KD (Review of Enduring Powers) - [2012] TASGAB 40

GUARDIANSHIP AND ADMINISTRATION BOARD
HOBART

KD – Application to review an enduring power of attorney by DD

Neutral citation: KD (Review of Enduring Powers) [2012] TASGAB 40

REASONS FOR DECISION

Anita Smith (President)
Kim Barker (Member)
Gerard Dibley (Member)

Dates of hearings: 12 January 2012, 5 October 2012 and 22 November 2012

Review of an enduring power or attorney – instrument created under repealed legislation – non-compliance with witnessing provisions– Board’s jurisdiction to determine validity of instrument created under repealed legislation - deficiencies in the execution or the process of registration are perfected by the fact of registration to the extent that the instrument becomes reviewable by the Board – meaning of “this Act” and “for any other reason”

Powers of Attorney Act 1934 s.6, 11A
Powers of Attorney Amendment Act 1987
Power of Attorney Act 2000 s. 9, 19, 22, 33, 58
Guardianship and Administration Act 1995
Registration of Deeds Act 1935

KD is the mother of DD, HD, QD and MD and the widow of GD. She and her late husband bought five acres of land in the City of Glenorchy in the 1950s (the property). They subdivided this property and built their family home on one lot. In the 1970s they commenced building some units on another lot. Various lots within the original plan have been built on at various times since then and some have been sold. In 1986, KD’s late husband commenced trading as XXXX. On 9 November 1998 GD and KD each executed a purported power of attorney and enduring power of attorney appointing MD as their attorney. The document was registered three days later.
In 1996 company records indicate that 50 shares in XXXX were held evenly between all members of the family. In 1999, GD retired leaving the handling of the business to MD. In 2001 GD and KD ceased as directors of the company and MD commenced as sole director. In 2003 MD held 40 shares in the company and DD held 10. At the date of the hearing, MD is the sole director and shareholder in the company. As such he has also controlled the operations with respect to building on the remaining lots of the property. The property was never transferred into the Company name and a dispute has arisen about how MD has handled GD and KD’s affairs, in particular about the recording of income from the sale of units and houses built on the property and the attribution of taxation liability for that income.
In March 2010, KD developed dementia and became incapable of managing her affairs. However, it appears that GD retained mental capacity until his death. MD asserts that he did not intervene as an attorney until May 2011 when his parents were admitted to an Aged Care Facility. Sadly, GD died in March 2012.
The applicant was particularly concerned that, by his calculations, the improvements to the property had generated over $1 million but when GD and KD were admitted to nursing home care their personal assets assessment amounted to only $150,000.00. On 10 August 2011, the applicant sought a review of the purported power pursuant to section 33 of the Power of Attorney Act 2000 with respect to both donors.
On 12 January 2012 the Board held a preliminary hearing to determine whether it had jurisdiction to hear the matter given (i) many of the issues appear to relate to company law matters and may be best dealt with in an alternative jurisdiction and (ii) the fact that many of the transactions complained of occurred at a time when the purported power was either not operational or not in its enduring phase.
As recorded in an interim statement of reasons in this matter, on 28 May 2012 the Board appointed Mr Turner, an Australian legal practitioner, to assist the Board in these proceedings. Mr Turner brought to the Board’s attention the following matters the day before the second hearing on 5 October 2012:
“1. By s33(1) of the Powers of Attorney Act 2000 the Board is able to review an "enduring power of attorney" - regardless of when that power was created (recalling that an enduring power of attorney could not exist before the amendments effected to the Powers of Attorney Act 1934 in 1987 - by the Powers of Attorney Amendment Act 1987) and regardless of whether it was compliant with the statutory provisions applicable at the time it was created (which provisions have changed since 1987);
2. s33(2)(e)(ii) refers to "this Act" which can only sensibly be the Powers of Attorney Act 2000 (and not the Powers of Attorney Act 1934), but s33(2)(e)(iii) confers power to declare an enduring power of attorney "...invalid for any other reason";
3. Following the hearing the Board might be satisfied that the (purported) enduring power of attorney from KD to MD did not comply with the provisions of the Powers of Attorney Act 1934 in two critical respects - viz that KD's signature was not attested by 2 witnesses, as required by s11A(2)(a) of that Act and that clause 57 does not evince the intention prescribed by s11A(1) of that Act. Either or both mean the power is not an "enduring power of attorney" within the meaning of s11A and in consequence the Board could, if it was so satisfied, declare the power to be invalid, pursuant to s33(2)(e)(iii) of the Powers of Attorney Act 2000;
4. After that the Board could, if it was so disposed, proceed to appoint someone as an administrator - s33(2)(c). It might be observed that s33(2)(f) is of application only where the power is revoked - which connotes that the power is valid to start with (i.e. compliant with the mandated requirements and not therefore amenable to a declaration under s33(2)(e)).”
This submission was explained to the parties at the hearing on 5 October 2012. The applicant, QD and HD agreed with the construction by counsel assisting. MD sought an adjournment to seek legal advice. The Board granted the adjournment.
The Board then entertained an application for the appointment of an administrator during the interim period before the next hearing. Evidence taken in relation to the management of the estate satisfied the Board that an interim administration was warranted in the circumstances. The consequence of such an order is the appointment of the Public Trustee as administrator between hearings.
On the eve of the next hearing date, being 22 November 2012, MD’s solicitors faxed a letter to the Board indicating:
·That the witnessing of the purported power was insufficient to create an enduring power of attorney.
·That the document registered could only be a power of attorney, not an enduring power.
·The Board lacks jurisdiction to make orders with respect to the purported power.
·If the document created an agency, that agency ceased with the onset of KD’s dementia.
·MD did not wish to make any submissions in opposition to the appointment of the Public Trustee as KD’s administrator, and
·MD did not intend to attend the hearing on the following day.
Mr. Rees, counsel for MD, argued that the Board had no jurisdiction because the document was deficient in its witnessing provisions and because of the manner in which the Recorder of Titles has recorded the document for the purposes of a search. Mr. Rees argues that the document is only a general power of attorney and the Board has no jurisdiction with respect to a general power of attorney.
The Board agrees to the extent that if the document is only a general power of attorney, the Board has no jurisdiction. The Board’s jurisdiction only relates to enduring powers of attorney.
The Board determined that it has jurisdiction with respect to the purported power for the following reasons:
On 9 and 12 November 1998 an enduring power of attorney could be created and registered pursuant to the Powers of Attorney Act 1934 because of the amendment effected by Powers of Attorney Amendment Act 1987 for the creation of enduring powers.
Pursuant to section 6 of the 1934 Act, a power was invalid until registered under the Registration of Deeds Act 1935 as an instrument.
Section 58 of the Powers of Attorney Act 2000 provides that:
“Where the registration of a power of attorney or a copy of an enduring power of attorney in accordance with the Registration of Deeds Act 1935 was in force immediately before the commencement of section 59, that registration is taken to continue in force notwithstanding the repeals effected by that section.”
Therefore, as the power was registered pursuant to the 1987 amendment Act, the registration remains in force in accordance with the current Act.
Section 19 of the Powers of Attorney Act 2000 provides that Division 3 of Part 3 of the Act applies to powers of attorney executed either before or after the commencement of this Act. Section 22 of the Act is within Division 3, hence section 19 applies. Section 22 states that a power of attorney - which in Part 3 of the Act refers to a power of attorney made or created under section 18 or 30 being general powers of attorney or enduring powers of attorney (see section 9(1)) - remains in force inter alia until it is revoked under this Act. From this sequence of provisions, the Board deduces that an enduring power of attorney registered pursuant to previous enactments can be revoked under the current Act, including by revocation by the Board.
The document in question purports to be an enduring power in substance because it contains the words in clause 57:
“I declare also that the authority conferred by this power is exercisable notwithstanding the Donor’s subsequent mental incapacity or in the event of the Donor’s subsequent mental incapacity.”
These words comply in substance with the requirements in section 11A(1) of the 1934 Act, although clearly other requirements of section 11A were not complied with. At the least up until the 5 October 2012, the purported attorney relied on that document as if it was a valid enduring power of attorney. Internal markings on the register by the Recorder of Titles are not persuasive with respect to the purported substance of the document.
Regardless of whether the document ought to have been registered, the registration was in force. Registration is a powerful process, see for instance section 14 of the 1934 Act. None of the enactments provides a process to dispute registration with the Recorder of Titles. Therefore the Board is, under both enactments relating to enduring powers, the relevant authority to review the propriety and effect of registration. In other words, deficiencies in the execution or the process of registration are perfected by the fact of registration to the extent that it becomes reviewable by the Board.
The document in question was not attested by two witnesses and therefore did not comply with the requirements of the 1934 Act. The Board considered it to be invalid for that reason.
As Mr. Turner pointed out to the Board, the fact that the purported power was made under a previous enactment meant that section to s33(2)(e)(ii) of the Powers of Attorney Act 2000 could not apply because it is related to “this Act”. However to s33(2)(e)(iii) is applicable because the Board can declare an instrument invalid “for any other reason”. As stated above, the reason is that the attestation of the instrument did not comply with the requirements of the enactment under which it was made.
The Board was satisfied that KD is a person with a disability, incapable of making reasonable judgments about her estate and is in need of an administrator. Given that the applicant and other members of his family sought the appointment of the Public Trustee as administrator, and that MD did not object to that appointment, the Board considered that appointment to be appropriate. Such appointment is made pursuant to section 33(2)(c) or alternatively section 33(2)(f) or (g) of the Act.

Anita Smith

PRESIDENT