HLT - [2014] NSWCATGD 5

NSW Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation: HLT [2014] NSWCATGD 5
Hearing dates: 16 September 2013, 4 November 2014 and 20 January 2014
Decision date: 07 February 2014
Jurisdiction: Guardianship Division
Before: Boland J, Senior Member (Legal)
Wroth M, Senior Member (Professional)
Porter L, General Member (Community)
Decision:
Declaration that principal did not have mental capacity to make a valid enduring power of attorney on 17 January 2012.
Financial management order made; NSW Trustee and Guardian appointed.

Catchwords:
ENDURING POWER OF ATTORNEY - review of making - capacity to make enduring power of attorney - no independent advice - undue influence - multiple instruments - review of operation and effect - best interests - solicitor appointed as attorney - transfer of property and assets to attorneys - attorney charging remuneration - fiduciary duties - family trust - company arrangements - other litigation - attorney acting as tutor - conflict of interest.
FINANCIAL MANAGEMENT - application for financial management order - sale of property - capacity to instruct - Supreme Court litigation - complex estate - suitability for appointment as financial manager - conflict of interest - conflict between proposed manager and family - recovery action may be required - remuneration of private financial manager - whether order should specify review.
Legislation Cited: Powers of Attorney Act 2003 (NSW)
Guardianship Act 1987 (NSW)
Civil and Administrative Tribunal Act 2013 (NSW)
Conveyancing Act 1919 (NSW)
Corporations Act 2001 (Cth)
Cases Cited: Banks v Goodfellow (1870) LR 5 QB 549
Gibbons v Wright (1954) 91 CLR 423
McD v McD (1983) 3 NSWLR 81
Ranclaud v Cabban (1988) NSW Conv 55 -385
Kennon v Spry [2008] HCA 56
Szozda v Szozda [2010] NSWSC 804
Scott v Scott [2012] NSWSC 1541
M v M [2013] NSWSC 1495
Category: Principal judgment
Parties: Mrs HLT
Mr GAU (Applicant)
Mr KCC (Applicant)
Mr BES (Attorney)
Ms MMR (Attorney)
The NSW Trustee and Guardian
File Number(s): 52523
Publication restriction: Decisions of the Guardianship Division of the Civil and Administrative Tribunal have been anonymised to remove any information that may identify any person involved in the Tribunal's proceedings (s 65, Civil and Administrative Tribunal Act 2013 (NSW)).

reasons for decision

On 20 January 2014 the New South Wales Civil and Administrative Tribunal, Guardianship Division ("the Tribunal") reserved its decision in respect of an application to review an enduring Power of Attorney dated 17 July 2012 granted by Mrs HLT to her solicitor, Ms MMR, and her son, Mr BES. The proceedings commenced in the NSW Guardianship Tribunal ("the GT") but by reason of the of the Civil and Administrative Tribunal Act 2013 (NSW) ("the Civil and Administrative Tribunal Act"), which statute came into force on 1 January 2014, the Guardianship Tribunal was abolished, and pursuant to the transitional provisions in that Act the matter continued in the Tribunal.

On 7 February 2014 the Tribunal made a declaration under s 36(3)(a) of the Powers of Attorney Act 2003 (NSW) ("the Powers of Attorney Act") that Mrs HLT did not have the mental capacity to make a valid power of attorney on 17 January 2012.

The Tribunal also made a final financial management order under s 25E of the Guardianship Act 1987 (NSW) ("the Act") in respect of Mrs HLT's estate. The NSW Trustee and Guardian ("the NSW Trustee") is appointed as the financial manager.

These are the Tribunal's reasons for the declaration and the order made. The reasons should be read in conjunction with the Guardianship Tribunal's earlier reasons in respect of orders made on 4 November 2013 following the determination of a guardianship application in respect of Mrs HLT ("the guardianship reasons"). Also relevant to aid understanding of these reasons are reasons published by the Guardianship Tribunal after the first day of the hearing that took place at regional NSW on 16 September 2013 ("the first reasons").

As in the first reasons, and the guardianship reasons, the Tribunal, with the consent of the parties, to avoid confusion and to aid understanding of the reasons set out how we would describe relevant parties and entities associated with the applications before the Tribunal. We now again set out the descriptions used in [5] of the guardianship reasons:

Mrs HLT as "[Mrs HLT]";
Mr FOT as "[Mr FOT]". Mr FOT is the deceased husband of Mrs HLT;
Mr GAU as "[Mr GAU]". Mr GAU is one of Mrs HLT's sons. He was adopted by Mr FOT and Mrs HLT as an infant; Mr GAU is the applicant in the guardianship application;
Mrs OEU as "[Mrs OEU]". Mrs OEU is Mr GAU's wife;
Mr DEU as "[Mr DEU]". Mr DEU is the son of Mr GAU and Mrs OEU;
Mr FEU as "[Mr FEU]". Mr FEU is another son of Mr GAU and Mrs OEU;
Mr BES as "[Mr BES]". Mr BES is Mrs HLT's other son. He too was adopted by his parents as a small child; Mr BES is a joint attorney under an enduring Power of Attorney granted by Mrs HLT;
Mrs NES as "[Mrs NES]". Mrs NES is Mr BES's wife;
Mr KCC as "[Mr KCC]". Mr KCC is Mrs HLT's cousin and the applicant in the financial management application;
Mrs TCC as "[Mrs TCC]". Mrs TCC is Mr KCC's wife;
Ms MMR as "[Ms MMR]". Ms MMR is a solicitor carrying on practice in regional NSW. She has acted as Mrs HLT's solicitor since 2008 and is appointed as her attorney jointly with Mr BES under an enduring Power of Attorney. She is also appointed jointly with Mr BES as Mrs HLT's enduring guardian;
Mr DOX as "[Mr DOX]". Mr DOX is a solicitor engaged by Ms MMR as a consultant to her firm. Mr DOX took instructions from Mrs HLT and provided certificates prior to her executing a number of enduring Power of Attorney documents;
The [removed] Family Trust as "the Trust". The trust is a discretionary trust and formerly owned fifty per cent of a hotel which traded under the name the [removed] Hotel at [regional] NSW;
Company A Pty. Ltd. as "[Company A]". Company A is the corporate trustee of the Trust. Mrs HLT is the governing director of Company A;
Ms SUY as "[Ms SUY]". Ms SUY is a solicitor in private practice. She is the solicitor appointed as Separate Representative for Mrs HLT by the Legal Aid Commission of NSW;
Mr WER as "[Mr WER]". Mr WER is a solicitor carrying on practice as a principal in the firm [firm name removed]. Mr WER is Mr GAU's solicitor;
Mr FUH as "[Mr FUH]". Mr FUH carries on practice as a solicitor in the firm [firm name removed] at [regional NSW]. Mr FUH was Mr BES's solicitor but ceased acting for him before the resumed hearing;
Dr Z as "[Dr Z]". Dr Z is Mrs HLT's general practitioner of many years standing;
Dr Y as "[Dr Y]". Dr Y is a psychogeriatrician;
Dr X as "[Dr X]". Dr X is a physician; and
Dr W as "[Dr W]". Dr W is Mrs HLT's general practitioner when she is living at [regional NSW].

The applications and issued identified

When the proceedings commenced at [regional NSW] in September 2013 there were three applications before the Tribunal:

A guardianship application lodged by Mr GAU with the Tribunal on 31 January 2013;
A financial management application lodged by Mr KCC with the Tribunal on 8 April 2013; and
An application to review an enduring power of attorney lodged by Mr GAU with the Tribunal on 24 July 2013.

As there was insufficient time to complete the hearing at [regional NSW] the matter was adjourned part-heard to Balmain on 4 November 2013. On that day the Tribunal had sufficient time to conclude the guardianship application, and an order was made appointing the Public Guardian as Mrs HLT's guardian. The functions which may be exercised under the guardianship order by the guardian are to make decisions about Mrs HLT's accommodation, access to her, healthcare, services and legal services. The guardianship order is for a period of twelve months when it will be reviewed.

Mr WER on Mr GAU's behalf sought:

(1) a declaration that Mrs HLT lacked the capacity to enter into the power of attorney executed on 17 December 2012 ("the instrument"). He asserted that she lacked the mental capacity to understand the nature and effect of the instrument because of her illness of Alzheimer's type dementia;

(2) in the alternative, in the event we found that Mrs HLT had capacity to execute the instrument, but the instrument was not operating in Mrs HLT's best interests, an order revoking the instrument; and

(3) that a financial management order be made in respect of Mrs HLT's estate, with Mr KCC appointed as financial manager. He sought that the financial management order be reviewed in 12 months. In the alternative, he sought that the NSW Trustee be appointed as financial manager of Mrs HLT's estate.

Mr KCC did not express a formal position in respect of the application to review the instrument. He sought, as his primary position, that a financial management order be made under the Act, and that he be appointed as the financial manager. In the alternative, he proposed that the NSW Trustee be appointed as the financial manager.

The separate representative submitted the Tribunal should:

(1) declare that Mrs HLT lacked capacity to enter into the instrument as at 17 December 2012 and was subject to undue influence to execute the instrument;

(2) in the alternative, find that the instrument should be revoked as not operating in Mrs HLT's best interests;

(3) make a final financial management order in respect of Mrs HLT's estate and appoint the NSW Trustee as her financial manager;

(4) recommend to the NSW Trustee that auditors be appointed to audit all relevant financial records relating to Mrs HLT's financial affairs and to report to the NSW Trustee. (We infer from the separate representative's submission that this recommendation includes an audit of Company A and the Trust financial records).

Mr BVC [Barrister], on behalf of Ms MMR, and Mr BES individually, the attorneys appointed under the instrument, disputed Mr GAU's assertion that Mrs HLT lacked capacity in December 2012 to understand the nature and effect of the instrument. However, neither proposed they should either jointly or individually continue in the role of attorney. Ms MMR specifically disavowed doing so. Mr BVC, on behalf of Ms MMR, and Mr BES individually supported the making of a financial management order with the NSW Trustee being appointed as the financial manager.

There was no issue at the date of the adjourned hearing that Mrs HLT currently lacks the capacity to manage her financial affairs, and that it would be in her best interests for her affairs to be managed by another person, either as attorney or financial manager. Thus the principal issues requiring determination by the Tribunal were:

did Mrs HLT have capacity to enter into the instrument in December 2012? This issue required an assessment of and findings in respect of the expert medical evidence before the Tribunal, as well as the evidence of Ms MMR and Mr DOX who provided the Certificate under s 19 of the Powers of Attorney Act;
was Mrs HLT subject to undue influence to execute the instrument;
if the Tribunal determines that Mrs HLT did have capacity, should the instrument be revoked because the attorneys' continuing operation of the instrument is not in her best interests; To determine this issue it is necessary for the Tribunal examine how the attorneys have acted to date to form a prediction or assessment of how Mr BES may act in the future if he remains the sole attorney. As noted above, it is not in dispute that Ms MMR does not wish to continue her role as attorney and that she supports the making of a financial management order;
if the Tribunal determines it should make a financial management order should the financial manager be Mr KCC or the NSW Trustee. This issue requires independent consideration by the Tribunal of Mr KCC's qualifications to manage Mrs HLT's complex financial affairs, the level of conflict between family members, actual and potential conflicts of interests, the impact of family disharmony on the ability of a financial manager to act in Mrs HLT's best interests, and the financial impact of a professional financial manager's fees and charges on her estate; and
finally the Tribunal must determine if it is in Mrs HLT's best interests if a financial management order is made, whether the order should be reviewed in approximately twelve months or be a final order.

Background

At paragraph 18 of the guardianship reasons the Guardianship Tribunal set out relevant background material as at the date of those reasons. That background is now repeated with the insertion of some additional factual material adduced in evidence on 20 January 2013 or relied on by one or more of the parties on that day.

The following matters, unless noted by us to be an assertion, were accepted as relevant facts established to the requisite civil standard.

Mrs HLT was born on [date removed] 1930. She is accordingly presently aged 83 years. At the date of the resumed hearing she was living with Mr GAU and Mrs OEU in [Property A in Sydney]. No decision had been made by the Public Guardian about her accommodation pending the outcome of this hearing. Mrs HLT was interviewed by [representative A] from the Public Guardian's office after the making of the guardianship order. [Representative A] was not available at the date of the hearing, but [representative B] from the Public Guardian's office told the Tribunal that Mrs HLT had expressed a strong view to [representative A] that she wished to remain living at [Property A in Sydney], to resume her lawn bowling activities and to see her local friends.

Mrs HLT and her late husband adopted three children. One child died in infancy. Their surviving children are Mr GAU and Mr BES.

Mr FOT held interests in hotels and lived for many years at [regional] NSW. He and Mrs HLT commenced living in their former matrimonial home at [Property B in Sydney] about thirty-six years ago. Mrs HLT's father lived with them for some time until his death and was cared for by Mrs HLT.

Mrs HLT lived principally in property B until about late November/early December 2012 when she commenced living with Mr BES and Mrs NES at regional NSW. Mrs HLT left regional NSW in about December 2013 for the purpose of attending family functions in Sydney. At the date of the adjourned hearing she had been living in Sydney for approximately 11 weeks. Mr BES asserted he had no contact with his mother during this period.

While living at Property B in Sydney prior to 2012 Mrs HLT enjoyed an active social life, had many friends, and enjoyed bowling and other activities at her local bowling club and in her immediate locale.

In May 1999 Mrs HLT executed an enduring Power of Attorney ("the 1999 instrument") by which she appointed Mr GAU and Mr BES as her attorneys. The 1999 instrument was formally revoked by Mrs HLT on 7 July 2010. No copy of the 1999 instrument was provided to the Tribunal.

Prior to January 2013 Mrs HLT's major assets comprised property B, and other real property. She had the potential, as a beneficiary, to receive distributions from the Trust. Property B in Sydney was encumbered by mortgage of approximately $1M. The mortgage advance was obtained to purchase two properties: Property C in regional NSW and Property A in Sydney. The purchase price of Property C was $415,000. The purchase price of the Property B was $600,000. Property C was initially purchased in the name of Mrs HLT but subsequently transferred to Mr BES and Mrs NES as joint registered proprietors. Mr BES and Mrs NES made one rent payment of $5,000 prior to the transfer of the property to their names. Property B is registered in Mrs HLT's name, but occupied after its purchase by Mr GAU, Mrs OEU and their two adult children. It is asserted by Ms MMR that no evidence of rent paid by Mr GAU and/or Mrs OEU is disclosed in Mrs HLT's bank statements.

The appointor of the Trust is Mrs HLT, and on her death Mr GAU and Mr BES are the appointors. The beneficiaries are Mrs HLT, Mr FOT, Mr GAU, Mr BES, their wives and children. The Trust Deed was not in evidence before the Tribunal on the second day of the hearing, but was subsequently produced to the Tribunal at our request. There is no provision in the trust deed to deal with the situation if the appointor becomes incapable.

Ms MMR, also at the Tribunal's request, produced the financial statements for the Trust for the years ended 30 June 2011, and 30 June 2012 for the adjourned hearing. Ms MMR also produced income tax returns for the financial years ended 30 June 2011 and 30 June 2012 for Mrs HLT as well as the partnership returns for a partnership between Mrs HLT and the Trust. The financial statements for year ended 30 June 2013 are incomplete and it is asserted they cannot be completed until the conclusion of these proceedings.

In the year ended 30 June 2012 Mrs HLT, as a beneficiary of the Trust, received the total gross income of the Trust $102,564 and the partnership profit $104,064. The balance sheet for the partnership discloses a loan owing by the Trust to the partnership of $303,445.51. It is asserted by Mr BES that Mrs HLT has a debt to her late husband's estate, but Mr DOX asserts that the debt is one owed to Mr FOT by the Trust. The 2011 balance sheet for the trust shows a credit loan account in the name of Mr FOT in the sum of $294,751.97 and a credit loan account in Mrs HLT's name of $470,815.18. The same balance sheet discloses debit loan accounts in the names of Mr GAU, Mrs NES, [Mr BES' son], [Mr DEU] and Mr DEU. A demand addressed to Mr WER for repayment of Mr GAU's debit loan account has been made by Ms MMR.

Ms MMR, in a letter dated 5 June 2013, states Mrs HLT holds a [savings account A] with a then current balance of $94,000 a [savings account B] with a balance of $960,000 and [savings account C] with a balance of $540. Additionally, Mrs HLT is noted to be the registered owner of a vehicle with a value of approximately $19,500. It is asserted that [Mr BES' son] became the registered owner of the vehicle in about January 2013 when Mrs HLT's licence was cancelled.

Mrs HLT's current liabilities are asserted by Mr BES to be a capital gains tax debt of approximately $400,000, a debt to the estate of Mr FOT of $300,000 and a mortgage indebtedness secured over the property B, the precise quantum of which was not before the Tribunal. Mr BES asserts the property B must be sold to meet Mrs HLT's ongoing financial needs notwithstanding the sale of her interest in the Hotel. Ms MMR in her letter to the Tribunal dated 5 June 2013 does not mention these debts but does list as Mrs HLT's liabilities a Quarterly BAS/PAYG/GST of $41,130 to be adjusted in June quarter BAS following the sale of the Hotel. The list of Mrs HLT's assets and liabilities was not updated for the adjourned hearing.

From about 2008 Mrs HLT commenced suffering a decline in her cognitive capacity. She continued, until late November 2012, to see and be cared for her general practitioner, Dr Z, whom she consulted for a period of about 30 years.

In 2008 Ms MMR commenced acting for Mrs HLT. Ms MMR had formerly acted for Mr BES. Her firm also, at some stage, acted for Mr GAU drawing a Will for him. Mrs HLT's files and those of Company A were obtained from her former solicitor, Mr QHT of [firm name removed]. Mr QHT wrote to Ms MMR on 18 December 2008 at the time of the handover of his files and advised that Mrs HLT had been diagnosed suffering from "early stage Alzheimer's dementia". Mr QHT noted that his reports to Ms MMR of his discussions with Mrs HLT were "true and correct" and that her inconsistent instructions (to his firm and as recorded by Ms MMR) may be as a result of her diagnosis.

On 16 June 2010 a cheque signed by Mrs HLT and drawn on her account to pay professional fees of Ms MMR in the sum of $9,233.66 was dishonoured. It is also asserted by Mr DOX that Mr BES claimed a cheque signed by his mother and drawn in favour of the ATO was also dishonoured. At about this time Mr GAU and Mrs OEU were absent from Sydney on a cruise. Mrs HLT told Mr BES she had no funds and he travelled to Sydney and arranged a transfer of funds into her cheque account so that there were funds to meet the dishonoured cheques and to provide for his mother's living expenses.

On 7 July 2010 Mrs HLT executed an enduring Power of Attorney ("the July 2010 instrument") in favour of Ms MMR. Mr DOX executed the relevant certificate of understanding. Ms MMR, pursuant to the July 2010 instrument, took over the management of Mrs HLT's financial affairs. Ms MMR paid Mrs HLT's bills and rendered accounts for professional services and also charged for payment of accounts. It is asserted Mrs HLT received rental income from the Hotel either in her own capacity, or by way of distribution or by a loan advance from the Trust of approximately $23,000 per month. Mrs HLT is asserted to have requested Ms MMR pay her the sum of $800 per week for her personal expenses. Ms MMR arranged for a periodical payment to be made to Mrs HLT by payment into a separate bank account, which arrangement remained in place at the date of the hearing.

On 16 February 2011 Mr DOX, on behalf of Ms MMR wrote to Mr BES. He explained the firm may have to cease to act for her, that Mr BES could apply to the Guardianship Tribunal to be appointed as Mrs HLT's financial manager, and that he may wish to telephone Mr DOX to discuss. It is asserted this letter was written because of unexplained withdrawals on Mrs HLT's account.

On 25 January 2012, Mrs HLT executed a further Power of Attorney ("the January 2012 instrument") by which she again appointed Ms MMR as her attorney. Mr DOX said on the same day Mrs HLT executed a Power of Attorney on behalf of Company A appointing Ms MMR as Company A's attorney ("the January 2012 Company A instrument"). It is asserted by Mr DOX that these documents were executed as a precaution because Mrs HLT was unable to recollect whether she had signed other documents before a solicitor in Sydney sometime after July 2010. The July 2010 instrument was not formally revoked. The January 2012 instrument was not included in the papers provided to the Tribunal for the hearing. However, Ms MMR provided a copy of the January 2012 Company A instrument to the Tribunal on 15 January 2014. It is asserted this instrument was executed to facilitate the sale of the Hotel. Mr GAU attended the conference with Mrs HLT and Mr DOX.

Mr DOX's file note dated 25 January 2012 refers to Mrs HLT's account being overdrawn. It also set out items of expenditure in respect of the property B and Mrs HLT is noted to be getting a quote for painting at home at a cost of about $13,000.

Shortly after Mrs HLT executed the January 2012 Company A instrument and January 2012 instrument she contacted Ms MMR's office, on 3 February 2012, and advised she wished to revoke both instruments.

On 7 February 2012 Ms MMR (per Mr DOX) wrote to Mrs HLT and noted he was "somewhat disappointed" at her decision. The letter concluded:

Upon receipt of the signed and witnessed Revocations, I will be declining to act any further in the matter and will render a bill of my costs, will seek your authority for deduction of those costs from the monies in the account and then have the account transferred back to your sole control.

Also on 7 February 2012, Mr DOX, on behalf of Ms MMR's firm, wrote to Mr BES noting Mrs HLT had executed a power of attorney from Company A in "[Ms MMR]'s favour to enable the sale to proceed". He further explained Mrs HLT had telephoned her instructions to revoke the January 2012 Company A instrument. He then said:

You will need to go on to the New South Wales Guardianship Tribunal website and complete an online application form. If you need help in completing it please telephone the writer as I think the application should be for the New South Wales Trustee & Guardian to be appointed both guardian and financial manager so that the Hotel can be sold.

I have spoken to [agent's name removed] who will attempt to keep the purchaser on hold pending an appointment of a financial manager.

On 10 February 2012 Mr DOX spoke to Mr BES and discussed the proposed application to the Guardianship Tribunal. His file note states "Havent rec'd forms from office". On 13 February 2012 an employee of Ms MMR sent an email to Mrs NES requesting her to advise Mr BES she had been unable to download the Guardianship Tribunal forms which could only be completed online.

On 13 February 2012 Mr DOX wrote to Mrs HLT asking her to advise the name of the firm of solicitors who would be taking over her matters.

On 15 February 2012 Mr DOX telephoned Mrs HLT. He recorded in his file note "Discuss POWERS OF ATTORNEY - she tore up the revocation - says she did that because Mr BES told her to - taken by surprise. He also noted:

Advise she needs to decide whether POWERS OF ATTORNEY (2) stay in place - if not then we can't continue to act for her - couldn't operate on bank a/c to pay bills etc - have to send everything back to her and she get another slr.

After speaking to Mrs HLT, Mr DOX telephoned Mr BES the same day and reported to him the details of his conversation with Mrs HLT.

On 16 February 2012 Ms MMR wrote to Mr BES. She advised him that, as funds had been withdrawn from an ATM at [Sydney], she could "no longer control withdrawals from the account". She proposed she either "cease acting as a financial manager of your mother" or "withdraw all of the funds from the account and place them in an account in my own name from which the outgoings may be paid". Ms MMR said, in concluding her letter, "You may wish to telephone to discuss this before I write to your mother". At the resumed hearing Ms MMR referred to two transactions that caused her concern namely two withdrawals each of $8,500 made respectively on 26 March 2012 and 29 March 2012, that is over a month after her letter to Mr BES.

On 10 May 2012 Mr DOX wrote to Mrs HLT seeking instructions from her about matters concerning the tenant of the Hotel.

On 16 May 2012 Mr DOX telephoned Mr BES. He recorded in his file note "Discussed letter. Will make apt for next Wednesday with [Mrs HLT]. Need to do something re (1) POWERS OF ATTORNEY (2) bank a/c".

On 2 July 2012 Mr DOX telephoned Mr BES. An appointment for Mrs HLT was cancelled because of Mr FOT's illness. Mr DOX recorded "Also re-do POWERS OF ATTORNEY x 2 and when he can get mother up to see me he will - possibly 2-3 weeks".

Mr DOX asserts, again because Mrs HLT was unable to recollect whether or not she had signed other documents in Sydney before a solicitor, on 25 July 2012 she executed a Deed of Enduring Guardianship ("the July 2012 deed") appointing Ms MMR and Mr BES as her joint and several guardians ("the July 2012 deed") and an enduring Power of Attorney appointed Ms MMR and Mr BES as her joint and several attorneys ("the July 2012 instrument"). Ms MMR and Mr DOX are unable to locate the file note of Mr DOX's attendance on Mrs HLT on 25 July 2012.

On 19 November 2012 Mr DOX wrote to Mr BES. He noted:

[Mr GAU] has advised that there will be a telephone monitoring system on both [Mrs HLT] and his own telephones which will record all conversations.

If you feel it appropriate you should complete an application to the Guardianship Tribunal for:

1. Termination of [Ms MMR's] Power of Attorney; and

2. The appointment of the Public Guardian as financial manager and guardian for [Mrs HLT].

In the same letter Mr DOX advised that the requisite forms could be downloaded from the Tribunal website "and you will note that two medical reports are necessary in relation to [Mrs HLT]'s capacity".

Mr GAU asserts that, for approximately four or five years prior to November 2012, he had been, with assistance from Mrs OEU, the primary carer of Mrs HLT. They also provided care and assistance to Mr FOT. After Mr FOT's death in November 2012 he and Mrs OEU, who has aged care qualifications, moved into property B to provide care for Mrs HLT.

Mr GAU asserts that after an abusive phone call from Mr BES in November 2012 he and Mrs OEU moved out of property B, and returned to property A. Mr GAU states he contacted Ms MMR and advised Mrs HLT would need nursing care. Mr GAU's assertions are disputed by Mr BES and by Mr DOX. Mr DOX asserts Mr BES left a voicemail message in which he said "[Mr DOX], you and [Mr BES] have had your own way. [Mrs OEU] and I moved out of mum's home but you will have to arrange some nursing care for her". Mr DOX says, that following the receipt of the voicemail message, he telephoned Mr BES "to advise him of that message and for him to arrange care for his mother". Mr BES is asserted to have collected Mrs HLT the following day and taken her to property C in regional NSW.

Mr BES asserts that Mr GAU has defrauded Mrs HLT and taken approximately $800,000 of her funds. Mr GAU disputes this allegation, and says it is not supported by Mrs HLT's bank statements. At the resumed hearing Mr BES asserted Mr GAU withdrew $1200 per fortnight from Mrs HLT's account as a charge for caring for his mother as evidenced by her bank statements. Mr GAU also disputes this assertion.

On 17 December 2012, in the presence of Mr DOX, Mrs HLT executed a Deed of Enduring Guardianship ("the December 2012 deed"). She appointed Mr BES and Ms MMR as her joint and several guardians. On the same day she executed an enduring Power of Attorney in favour of Ms MMR and Mr BES as her joint and several attorneys ("the instrument"). The relevant certificate of understanding was executed by Mr DOX.

Also on 17 December 2012 Mrs HLT, purportedly as sole director, (now asserted to be in error but rather in her capacity as governing director) of Company A executed a document on behalf of Company A appointing Ms MMR and Mr BES as joint and several attorneys of Company A ("the December 2012 Company A instrument"). Mr DOX is unable to locate his file note of his attendance on Mrs HLT when he took instructions and explained the nature and effect of the December 2012 deed, the instrument and the December 2012 Company A instrument.

On 8 January 2013 Mr GAU rang the NSW Police. A COPS report states he "informed police he was at a headland, advising police he had taken a large amount of pseudo ephedrine tablets and was going to take his life". Mr GAU was found by police to be unsteady on his feet but coherent and able to answer questions. Members of the NSW Police Force took him to a Hospital where he remained overnight. Mr GAU denies any suicidal ideation, but asserts his actions were atypical, and caused by stress. Mr BES asserts Mr GAU has expressed suicidal ideation in the past when he has needed money.

On 10 January 2013 Mr DEU attended the regional Police Station to request a welfare check be conducted on Mrs HLT as he had been unable to make arrangements with Mr BES to see his grandmother. Mr GAU and Mrs OEU also assert they were unable to speak to Mrs HLT on the telephone, except on Christmas Day.

On 17 January 2013 in a file note Ms MMR notes instructions from Mr BES to purchase [property D in regional NSW] in his name and that of Mrs NES for a purchase price of $531,500. The file note is overwritten with Mr DOX handwriting in which he notes "74 acres approx", "House and Shed + cattle yards, tractor, slasher, truck (reg'd) 2 cows abt $2600. Apportion amt." "[Mr BES] and [Mrs NES] to live there with [Mrs HLT]".

Ms MMR, in her capacity as Mrs HLT's attorney executed a costs agreement in respect of the purchase of the property D in regional NSW with her firm for costs from 17 January 2013. The charge out rate for a principal solicitor in this agreement is $375 per hour plus 10 per cent GST.

On 23 January 2013 Mr BES conferred with Mr DOX. Mr DOX's file note, which is headed "re [Mrs HLT], re Properties [indecipherable] and purchase" records matters including the following "[name removed] going/likely to make offer on [Mrs HLT]'s ppty within next 3-4 days. See [Mrs HLT]'s letter re [Mr GAU] & properties." "Discussed GT appln - we'll meet it if arises." "Write to [Mr WER's firm]'s re:

(1) [Mr GAU] can collect his + [Mr FOT]'s stuff

(2) [Mrs HLT] going to transfer [Mr GAU]'s home to [Mr GAU] & his 2 sons.

(3) [Mrs HLT] giving [Mr GAU] $200,000 from sale of hotel (less s/d vln. & [Mrs HLT]'s legal expenses) "

The file note also recorded the purchase of property D in regional NSW was to be in Mr BES and Mrs NES's names, and that they were going to live with and care for Mrs HLT.

Mr BES asserts that when a police welfare check was conducted at the instigation of Mr DEU he was advised by the attending police officer that property C in regional NSW was unsuitable for Mrs HLT, Mrs NES and him to live together as it only had one bedroom. He further asserts that following this advice he negotiated with a friend to purchase property D in regional NSW.

Mr GAU asserts Mrs HLT told neighbours she was going to regional NSW for about a week and would then return to the property B in Sydney.

Ms MMR asserts that, on 17 January 2013, the Hotel was sold for a sale price of $2.75million inclusive of GST. The sale is asserted to have been discussed with Mrs HLT, but the Contract for Sale was signed by Ms MMR acting in her capacity as Mrs HLT's attorney under the instrument and the 2012 Company A instrument. Settlement of the sale occurred on 15 April 2013. The transfer was signed by and on behalf of Company A by Ms MMR and Mr BES. The sum $1,070,590.55 was paid to the Bank to discharge outstanding loans from that bank. Also deducted from the sale proceeds was the purchase price of property D of $511,381.22 and a reimbursement to Mr BES for expenses totalling $32,000. Mr BES also received a payment of $200,000. The purpose of this payment is not disclosed by him or Ms MMR in their statements. Mr DOX asserts that the accountants for the Trust are to advise the most tax effective way of dealing with this sum in the 2013 financial statements of the Trust. The whole of the net proceeds of sale of $1,063,936 were invested as to $900,000 in a term deposit in Mrs HLT's name and $163,036.40 on trust for her, rather than fifty per cent of those proceeds (excluding the cost of the property D and repayments to Mr BES) being paid to Company A. Ms MMR asserts this mistake will be rectified when the term deposit matures.

The Hotel is asserted to have been purchased by the tenant. It is asserted the hotel was sold 72 hours later by the tenant to [company name removed]. The relevant transfer for the latter sale shows a consideration of $1.00.

In about February 2013 Mrs HLT is asserted to have commenced living with Mr BES and Mrs NES at the property D as a tenant because property C was unsuitable for their occupation. Mrs HLT lived in property C between December 2012 and 18 January 2013. Between 18 January 2013 and 3 February 2013 she lived with her grand-daughter in law Ms RXZ in Queensland. She was collected by Mr BES and flew with him from Queensland to NSW on 3 February 2013. She is asserted to have executed a contract for sale to purchase property D in about May 2013 at a purchase price of $514,000. A copy of the contract produced at the January adjourned hearing is dated 1 March 2013.

The purchase price of the property D was funded from the proceeds of sale of the Hotel. Fencing costing $11,000 has been erected at the property D and paid for by Mrs HLT. The property D comprises a four-bedroom home located on 28 hectares. It is described by the listing agent as suitable for running cattle with two double hay sheds, plus a new three bay shed with eight well fenced paddocks with three dams. Mr BES asserts the property D is a good investment as it is suitable for subdivision, and it has standing cedar trees suitable for felling.

Mr GAU asserts a removalist truck removed Mrs HLT's furniture from property B on 19 January 2013. Mr BES concedes the furniture has been removed and placed in storage in the regional area. It is not in dispute that Ms MMR and Mr BES pursuant to the instrument have listed property B with local agents for sale. They have each given an undertaking to the Tribunal not to proceed with sale of property B, or other assets of Mrs HLT, pending determination of these proceedings.

Dr Z completed a health professional report dated 30 January 2013 and a report about Mrs HLT. The Tribunal received these documents on 31 January 2013.

On 18 February 2013 Mr DOX saw Mrs HLT. Also present at the interview were Mr BES, Mrs NES, and [removed] and [removed]. Mr DOX's file note discloses he discussed the guardianship application. Mr DOX noted that he would "Do FOI application re [Mr WER's] contact with [regional] police". Mr DOX also recorded he "questioned [Mrs HLT] about will - knows what will is - dispose of what she owns when she dies. Gave me the address of home, hotel and [Mr GAU]'s house (she owns) car - money in bank. She knew she needed to provide for those close to her [Mr BES] and [Mr GAU] knew names of g/children - 4 of - 2 of [Mr BES's] and 2 of [Mr GAU's]". Mr DOX also noted Mrs HLT's wish to buy the property D. He further noted he discussed the fraud report and recorded "wants me to complete it - won't want [Mr GAU] charged". Mr DOX then notes a proposal about "[Mr GAU]'s home". He concludes "If [Mr GAU] then agrees to ppl (proposal) - wont be any need to impose rent. It might also cause him to break-off with GT proceedings".

On 8 March 2013 the Tribunal rejected an application for Mrs HLT to be represented by an Australian Legal Practitioner and requested the Legal Aid Commission of NSW to appoint a separate Representative for her.

Mr DOX wrote to Mrs HLT reporting on the outcome of the directions hearing on 8 March 2013. Mr DOX advised Mrs HLT of her right to appeal on error of law.

The NSW Police created a COPS entry on 12 March 2013. The entry notes that Mrs HLT has completed a Fraud Report form which had been forwarded to the Investigations manager.

On 18 March 2013 Mr DOX saw Mrs HLT and Mr BES. His file note records "lease by [Mr HLT] to [Mr BES] of ppty - minus house $2,000 per annum - lease." Mr DOX confirmed the lease was in respect of property D.

Also on 18 March 2013 Mr DOX conferred with Mrs HLT. His file note disclosed that he did so "in [Mr BES's] absence". In his file note Mr DOX sets out information provided by Mrs HLT. Mr DOX recorded "don't think she would satisfy Banks v Goodfellow today. Then brought [Mr BES] in". During his conference with Mrs HLT, Mr DOX drew a circle with a dot in the middle and asked Mrs HLT to complete a clock face showing ten minutes to 2p.m.

On 4 April 2012 Ms MMR, on behalf of Mrs HLT filed a Summons in the Supreme Court seeking leave to appeal the Tribunal's decision to refuse to appoint an Australian Legal Representative for Mrs HLT. Those proceedings were subsequently settled. However, at the date of the hearing, an application in respect of the costs of the proceedings is pending before a judge in the Supreme Court. Dr W and Dr X are to give evidence in these proceedings.

On 17 December 2013, the day following the first day of the hearing in regional NSW, Mr WER wrote to Ms MMR and requested her and her co-guardian, Mr BES to consent to Mrs HLT returning to Sydney with Mr GAU and Mrs OEU for a visit for a week at property B. Ms MMR wrote to Mr WER on 18 September 2013. She advised Mr WER that she had discussed the proposal with Mr BES and they did not think it was in Mrs HLT's best interests to return to property B. Ms MMR proposed "that subject to Mr GAU being prepared to travel to [regional NSW] that he (and his family) spend time with [Mrs HLT] on a daily basis, say from 11a.m. to 4p.m."

On 3 October 2013 Mr WER again wrote to Ms MMR and Mr FUH advising that Mr FEU's 21st birthday was to be celebrated on 26 October and requested that consideration be given to Mrs HLT attending "this family celebration". On 23 October 2013 Mr WER again wrote to Ms MMR noting he had not received a response to his letter of 3 October and requested that Mrs HLT stay with Mr GAU from 26 October until the resumed hearing date of 4 November 2013. Mr BES asserts he did not receive Mr WER's letter, which was forwarded to Mr FUH, until the day prior to the party.

The hearing

The adjourned hearing was conducted at the Tribunal's Balmain premises. Mrs HLT attended the hearing as did all other parties except Mr BES. Mr BES was contacted by the Tribunal on his only phone, a mobile phone, but there were problems experienced with the connection. The Tribunal offered Mr BES the opportunity to make an application for an adjournment so that he could come to Sydney to participate in the hearing, but he informed the Tribunal he would not come to Sydney. With Mr BES's permission, after several occasions when his phone "dropped out", and some considerable time after the hearing commenced, the call was disconnected. However, the Tribunal telephoned Mr BES at the end of the hearing and afforded him the opportunity to make any submissions and to hear other parties' and the Separate Representative's submissions.

As has been the case throughout the course of this matter, further documents were provided to the Tribunal during the adjourned period, and on the day of the resumed hearing. The separate representative described the piecemeal provision of documents to the Tribunal as being received in "dribs and drabs". She noted the difficulties caused by the sheer volume of documents many of which were supplied during the course of the hearing in response to her requests or that of the Tribunal. We agree with the separate representative's comments. The manner in which the Tribunal received documents made it difficult to adhere to the object of the Civil and Administrative Tribunal Act 2013 (NSW) that the proceedings be conducted justly, cheaply and quickly and with as little formality as possible (see s 3(d)).

The Tribunal, at the commencement of the hearing raised with the parties, the option of a transfer of the proceedings to the Supreme Court as a more suitable venue given the then identified complexities in the matter (see s 34 of the Powers of Attorney Act). All parties opposed this course. Those complexities increased as further evidence became available to the Tribunal during the subsequent two hearing days.

The separate representative noted in her final submissions that she was unable, by reason of lack of documents, to be confident about Mrs HLT's assets and liabilities and various financial transactions which have occurred in recent times. The Tribunal agreed with her submission and found it too could not be confident about all relevant financial transactions, or Mrs HLT's true asset and liability position at the conclusion of the hearing.

The Tribunal is required under s 66 of the Guardianship Act not to make a decision (in this case in respect of the financial management application) until it has used its best endeavours to achieve a settlement. Unfortunately the Tribunal was unable to facilitate the parties reaching a negotiated settlement in this matter.

Standing to bring the application

An application may be made to the Tribunal under s 35 of the Powers of Attorney Act in respect of a reviewable power of attorney, by the attorney, the principal, the guardian of the principal, or an enduring guardian. An application may also be made by "any other person, who in the opinion of the review Tribunal, has a proper interest in the proceedings or a genuine concern for the welfare of the principal" (see s 35(1)(d)). No objection was taken to Mr GAU's standing to bring the review application by any party to the proceedings. The Tribunal was independently satisfied that Mr GAU fulfils the criteria in s 35(1)(d).

Section 33 of the Powers of Attorney Act describes a reviewable power of attorney as one which the Tribunal to whom the application is made has jurisdiction to deal with the application. There was no dispute this Tribunal has jurisdiction to review the instrument.

Statutory provisions - reviewable power of attorney

Section 36 of the Powers of Attorney Act provides that the Tribunal may, or may not, decide to carry out a review of:

the making of the power of attorney or
the operation of the power of attorney.

The orders which the Tribunal may make are set out in s 36(3), in the case of the making of a power of attorney and s 36(4) in the case of the operation and effect of the Power of Attorney. Those sub-sections provide as follows:

(3) Orders relating to making of power of attorney

A review Tribunal may make either or both of the following orders with respect to the making of a power of attorney:

(a) an order declaring that the principal did or did not have mental capacity to make a valid power of attorney,

(b) an order declaring that the power of attorney is invalid (either in whole or in part) if the tribunal is satisfied:

(i) the principal did not have the capacity necessary to make it, or

(ii) the power of attorney did not comply with the other requirements of this Act applicable to it, or

(iii) the power of attorney is invalid for any other reason, for example, the principal was induced to make it by dishonesty or undue influence.

(3A) ..........

(4) Orders relating to operation and effect of power

A review tribunal may, if satisfied that it would be in the best interests of the principal to do so or that it would better reflect the wishes of the principal, make any one or more of the following orders relating to the operation and effect of a power of attorney:

(a) an order varying a term of, or a power conferred by, the power of attorney,

(b) an order removing a person from office as an attorney,

(c) an order appointing a substitute attorney to replace an attorney who has been removed from office by a review tribunal or who otherwise vacates the office,

(d) an order reinstating a power of attorney that has lapsed by reason of any vacancy in the office of an attorney and appointing a substitute attorney to replace the attorney who vacated office,

(e) an order directing or requiring any one or more of the following:

(i) that an attorney furnish accounts and other information to the tribunal or to a person nominated by the tribunal,

(ii) that an attorney lodge with the tribunal a copy of all records and accounts kept by the attorney of dealings and transactions made by the attorney under the power,

(iii) that those records and accounts be audited by an auditor appointed by the tribunal and that a copy of the report of the auditor be furnished to the tribunal,

(iv) that the attorney submit a plan of financial management to the tribunal for approval,

(f) an order revoking all or part of the power of attorney,

(g) such other orders as the review tribunal thinks fit.

Section 38(8) empowers the Tribunal, if it requires the attorney to furnish accounts or other information, to make further orders. The section is in the following terms:

(8) Further orders relating to accounts and information

If a review tribunal makes an order under this section directing an attorney to furnish accounts or other information, the tribunal may decide to make further orders for:

(a) limiting the disclosure of accounts or other information by the attorney, and

(b) inquiry and report on the conduct of the attorney.

The Tribunal may, if it decides not to make an order under s 36 of the Powers of Attorney Act, determine to treat the application as an application for a financial management order.

In this case, as urged by the separate representative, the Tribunal determined it would conduct the review. As we later explain because we found Mrs HLT did not have the capacity to enter into the instrument, a declaration to that effect was made. We then separately considered Mr KCC's application for the making of a financial management order.

Relevant law capacity to grant an Enduring Power of Attorney

The determination of capacity to enter into a valid Power of Attorney is the subject of considerable authority including appellate authority and academic discussion.

The learned authors of Powers of Attorney in Australia and New Zealand, Federation Press, Berna Collier and Shannon Lindsay refer at page 68 of their text to the seminal decision of the High Court in Gibbons v Wright (1954) 91 CLR 423. The authors note:

The High Court in Gibbons preferred to avoid prescribing a standard of capacity for the execution of any particular instrument and instead held:

The mental capacity required by the law in respect of any instrument is relative to the particular transactions which is being effected by means of the instrument, and may be described as the capacity to understand the nature of that transaction when it is explained.

The authors go on to note that the High Court held "that in order to possess the requisite capacity, the person executing the instrument must be capable of understanding not only the general purport of the instrument, but the effect of a wider transaction which the instrument is a means of carrying out".

The question of capacity is also explored with reference to authority by O'Neill and Peisah in Capacity and the Law 2011 SyUPLawRK 12 (Chapter 10).

The principle enunciated by the High Court in Gibbons has been discussed (and followed) in many matters. The High Court's statement remains the definitive authority on this topic.

Particularly helpful on this topic however is the discussion by Young J (as his Honour then was) in Ranclaud v Cabban (1988) NSW ConvR 55-385. His Honour expands, in a practical way, the meaning of the principles pronounced by the High Court in Gibbons. In Ranclaud his Honour said:

Such a power permits the donee to exercise any function which the donor may lawfully authorise an Attorney to do. When considering whether a person is capable of giving that sort of power one would have to be sure not only that she understood that she was authorising someone to look after her affairs but also what sort of things the Attorney could do without further reference to her.

Young J's decision in Ranclaud provided the basis for legislation in the ACT, and has been widely followed in other state jurisdictions in Australia.

Two recent decisions of the NSW Supreme Court are instructive. The trial Judges in these cases both adopt the test used by Young J in Ranclaud but appear to differ in their reasoning as to whether or not the test of capacity to grant a Power of Attorney is identical to the test of testamentary capacity (to make a will). In Szozda v Szozda [2010] NSWSC 804 Barrett J expressed the view that a different consideration of capacity is necessary when considering the appointment of an attorney. He said (referring to the granting of a power of attorney) "an understanding of the transaction to be facilitated is indispensable to an understanding of the power of attorney".

By contrast, in Scott v Scott [2012] NSWSC 1541 Lindsay J explained that the "standard" test for capacity to make a will (as described in Banks v Goodfellow (1870) LR 5 QB 549 at 564-565) may be the appropriate test. At paragraphs 199 to 201 of his reasons Lindsay J refers to the necessity to examine each case on its own facts, consideration of the events leading up to the execution of the instrument as well as the time of its actual execution and notes "A longitudinal assessment of mental capacity, along a time line extending either side of the focal point, may be necessary .....in order to examine the subject's mental capacity in context". He goes on to note "Medicos and lawyers, alike, tend to embrace that approach... Context has a temporal as well as spacial and relational dimensions".

Lindsay J in his remarks at [201] notes, given Equity's regard for the vulnerable person, that the question of capacity will often "invite a critical inquiry as to whether any element of undue influence may be discernable".

Expert Medical Evidence

In our guardianship reasons the Guardianship Tribunal summarised, without making findings, the evidence about Mrs HLT's capacity to grant the instrument in December 2012. We summarised the expert medical evidence at paragraphs 81 to 95. For convenience, we now repeat those paragraphs:

Ms MMR sought to rely on a report of Dr X obtained after the first hearing day. Dr X has not seen Mrs HLT since April 2013. We do, however, refer briefly to Dr X's reports.

Dr W completed a Heath Professional Report Form dated 28 March 2013. She noted Mrs HLT's diagnosis to be dementia (Alzheimer's disease) which was present since 2008. She also recorded Mrs HLT has a past history of depression, hypertension and paroxysmal atrial fibrillation. She opined Mrs HLT would not be able to look after herself or find accommodation, that she needed help with medications, and assistance with managing her financial affairs. Dr W recorded a mini mental state examination ("MMSE") conducted by her on 22 March 2013 revealed a score of 19/30. She also opined that she thought Mrs HLT could make a limited contribution at the hearing. She recorded Mrs HLT's current medications are Aricept, Citalopram, Coumadin, Karvea, Lipitor, Minax, Panadol Osteo and Tripim.

Under the heading "Social History" in the clinical notes produced from Dr W's practice is it recorded "2 children, other son [Mr GAU] has defrauded her of a large sum of money".

Dr W, in her oral evidence, explained that she had seen Mrs HLT on nine or ten occasions. The doctor explained Mrs HLT suffers a significant deficit in short-term memory recall, and if provided with information, unless written down, she would forget the information and not follow instructions.

Dr W also explained Mrs HLT is eager to please people and is very compliant. She expanded this opinion in her oral evidence and noted that she had concerns for Mrs HLT in a legal setting as, if she had to give evidence in court, a barrister could easily lead to her agree to things with which she would not normally agree. She explained Mrs HLT has a number of other health issues, that she needs help to take her medication, and it would not be "ok" for her to live independently. She further explained she did not think Mrs HLT could weigh up options, and she stressed she had concerns about Mrs HLT being easily led.

In her report date 18 April 2013 Dr Y noted she had first seen Mrs HLT in 2008 and again in 2009 when she presented with short term memory loss. At that time her MMSE score was 29/30. At this consultation (ie April 2013) Dr Y explained Mrs HLT had scored 16/30 with all points lost in orientation and in recall although she drew a good clock and placed the hands correctly. Mrs HLT was unable to tell Dr Y about any properties she owned other than [property B in Sydney] (where she thought she was living). When asked where she would like to reside, Mrs HLT said with Mr BES and Mrs NES and explained she was happy there and well looked after. Dr Y opined:

It is my opinion that Mrs HLT suffers with Alzheimer's Dementia (moderate) and that she displays no testamentary capacity today to manage her own affairs. In terms of accommodation and lifestyle choices Mrs HLT does appear to have much better capacity in making choices on the information provided to her. I would postulate that in most cases she has capacity in lifestyle choices although this would need to be determined.

The Tribunal notes Dr Y requested Ms MMR to provide a copy of the December 2012 instrument "to see when it was dated".

Dr X saw Mrs HLT on 30 April 2013. In his report dated 30 April 2013 he noted Mrs HLT's MMSE of 19/30 and noted he had also performed the Montreal Cognitive Assessment (a more rigorous test) in which she scored 12/30. In his oral evidence, taken via the telephone from Balmain, Dr X confirmed that score achieved in the Montreal test is a low score. He explained that he did not question Mrs HLT about her capacity to understand specific concepts but relied on her MMSE and Montreal Cognitive Assessment results. In a further report, dated 15 May 2013, Dr X opined Mrs HLT "is in need of a guardian".

Although we do not propose in these reasons to refer to Dr Z's evidence about Mrs HLT's capacity at the date of executing the December 2012 Deed and instrument, and the December 2012 Company A instrument, it is important we refer to aspects of her letter received 30 January 2013. In this report Dr Z explained the length of time Mrs HLT has been her patient. At paragraph 5 of her letter she stated:

Mrs HLT's cognitive capacity has been declining steadily, particularly in the past year. She became confused often and her memory was poor. While she can attend to her personal hygiene and showering she is unable to cook, organize appointments, manage her own medication, finances, and required the support of her son Mr GAU and his wife Mrs OEU for most tasks. Either has accompanied Mrs HLT to appointments at the practice in recent years.

It is my opinion that Mrs HLT is better in a familiar environment, such as her home for the past 30 years.

In her oral evidence Dr Z explained that either Mr GAU and/or Mrs OEU had accompanied Mrs HLT to all medical appointments in recent years. She told the Tribunal that Mr FOT was very concerned about Mrs HLT's cognitive decline in the eighteen months prior to his death reporting to Dr Z that Mrs HLT was unable to do simple banking, could not write a cheque, and was unable to cook.

Dr Z also explained that Mrs HLT was a private patient, but she lacked the capacity to pay her bill at the end of a consultation, and Mr FOT had put in place alternate arrangements to meet her fees. She also explained that she had been able to track Mrs HLT's failure to take prescribed medication on a weekly basis, notwithstanding it was packed in a "Webster" pack, by consulting her pharmacist. She noted that at the time of Mr FOT's hospital admission, prior to his death, the hospital social worker had organised an Aged Care Assessment Team ("ACAT") assessment of Mrs HLT.

Dr Z reported Mrs HLT also demonstrated word finding difficulty on occasions (aphasia). In a Health Professional Form dated 30 January 2013 Dr Z noted that on 1 November 2011 Mrs HLT had scored 17/30 on the administration of a MMSE and on 26 November 2011 25/30.

When questioned by Mr BVC about her clinical notes for a consultation on 26 November 2012 which records "This result indicates that no significant cognitive impairment has been identified" next to the MMSE score of 25/30, Dr Z explained this is a "computer generated" recording, and not her professional opinion. The computer programme automatically generates the description on entry of a MMSE as part of prescribing protocols under the Pharmaceutical Benefits Scheme.

Dr Z pointed out that the MMSE is a test that should not be used as an "isolated tool", but stressed the importance of observing how a patient presents over a number of appointments, together with the input of family members to obtain an overall clinical picture. She also explained how MMSE scores can fluctuate, and stressed the danger of looking at results in isolation.

In discussing Mrs HLT's ability to make life-style decisions about where she might live, Dr Z opined that Mrs HLT was very settled at [property B], that she seemed very reliant on Mr GAU and Mrs OEU, that she had a good social network, and health care provision. Notwithstanding her evidence that, had the option of moving away from [property B] been fully explained to her, she could have expressed a view, Dr Z opined Mrs HLT does not have the capacity to live independently.

Dr Z in her oral evidence confirmed that, in the latter part of 2011, she was seeing Mrs HLT on a fortnightly basis. Dr Z saw Mrs HLT last on 26 November 2012. She said that she did not believe Mrs HLT had the capacity to understand the nature and effect of a power of attorney at 17 December 2012. The underlying facts on which she based her opinion included:

the fact Mrs HLT was incapable of carry out any financial transactions including paying a simple bill or writing a cheque;
her discussions with Mr FOT over an 18 month period prior to his death about his reporting of Mrs HLT's inability to manage financial matters and to cope generally, for example, her inability to cook;
her compliant nature leading to her agreeing with advice given;
her non compliance with taking medication , particularly Warfarin, by reason of forgetfulness;
her observations, made on seeing Mrs HLT on a regular basis, of a steady decline in her cognitive capacity; and
that Mrs HLT was eager to please and would sign a document particularly if asked by a family member.

Dr Z was not shaken in answers she gave to Mr BVC of Counsel's questions about Mrs HLT's cognitive capacity, and rationally explained why it was unsafe to rely on one mini mental state examination of 25/30 in isolation as a reliable indicator of capacity.

As noted above there was a striking similarity in aspects of the evidence of Dr Z and that of Dr W about Mrs HLT being compliant and easily influenced. Dr Z saw Mrs HLT very shortly before she executed the instrument, and Dr W commencing caring for Mrs HLT shortly after its execution.

Dr X also gave evidence by telephone on 4 November 2013. He explained that Mrs HLT had been accompanied by Mr BES throughout the whole of his consultation, that he had not conducted a forensic examination on capacity, nor had he directed any questions to Mrs HLT about her assets, or asked questions directed to her capacity to enter into a power of attorney or to weigh the consequences of making such a document.

The lawyer's evidence

Detailed written statements were relied on in these proceedings by both Ms MMR and Mr DOX. Ms MMR told the Tribunal that she had typed her statement, but before doing so she had read Mr DOX's statement, cross-referenced her statement to his statement (which she had relied on) as well as independently checking file notes. There is, unsurprisingly given Ms MMR's candid evidence on this topic, significant overlap in the statements.

Mr DOX is retained as a consultant by Ms MMR's firm. Ms MMR is a sole practitioner. Mr DOX generally works in her office two to three days per week. He has worked with Ms MMR since about 2003/04. Clients seen by Mr DOX are charged professional fees by Ms MMR slightly in excess of the sum she pays to Mr DOX. Ms MMR freely explained in her oral evidence that she relies on Mr DOX's experience and expertise in a number of areas of the law.

Mr DOX gave evidence that he has considerable expertise, gained over of a period of over 30 years, in Wills and Powers of Attorney. He also has expertise in liquor licensing law. Mr DOX, in his oral evidence, explained that on the majority of occasions, Ms MMR sees a client and takes instructions in respect of a power of attorney, and he then sees the client, checks their understanding of the nature and effect of the instrument, and provides the necessary certificate. (Ms MMR confirmed this regime is followed if she is appointed as the attorney, or a family member or third party is appointed) Ms MMR also volunteered in answer to questions posed to her that on occasions Mr DOX suggests to a client who does not have a suitable relative to act as attorney, that the client appoint Ms MMR. Ms MMR indicated she has a dozen or so appointments as attorney for clients.

Mr DOX indicated that, although he had not read them for some time, he was familiar with the Law Society Guidelines relating to capacity and powers of attorney. Mr DOX and Ms MMR were extensively questioned in a manner similar to cross-examination by Mr WER and the separate representative although, as is the usual practice in Tribunal hearings, neither their statements or oral evidence was sworn or affirmed. The Tribunal also itself directed a number of questions to each of them. The Tribunal was satisfied as officers of the Court the material presented to the Tribunal and their answers to the Tribunal should be truthful.

Material which the Tribunal found relevant to this matter included many of Mr DOX's file notes. Many of the relevant file notes and documents summarised by us under the heading "Background", were produced pursuant to Summons or at the request of the Separate Representative. A number of documents were not made available to the Tribunal until the final day of the hearing. This, in part, led to our decision to reserve our decision.

It is unnecessary we set out the details of Mr DOX's and Ms MMR's statements. The statements are basically identical. Specific details of their respective file notes (which were not attached to the statements are summarised under "Background" in this reasons). Each recites in their respective statements:

commencing acting for Mrs HLT in 2008;
the withdrawals from Mrs HLT's account during the period from February 2010 to 27 July 2012 totalling $135,000 including two withdrawals of $8,500 on 26 March 2012 and 29 March 2012 which Mrs HLT could not explain;
attendances in July 2010, January 2012 and 17 December 2012 when each of the instruments and or deeds were discussed and executed;
problems with the lease of the Hotel;
a summary of events occurring in late 2012/2013;
the purchase of property D.

In his oral evidence, given by telephone when the Tribunal sat at a regional location on 16 September 2013, Mr DOX explained that his understanding of the law is that the test for capacity to execute a power of attorney is not as high as the test in Banks v Goodfellow, rather that he believed the test is "a little lower". However, he said that if he were dealing with a client with some question of memory loss he would apply the Banks v Goodfellow test prior to providing the requisite certificate of understanding. He also explained he conducted "a form" or "variation" of a mini mental state examination asking the client for family details, and later in the interview returning to have the client repeat the earlier family information provided. He explained he always had a client draw a clock face showing the time at ten minutes to two o'clock.

On 16 September 2013 Mr DOX said he had, so far as he was aware, not asked Mrs HLT to draw a clock face in 2013, and he had not asked her to do so at the conference held on 18 March 2013. We are not aware whether he had access to the relevant file when he gave this evidence. That evidence is inconsistent with the page provided to us on the last day of the hearing bearing date 18.3.2013 which contains nothing but a clock face with somewhat wobbly lines in the ten to two position. Mr DOX said he drew the circle and put the dot in the middle and the lines were drawn by Mrs HLT.

On 4 November 2013 Mr DOX appeared in person at the Tribunal's Balmain premises. He explained that he had been unable to locate his file note of attendance on Mrs HLT on 17 December 2012 when she executed the instrument and the December 2012 Company A instrument. He explained he did not always make contemporaneous file notes, and often wrote up file notes at night after a day of appointments by reference to his diary.

Mr DOX explained he had prepared a first draft of his statement in about March or May 2013 when the matter was first listed before the Tribunal. Mr DOX confirmed that Mrs HLT personally executed the contract for purchase of property D and Ms MMR had executed the contract for sale of the Hotel as Mrs HLT's personal attorney and on behalf of Company A as attorney appointed under the 2012 Company A instrument.

On 4 November 2012 Mr DOX was asked again asked questions about his interview with Mrs HLT on 12 December 2012. He said he had:

discussed with her what an enduring power of attorney was;
told her the power of attorney could be revoked;
explained that the attorney must act in her best interests;
that the Guardianship Tribunal could suspend the operation of a power of attorney;
that the attorney's actions were limited to financial matters such as dealing with real estate;
that the attorney could be limited to specific acts or times;
explained what an attorney can't do - cannot execute documents on behalf of a director or trustee, and can't make life-style decisions.

When asked how he checked Mrs HLT's understanding of the information he conveyed, Mr DOX explained he had stopped at various points in his explanation and asked Mrs HLT if she had any questions.

Mr DOX said that, although the instrument had appointed Ms MMR and Mr BES jointly and severally, he told Mrs HLT as Ms MMR already had control of the bank account it was not anticipated that Mr BES would have any active role. He confirmed that Mrs HLT had not had too many questions. He also confirmed that although she was accompanied by Mr BES, she was seen individually and that Ms MMR sat in the room in the role of an observer while he interviewed Mrs HLT.

Mr DOX said he had never had any difficulties with Mrs HLT's cognitive capacity, that he had never sought a medical opinion about her capacity, and none of the expert reports described her dementia as severe. When asked about Dr Y's findings in April 2013, Mr DOX said Mrs HLT may have been overawed by Dr Y.

Mr DOX on being asked questions by the separate representative said that Mr QHT's advice was that Mrs HLT was suffering mild moderate dementia, and this was not a diagnosis.

When asked why Mrs HLT had executed the July 2010 instrument he explained that, at that time, there had been two significant withdrawals from her bank account, and Mrs HLT could not remember the withdrawals or explain them. He agreed that at that time she had issues with memory, but said that he didn't think she was incapable. He also explained he made the suggestion to Mrs HLT to appoint Ms MMR to manage her financial affairs by appointing her as her attorney.

When questioned why, given his various consultations with Mrs HLT, to which he did not refer to in his statement, he had included reference to attendance on 18 August 2010, Mr DOX agreed he had done so because this date was close to Dr Z recording a MMSE of 25/30 to which he retrospectively had regard. However, by the time of the resumed hearing on 20 January 2014 he had located a file note of a conference noted to be with Mrs HLT, Mr GAU and Mrs NES (but in fact Mrs OEU) where the July 2010 instrument was discussed. He explained Mrs OEU raised the issue of costs of managing Mrs HLT's financial affairs, and he explained that Ms MMR would only charge costs as a solicitor at the rate of $300 per hour plus GST, and that she would moderate her costs where necessary. Ms MMR's evidence was that no costs agreement or written confirmation to Mrs HLT of the financial arrangements to be enacted pursuant to the July 2010 instrument could be located.

During the course of answering questions posed by the separate representative, Mr DOX corrected his statement in respect of paragraphs 22 and 23. He noted that these paragraphs referred in error to his attendance on Mrs HLT on 25 January 2012 when she had signed the January 2012 instrument because she was unable to remember whether she had signed another document at another solicitors' office after she executed the 2010 instrument. Mr DOX confirmed that he did not carry out any assessment of Mrs HLT's capacity at the time of executing the July 2012 instrument and July 2012 Company A instrument. Rather, the document was simply reproduced from a copy of the January documents with a change of date. Mr DOX said there was no difference in Mrs HLT's conversation or appearance on this occasion.

Mr DOX confirmed that when Mrs HLT executed the July 2012 instrument she was accompanied to the appointment by Mr BES, but seen separately. Mr DOX confirmed Mr BES had advised that Mrs HLT again could not remember if she had signed another power of attorney elsewhere since executing the January document and the July 2012 instrument was also executed "as a precaution".

The separate representative asked Mr DOX why he had addressed the correspondence sent from Ms MMR's firm, but authored by him, to Mr BES on 11 February 2011 suggesting Mr BES be appointed as Mrs HLT's financial manager. Mr DOX conceded that Mrs HLT did have some memory problems at this time and that was why he had written to Mr BES but said the decision to file the application would be Mr BES's decision. When asked about corresponding with Mr BES, Mr DOX explained Mrs HLT had instructed him to send copies of his letters to her to Mr BES and Mr GAU, because she sometimes forgot to respond to his correspondence. Mr DOX confirmed that the issue of Ms MMR's authority as attorney to solely operate Mrs HLT's principal bank account and to stop any drawdown on her funds was not resolved for over a year (until mid 2012).

Mr DOX was cross examined about costs agreements between Mrs HLT and Ms MMR's firm, and costs agreements generally. He said a costs agreement had been executed by Ms MMR in May 2010 in respect of the then proposed sale of the Hotel for $6,000 which was later amended to $12,000. We will refer to the question of costs agreements when discussing Ms MMR's evidence.

Ms MMR's evidence

Ms MMR was subject to what was a careful and extensive cross-examination by the separate representative. She was also questioned by Mr WER, Mr KCC and the Tribunal members.

Ms MMR was questioned about the circumstances in which she acted under the July 2010 instrument, and her action in closing Mrs HLT's principal bank account and opening the account in her name as trustee for Mrs HLT. She explained that Mrs HLT is a lady who likes to be very pleasing and who is compliant. She was unable to say whether she had discussed with Mrs HLT, either before or after the event, her action in closing the bank account. She acknowledged no letter had been sent to Mrs HLT advising about this action.

Ms MMR was asked why she had disbursed the sum of $200,000 to Mr BES from the sale proceeds of the Hotel and also "reimbursed" him the sum of $32,000. Ms MMR gave evidence that she relied exclusively on a letter dated 22 January 2013 signed by Mrs HLT as her authority to pay these sums. She agreed she made no independent inquiries of Mrs HLT as to why Mr BES should receive these sums. She also agreed that she had not paid the sum of $200,000 less stamp duty payable on the transfer of property A to Mr GAU as instructed by Mrs HLT in the same letter.

Ms MMR explained that how the sums advanced to Mr BES are to be treated had been referred to the accountants. She also explained that Mr DOX handled tax issues.

Ms MMR explained that the sum of $32,000 reimbursed to Mr BES represented a repayment of funds he advanced to provide the deposit for the purchase of property D. Ms MMR provided a bank statement to support her explanation. She conceded however that only three deposits were made into Mrs HLT's account ($10,000, $11,000 and $6,000). She was unable to explain why Mr BES received an additional $5,000. She was also asked whether the sum of $11,000 was reimbursement by Mr BES for fencing paid for by her on Mrs HLT's behalf for fencing of property D. The purpose of the fencing was explained as necessary because Mr BES has dogs and cattle on the property.

Ms MMR also gave oral evidence that she was unaware of the disposal or gifting of Mrs HLT's motor vehicle to Mr BES' son, until she contacted Mr BES in January 2013 when she received Mrs HLT's licence renewal and was informed by him that her licence had been cancelled and the car transferred to [Mr BES' son].

Ms MMR answered a number of questions about costs agreements between her firm and Mrs HLT and Company A. She conceded she was unaware of the Law Society's recommendations in relation to costs agreements where a solicitor is to be appointed as an attorney. She was unaware the Law Society recommend the appointment of a co-attorney who can scrutinize and approve bills rendered by the solicitor if the principal lacks capacity.

When asked whether she felt the costs agreement or charges made were was appropriate for charges made for payment of Mrs HLT's household utilities, rates etc. as distinct from professional work conducted by a solicitor, she explained the basis of her charges were, in her view, reasonable.

Ms MMR agreed that a costs agreement in relation to the Hotel had been provided to Mrs HLT disclosing costs of $5,000 but this agreement was amended. She did not dispute that she signed the costs agreement with her firm in her capacity as Mrs HLT's attorney. She did not dispute that Mrs HLT was charged $10,300 but said the increase in the conveyancing costs was to $8,500 and extra charges were made for a Deed relating to arrears of rent ($1,800) and the issue of a Notice of Complete ($200). Ms MMR acknowledged Mrs HLT was only provided with the amended costs agreement when a bill was rendered on 12 April 2013 and the agreement was attached to the bill. A copy of the amended costs agreement was again forwarded to Mrs HLT with a bill on 10 May 2013.

Ms MMR also conceded she had signed, in her capacity as Mrs HLT's attorney, a costs agreement with her firm in respect of the fees charged for the purchase of property D on 17 January 2013.

When asked about her assessment of Mrs HLT's cognitive capacity on 17 December 2012 she explained she was aware Mrs HLT was a "bit confused" about things, and she did not know whether this was attributable to short term or long term memory loss. However, she said she was able to exchange pleasantries with Mrs HLT, and she explained she observed what she was wearing, noting she was well groomed with matching shoes and handbag, and that her appearance was not dishevelled as is the case with some other persons who have attended her in conference with their carer.

Ms MMR was also extensively cross examined about the purchase of property D and whether or not she had discussed with Mrs HLT the suitability of the property for her needs. She explained that although Mr BES at first instructed the property should be purchased in his name and that of Mrs NES, neither she or Mr DOX agreed with that proposal when it became clear the funds for the purchase were to be provided by Mrs HLT.

When asked about the removal of Mrs HLT's furniture from property B in January 2013 Ms MMR gave evidence she thought this was to make Mrs HLT comfortable, and that she was not aware of the removal (and placement of Mrs HLT's furniture into storage) until she received the bill.

In the course of Ms MMR's oral evidence the Tribunal became aware that a letter of demand had been sent by her firm to Mr WER's firm for repayment of the loan account in Company A in Mr GAU's name. Ms MMR agreed she was unaware of how the loan accounts came into existence. She explained she had written to Mrs HLT's former accountants last year but said "she did not have a clear picture of the loans".

It also emerged during her evidence that Mr BES has made a claim under the Succession Act 2006 (NSW) for provision out of the estate of Mr FOT and that Mr GAU, as the executor of the estate, is the defendant in proceedings in the Supreme Court. Ms MMR is acting for Mr BES in the proceedings. She explained the demand for repayment of the loan had been made in reaction to a demand by Mr GAU, as executor, for repayment of Mr FOT's loan account to his estate.

When questioned as to whether she thought her decisions made her capacity as Mrs HLT's attorney had been in her best interests, and in particular the sale of her interest and that of Company A in the Hotel, Ms MMR did not answer the question directly, but explained that she needed Mr DOX's input to make decisions in Mrs HLT's best interests.

At the end of her oral evidence Ms MMR was asked by the Tribunal about her understanding of Mrs HLT's capacity in July 2010 and in 2012 when she assumed control of the bank account in a trustee role. Ms MMR explained that, in her opinion in 2010, while Mrs HLT could manage some day-to-day matters, because of the complexity of her affairs she found her financial affairs in relation to trust "very cumbersome and very confusing". She opined that had Mrs HLT's affairs been a "house and garden" matter she could have managed, but at least by mid 2012 her affairs were so complex she found them overwhelming.

Mr GAU's evidence

Mr GAU provided a statement in support of his application, and statements in response to statements relied on by Mr BES and Mrs NES. He was not subject of any significant questioning by the other parties. Mr BES however asserted that Mr GAU had consistently withdrawn the sum of $1,200 per fortnight from Mrs HLT's account and paid himself $600 to be his mother's carer and this would be clear from an examination of the relevant bank statements. Mr GAU disputed Mr BES's assertions.

Mr BES's statement and oral evidence

In his statement Mr BES provided evidence of driving to Sydney to assist his mother when her cheque account was overdrawn in June 2010. He said he arranged to transfer $15,000 into her cheque account which enabled her to pay Ms MMR's account and her overdue tax bill.

Mr BES said he accompanied Mrs HLT to the bank and was shown withdrawal slips signed by Mrs HLT including one for a withdrawal of $10,000.

In his statement received by the Tribunal on 26 August 2013 Mr BES stated "we" began renting property D and that Mrs HLT had become attached to it. He also referred to Mrs HLT purchasing property D in April 2013. In his oral evidence on the last day of the hearing in response to questions asked by Mr WER, Mr BES explained that he had known property D was listed for sale as it was owned by a friend, who worked in the mines, and he paid the friend cash for the occupation of the property until its purchase.

The Tribunal finds the statement of Lindsay J (referring to Barrett J) at [209] in Scott v Scott readily distinguishable in this case. She was not a specialist reasoning from pursing medical records, but a treating doctor. Dr Z has had a much longer relationship with Mrs HLT than Mr DOX or Dr X. Dr Z relationship with Mrs HLT stretched over 30 years. She was seeing Mrs HLT on a fortnightly basis at the relevant time, and in addition to her own observations, and the MMSE she conducted, she had the benefit of input from Mr FOT about Mrs HLT's lack of ability to handle the simplest of financial transactions and domestic arrangements. Against this background and noting that Mr DOX said Mrs HLT asked very few questions when he recited his standard information about the effect of a power of attorney we accept Dr Z was in a better position to judge capacity than was Mr DOX.

The operation and effect of the instrument

Even if we are wrong about Mrs HLT's capacity to understand the nature and effect of the instrument, or that she was not subject to undue influence, the Tribunal is satisfied the power of attorney should nonetheless be revoked. Our primary finding is however that the 2012 instrument is void by reason of Mrs HLT's lack of capacity.

The circumstances surrounding the sale of the Hotel and the purchase of the property D and whether those matters were in Mrs HLT's best interests could not be fully investigated in this forum. But those matters which came to light during this hearing, and which we have summarised under background and in our recording of the questions asked of Ms MMR and Mr DOX, lead us to a finding that the instrument has not, and is not, working in her best interests.

The circumstances of Mrs HLT's letter of 22 January 2013 raise significant issues about the credibility of and true authorship of the matters expressed in that document. We acknowledge it is in Mrs HLT's handwriting, but accept Dr Z's evidence about Mrs HLT's lack of capacity to express the sentiments or to give the instructions set out in the letter. Ms MMR did not seek any further information about the document. The letter, which Ms MMR thought came by ordinary post was not date stamped in accordance with the practice in her office. Mrs HLT was in Queensland on 22 January 2013 and in accordance with Ms RXZ's affidavit evidence was unaware of Mr GAU's suicide attempt until 2 February when told about it by Mr BES. Mr BES did not mention in his statement that he had travelled to Queensland to see Mrs HLT during the period of her residence there, but said he may have done so when questioned on this topic. It appears inherently improbable in the light of Ms RXZ's evidence that Mrs HLT could have written the letter on 22 January 2013 containing as it does references to Mr GAU's suicide attempt.

Ms MMR was unable to explain, other than in reliance on the letter of 22 January 2012, the basis she had caused $200,000 to be paid to her co-attorney, nor could she account for the shortfall of $5,000 from the sums deposited by Mr BES and the "reimbursement" made to him.

Mrs HLT did not receive independent advice, as explained by the Law Society Guidelines, prior to signing of the instrument. Ms MMR's evidence of her reliance of Mr DOX was telling. The Tribunal had no hesitation in finding Ms MMR does and has relied on Mr DOX expertise, experience and views and not her own independent assessment. The Tribunal is satisfied she failed to appreciate the lack of independence between herself and Mr DOX in providing advice and suggesting that she be appointed as attorney with Mr BES.

The Tribunal found her execution of costs agreements with her own firm in her capacity as attorney, and lack of prior discussion or provision of those agreements, to Mrs HLT failed to meet the Law Society guidelines. The deficiency of lack of independent advice and/or a co-attorney who could scrutinise bills once Mrs HLT lacked the capacity to do prior to payment is not in our view overcome by the subjective view of Ms MMR of the "reasonableness" of the charges. The Tribunal also found it was not in Mrs HLT's best interests that the amended costs agreement was not provided to her until the rendering of the bill in respect of the sale of the Hotel. Such an action defeats the rationale of a client knowingly agreeing to costs to be charged to him or her.

In reaching our findings about Ms MMR, the Tribunal accepts that she was candid in her oral evidence to the Tribunal. The Tribunal has no doubt Ms MMR was genuinely concerned about the unexplained withdrawals from Mrs HLT's account and tried to establish how the funds had been obtained from the bank account.

We note that at the commencement of the hearing the separate representative indicated that she would ask the Tribunal to make an order appointing auditors to investigate Mrs HLT's financial affairs including those of Company A and the trust. When the Tribunal pointed out that such an order would require the auditors to report to the Tribunal, the separate representative changed her position to a recommendation that the financial manager appointed should appoint auditors.

There can be no doubt that if Mrs HLT is validly appointed as governing director of Company A pursuant to the Constitution, as amended by the 1995 meeting of directors, she can execute a power of attorney in her capacity as governing director by reason of the provisions of s 124 of the Corporations Act 2001 (Cth). In light of the copy of the Constitution provided to us we make no finding about that matter. Nor is it in doubt a duly appointed attorney for a corporation can sign documents to convey property on behalf of the corporation (see s 51A Conveyancing Act 1919 (NSW)).

Mrs HLT, it appears, has been treated in the conveyance of the Hotel and receipt of its proceeds as the alter ego of the trust. While she prima facie has the ability to control the Trust by the appointment and removal of the trustee, the directors of Company A have a fiduciary duty as trustees to the named beneficiaries (see Kennon v Spry [2008] HCA 56 per French CJ at [75]-[77 ). The Tribunal notes the trust deed contains no provision for the appointment of a substitute appointor in the event of the incapacity of the appointor, only on the appointor's death do Mr GAU and Mr BES become the appointors of the Trust. These are matters beyond the direct scope of these proceedings, but clearly support a recommendation to a financial manager appointed by the Tribunal to appoint auditors to investigate and report on Mrs HLT's financial affairs which are intrinsically linked with Company A and the Trust.

FINANCIAL MANAGEMENT

Section 25G of the Guardianship Act 1987 (NSW) ('the Act') sets out the criteria to be established by the Tribunal if it is to make a financial management order. The Tribunal must be satisfied, to the relevant civil standard, of three matters. First, that the person the subject of the proposed order is not capable of managing his or her financial affairs. Secondly, that there is a need for another person to manage those affairs on behalf of the person, and thirdly that it is in the person's best interests that the order is made.

Is Mrs HLT incapable of managing her financial affairs?

There was no issue by any party that, at the commencement of this hearing that Mrs HLT lacked the capacity to manage her financial affairs. That remained the situation at the conclusion of the hearing.

The Tribunal however notes in making a financial management order the Tribunal must look, not just at the circumstances on the day of the hearing, but to the reasonably foreseeable future (see McD v McD (1983) 3 NSWLR 81 at 86). We are satisfied by reason of Mrs HLT's diagnosis and her cognitive decline her capacity is not likely to revive.

The evidence relevant to Mrs HLT's financial affairs

We have set out in our reasons in respect of the review of the enduring power of attorney a summary, as best we have been able to glean, of Mrs HLT's financial affairs. Those affairs are of some complexity. We repeat our earlier findings.

Who should be the financial manager?

In appointing a financial manager, as in making all other orders under the Act, the Tribunal must act with the interests of the person concerned as the paramount consideration and in accord with the other principles set out in s 4 of the Act.

Section 25M of the Act provides that, if the Tribunal makes a financial management order, it may appoint a suitable person to manage the person's estate or may commit the management of the estate to the NSW Trustee.

The matters or "guidelines" which a Tribunal should consider when determining who to appoint as a financial manager are discussed by Lindsay J in M v M [2013] NSWSC 1495 at [50]. There his Honour, albeit in the context of an application to replace a financial manager, said:

As presently advised, and subject to reconsideration in light of further experience and argument in contested cases, I adopt the following propositions as non-exhaustive "guidelines" (or, in deference to Kirby P's observations in Holt v Protective Commissioner (1993) 31 NSWLR 227 at 241E-F and 243E-F, a "framework of approach" or a "checklist of considerations") that might be borne in mind when the Court is called upon to make a decision about the identity of a manager of a protected estate or the substitution of one manager for another:

(a) First, the jurisdiction the Court is called upon to exercise is not a "consent jurisdiction". An order for the appointment, removal or replacement of a particular manager is not to be made merely because a party, or some other person, seeks it, consents to it or acquiesces in it: JJK v APK (1986) Australian Torts Reports 80-042 at 67, 881 (first guideline); JMK v RDC and PTO v WDO [2013] NSWSC 1362 at [60]-[62]. The Court is bound to exercise an independent judgment because of the public interest element in the decision to be made and the possibility, if not the fact, that the protected person lacks the mental capacity requisite to informed decision-making.

(b) Secondly, the governing purpose of the jurisdiction exercised by the Court is protection of the welfare and interests of the particular protected person concerned: Holt v Protective Commissioner (1993) 31 NSWLR 227 at 238B-C and 241A-B and F-G.

(c)Thirdly, any decision made affecting the welfare or interests of a protected person must be made in a manner, and for a purpose, calculated to be in the best interests, and for the benefit, of the protected person: Holt v Protective Commissioner (1993) 31 NSWLR 227 at 238D-F and 241G-242A.

(d) Fourthly, care needs to be taken in all decision-making affecting a protected person to focus on the facts of the particular case, preferably with due consultation with the protected person, his or her family and carers who may be well placed to inform the Court of the protected person's particular circumstances: Holt v Protective Commissioner (1993) 31 NSWLR 227 at 238C-239B, 240D, 241B-F and 243E-F; Re L [2000] NSWSC 721 at [10].

(e) Fifthly, in the choice of a manager consultation of the welfare and interests of a protected person may favour appointment of a member of his or her family over the appointment of an institutional manager: Holt v Protective Commissioner (1993) 31 NSWLR 227 at 238G-239B.

(f) Sixthly, decisions need to be made in the context of a prudential management regime that can be administered, without strife in the simplest and least expensive way, in the interests of the protected person: HS Theobald, The Law Relating to Lunacy (Stevens and Sons, London, 1924), pp 380 and 382.

(g) Seventhly, regard needs to be had to the value and nature of the property comprising a protected person's estate in deciding upon the identity of a manager or an appropriate management plan: Holt v Protective Commissioner (1993) 31 NSWLR 227 at 242E and 243D-F.

(h) Eighthly, recognition needs to be given to the status and obligations of a manager of a protected estate as the holder of a fiduciary office. This means that the Court, managers and other affected persons need to be alive to the importance of avoiding, or at least minimising, exposure of a protected person to dangers associated with a manager having a conflict between a duty owed to the protected person and the manager's personal interests: Holt v Protective Commissioner (1993) 31 NSWLR 227 at 239B and 242B-C; Re L [2000] NSWSC 721 at [12]. Nevertheless, it must also be recognised that the liability of a manager of a protected estate to account may differ from that of a trustee of an ordinary trust to the extent necessary to accommodate the protective purpose of the manager's appointment: Countess of Bective v Federal Commissioner of Taxation (1932) 47 CLR 417 at 420-423.

(i) Ninthly, in conformity with fiduciary law, the office of a manager of a protected estate must generally be regarded as a gratuitous one unless, by an order of the Court or by legislation, a special arrangement to the contrary is made: Gell v Gell (2005) 63 NSWLR 547 at 553-554 [21]-[23]; Macedonian Orthodox Community Church St Petka Incorporated v Bishop Petar (2008) 237 CLR 66 at 93 [69].

(j) Tenthly, in deciding whether, when and on what terms a manager of a protected estate is to be allowed remuneration out of the estate, care needs to be taken not to shift the focus of decision-making from what is in the best interests, and for the benefit, of the protected person to a perceived "right" on the part of any, or any prospective, manager to remuneration. If a manager is to be allowed remuneration, a decision to that effect must be driven by the perspective of the protected person, not the perspective of the manager: Fletcher, Ex parte (1801) 6 Ves Jun 427; 31 ER 1127; Re Walker (1848) 2 Phil 630; 41 ER 1087; Re Westbrooke (1848) 2 Phil 631; 41 ER 1087; G v B (Powell J, 27 May 1992) BC 9201855 at 13.

(k) Eleventhly, the primacy given to the protective purpose of the Court's jurisdiction carries with it, as a correlative, the absence in any manager (public or private) of a legal entitlement to be, or to remain, manager of a particular protected estate: Holt v Protective Commissioner (1993) 31 NSWLR 227 at 237F-238F.

(l) Twelfthly, a decision about whether a manager should be replaced may need to be approached differently from one made about the identity of an appointment as an initial manager because of a perceived need to identify an acceptable reason (ie, one governed by the purpose of the protective jurisdiction and consideration of the best interests of, and benefits available to, the protected person) for change. Depending on the facts of the particular case this may, but will not necessarily, involve recognition that an applicant for change bears, at least, a forensic onus to establish a case for change: Holt v Protective Commissioner (1993) 31 NSWLR 227 at 237F, 238B-F, 239C-G and 242A-B.

(m) Thirteenthly, a manager, or prospective manager, of a protected estate needs to have given thoughtful attention (in the case of a private manager, in consultation with the NSW Trustee and, in the context of the Corporations Act, the Australian Securities and Investments Commission) to the development, and operation, of a plan for management of the protected person's estate: Re L [2000] NSWSC 721 at [11]-[12]; Re McL [2001] NSWSC 280 at [3]-[5].

(n) Fourteenthly, although disputes about the management of a protected estate may at times need to be determined in an adversarial setting, an exercise of protective jurisdiction is not inherently, or necessarily, adversarial in nature. That reality finds expression in the Court's approach to orders for costs in protective list proceedings. The Court ordinarily exercises its discretion, not by reference to a rule that costs follow the event, but having regard to what, in all the circumstances, seems proper: CCR v PS (No 2) (1986) 6 NSWLR 622 at 640.

(o) Fifteenthly, part of the role of the Court in its exercise of protective jurisdiction is to give consideration to the manner and form of a decision-making process calculated to ensure that the protective purpose of the jurisdiction is duly served.

(p) Sixteenthly, in the context of the current legislative and administrative regime for management of protected estates, the Court will ordinarily require that any substantial decision it may be called upon to make affecting a protected estate, beyond the routine, is made on notice to the NSW Trustee, allowing the NSW Trustee to be heard in an appropriate case and inviting its assistance where necessary.

Mr KCC impressed the Tribunal as a sincere and honest witness. He is well qualified in commercial matters as disclosed in his curriculum vitae. During the course of the hearing Mr KCC endeavoured to explain to Mr BES that he would act in Mrs HLT's best interests, that he had time to devote to her affairs, and that he hoped, with time, to effect some sort of peaceful resolution to the clear animosity displayed by Mr BES towards Mr GAU, and to modify Mr GAU's views of Mr BES.

Mr GAU supported Mr KCC's appointment for a period of one year with a review of the order at the end of that time.

The Tribunal accepts Mr KCC can devote time to Mrs HLT's affairs. He conceded to do so properly would require him to engage accountants. The Tribunal found he would use his best endeavours to act in Mrs HLT's best interests.

The Tribunal finds any financial manager appointed will need to appoint accountants to investigate Mrs HLT's financial affairs including her interest in the trust and role as governing director of Company A. Because of the evidence before the Tribunal relating to the demand for loan accounts in the Trust on behalf of Mr GAU as executor of Mr FOT's estate, and the pending family provision claim, it is likely an independent solicitor will need to be retained by Mrs HLT's financial manager. She will need representation in the Supreme Court costs proceedings by a guardian at litem. The Tribunal accepts the engagement of such experts could be made by either Mr KCC or the NSW Trustee.

Mr BES's evidence, both written an oral, demonstrated a hostile, abusive attitude to Mr KCC. Mr BES has made assertions that Mr GAU was improperly withdrawing funds from his mother's account between 2010 until Ms MMR closed the account in March 2012. The Tribunal is satisfied that he does not trust Mr KCC to investigate, or to take any remedial action in respect of such funds, if on investigation, there is substance to his allegations. In these respect we note the table of withdrawals provided by Ms MMR from Mrs HLT's bank account does disclose regular withdrawals, albeit not as asserted by Mr BES of $1,200 each fortnight, but of varying amounts in that range.

A financial manager will also need to look at the terms and conditions of Mr GAU and Mrs OEU's occupation of property A, and take into account how the funds applied from the proceeds of sale of the Hotel to discharge the mortgage used to purchase this property and property C should be treated. This is likely to be a difficult exercise for Mr KCC who would no doubt be exposed to conflicting positions of Mr BES and Mr GAU on this issue.

Of more significance is the role Mr KCC would have to undertake as financial manager in respect of property D. Ms MMR asserted Mr BES and Mrs NES had vacated property D shortly prior to the resumed hearing. It is likely the property, which is subject to the lease the validity of which is questionable, will have to be sold. Mrs HLT's furniture may need to be removed from storage, and the circumstances of [Mr BES's son's] acquisition of the motor vehicle investigated.

The Tribunal was satisfied from the attitude displayed by Mr BES, particularly in closing submissions, that sadly he has no confidence in or respect for Mr KCC. The Tribunal was satisfied from the attitude displayed by Mr BES that it would be extremely difficult for Mr KCC to work with him or to investigate transactions which have involved Mr BES and his family members.

Weighing the undoubted attributes which Mr KCC would bring to the role, against the disqualifying factors involved a fine balancing of those factors by the Tribunal in exercising its discretion.

The Tribunal found the following factors supported Mr KCC's appointment:

the benefits to Mrs HLT of his personal concern for her well being;
his familial relationship;
his commercial experience, together with financial benefits given his voluntary role as against the fees charged by the NSW Trustee.

The Tribunal found the following matters supported the appointment of the NSW Trustee:

the trustee is independent and has considerable expertise in the management of complex estates;
there would be no financial disadvantage to Mrs HLT in the engagement of solicitors or accountants as charges would be incurred whether retained by Mr KCC or the trustee;
the appointment of the trustee would avoid conflict between Mr KCC and family members particularly Mr BES which conflict is likely to adversely impact on management of Mrs HLT's estate; and
all parties accepted that the NSW Trustee could be appointed although this was not Mr KCC's primary position or that of Mr GAU.

Ultimately the Tribunal determined that the NSW Trustee should be appointed as financial manager. In doing so we gave significant weight to the following matters:

The independence of the office;
That there would be no costs saving to Mrs HLT whether the NSW Trustee or Mr KCC instructed accountants and or solicitors to act;
That Mr BES and Mr GAU would both have access to a neutral arbitrator in respect of their competing allegations of improper or imprudent financial dealing with their mother's assets and income;
Mrs HLT's age and state of health and the benefit to her to bringing the proceedings to a conclusion with a final financial management order being made;
That by reason of the neutrality of the NSW Trustee and the trustee's corporate experience that matters are likely to be resolved in the least expensive way and with minimum strife if the trustee is appointed. This is to be compared with appointing Mr KCC, who is inherently likely to run into difficulties in dealing with Mr BES. This last finding is consistent with guideline 7 of the guidelines suggested by Lindsay J in M & M.

Ultimately the Tribunal determined, for the reasons exposed above, that Mrs HLT's best interests will be served by a final financial management order with the NSW Trustee as her financial manager.

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I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.

Registrar

Decision last updated: 15 April 2014

Medium Neutral Citation:	HLT [2014] NSWCATGD 5
Hearing dates:	16 September 2013, 4 November 2014 and 20 January 2014
Decision date:	07 February 2014
Jurisdiction:	Guardianship Division
Before:	Boland J, Senior Member (Legal) Wroth M, Senior Member (Professional) Porter L, General Member (Community)
Decision:	Declaration that principal did not have mental capacity to make a valid enduring power of attorney on 17 January 2012. Financial management order made; NSW Trustee and Guardian appointed.
Catchwords:	ENDURING POWER OF ATTORNEY - review of making - capacity to make enduring power of attorney - no independent advice - undue influence - multiple instruments - review of operation and effect - best interests - solicitor appointed as attorney - transfer of property and assets to attorneys - attorney charging remuneration - fiduciary duties - family trust - company arrangements - other litigation - attorney acting as tutor - conflict of interest. FINANCIAL MANAGEMENT - application for financial management order - sale of property - capacity to instruct - Supreme Court litigation - complex estate - suitability for appointment as financial manager - conflict of interest - conflict between proposed manager and family - recovery action may be required - remuneration of private financial manager - whether order should specify review.
Legislation Cited:	Powers of Attorney Act 2003 (NSW) Guardianship Act 1987 (NSW) Civil and Administrative Tribunal Act 2013 (NSW) Conveyancing Act 1919 (NSW) Corporations Act 2001 (Cth)
Cases Cited:	Banks v Goodfellow (1870) LR 5 QB 549 Gibbons v Wright (1954) 91 CLR 423 McD v McD (1983) 3 NSWLR 81 Ranclaud v Cabban (1988) NSW Conv 55 -385 Kennon v Spry [2008] HCA 56 Szozda v Szozda [2010] NSWSC 804 Scott v Scott [2012] NSWSC 1541 M v M [2013] NSWSC 1495
Category:	Principal judgment
Parties:	Mrs HLT Mr GAU (Applicant) Mr KCC (Applicant) Mr BES (Attorney) Ms MMR (Attorney) The NSW Trustee and Guardian
File Number(s):	52523
Publication restriction:	Decisions of the Guardianship Division of the Civil and Administrative Tribunal have been anonymised to remove any information that may identify any person involved in the Tribunal's proceedings (s 65, Civil and Administrative Tribunal Act 2013 (NSW)).