DXX (Review Enduring Powers)
[2015] TASGAB 11
•3 July 2015
GUARDIANSHIP AND ADMINISTRATION BOARD
HOBART
DXX – Application to review an enduring power of attorney
DXX (Review Enduring Powers) [2015] TASGAB 11
REASONS FOR DECISION
Anita Smith (President)
Ged Dibley (Member)
Wendy Hudson (Member)
Date of hearing: 3 July 2015
The donor, DXX, is an 85 year old man who resides in an Aged Care Facility administered by Presbyterian Care Tasmania. On 24 December 2013 he executed an enduring power of attorney (registered number PAXXXX) in favour of DN ( ‘the instrument’).
On 22 April 2015, Advocacy Tasmania Inc. made an application for a review of the instrument pursuant to section 33 of the Powers of Attorney Act 2000 (‘the Act’). For reasons outlined in a statement of reasons delivered 5 June 2015, the Board suspended the operation of the instrument and appointed the Public Trustee under an emergency administration order on 15 May 2015. This decision is published as DXX (Emergency Suspend EPA and Administration) [2015] TASGAB 7 (15 May 2015). That emergency suspension and administration order was renewed for a further 28 days on 17 June 2015. The factual situation regarding the donor has not changed significantly since those reasons were written, apart from the operation of the order, and I adopt so much of those reasons as establish the factual background to this decision.
The application was heard on 3 July 2015. The donor elected not to attend and a witness reported that he would have been overwhelmed by the proceedings. Mr. Egan, his solicitor, also indicated an intention not to attend the hearing. The following persons attended the hearing:
DN, attorney
Carolyn Youle (supported by Leanne Groombridge) representing Advocacy Tasmania, applicant
Felicity Weeding representing Presbyterian Care Tasmania
Edward Kempa representing the Public Trustee
Elizabeth Dalgleish, GAB Investigator
Ms Weeding indicated that, since his admission to care, the donor has always perseverated about issues related to his money. From Ms. Weeding’s perspective, DN has assisted the donor with his finances and payment of Aged Care fees at least since his admission. At some point, the nature of his perseveration had changed to the effect that he did not trust DN to protect his money and his concerns began to focus on whether DN could be trusted with his funds. As a result, Ms. Weeding contacted Advocacy Tasmania on his behalf to provide him with assistance.
Ms. Youle, as an advocate with Advocacy Tasmania had several attendances with the donor at which she says he was consistent in his concerns about his interest in his house and about DN’s modifications to the house. She said that the donor was comfortable with the idea that he had sold his house to DN, but was concerned about ‘where the money was.’
The attorney’s father is the donor’s brother or, in other words, the attorney is the donor’s niece. She explained to the Board that the donor had longstanding reliance on her and her family, especially since his former wife had poisoned him and stole from him in the late 1960s. Since that time he has been very careful with his finances. He consulted a psychiatrist for many years in relation to these events. Approximately 15 years ago, the donor suffered an aneurysm and lived with the attorney until he recovered. She has cared for him when unwell and assisted him with chores for many years.
The attorney said that there has been discussion within the family for a ‘long, long time’ about transfer of the donor’s house to her. The Board has not received a copy of any agreement regarding this transfer although it was requested prior to the hearing. The attorney stated that the terms of the agreement (or at least the mutual understandings) are that she pays for rates, insurance and utilities and that she may live in and renovate the property prior to the settlement of the transfer.
The application and the history of this matter gives rise to the following issues:
· Is the instrument operating in its enduring phase? i.e. has the donor lost capacity to manage his affairs or is DN merely acting as agent for the donor under a general power of attorney?
· Do the donor’s statements affect the continued operation of the instrument?
· Is it appropriate that the attorney continues to operate under the instrument?
The Board will address these questions in turn:
Is the instrument operating in its enduring phase?
This question does not relate to a test in the Act, but it is relevant to the purpose of the Board’s enquiry. If the donor retains capacity, the operation of the instrument is a matter that is regulated by the laws of agency and he can take legal action against an attorney if he has concerns that he or she has acted contrary to his instructions. If he has lost capacity to manage his estate, then the operations under the instrument are reviewable by the Board and form part of its consideration. In addition, if the donor has capacity, any orders the Board might make could be futile because a competent donor could respectively revoke or renew any instrument that the Board might amend or revoke. Therefore it is convenient to make a finding about whether the instrument is or should be in its enduring phase, based on medical evidence.
The attorney’s view is that she has been assisting the donor with his affairs, but that he has retained control of his finances. However, she also described how she has been able to control his access to cash to ensure that he is not vulnerable to loss. She stated that she has paid for some of his personal needs from her own funds and that his Aged Care fees are paid by direct debit, meaning she is not required to have much direct intervention.
Ms. Weeding had formed the view since the admissions process that the donor would be too overwhelmed by his anxiety to manage his finances. She has relied on the ostensible authority of the attorney as an enduring attorney and would have continued to do so but for the donor’s expressions of concern about his estates.
Mr. Egan provided to the Board a report by Dr. Richard Bourke who has been the donor’s General Practitioner for ‘many years’ and who last saw him on 18 May 2015. He administered a MMSE in which the donor scored 27/30. Dr. Bourke concluded that the donor is ‘performing reasonably’. The MMSE is a screening device for cognitive impairment, it is not the definitive test of a person’s understanding of executing instruments or of business affairs.
Dr. Bourke considered that the donor had a good or ‘more than reasonable’ understanding of an enduring power of attorney and that the donor was in no doubt that DN should be his attorney. Dr. Bourke’s report does not set out the facts he had taken into account in support of his opinion. Dr. Bourke stated that DN ‘has always been his guardian angel so to speak and seems to be the only person that I know of, who over the years has provided counsel, care, transport and support to DXX whenever needed.’
At the request of the Board, Old Age Psychiatrist Dr. Martin Morrissey interviewed the donor on 26 June 2015. Dr. Morrissey reports that the donor expressed sentiments to him about the attorney which were in keeping with those reported by the applicant. He reported to the Board as follows:
“On cognitive testing, DXX had evidence of marked impairment across a number of domains. … He was disoriented to day, date, month year and season. He exhibited markedly impaired short term memory being unable to recall any of the three items after three minutes. He was unable to follow a three step command and he had impaired visuospatial functioning.” …
“He appears to have a very poor understanding of his financial status, his assets and his liabilities.
As a result of his dementia, I believe DXX is unable to manage his financial affairs. He appears unable to grasp the concept of Enduring Power of Attorney and when taken in context of his degree of cognitive impairment, I believe he is now unable to validly make an Enduring Power of Attorney. DXX appears very confused regarding his financial affairs and I suspect misinterprets events around him that may have a bearing on this, for example his desire to find his wallet to pay the “railway bill”. He would be at risk of financial misadventure were he not to have a proxy decision maker for his finances.”
Some of Dr. Morrissey’s comments imply that these deficits have been evident, but also deteriorating, over some time.
Mr. Egan, by letter dated 2 July 2015, indicated that he considered that the donor would pass the tests in Banks v Goodfellow (note: previous decisions where the Board has criticised reliance on this test in relation to enduring powers of attorney e.g. QHT (Review Enduring Powers) [2014] TASGAB 20) but acknowledged ‘some mental and cognitive impairment’.
DN did not offer any specific objections to the contents of Dr. Morrissey’s report. She confirmed that he is ‘delusional’ about some matters, can be very confused and also that his memory is such that he does not remember persons visiting him at the Aged Care Facility and he can forget conversations ten minutes after they conclude.
While a long term relationship can be an advantage in assessing a patient’s cognition and Dr. Bourke’s opinion has that advantage over Dr. Morrissey’s report, the Board prefers the logic and evidence supporting Dr. Morrissey’s conclusions to those drawn by Dr. Bourke. It is unclear how Dr. Bourke drew his conclusions about the donor’s understanding of an enduring power of attorney and it is also unclear whether Dr. Bourke was making any distinction between the consistent donor’s expression of wishes and his understanding of the nature of the donor/attorney relationship.
On the basis of Dr. Morrissey’s report, Ms. Weeding’s and the attorney’s evidence, the Board was satisfied that the instrument has – or ought to have been - operating in its enduring phase. If more historical medical evidence was available, the Board would be able to consider whether the donor had capacity to execute the enduring power when it was created and also to consider whether he had capacity to reach an agreement to sell his property to the attorney. In the absence of such historical evidence the presumption of his capacity for such transactions prevails.
Do the donor’s statements affect the continued operation of the instrument?
It appears to remain the case that when the donor is speaking with Mr. Egan, Dr. Bourke or DN, he expresses adamant support for DN’s role as attorney. When he is speaking to other persons (e.g. Ms. Weeding, the applicant, the GAB Investigator or Dr. Morrissey) he expresses suspicion and concern about her role as attorney and her dealings with his house and money.
Purportedly, around the time of his admission to the Aged Care Facility the donor and the attorney entered into a verbal[1] agreement for the attorney to purchase the donor’s property for $150,000.00. According to the attorney this was the value independently nominated by the donor, after the donor had rejected another offer of $100,000.00 from a third party. The value of the property as listed in the council valuation and the Aged Care Assets assessment in 2012 is $200,000.00. Given the longstanding family relationships, it is reasonable to consider that the donor may have wanted (or possibly still wants) to confer on the attorney some financial benefit in the transaction in recognition of his familial love and affection.
[1] The Board remains unclear as to whether a written agreement exists. Mr. Egan has been requested to provide a copy, but none has been provided to the Board. The attorney told the Board at the hearing that she understood Mr Egan had supplied a copy to the Board.
DN states that she paid funds into the donor’s accommodation bond as part consideration of the purchase price. She stated that she has so far paid $43,000.00 which includes $25,000.00 she paid to Presbyterian Care the day before the hearing to extinguish the outstanding debt on the accommodation bond. She will pay the balance when her own property (listed for sale at $380,000.00) is sold. It has presently been on the market for two years. She will invest the balance sale proceeds on the donor’s behalf, possibly with Mr. Egan’s firm, Murdoch Clarke.
Whether the contract for sale of the property is for fair value or reflects the donor’s true and informed wishes is undetermined. The donor has raised concerns about the terms of the contract with numerous persons, but apparently not with Mr. Egan or the attorney. His concerns have caused independent persons to raise doubts about the management of the donor’s finances and the propriety of the attorney continuing in that role or completing (or failing to complete) the sale/purchase of the property. One possible interpretation of the evidence - but by no means the only one - is that the donor has had an anxious disposition in relation to his finances and his estate since his late ex-wife stole from him many years ago. In the progression of his dementia, that anxiety has been transferred to DN and her role as attorney. In any event, it is an uncomfortable position for an attorney (who has fiduciary duties as a trustee) to be in and one that would signal a need for avoidance of perceived conflicts or arm’s length approval of any possible conflict transactions.
Is it appropriate that the attorney continues to operate under the instrument?
Section 32AC of the Act prohibits an attorney from entering into a transaction that results or may result in a conflict of interest, unless the instrument expressly provides for such transactions. The instrument under review does not expressly provide for such transactions. According to that provision, a conflict of interest is a conflict between the duties of the attorney in respect of the donor and the interests of the attorney.
Mr. Egan denied any application of section 32AC to the facts of this application. He continually asserted that the Board had not made out any sufficient grounds as to why section 32AC applied. This approach caused the Board some difficulty as it is not a matter for the Board, as an independent statutory tribunal, to prosecute under section 32AC. The Board had sought to bring section 32AC to Mr. Egan’s and the attorney’s attention so that they might consider their positions in light of the agreement for sale of the donor’s land to the attorney. Correspondence from Mr. Egan made it clear that he did not apprehend any conflict of interest. He may also have been contending that the agreement pre-dated the amendments to the Act that implemented section 32AC. Section 32AC reflects ordinary common law principles of being a trustee. Further the agreement remains outstanding past the commencement of section 32AC and the possible conflicts are still in existence.
DN agreed that the following subjects demonstrate a conflict or a possible conflict between her duties to the donor as attorney and her own financial interests:
· If the attorney’s property does not sell for an extended period (having already been on the market for two years), what is an appropriate payment schedule for the balance purchase price?
· Should interest be charged on the unpaid portion of the purchase price, at what rate and during what period?
· Should the attorney, as tenant, be paying rental while she is in possession of the property or is it sufficient to meet the costs of rates, insurance and utilities?
The Board has concluded that the donor has lost capacity for management of his affairs. In light of this incomplete property transfer, the attorney in the enduring phase of the instrument is now making decisions as vendor/purchaser, creditor/debtor and landlord/tenant. All of these possible decisions have a direct bearing on the financial position of both the attorney and the donor. In the Board’s view, the unresolved transaction presents an unacceptable conflict of interest for the attorney to such an extent that it is not acceptable for the attorney to remain in that role. The Board put this view to the attorney during the hearing. She did not object to that characterisation. She interprets the relevant actions within the family paradigm and her historical role as carer, not within the broader paradigm of the duties of an attorney or trustee.
The Board is satisfied that it is appropriate to revoke the instrument because the attorney has an unacceptable conflict of interest while she is engaged in an incomplete transaction to purchase the donor’s property. This is especially the case as the purchase price has not been confirmed by independent valuation and may have been arrived at when the donor was under a disability. These issues require further investigation by an administrator.
Appointment of an administrator
The Board accepts Dr. Morrissey’s report as evidence that the donor has a disability – dementia – and is by reason of that disability incapable of making reasonable decisions about his estate. The Board is also satisfied that, in light of the incomplete property transaction and the need to invest funds that may arise from completion of that transaction, the donor is in need of an administrator.
The attorney was unable to nominate any other person involved in the donor’s life who could manage his affairs. She relayed some statements he had made about dissatisfaction with previous dealings with a trustee company, but then agreed that this may relate to another trustee company as he has had no dealings with the Public Trustee prior to the emergency order. The Board is satisfied that the Public Trustee should be appointed as the administrator for DXX.
At a future point in time when the Public Trustee has completed the sale/purchase transaction and the conflict of interest has been resolved (and subject to the results of any investigation by the Public Trustee), DN might meet the eligibility requirements of section 54 of the Guardianship and Administration Act 1995 given her close and longstanding family relationship with DXX. For that reason, the Board will note her liberty to apply for review of the order and appointment as an administrator at such point in time as all conflicts of interest have been resolved.
Conclusion
THE BOARD ORDERS
That the power is revoked from the date of this order.
That The Public Trustee be appointed administrator of the estate of DXX.
That the powers and duties of the administrator be those conferred by Division 4 of Part 7 of the Guardianship and Administration Act 1995.
That the administration order remains in effect to 2nd July 2018.
That DN is at liberty to apply for a review and to be substituted as an administrator when there are no incomplete or outstanding transactions involving the transfer of the represented person’s property to the attorney.
DATED this 3rd day of July 2015.
| Ged Dibley MEMBER | Wendy Hudson MEMBER | Anita Smith |
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