KNO (Review of Enduring Power of Attorney)

CITATION:	KNO (Review of Enduring Power of Attorney) [2019] TASGAB 25
HEARING DATE(S):	19 September 2019
DATE OF ORDERS:	19 September 2019
DATE OF STATEMENT OF REASONS:	9 October 2019
BOARD:	Mr R. Grueber Mr G. Dibley Ms M. Williams
APPLICATION	Review of Enduring Power of Attorney
CATCHWORDS:	Review of Enduring Power of Attorney – capacity of donor – appointment of administrator
LEGISLATION CITED:	Guardianship and Administration Act 1995 (Tas), ss 6, 51, 52, 54 Powers of Attorney Act 2000 (Tas), ss 30, 32, 33

Statement of Reasons

Application

By an Application dated 19 August 2019 HXM sought a declaration that an Enduring Power of Attorney (‘the Power’) executed by KNO, is invalid, and appointment of a new attorney or administrator of the estate of KNO.

Hearing

The Board heard the Application on 19 September 2019.
In attendance at the hearing were:
a.HXM, the Applicant;
b.KNO, the donor of the Power and the proposed represented person;
c.Mr Murray Chambers, counsel for HXM;
d.Ms Michelle Spicer, for the Public Trustee;
e.DMO, KNO’s daughter;
f.MXO, KNO’s daughter;
g.ENO, KNO’s son;
h.OXB, KNO’s brother; and
i.Mr Matthew Ryan-Sykes, Registry Clerk, present to observe the hearing.
The Board had before it the following documents:
a.Application for Review of an Enduring Power of Attorney dated 19 August 2019;
b.Healthcare Professional Report (‘HCPR’) by Dr Anand Kumar dated 27 March 2019;
c.MyAgedCare Support Plan dated 21 June 2019;
d.Letter by Dr Geeta Lad dated 15 March 2019;
e.Enduring Power of Attorney dated 20 February 2019;
f.Revocation of Power of Attorney dated 20 March 2019;
g.Commonwealth Bank of Australia – advice in respect to accounts dated 29 August 2019;
h.Australian Criminal Intelligence Commission National Co-ordinated Criminal History Check Certificate for HXM dated 11 July 2019;
i.LIST Property Information Report for [the first address in Hobart]; and
j.LIST Property Information Report for [the second address in Hobart].

Legislation

The power of the Board to make orders in respect of enduring powers of attorney is set out in section 33 of the Powers of Attorney Act 2000 (‘the Act’). For the purpose of this matter the relevant sub-sections of section 33 are ss(1AA), (1), (2), (3) and (7):
33. Power of Board to make orders in respect of enduring power of attorney
(1AA) In this section, a reference to an enduring power of attorney includes a reference to a purported enduring power of attorney.
(1) The Board may –
(a) of its own motion; or
(b) on application by an attorney; or
(c) on application by or on behalf of a donor; or
(d) on application by any other person who the Board believes has a proper interest in the matter –
hold a hearing in accordance with Division 1 of Part 10 of the Guardianship and Administration Act 1995 to review an enduring power of attorney.
(2) On the review, the Board may, by order –
(a) vary a term of, or a power conferred by, the enduring power of attorney; or
(b) appoint a substitute attorney; or
(c) appoint an administrator of the estate of the donor if he or she is over the age of 18 years; or
(d) declare that the donor did or did not have mental capacity to make a valid enduring power of attorney or to revoke an enduring power of attorney; or
(e) declare that the enduring power of attorney or the revocation of it by the donor is invalid if the Board is satisfied that –
(i) the donor did not have the mental capacity to make the power or the revocation, respectively; or
(ii) the power or the revocation, respectively, does not comply with the other requirements of this Act; or
(iii) the power or the revocation, respectively, is invalid because the donor was induced to make it by dishonesty or undue influence or invalid for any other reason; or
(f) revoke the enduring power of attorney and, if the donor is over the age of 18 years and the Board thinks fit, appoint an administrator of his or her estate; or
(g) make such other order as to the exercise of the power, or the construction of its terms, as the Board thinks fit.
(3) An appointment of a person as administrator under subsection (2)(f) has the same effect as if it had been made under Part 7 of the Guardianship and Administration Act 1995.
(7) An order under this section may be made subject to such terms and conditions as the Board thinks fit.
The creation of an enduring power of attorney is established and regulated by section 30 of the Act. Section 30(2) and (3) provide the following:
30. Creation and effect of enduring powers of attorney
(2) A deed or instrument is not effective to create an enduring power of attorney unless –
(a) the donor understands the nature and effect of the deed or instrument; and
(b) . . . . . . . .
(c) the deed or instrument has endorsed on it, or annexed to it, a statement of acceptance in accordance with form 3 or 4 , or in a form to the same effect, executed by the person appointed to be the attorney.
(3) For the purposes of subsection (2)(a) , a donor is taken to understand the nature and effect of a deed or instrument only if he or she understands the following matters:
(a) that the donor may, in the enduring power of attorney, specify or limit the power to be given to an attorney and instruct an attorney about the exercise of the power;
(b) when the power begins;
(c) that, once the power for a matter begins, the attorney has power to make, and will have full control over, the matter subject to terms or information about exercising the power included in the enduring power of attorney;
(d) that the donor may revoke the enduring power of attorney at any time when he or she has the mental capacity to do so;
(e) that the power the donor has given continues even if the donor subsequently loses his or her mental capacity;
(f) that the donor is unable to oversee the use of the power if he or she subsequently loses mental capacity.
Section 32AE(1) provides that an enduring power of attorney, whether registered or unregistered, may be revoked by the donor giving notice of revocation to the attorney.

Background

To avoid confusion, KNO and her children ENO, DMO and MXO will be referred to in this Statement of Reasons by their first names.
KNO was born on 18 August 1948 and is 71 years old. She has lived in a de-facto marital relationship with HXM for about forty years. They live together at [the first address in Hobart]. The HCPR by Dr Kumar states that KNO has been diagnosed with moderate severity mixed vascular and Alzheimer’s dementia.
For reasons that will become apparent, it is appropriate to refer to some of KNO’s assets. A notice from the Commonwealth Bank of Australia dated 29 August 2019 shows KNO as the joint holder with HXM of a savings account and a pensioner security account. The Application by HXM, dated 19 August 2019, only notes the pensioner security account and provides an amount for KNO’s interest that is about one third of the balance disclosed by the bank as at 29 August 2019. The LIST searches show KNO as the sole registered proprietor of a house and land at [the second address in Hobart]. The Application describes her as having a half interest [the second address in Hobart]. The LIST searches note KNO as a joint proprietor with HXM of a house and land at [the first address in Hobart]. The Application notes KNO as having a half interest in [the first address in Hobart] at a value significantly less than the 2015 capital value in the LIST search. In terms of liabilities, the Application notes a mortgage over [the second address in Hobart] estimated at $200,000.00, apparently the full amount of the mortgage. The Commonwealth Bank report shows a MasterCard in KNO’s name with a debit balance of $28,682.67 as at 29 August 2019. The Application does not refer to the credit card debt. The Application notes KNO’s only income as being from an aged pension and estimates her fortnightly expenses as a little over half the amount of the pension. She has a small number of shares.

The Power

On 20 February 2019 KNO executed the Power appointing DMO, ENO and MXO as joint and several attorneys. The Power was registered on 26 February 2019. On 20 March 2019 KNO executed a revocation of the Power, which was registered on 21 March 2019.
The first question raised in the Application is whether KNO had the capacity to grant the Power, and if so whether she had the capacity to revoke it.

Evidence

The HCPR by Dr Kumar dated 27 March 2019 notes that he is a Registrar in geriatric medicine at the Royal Hobart Hospital. He examined KNO on the date of the report, at which time he had had known KNO for one month. Although Dr Kumar did not know KNO when the Power was executed on 20 February 2019, he says that he is able to express an opinion regarding KNO’s probable capacity to execute the Power on that date. Dr Kumar provides a diagnosis of moderate severity mixed vascular and Alzheimer’s dementia. He considers that KNO lacked the capacity to appoint an attorney and to manage simple and complex financial tasks. He considers that as at the date of execution of the Power, KNO did not appreciate the nature and extent of her estate, did not understand that she had given the attorneys the authority to manage her estate and financial affairs, did not understand that the effect of the Power was to provide the attorneys with full control over her estate and did not understand her power to vary or revoke the Power. Dr Kumar considers that KNO did not have capacity to appoint an attorney when he assessed her on 27 March 2019 and that it is unlikely that her condition would have changed significantly over the previous months. He had regard to a MoCA Cognitive Assessment with a result of eleven out of thirty and a standardised MMSE Cognitive Assessment with a result of fifteen out of thirty. He says that KNO’s dementia is deteriorating and that the prognosis is for progressive decline. Her ability to manage both simple and complex financial decisions is impaired, and she experienced deficits by reason of her dementia in respect to orientation to person, place or time, capacity for new learning, susceptibility to influence and planning and reasoning skills. In respect to her financial affairs the HCPR notes that KNO had a vague understanding of her financial assets and was unable to spontaneously provide basic details regarding her own houses and cars. She was unable to understand the other investment assets she owned. She could not provide a reasonable estimate on the value of her assets. She showed inability to manage payment for groceries and simple tasks. She had considerable debts which were unpaid. She is unable to operate her finances independently and needs supervision for financial decisions. She lacks capacity for sale of major financial assets with a poor understanding of her financial position and consequences for the sale of assets.
The short letter by Dr Geeta Lad dated 15 March 2019 is addressed “to whom it may concern” and states that the letter is written at KNO’s request. In the letter Dr Lad says that KNO has had cognitive function decline and memory loss which has progressively worsened over the past two years as a result of her medical condition and side effects of treatment. Dr Lad expresses the opinion that KNO is not capable of making any decision regarding a power of attorney and financial matters due to her cognitive function decline.
There was no other medical opinion provided to the Board. ENO contended that KNO had capacity at the date that the Power was signed. He told the Board that KNO had spent an hour with the lawyer who prepared the Power and that the lawyer had apparently formed the view that she had capacity. That lawyer did not appear and there was no evidence from him in respect to capacity, other than the implication that by preparing and witnessing the Power he had, at least, not formed the view that KNO did not have capacity. There was no evidence before the Board as to what method, if any, had been used to assess KNO’s capacity.
Capacity is determined according to section 30(2) and (3) of the Act as set out above. Section 30(3) requires that for KNO to have had capacity at the time that the Power was signed she would have had to have understood each of the listed matters.
KNO is Dr Lad’s patient. Dr Lad says that she has experienced cognitive function decline and memory loss progressively worsening over the past two years. She says that in her opinion KNO is not capable of any decision regarding her power of attorney and financial matters due to her cognitive function decline. That opinion was expressed in a letter dated 15 March 2019, twenty-three days after KNO signed the Power. It might be said to be ambiguous as to KNO’s capacity on the date of making the Power, but it is unlikely that there was any difference in capacity given the short time scale and the absence of any reference to a rapid decline, and it clearly indicates that KNO did not have capacity at the date of revocation on 20 March 2019, five days after Dr Lad’s letter.
Dr Kumar had only known KNO for one month prior to providing the HCPR dated 27 March 2019, but his report more directly addresses the issues for the Board. Dr Kumar is a Registrar in geriatric medicine and was assisted by the results of the MoCA and MMSE assessments. His report notes that KNO has moderate mixed vascular and Alzheimer’s dementia which has been present for two years and is deteriorating. He considers that KNO did not have capacity to appoint an attorney when he assessed her and it is unlikely that her capacity would have changed significantly over the preceding month. His opinion was that KNO would not have understood the matters in section 30(3) of the Act.
ENO told the Board that he, DMO and MXO had arranged for KNO to grant them a power of attorney because they were worried about the mortgage not being paid after the tenant, KNO’s brother, had died last year and they wanted to facilitate a sale of the property. ENO said that KNO’s memory was not good, but she could make a decision and then forget that decision. Although ENO contended that KNO had capacity at the time that she signed the Power he could not provide a convincing explanation to why KNO could not sign a contract of sale herself. He said that the Power was arranged because KNO was declining quickly and they were concerned that she would not be able to make decisions in the future. This did not explain why she could not sign a contract at that time.
DMO told the Board that she had “orchestrated” the Power with her brother and sister. She did so because she had had discussions with her mother over a period of about twelve months and her mother had not decided which of the children she should appoint as attorney. She said that the children decided that they would collaborate so that there would not be a problem. She said that the reason that they did this because they knew better what needed to be done financially than HXM. The children were alert to the issue of capacity and raised this with the lawyer who prepared the Power. DMO had concerns about her mother’s capacity. She said that there were a lot of times when her mother was able to remember things. Her memory was vague, but it could come back. KNO saw the solicitor for an hour and then returned two days later to sign the Power. As to the question of why, if KNO had the capacity to sign the Power, she could not have simply signed the contract of sale, DMO referred to family members fighting with each other and said that because of her health KNO had been manipulated and bullied.
There was no expert evidence before the Board that KNO could, at the time of granting the Power, understand the matters in section 30(3) of the Act. ENO, and DMO to a lesser degree, contended that KNO did have capacity at that time, as set out below, however they clearly had concerns about KNO’s capacity. They relied on the solicitor who had prepared the Power as having assessed KNO as having the relevant understanding, but there was no evidence of his opinion or of the methods that he may have been used to assess KNO’s understanding at the time that the Power was signed. ENO’s contention that KNO did have capacity, but had deteriorated rapidly, was not reflected in the medical opinion before the Board. On balance, the expert opinions of Dr Lad and Dr Kumar are preferred, informed in Dr Lad’s case by her long involvement with KNO, and in Dr Kumar’s case by his area of practice and cognitive testing.
KNO did not engage at all in the hearing except in response to direct questions from the Board. She sat quietly without any apparent response to the matters discussed in the hearing room, which became quite heated at times between HXM and ENO in particular. The Board asked KNO what she wanted to happen. She began to answer, saying “well I thought it was going to” when HXM finished her sentence for her by saying “be sold to pay all the debt off”. HXM was asked not to interrupt KNO’s answers. KNO was asked why she signed the Power and HXM immediately interrupted to answer for her. The Board explained to HXM that it needed KNO to respond as part of its assessment of the issues. Despite this, HXM continued to answer on KNO’s behalf. It was necessary to warn HXM that he would be removed from the room if he did not permit KNO to answer. KNO was asked if she remembered signing the Power. She nodded to indicate that she had. Once again, she was asked why she signed the Power and HXM again interrupted to answer for her. KNO was asked again if she remembered signing the Power and she said no. KNO was asked if she had anything else she wanted to say and gave no answer. It was not possible to obtain any reason from KNO as to why she had signed the Power and then a short time later signed the revocation. It appears likely that on each occasion she did so at the behest of members of her family without appropriate understanding of what she was doing, even if those family members at the respective times believed that they were protecting her interests. It was not possible to discern from KNO what her wishes were.
The Board is satisfied, based on the medical opinion of Dr Lad and Dr Kumar, that KNO did not have the relevant understanding within the meaning of section 30(2) of the Act in order to create an effective enduring power of attorney. The Board is therefore satisfied that KNO did not have the capacity to grant the Power. It follows that the revocation is of no effect, but it is clear that KNO did not have capacity to make the revocation. Consequently, the Power dated 20 February 2019 is invalid.

Administration

Pursuant to section 30(2) of the Act, if the enduring power of attorney is revoked the Board may, if it thinks fit, appoint an administrator of KNO’s estate. The appointment under that section has the same effect as if made under the Guardianship & Administration Act 1995. The Act does not provide any further guidance in respect to the matters to be considered by the Board in respect to the appointment of an administrator, but it would be appropriate to apply the same considerations that apply under the Guardianship & Administration Act 1995. Applying the criteria in section 51(1), the Board may make an order appointing an administrator in respect to KNO’s estate if it is satisfied that:
a)KNO is a person with a disability; and
b)She is unable by reason of that disability to make reasonable judgments in respect of matters relating to all or any part of her estate; and
c)She is in need of an administrator of her estate.
Pursuant to section 6 of the Guardianship and Administration Act 1995, when making an administration order:
a)The Board must consider whether the needs of KNO could be met by other means less restrictive of her freedom of decision and action; and
b)The Board must not make an order unless it is satisfied that the order would be in KNO’s best interests; and
c)If an order is made it must be the least restrictive of KNO’s freedom of decision and action as possible in the circumstances.
Section 54 sets out who the Board may appoint as an administrator. The potential administrators include the Public Trustee and any other person who consents to act as an administrator of KNO’s estate if the Board is satisfied that:
a)That person will act in KNO’s best interests; and
b)That person is not in a position where his or her interests conflict or may conflict with KNO’s; and
c)The person is a suitable person to act as the administrator of KNO’s estate; and
d)That person has sufficient expertise to administer her estate.
In determining whether a person is suitable to act as an administrator the Board must take into account:
a)KNO’s wishes, so far as they can be ascertained; and
b)The compatibility of the proposed administrator with KNO.

It is apparent that KNO is a person with a disability, as described by Dr Kumar. It is also apparent from Dr Kumar’s report that KNO is unable by reason of that disability to make reasonable judgments in respect to her estate generally. Dr Kumar notes that KNO had a vague understanding of her financial assets but was unable to spontaneously provide basic details regarding owning her own houses and cars. She was unable to understand the other investments and assets she owned. She could not provide a reasonable estimate on the value of her homes or estimate the value of her other assets. He considered that she showed inability to manage simple payment for groceries and simple tasks. She is unable to operate her finances independently and requires supervision for day to day financial decisions and lacks capacity to make major financial decisions. Given the income, assets and liabilities outlined above this alone would mean that KNO is in the need of an administrator. In addition, the evidence established an urgent need to confirm a contract to sell [the second address in Hobart] in order to satisfy the mortgage which is in arrears and debts including KNO’s credit card debt.
Mr Chambers submitted that there was a need for an administrator to facilitate the sale of [the second address in Hobart]. The property is vacant and not producing income. A mortgage of around $200,000.00 is now substantially in arrears as HXM had previously been making payments but was unable to continue to do so. This was confirmed by HXM, but the source of funding for the mortgage was disputed by ENO and OXB.
HXM told the Board that he and KNO had met in 1979 and had been living together in a de-facto marital relationship since 1982 or 1983. He said that KNO did not want to get married, but he put half of his property in her name “just to keep her happy”. They are currently living on aged pensions. HXM said that he managed the couple’s finances. Notwithstanding this he told the Board that KNO and her mother (who is now deceased) had obtained a loan secured against [the second address in Hobart] in the sum of $250,000.00 for a business deal and had on-lent $196,000.00 to a third party who had not repaid it. HXM said that he had not known of this arrangement for four years even though mortgage repayments were being made from his account.
HXM had had several careers, working as an ambulance driver, miner, and in abalone fishing. He had at various times a couple of hotels, a fish factory, a marina in [Tasmania], and had invested in an apple business at [the Hobart area]. In respect to the apple business, he described it as a scam and said that he had been losing a million dollars a year. He said that he had lost a lot of money in respect to the marina. He said that he had put a couple of million dollars into a furniture business run by the husband of his ex-wife and had lost that money. He blamed his financial losses on others, including KNO’s children, for putting them in positions of responsibility. He and KNO were surviving on the pension and he had been selling assets. He said that he was losing $3,000.00 per month. As a result, there was an urgent need to sell [the second address in Hobart]. A purchaser had been found and a contract had been signed but an administration order was required to confirm the contract and finalise the sale. The property was vacant in order to facilitate the sale.
OXB told the Board that [the second address in Hobart] had been bought by two of his children and put into his (and KNO’s) mother’s name because both children had been in unstable relationships. He said that, as a result, his mother had held the property in trust for his children.
As noted above, the Board was not able to discern from KNO what her wishes were.
The only person who sought appointment as KNO’s administrator was HXM. Mr Chambers made submissions in favour of his appointment. He pointed out that HXM was KNO’s spouse and primary care giver, and was compatible with her. He was familiar with her financial affairs and means. Mr Chambers submitted that HXM would act in KNO’s interests. HXM is the executor of KNO’s estate under her will.
Throughout the hearing HXM interrupted, spoke over other people and made sotto voce comments, often disparaging of KNO’s children, ENO in particular. He accused KNO’s children of being greedy and OXB of being Tasmania’s biggest criminal. On several occasions he stood up as though to leave and then sat back down again. Despite Mr Chambers’ best efforts and directions from the Board HXM was unwilling or unable to contain himself. When the Board retired to consider its decision there was what Mr Chambers subsequently described as a disturbance in the hearing room and the waiting area between HXM and other family members. The disturbance was serious enough for Registry staff to summon the Police, although they did not arrive before the hearing was finalised. HXM removed KNO, who was in a wheelchair, from the hearing room and the pair did not re-enter when the Board re-convened to announce its decision.

Decision

For the reasons set out above, the Power dated 20 February 2019 is invalid. KNO does not have the capacity to manage her estate. As the Power is invalid the Board cannot appoint a substitute attorney. It is appropriate therefore to consider the appointment of an administrator, pursuant to section 30(2) of the Act.
The Board is satisfied that KNO satisfies the criteria in section 51 of the Guardianship and Administration Act 1995 for the appointment of an administrator of her estate. There was no dispute about this at the hearing. By reason of the disability described by Dr Kumar, KNO is unable to make reasonable judgments about even simple financial matters. An administrator is needed to manage her finances, assets and liabilities generally, as well as in respect to the sale of [the second address in Hobart]. There is no apparent less restrictive means and it would be in KNO’s best interests for an administrator to be appointed, not the least to manage her borrowings and credit card debt. The contentious issue in respect to administration was who ought to be appointed as administrator.
The factors in favour of appointing HXM are those summarised by Mr Chambers. There are, however, factors that militate against his appointment. By his own description, HXM has been involved in several businesses that have lost, in his words, “millions of dollars”. There is clearly a great deal of hostility and ill feeling between HXM and KNO’s children, ENO in particular. Although HXM told the Board that he had been managing the family finances, KNO had apparently arranged a mortgage of which HXM was unaware for four years notwithstanding that the repayments were being made from an account of his. The information provided by HXM in the Application in respect to KNO’s assets was inaccurate and incomplete, particularly in respect to the description of KNO’s interest in [the second address in Hobart] and the omission of her credit card debt, both significant matters. There is apparently a dispute as to the equitable ownership of [the second address in Hobart]. HXM’s behaviour in the hearing did not provide any encouragement that he would act in a measured, thoughtful or disciplined way in managing KNO’s estate. Taking these matters into account the Board is not satisfied that HXM is a suitable person to act as KNO’s administrator or that he has sufficient expertise to do so. No other family member was proposed. Without making any findings in respect to DMO’s assertions that KNO had been subject to manipulation and bullying it is apparent that KNO is vulnerable, as noted in Dr Kumar’s report. KNO would benefit from having her estate managed by an objective and independent administrator able to make impartial decisions in her best interests without the burdens and encumbrances of the history, hostility and ill feeling between family members. The Public Trustee will be appointed. KNO’s prognosis is for deterioration of her condition and her need for an administrator will be ongoing. Having regard to section 52 of the Guardianship and Administration Act 1995, it is appropriate to make the order for a period of three years.

Orders

Accordingly, with respect to KNO as the Donor, the Board Orders:
1.    That the Enduring Power of Attorney PA115794 is declared invalid.
2.    That the Revocation of Power of Attorney PA116216 is declared invalid.
3.    That the Public Trustee (Tas) is appointed Administrator of the estate of the Donor.
4.    That the powers and duties of the Administrator be those conferred by Division 4 of Part VII of the Guardianship & Administration Act 1995.
5.    That the Administration Order remains in effect until the 18^th day of September 2022.

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[2019] TASGAB 25

19 September 2019