been considered may be instructive in the case before me.
32 The Full Board of the former Guardianship and Administration Board considered gifting in the context of administration in Review of Administration Order in respect of Mrs M (Unreported decision delivered 13 June 2000) (Mr Keith Chapman, President, Mrs Pamela Eldred, Deputy President and Mr John James, Member).
33 In that case the Full Board found that the represented person's estate comprised just over $1 000 000 and that she received some $50 000 income per year with approximately $15 000 of expenses. She was 89 years of age. The proposed gift was to a grandson who was under disability and needed a special behaviour management programme which was to cost $12 000 per year over three years. The Full Board was satisfied "… that the estate of the represented person [was] more than sufficient to care for her needs during her lifetime and [was] sufficient to make gifts in appropriate circumstances" (page 2). The Board went on to say at page 3 of its reasons:
"As provided in section (4)(2)(a) of the Guardianship and Administration Act ('the Act') the primary concern of the Board is in the best interests of the represented person. In the normal course it would not be apparent that the expenditure of the funds of the represented person for the benefit of some other person would be in her best interests.
However, pursuant to section 72(3)(a) of the Act the Board may authorize an administrator to make a payment of a benevolent or ex gratia nature. That section gives no guidance as to the appropriate factors to take into account in exercising that discretion.
Assistance is to be found in section 71(5) of the Act which reads:
'In exercising its jurisdiction under this Part the State Administrative Tribunal may take a liberal view of the best
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- interests of the represented person as mentioned in section 4(2)(a), and in particular may, if the circumstances so require, empower an administrator to make a payment or enter into a transaction of a kind described in section 72(3) on behalf of the represented person.'
Given the provisions of the Act the Board is of the view that the following are some of the factors which are appropriate to take into consideration when exercising its discretion pursuant to section 72(3) of the Act.
1. The relationship between the represented person and the beneficiary of the gift.
2. The extent of the estate of the represented person.
3. The income and expenditure of the estate.
4. The age and needs of the represented person.
5. The purpose of the gift.
6. The likelihood of the represented person acceding to the request if she had capacity.
7. The alternatives open to the recipient.
8. The attitude of those who are likely to benefit from the estate of the represented person on her death.
9. The needs of any other person dependant upon the represented person."
34 The Full Board approved the gift.
35 In a matter heard by the Queensland Guardianship and Administration Tribunal, CMB, Re [2004] QGAAT 20 (27 May 2004) the gifting of a substantial part of an incapable person's estate by an administrator was approved by majority under the "conflict transactions" provisions of that State's Guardianship and Administration Act. The basis of the approval was the Tribunal's view that the gift would have been of the type contemplated by the incapable person during her lifetime, the beneficiaries of the gift were also the beneficiaries under her will (the Tribunal did not take as compelling the notion that the estate should not be distributed prior to her death) and the person's remaining income and
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- assets were sufficient to meet any future care needs. This is broadly consistent with the decision in Review of Administration Order in respect of Mrs M above.
36 To highlight the difficulty in decisions of this type it should be noted that the dissenting member in CMB strongly disagreed with the majority view, and in those reasons cited a case which considered a power of attorney and which principles the member said (in the case before the member), applied to administrators. At par [39]:
"His Honour Justice Chesterman in Greenland & Anor v Intellectually Disabled Citizens Council of Queensland & Anor [2000] QSC 84 quoted with approval Thomas J in Powell v Thompson [1991] 1 NZLR 597 at 605.
An attorney cannot utilise a power of attorney to pay his or her personal debts. To do so contravenes the fundamental nature of an agency fiduciary relationship. Powers of attorney [are] specifically directed at the management of the principal's affairs: it is not open to attorneys to either obtain an advantage for themselves or act in a way which is contrary to the interests of the principal's…"
The decision of the Tribunal
37 It appears to me that there is a common thread that runs through the legislation and the case law as regards the disposition of an incapable person's estate during the person's lifetime when done under the authority of an administration order or by an attorney under an enduring power of attorney. Both administrators and attorneys are in fiduciary positions and although, in Western Australia at least, disposition by way of gifting is legislated for administrators but not attorneys, the same principles likely apply.
38 When the Tribunal determines whether a gift may be made from the estate of a person under administration, the conflict of interest position in which the administrator might otherwise find themselves is resolved. In the case of attorneys they must, in the first instance, rely on their own judgment after considering the duties and obligations they have to their principals.
39 It is my view then that attorneys under an enduring power of attorney are not necessarily precluded from making gifts from the estate of their principals (unless the instrument itself prohibits such dispositions), but
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- must be directed by their duty of loyalty in the judgments they make. In that respect they are guided by the legislation detailing the obligations of an attorney (s 107 of the GA Act) and their common law duties. The case law assists in deciding how those duties might be expressed in a calculation of how the gift will impact on the person's estate and whether it can be said, on balance, that the gift is in the interests of the incapable person. As I have stated, it seems to me that the case law in respect of administration and gifting can be applied to the situation of attorneys given they are both in fiduciary relationship with the persons whose estates they manage.
40 The "factors" for consideration stated in Review of Administration Order in respect of Mrs M above are to my mind indicative of the questions that should be asked in the contemplation of a gift and which, when weighed up, can provide an attorney with a sense of any likely conflict of interest that would shape the final decision made. Whether they assist when the gift is directed to the attorney him or herself is more problematic; the duty not to profit from an agency relationship unless the principal gives informed consent (which of course an incapable principal cannot), is fundamental to the integrity of the relationship. This, however, is not a concern for me here as the applicant does not stand to personally benefit from the proposed gift.
41 On the information provided by the applicant in respect of the proposed gift from the estate of DW, it would appear that it reasonably satisfies the factors in Review of Administration Order in respect of Mrs M and if DW had been under administration then, it would have been open to me to approve the gift under s 72(3) of the GA Act.
42 The applicant is seeking directions in this matter pursuant to s 109(2)(b) of the GA Act which provides that a donee (attorney) of an enduring power of attorney may apply to the Tribunal for directions as to matters concerned with the exercise of the power or the constructions of its terms.
43 I have set out my view on whether an attorney, under an enduring power of attorney, is absolutely precluded from making gifts from the estate of donor. I do not think that an attorney is so precluded but also say that any disposition of a person's estate by way of gift made by an attorney needs to assessed by the attorney against their responsibilities as a fiduciary. That responsibility is a serious one indeed when the circumstances are such that the attorney is acting under an enduring power of attorney at the time the donor is incapable.
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44 I am also of the view that the decided cases on gifting when a person is under administration are a useful guide to an attorney contemplating a gift and are instructive as to the questions than an attorney should pose in assessing the gift against the interests of the donor. I refer particularly to Review of Administration Order in respect of Mrs M in this regard.
45 I do not think it is generally the role of this Tribunal under the GA Act to direct attorneys on the matter of gifting. Parliament has given the Tribunal this responsibility when the person is under administration but there is not a similar provision when the person's estate is being managed by the authority of an enduring power of attorney. I can speculate that the intention of Parliament was that an enduring power of attorney is considered an essentially private matter between the donor and donee (attorney) and State intervention should only occur when protection of the donor's estate is needed.
46 In the case before me I am of the view that protection of DW's estate is not required. I therefore dismiss the application.
I certify that this and the preceding [46] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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MR J MANSVELD, MEMBER
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