ESTATE OF SHYLIE VANESSA EVANS - [2010] SASC 193

SUPREME COURT OF SOUTH AUSTRALIA
(Testamentary Causes Jurisdiction: Application)
ESTATE OF SHYLIE VANESSA EVANS
[2010] SASC 193
Judgment of The Honourable Justice Gray
30 July 2010
EQUITY - POWERS OF APPOINTMENT - REVOCATION OF APPOINTMENT
EQUITY - GENERAL PRINCIPLES - FIDUCIARY OBLIGATIONS - CONFLICT OF INTEREST AND DUTY
EQUITY - TRUSTS AND TRUSTEES - APPLICATIONS TO THE COURT FOR ADVICE AND AUTHORITY - PETITION OR SUMMONS FOR ADVICE - PRINCIPLES APPLIED AND PARTICULAR CASES OF ADVICE
Application for advice and direction by plaintiff pursuant to section 11 of the Powers of Attorney and Agency Act 1984 (SA) in relation to the conduct and administration of the estate of her mother, the donor - plaintiff purporting to act under power of attorney executed by the donor in 1995 - a number of powers of attorney executed by the donor - application made by brother of plaintiff seeking a declaration that the 1995 power is invalid - whether the 1995 power impliedly revoked by subsequent conduct of donor - whether the plaintiff acting in a position of conflict.
Held: application for declaration that 1995 power is invalid, refused - Court is reluctant to impute to a donor an intention to revoke a power of attorney in the absence of conduct or words unambiguously inconsistent with the continued operation of the power - issue of conflict of duty and interest arises for consideration but is not operative while this Court has supervision of the matter pursuant to section 11 of the Powers of Attorney and Agency Act - consideration of the issue of conflict deferred.
Powers of Attorney and Agency Act 1984 (SA) s 11 and s 7, referred to.
Knight v Bulkeley (1859) 5 Jur (NS) 817; Cousins v International Brick Company Ltd [1931] 2 Ch 90; In re E (Enduring Power of Attorney) [2001] Ch 364; Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar The Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66; In the Matter of Australian Motors SA Pty Ltd Staff Superannuation Fund [2010] SASC 62, considered.

ESTATE OF SHYLIE VANESSA EVANS
[2010] SASC 193
Testamentary Causes
GRAY J:

The plaintiff, Jennifer Shylie Evans, in her capacity as the holder of an enduring power of attorney, applied to this Court in September 2008 for advice and directions[1] in relation to the conduct and administration of the estate of her mother, Shylie Vanessa Evans.
[1] Pursuant to Powers of Attorney and Agency Act 1984 (SA), section 11.
Introduction
Shylie was born on 6 September 1923, and is aged 86 years. Shylie and her late husband, Donald Brooke Angas Evans, owned and managed a farm in the Barossa Valley region of South Australia. They have three children: William Maurice Evans, Sally Ann Kerr and Jennifer. William is aged 57 years, Sally 55 years and Jennifer 52 years.[2]
[2] I propose to refer to the family members by their first names.
Advice and directions have been sought as to the leasing of the principal asset of the estate – the farming property. In the course of the proceedings other issues have arisen – the validity of the power of attorney and questions of conflict of interest on the part of Jennifer. All relevant persons have been notified of the proceedings brought by Jennifer.
A number of properties comprise the Barossa farm, together known as “Ivanhoe”. The land is held by Ivanhoe Homestead Pty Ltd and Ivanhoe Pastoral Pty Ltd. The farming land has been in the Evans family for five generations. Other properties adjacent to Ivanhoe and in the area are owned by extended members of the family. William also himself owns a property adjacent to Ivanhoe. Since completing high school, William has worked at Ivanhoe.
In the 1980’s Shylie’s health began to deteriorate. Shylie has executed a number of powers of attorney. On 6 September 1989, she appointed her husband, Donald and Jennifer as attorneys. Donald died on 10 July 1993. That power was expressly revoked by an instrument of revocation dated 22 May 2001. On 11 November 1995, Shylie executed an enduring power of attorney appointing Jennifer alone as attorney. This power has never been expressly revoked. It is the power that Jennifer purports to currently act under. On 22 May 2001 a further power of attorney, general and enduring, was executed, appointing Jennifer, along with her siblings Sally and William, as attorneys. This power was expressly revoked by an instrument of revocation dated 31 January 2003. There also exists a power of attorney dated 14 June 2001. This power is general and enduring and appoints only William and Sally as attorneys, excluding Jennifer, and has not been expressly revoked. This power however, has not been executed by Sally. On 31 January 2003 a further enduring power of attorney was executed by Shylie, appointing her accountant, Andrew Olekalns and her solicitor, David Semple, as attorneys. This power has not been expressly revoked.
Since the death of Shylie’s husband in July 1993, there has been ongoing tension within the family regarding the ultimate destination of the farm property, and the interests of Shylie. The present proceedings have been informed by that disputation and the hostility arising from it.
Since 11 April 2007, Shylie has been a resident in a nursing home in the Barossa Valley. She lacks mental capacity and was the subject of a Guardianship Board order made on 11 April 2006, appointing the Public Advocate to be her full guardian and recommending that the order be reviewed on 11 April 2008. As noted, Shylie became a resident in the nursing home in April 2007, and the Guardianship Board Order was ultimately revoked on 20 June 2008.
Before entering the nursing home, Shylie lived with William and his family in the homestead on the farm property. William and his family moved into the homestead in 2002, and continue to live there. William continues to occupy and manage the farm.
In December 1998, Shylie executed a will, which appointed Jennifer and Sally as executors. Jennifer and Sally were the principal beneficiaries of the will. In August 1999, a codicil to the 1998 will was executed by Shylie, adding William as an executor. Other wills were executed in 2002 and 2003, which in substance, would permit William to manage and conduct the farm, and in return, pay Jennifer and Sally each one-sixth of the value of the farm at the date of Shylie’s death within 10 years, and on satisfaction of such stipulation, William would acquire the right to the farming land. Under those wills, Jennifer and Sally would each receive equal shares in Shylie’s non-farm assets. The final will of 2003 changed the executors from the three children to Wallmans Lawyers.
It is relevant to make some observations regarding Shylie’s loss of capacity to deal with her affairs. Shylie was diagnosed with Alzheimer’s disease in May 2001. Sometime thereafter, she lost capacity. It is unclear precisely when that was. A report of Dr Ludomyr Mykyta dated January 2004, observed that at that time Shylie “clearly lacks the capacity to make decisions about her affairs”. In a report of April 2004, Dr Paul Drysdale stated that despite her dementia, Shylie “is aware of her major assets”, concluding that it would be speculation at that time to provide a definitive answer on the issue of Shylie’s capacity in January 2003. In February 2006, a report of Dr John Urlwin concluded that Shylie’s dementia had progressed and was then in the severe range. The above reports were exhibited to an affidavit of Jennifer. This material, and other material on the court file raises the issue of when Shylie’s capacity was lost, however, as acknowledged by all parties, there is insufficient evidence to make a positive finding in this respect.
These proceedings have a long and complex history and have been drawn out by differences and hostilities between the siblings. The differences centre on William’s continued occupation and management of the farm in the absence of a commercial lease. By affidavit, Jennifer deposed that the farming operations had been conducted at a loss in four of the last five financial years, and that to continue to operate at a loss would not be in the financial interests of Shylie. William has expressed concern about Jennifer’s position, and alleges that Jennifer is not an appropriate person to act as attorney for Shylie as she “has shown that where she has a conflict of interest, she will act in her own interest.”
When Jennifer first approached the court for advice and directions, she was seeking to sell the farm property, or at least part of it. That is no longer the position; rather, Jennifer seeks the lease of the farm for a commercial rent. I return to the issue of conflict of interest later in these reasons. Finally, William has registered caveats on the title of the farming properties, claiming both a constructive trust and a profits a prendre.
The Power of Attorney 11 November 1995
On 2 October 2009 I directed that if William sought to allege that the 11 November 1995 power of attorney, under which Jennifer purports to act, was invalid, an application be made to that effect. An application has since been made, specifically seeking that the 1995 power be revoked or alternatively, that an order be made appointing a substitute donee of the 1995 power of attorney being either or both of Mr Semple and Mr Olekalns, or an independent person. These reasons are a consideration of that application.
Two questions presently arise for determination. First, whether the power of attorney executed in 1995, has been impliedly revoked through subsequent conduct. Second, whether Jennifer, as director of the company which is trustee for the family trust, is currently acting in a position of conflict as between her role as power of attorney and fiduciary of the donor, and her position as beneficiary of the family trust.
In Macedonian Orthodox Community Church,[3] the High Court had occasion to consider the construction and reach of section 63 of the Trustee Act 1925 (NSW) in relation to the giving by the Court of advice or directions to a trustee on application. Their Honours treated their observations as having application in regard to parallel legislation throughout Australia. Significantly, the Court held that the statutory jurisdiction of the Court to give advice or directions to a trustee on any question relating to the management or administration of trust property was not limited to non-adversarial proceedings.
[3] Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar The Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66.
In their joint judgment, Gummow ACJ, Kirby, Hayne and Heydon JJ undertook a detailed analysis of the progenitor United Kingdom provisions. In the course of their reasons a number of general propositions were identified and discussed, including the following important propositions,[4] which I collected and summarised in In the Matter of Australian Motors SA Pty Ltd Staff Superannuation Fund in the following terms:[5]
[4] Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar The Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66 at [55]-[74].
[5] In the Matter of Australian Motors SA Pty Ltd Staff Superannuation Fund [2010] SASC 62 at [12], a case involving a consideration of the jurisdiction conferred by section 69 of the Administration and Probate Act 1919 (SA), and section 91 of the Trustee Act 1936 (SA).
-Provisions conferring powers to the court are not to be subject to implied limitations.
- Section 63 contained no implied limitations on the power to give advice.
-The only jurisdictional bar to relief pursuant to section 63 or its equivalent, is that the applicant must point to the existence of a question respecting the management or administration of trust property or a question respecting the interpretation of the trust instrument.
- Nothing in section 63 limits or mandates consideration of discretionary factors.
- The procedure pursuant to section 63 and its equivalents is summary in character.
-The provisions operate as an exception to the Court’s ordinary function of deciding disputes between competing litigants as they afford a facility of giving “private advice” as the function of the advice is to give personal protection to the trustee.
-Section 63(2) precludes any trustee, who acts in accordance with the private advice, from being held liable for breach of trust in the event that in conventional proceedings it is later held that the legal position does not correspond with the advice given, so long as the proviso to section 63(2) is satisfied.
-The application of section 63 will tend to vary with the type of trust involved and as a consequence the context of the application for advice will be important.
-Section 63 has a relationship to rights of indemnity. Provision is made for a trustee to obtain judicial advice about the prosecution or defence of litigation in recognition of both the fact that the office of trustee is ordinarily a gratuitous office and the fact that a trustee is entitled to an indemnity for all costs and expenses properly incurred in performance of the trustee's duties. Obtaining judicial advice resolves doubt about whether it is proper for a trustee to incur the costs and expenses of prosecuting or defending litigation. No less importantly, however, resolving those doubts means that the interests of the trust will be protected; the interests of the trust will not be subordinated to the trustee's fear of personal liability for costs.
In my view, the Macedonian decision is relevant more generally in terms of the scope and purpose of the jurisdiction, where conferred, of the Court to give advice and directions to those administering the affairs of others.
Section 11 of the Powers of Attorney and Agency Act 1984 (SA), which deals with the powers of the Supreme Court in respect of enduring powers of attorney relevantly provides:
(1)     Any person who has, in the opinion of the Supreme Court, a proper interest in the matter may, at any time, apply to the Supreme Court for an order—
(a)requiring the donee (or former donee) of an enduring power of attorney to file in the Supreme Court and serve on the applicant a copy of all records and accounts kept by the donee of dealings and transactions made by him in pursuance of the power; or
(b)requiring such records and accounts to be audited by an auditor appointed by the Supreme Court and requiring a copy of the report of the auditor to be furnished to the Supreme Court and the applicant for the order; or
(c)revoking or varying the terms of an enduring power of attorney or appointing a substitute donee of such a power.
(2)     The donee of an enduring power of attorney may apply to the Supreme Court—
(a)     for an order referred to in subsection (1)(c); or
(b)for advice and direction as to matters connected with the exercise of the power or the construction of its terms.
(3)     The Supreme Court has, upon an application under this section, jurisdiction—
(a)     to make an order referred to in subsection (1); or
(b)to make such other order (declaratory or otherwise) as to the exercise of the power, or the construction of its terms, as the Court thinks fit.
(4)     An order under this section may be made subject to such terms and conditions as the Supreme Court thinks fit.
[Emphasis added]
It is convenient to first consider whether, through her conduct, Shylie has impliedly revoked the power of attorney of 11 November 1995.
A power of attorney may be impliedly revoked where the donor performs an act inconsistent with the continued operation of the power.[6] Conduct of the donor which will amount to being inconsistent with the continued operation of the power, has been held to include where the power authorises the donee to perform a particular act, but the donor instead performs that act.[7]
[6] See B Collier and S Lindsay, Powers of Attorney in Australia and New Zealand (1992) at 221.
[7] See for example: Knight v Bulkeley (1859) 5 Jur (NS) 817 and Cousins v International Brick Company Ltd [1931] 2 Ch 90.
The execution of a later power of attorney does not automatically revoke an earlier power. In other words, the mere existence of one power of attorney, of itself, does not cast doubt over the validity of another power of attorney. Collier and Lindsay in their text Powers of Attorney in Australia and New Zealand, say the following:[8]
There is no principle that the grant of a power impliedly revokes previous powers granted by the donor, and it seems that where a donor has given several powers of attorney to different attorneys, even though the authority given may be general, one of the donees would not have authority to revoke the authority of the other donees – such a decision would appear to be one within the province of the donor alone, as a matter requiring personal discretion.
[8] See B Collier and S Lindsay, Powers of Attorney in Australia and New Zealand (1992) at 42.
In the case of multiple powers of attorney, the onus is on a plaintiff to show an intention on the part of the donor to revoke the earlier power, as demonstrated by words or conduct unambiguously inconsistent with the continuation of the earlier instrument.[9]
[9] In re E (Enduring Power of Attorney) [2001] Ch 364 (Arden J).
Counsel for William contended that as Shylie had executed the 31 January 2003 power of attorney, appointing her accountant and solicitor, on the same day as executing an express revocation of the 22 May 2001 power of attorney, which had appointed her three children, she clearly intended not to have her children as her attorneys and instead she had an intention to appoint independent third parties. It was said that this conduct was inconsistent with the continuation of the 11 November 1995 power of attorney. Counsel also sought to rely on the execution of Shylie’s latest will on 30 April 2003, that will being identical to the previous will, save that it appointed Wallmans Lawyers as executors where the previous will named her children as executors. It was said that this conduct was inconsistent conduct and evidenced a clear intention on the part of Shylie to remove her children from any direct involvement with her estate. It was further said that it would be irrational for Shylie to have intended for Jennifer, William, Sally, Mr Olekalns and Mr Semple to all be her attorneys.
As with the case of multiple powers of attorney, where a party alleges that a power has been impliedly revoked, the Court will be reluctant to impute to the donor an intention to revoke the power of attorney in the absence of conduct or words unambiguously inconsistent with the continued operation of the power. I have reached the view, notwithstanding the execution of the later instruments referred to by counsel for William, and the effect of those instruments, that there is insufficient evidence before this Court to impute to Shylie an intention to revoke the 11 November 1995 power of attorney. It is relevant to note that Shylie was clearly aware of the power of express revocation as evidenced by her execution of two instruments of express revocation, on 22 May 2001 and 31 January 2003.
The debate regarding Shylie’s capacity during 2003 is a relevant matter for the Court in the present proceedings. The material on the Court file discloses that there is a real dispute about when Shylie started to lose the ability to deal with her affairs in a meaningful way. This debate permeates the issue of implied revocation. This is so as the relevant period coincides with the period when Shylie executed her latest will, appointing Wallmans Lawyers executers instead of her children, and when she executed an express revocation of the May 2001 attorney which had appointed her three children as attorneys, and when she executed a power of attorney appointing her accountant and solicitor as attorneys. It is to be recalled that it is the execution of these documents that counsel for William sought to rely on as “conduct” that demonstrates Shylie’s intention to revoke the November 1995 power under which Jennifer purports to act.

It is against this background that I am not prepared to make a finding that Shylie’s conduct has impliedly revoked the 11 November 1995 power of attorney.
Conflict of Duty and Interest
The two latest wills of Shylie known to be in existence are dated 26 August 2002 and 30 April 2003. They are identical in their terms, except for, as earlier mentioned, the named executors. According to the terms of the wills, the shares in the companies which own the relevant farming land are to be held on trust by the executors of the will to be held and dealt with according to the will. Further, the farm land is to be held on trust for William with provision that within 10 years of Shylie’s death he is to pay one-sixth of the market value of the land as at the date of her death to Jennifer and Sally. The will further stipulates that if the payment is not made within 10 years, the land will be held two thirds as to William, with the remaining third to be held for Jennifer and Sally in equal shares. Jennifer and Sally are to inherit equal shares of the non-farm assets of the DBA Evans Family Trust and Ivanhoe Pastoral Pty Ltd.
Jennifer used the power conferred to her by the 1995 power of attorney, to appoint herself as director of Ivanhoe Homestead Pty Ltd, which is trustee of the DBA Evans Family Trust. It was contended by counsel for William that this position constitutes a conflict of duty and interest between Jennifer’s fiduciary duties to the donor and her position as a beneficiary of the trust.
Counsel for William submitted that in the circumstances described above, Mr Olekalns and Mr Semple, or in the alternative, an independent person, be appointed pursuant to the Powers of Attorney and Agency Act to manage Shylie’s affairs.
Counsel further said that the differences between the siblings thus far has resulted in waste to Shylie’s assets, and that any cost to the estate of Shylie of an appointment of a person other than Jennifer as attorney, would be ameliorated by the reduction in waste to the estate by the decline in conflict that would be brought about by such an appointment.
It is to be noted that William emphasised that he did not seek to have himself or Sally appointed as attorneys. He said that this would present the very same difficulties which have arisen as a result of the differences between the siblings, emphasising the need for an independent appointment. This was an appropriate position to take.
It is to be recalled that Jennifer came to this Court seeking advice and directions as to matters connected with the exercise of the 1995 power of attorney. Jennifer’s current position is that she seeks directions in relation to the leasing of the farming property for a “commercial rent”.
Section 11 of the Powers of Attorney and Agency Act should be exercised by this Court having regard to the interests of the donor. Section 7 of the Act, titled “General duty of a donee of an enduring power”, supports this construction, and is in the following terms:
The donee of an enduring power of attorney must, during any period of legal incapacity of the donor, exercise his powers as attorney with reasonable diligence to protect the interests of the donor and, if he fails to do so, shall be liable to compensate the donor for loss occasioned by the failure.
In my view, the statutory jurisdiction under consideration in Macedonian Orthodox Community Church is analogous with that presently before this Court. Here, the Court is concerned with a trustee seeking to ensure that there is no breach of duty on the part of the attorney, thereby giving personal protection to the attorney. The Court is also concerned with the daily well-being of the donor and the maintenance of the value of the donor’s estate. The interests of the donor are to be protected, and must not be subordinated to the donee’s fear of personal liability.[10] In accordance with the views expressed in Macedonian Orthodox Community Church, the jurisdiction of this Court, invoked by the application made pursuant to section 11, is broad. The jurisdiction must have a broad enough reach to give effect to the purposes described above.
[10] Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar The Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66 at [71]-[73].
The terms of section 11 of the Powers of Attorney and Agency Act alone confer a broad jurisdiction through the manner in which an attorney may apply to the Court for advice and directions and the orders that the Court may make, including “such…order … as the Court thinks fit”.[11]
[11] Powers of Attorney and Agency Act 1984 (SA), section 11(3).
It is my view that an issue of conflict of duty and interest with respect to Jennifer’s position does arise for consideration in the present proceeding. However, as this Court continues to supervise the matter pursuant to section 11 of the Powers of Attorney and Agency Act, and is equipped with the broad jurisdiction thereby conferred, the Court maintains control over the conduct and administration of the estate of Shylie. The Court is directly concerned with the protection of Shylie and the maintenance of her estate. Any conflict, actual or potential, on the part of Jennifer is addressed by this ongoing supervision.
In the above circumstances, I defer further consideration of the issue of alleged conflict of duty and interest on the part of Jennifer.
Conclusion
For the reasons given, the 11 November 1995 power of attorney has not been impliedly revoked, and is therefore validly allowing Jennifer to act as she has in seeking directions from the Court in her capacity as attorney. I defer consideration of the issue regarding conflict of duty and interest.