MQN (No 4)

[2020] NSWCATGD 55

NSW Civil and Administrative Tribunal

New South Wales

• Amendment notes

Medium Neutral Citation:

MQN (No 4) [2020] NSWCATGD 55

Hearing dates:

5 March 2020

Date of orders:

17 March 2020

Decision date:

17 March 2020

Jurisdiction:

Guardianship Division

Before:

L Organ, Senior Member (Legal)
Dr B McPhee, Senior Member (Professional)
F E Hilson, General Member (Community)

Decision:

In relation to the enduring power of attorney made by MQN on 15 July 2011 which appointed DVN as attorney the Tribunal determines, orders or declares:

to carry out a review of the operation and effect of the enduring power of attorney.

Having conducted the review has determined to make no orders and dismiss the application.

Catchwords:

REVIEW OF AN ENDURING POWER OF ATTORNEY – review of the operation and effect of an enduring power of attorney – whether an order under s 36 of the Powers of Attorney Act should be made – whether attorney in breach of their fiduciary duty as attorney – eviction of principal’s children from investment property belonging to the principal - allowing rent-free occupation of the principal’s property amounting to a gift – not in principal’s best interests that an order be made – review of enduring power of attorney conducted – no order made – application dismissed.

Legislation Cited:

Div 4, Pt 3 of the Powers of Attorney Act 2003 (NSW)

the POA Act, s 36 (1)

ss 36(3)-(9) of the POA Act

Pt 3A of the Guardianship Act 1987 (NSW)

s 37(1) of the POA Act

the POA Act: s 36(1)-(2)

s 35 of the POA Act

s 4 of the Guardianship Act

s 36(4) of the POA Act

s 37(1) of that Act

s 36(4) of the POA Act

s 11(2) of the POA Act

Cases Cited:

ZBC v ZBD [2016] NSWCATAP 264

C v W [2015] NSWSC 1774

Texts Cited:

GD Dal Pont, Powers of Attorney (2015, LexisNexis, Butterworths Australia) at [8.32]

Category:

Principal judgment

Parties:

015: Review of an Enduring Power of Attorney
MQN (the person)
NZG (applicant)
DVN (attorney)
MBL (joined party)
NSW Trustee and Guardian

Representation:

Counsel:
T Alexis SC, Counsel for DVN

Solicitors:
G Coyne, Solicitor for NZG and MBN

File Number(s):

NCAT 2017/00198140

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: Civil and Administrative Tribunal Act 2013 (NSW), s 65.

REASONS FOR DECISION

APPLICATION FOR REVIEW OF AN ENDURING POWER OF ATTORNEY

Background

1. MQN is 90 years old and of Italian background. MQN is a permanent resident at an aged care facility in Sydney’s Northern Beaches region. Prior to this MQN lived in another aged care facility after re-locating in 2015 from the unit in which she lived for many years in another suburb in the Northern Beaches. MQN’s husband died in 1998. MQN has three children: Mr DVN, Ms NZG and Mrs MBL. For ease of reference MQN’s children are referred to as DVN, NZG and MBL throughout these reasons.

2. MQN has a diagnosis of dementia.

3. On 15 July 2011 MQN granted an enduring power of attorney to DVN (the EPOA).

4. MQN has been the subject of previous proceedings before the Tribunal. On 28 March 2018 the Tribunal dismissed applications by NZG for review of the EPOA and for the appointment of a financial manager for MQN.

5. On 18 July 2019 NZG made a further application to the Tribunal to review the EPOA.

6. MBL has been joined as a party to the application. MBL, NZG and DVN have each been given leave by the Tribunal to be legally represented.

The hearing

7. At the end of these Reasons for Decision are lists of the parties to the application and the witnesses who attended the hearing. [Appendix removed for publication.]

8. MQN did not participate in the hearing. Although the Tribunal will usually try to involve the person who is the subject of proceedings we were satisfied it was appropriate not to do so in the circumstances of this matter. In reaching this conclusion we had regard to the fact that there was agreement by all parties that MQN would not be able to follow the proceedings or make a meaningful contribution to the hearing due the impact of her dementia. This view was consistent with medical evidence available to us and findings made by the Tribunal differently constituted on 28 March 2018. A report of Dr Z dated 31 July 2017 says MQN “is unable to manage her financial affairs due to her progressive Alzheimer's Disease”.

9. We also had regard to the evidence of Ms O, a registered nurse at the aged care facility, who said MQN’s cognitive impairment is such that she would not be able to understand the purpose of the hearing.

Statutory Framework

10. The Tribunal’s jurisdiction in relation to the review of powers of attorney is set out in Div 4, Pt 3 of the Powers of Attorney Act 2003 (NSW) (“the POA Act”).

11. The Tribunal may, on the application of an interested person, decide to review the making, revocation or operation and effect of a reviewable power of attorney: the POA Act, s 36 (1).

12. Relevantly for the purpose of the present application, when reviewing the operation and effect of a power of attorney, the Tribunal has a broad discretion to make orders in the terms of those set out in ss 36(3)-(9) of the POA Act if it is 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. For instance, the Tribunal may remove a person from office, vary a term or power, revoke all or part of the power of attorney and direct an attorney to lodge accounts.

13. In the alternative, the Tribunal may decide not to make any orders in respect of the review and, if so, may treat the application as an application for a financial management order under Pt 3A of the Guardianship Act 1987 (NSW) “if it considers it appropriate in all the circumstances to do so” (refer s 37(1) of the POA Act). The Tribunal may consider this would be appropriate if there are concerns about the making and/or operation and effect of a power of attorney but to revoke the instrument would leave the principal without a financial manager.

14. The Tribunal has a two-step discretion under the POA Act: s 36(1)-(2). We may first exercise a discretion under the POA Act, s 36 to “decide to review” the making, operation or effect of a reviewable power of attorney or “not to carry out such a review”: s 36(1). After deciding to review the making or operation and effect of a reviewable power of attorney, we may further exercise its discretion, “whether or not to make an order under” s 36.

The enduring power of attorney

15. MQN granted an enduring power of attorney to DVN on 15 July 2011 with the instrument to take effect from DVN’s acceptance of his appointment. DVN accepted his appointment on 15 July 2011.

16. The EPOA does not authorise DVN as attorney to give gifts or confer benefits to a named person or persons. Paragraph 5 of Part 2 of the EPOA under the heading “Additional Powers and Restrictions” which states “I authorise my attorney to give reasonable gifts as provided by s 11(2) of the Powers of Attorney Act 2003” was crossed out.

17. There is no dispute that the instrument is a reviewable power of attorney within the meaning of the POA Act and that the Tribunal has jurisdiction to review the instrument.

Overview of the evidence

NZG

18. NZG requests that the Tribunal review the operation and effect of the EPOA on a limited basis only. That is in respect of the exercise by DVN of his authority under the EPOA to evict NZG and MBL from the units that they each occupy in the apartment complex at Property A owned by MQN (Property A).

19. NZG occupies a Unit X at Property A. Up until July 2019 she paid no rent for the property. As part of an interim agreement with DVN she now pays $800 per week. However, only $300 of that amount is being paid to MQN currently. The balance is being treated as a debt accruing of $500 per week against NZG’s share of the inheritance she stands to receive from her mother’s estate. This agreement is to remain in place until the determination of the present proceedings. NZG says because of her own personal circumstances she is unable to pay full market rent for the unit which she occupies.

20. NZG asserts that the decision to evict her and MBL was not made in good faith by DVN and is not in MQN’s best interests. If DVN is allowed to exercise his authority under the EPOA to evict NZG and MBL, NZG says the effect of this will be that MQN will be deprived of her two daughters being in close proximity to the aged care facility where she lives. The consequence of this NZG says is that their ability to visit MQN will be negatively impacted and may be curtailed.

21. This, NZG says, would not be in MQN’s best interests. NZG gave a number of examples of occasions when she and/or MBL have been able to assist staff at the facility in settling MQN when she has become distressed or anxious particularly in the late afternoon or early evening when she experiences “sundowning” as a result of her dementia. NZG concedes that at times it has been possible to do this over the phone with NZG speaking to her mother in Italian and reassuring her over the phone. NZG says she is also able to be with her mother at hospital at short notice if her mother has to be taken to hospital urgently. Currently NZG visits her mother approximately three days during the week spending between one to one and half hours with her at a time. On weekends when she also visits she usually stays up to two and half hours.

22. NZG was cross-examined at length about her ability to afford alternate accommodation within a reasonable distance of her mother’s aged care facility in the Northern Beaches. NZG contends this would be difficult because of her current financial situation and that she would most likely have to move to an area some distance from the other suburb in the Northern Beaches. This would impact on the frequency of the visits she is able to make to see her mother. NZG is working part time as a carer for a person with a disability and currently assists her adult daughter by providing her with an amount of $250 per week. NZG says her daughter is not working at present, is not eligible for Centrelink benefits and is experiencing psychological issues arising from the breakdown of a long-term relationship. NZG acknowledged that she owns a one third interest in the property at which her daughter and her daughter’s former partner still live at regional NSW although she says this property is the subject of a family law property settlement between her daughter and ex-partner.

23. In both her written and oral evidence NZG disputed that the termination of her and MBL’s tenancies was necessary. Firstly she does not accept DVN’s assertion that the building and the roof at Property A require repair/maintenance. She also does not accept the repairs/maintenance works as set out by DVN need to occur or at least do not need to occur with any urgency.

24. NZG does not believe her mother would want her to pay market rent given her current financial circumstances. While her mother was still able to make decisions both she and MBL lived rent free at times in Property A and NZG says her mother accepted this situation. NZG says at times over the years DVN himself lived rent free in one of the units in Property A.

25. As DVN is the main beneficiary of their mother’s will apart from the one third interest in Unit X which she and MBL each stand to receive, NZG says he will be the one who benefits from the proposed work being undertaken on Property A rather than MQN.

26. It is conceded by NZG that she does not have any reason for concerns over MQN’s financial position. The Tribunal is not asked to consider the appointment of a financial manager for MQN by NZG.

MBL

27. MBL’s position is aligned to that of NZG. Like NZG, MBL does not accept the extent of the maintenance and repair work on Property A required which is alleged by DVN. She also says she cannot afford to pay market rent for the unit which she occupies. MBL says she and her husband Mr N have modest incomes with her husband being currently unemployed despite attempts to obtain employment. MBL is employed as the head of English language programs at a College.

28. MBL does not dispute that from around mid-2015 to July 2019 she did not pay rent for the unit she occupies. She says she ceased paying rent as she believed the money was going to DVN rather than being used for her mother’s benefit.

29. The consequence of DVN being able to proceed with their eviction from Property A would, MBL says, be to deprive their mother of the frequent visits which she and NZG make to her at her aged care facility. This she says would not be in her mother’s best interests.

30. MBL’s husband, Mr N, also gave evidence. He was cross-examined extensively about his financial position over the last few years. Although he is not employed, Mr N concedes that he has earned income from consultancy work as an IT specialist over the last few years although says his earnings if averaged out are modest.

DVN

31. DVN says he made the decision to terminate NZG and MBL’s tenancies as Property A requires substantial maintenance and repair work in order that it can continue to generate income for MQN as well as maintain its value. MQN’s sole income source is from the rental income she receives from the units which are leased at Property A. These include residential and commercial units. Payment of her residential aged care accommodation fees and other expenses such as allied health services are also funded from this rental income.

32. DVN says that there are insufficient funds in MQN’s bank account to cover the costs of the work that is required to Property A which he estimates will be approximately $400,000. He relies upon quotes he has provided to the Tribunal which detail the nature of the work said to be required and the costs of that work. For example a quote from a service provider dated 16 July 2019 puts the cost of repairs to the roof at $114,400.

33. We note that copies of the bank account from Bank Y in MQN’s name were in evidence. As at 15 March 2019 this account had approximately $101,000 in it. In oral evidence DVN said there is now approximately $134,000 in the Bank Y account.

34. DVN sets out in his affidavit of 5 December 2019 that if the units currently occupied by NZG and MBL were renovated and rented at market rent this would result in an increase in the amount in MQN’s account over a period of time thus enabling the cost of the proposed work at Property A to be met. He estimates that rental of NZG and MBL’s units at market rent if updated or renovated would generate an additional $100,000 per year income for MQN.

35. A particular concern of DVN is that MQN’s income from Property A would decrease significantly if the real estate agency which is the current tenant occupying the commercial units in Property A was no longer paying rent for whatever reason. This would result in depletion of the balance of MQN’s Bank Y account which he draws on to pay her accommodation fees.

36. DVN asserts he has had to supplement his mother’s accommodation fees and expenses on occasion because there has been a shortfall between revenue from Property A and MQN’s living expenses including her accommodation fees. This shortfall he says has occurred because an entirely commercial approach to the management of the property has not occurred with NZG and MBL not paying market rent for their units. DVN does acknowledge however that MQN’s income from Property A has generally been enough to cover her expenses.

37. The decision to issue termination notices to NZG and MBL in March 2019 was done he says after considerable thought. He says the decision was made in good faith. DVN says even though MBL stated at the previous Tribunal hearing that she would be willing to pay some rent for the unit which she occupied, she did not do so. When neither MBL nor NZG complied with the termination notice, proceedings were commenced in the Tribunal’s Consumer and Commercial Division (the CCD) for possession. Orders made by the CCD on 22 July 2019 for possession have been stayed pending the outcome of NZG’s application for review of the EPOA. We note that a copy of consent orders in the CCD proceedings agreed by NZG and DVN were in evidence. These provide that NZG will pay rent of $800 per week with $300 per week payable in cash and the balance of $500 per week to accrue as a debt to MQN’s estate. That debt cannot be called up until after MQN’s death. We were told a similar agreement was reached with MBL.

Should the Tribunal conduct the review?

38. We are satisfied NZG has a genuine concern for MQN’s welfare and is therefore an interested person within the meaning of s 35 of the POA Act. She is therefore entitled under s 36 of the Act to make the application for review of the EPOA.

39. Having considered the written evidence produced to the Tribunal and the oral evidence we were satisfied we should conduct a s 36 (of the POA Act) review as there were significant issues of concern raised regarding management of MQN’s financial affairs by her attorney DVN. Specifically the application raises concerns that DVN has not acted in good faith in taking the decision to evict NZG and MBL from the units they occupy in Property A. This they say has the potential to adversely affect the welfare and interests of MQN.

Consideration

40. It is useful to make some comment about the obligations of an attorney and the Tribunal’s role when it reviews an enduring power of attorney. The relationship between an attorney and principal gives rise to fiduciary duties. An attorney is required to act in the best interests of the principal, except to the extent that the instrument creating the relationship otherwise provides. The fiduciary duty owed by an attorney to the principal has also been described as the need for an attorney to (as a fiduciary) display undivided loyalty to his or her principal: GD Dal Pont, Powers of Attorney (2015, LexisNexis, Butterworths Australia) at [8.32].

41. An attorney should manage the estate of the principal competently and diligently. In doing so the attorney should have regard to the principal’s current and future needs for income. In this matter the Tribunal is not required to decide whether the decision to pursue a termination of the tenancy of NZG and MBL was the only or preferable decision. Rather our role is to decide if in doing so DVN was not acting in a manner consistent with the duties he owed to MQN as her attorney. Here it is worth noting that there will generally be a range of decisions available to an attorney to discharge the responsibilities of their role in a manner consistent with the duties owed to the principal.

42. The POA Act does not specify any matters that must be taken into account when the discretion of the Tribunal is to be exercised when reviewing an enduring power of attorney. NZG and MBL’s legal representative submitted that the Tribunal is under a duty to observe the principles in s 4 of the Guardianship Act which include that the welfare and interests of the protected person are the paramount consideration. However in ZBC v ZBD [2016] NSWCATAP 264 at [100-101], the Appeal Panel of the Tribunal heard an appeal against a decision of the Tribunal in relation to an application for review of an enduring power of attorney under the POA Act. The Appeal Panel noted that the Tribunal is only under a duty to observe the s 4 principles when the Tribunal is exercising its Division functions for the purpose of the Guardianship Act. At [101] the Appeal Panel said:

“The Tribunal below was not required to observe the s 4 principles when exercising its discretion under ss 36(1) and s 36(2) of the POA Act and they are not, as the appellant argued, mandatory considerations for the purposes of these provisions although best interests considerations may inform the exercise of the discretions under ss 36(1) and (2) (Susan Elizabeth Parker v Margaret Catherine Higgins & Ors [2012] NSWSC 1516 at [110].”

43. NZG and MBL’s Solicitor submits that the decision in ZBC v ZBD on this issue is inconsistent with the Supreme Court decision in C v W [2015] NSWSC 1774 and therefore should not be followed. The latter decision was an appeal from a decision of the Tribunal to dismiss an application for financial management. In this decision Lindsay J, in discussing the purposive nature of the jurisdiction says

“A constant point of reference for consideration of the plaintiff's appeal is recognition of the purposive character of the proceedings in the Tribunal, the decision of the Tribunal under challenge on appeal and, generally, any exercise of protective jurisdiction.

That character is established for the Tribunal, explicitly, by clause 5 of Schedule 6 to the Civil and Administrative Tribunal Act (which incorporates section 4 of the Guardianship Act by reference) and, implicitly, by the protective nature of the subject matter of the Tribunal’s jurisdiction when exercising functions of the Tribunal allocated (by clause 3 of Schedule 6 to the Civil and Administrative Tribunal Act) to the Guardianship Division of the Tribunal.”

44. We see no inconsistency between these two decisions. The decision in C v W dealt with an appeal from a decision of the Tribunal to dismiss an application under the Guardianship Act for the appointment of a financial manager. Therefore in the decision under appeal the Tribunal was exercising its Division functions for the purpose of the Guardianship Act and was under a duty to observe the s 4 principles of that Act.

45. We have decided to review the operation and effect of the enduring power of attorney pursuant to s 36(1) of the POA Act. However in our view it is neither in her best interests nor would it better reflect MQN’s wishes to make any orders under s 36(4) of the POA Act. Our grounds for reaching that decision are as follows:

1. The Tribunal’s jurisdiction is a protective one when considering an application under s 36 of the POA Act. Although NZG and MBL have requested the Tribunal to consider limiting DVN’s exercise of his power under the EPOA in one respect only we must act protectively if the evidence supports a finding that there are other issues of concern regarding DVN’s management of MQN’s financial affairs.

2. Having decided to conduct the review of the EPOA the second discretion requiring determination was whether we should make any orders under s 36 of the POA Act or not. If we decide not to make any order under s 36 of the POA Act, it would then be permitted to treat the application before us as an application for the appointment of a financial manager to manage MQN’s estate pursuant to s 37(1) of that Act. There was agreement by NZG and MBL that they do not wish a financial manager to be appointed and they concede they “have no reason to be concerned over their mother’s financial position” (paragraph 49 of the Outline of the Applicant's submissions and oral submissions). There was no evidence before the Tribunal which suggested the appointment of a financial manager should be contemplated. Accordingly the Tribunal proceeded to determine what orders, if any, it should make under s 36 of the POA Act.

3. Before making any orders under s 36(4) of the POA Act we must be satisfied that it would be in MQN’s best interests to do so or would better reflect her wishes. Although we did not have the benefit of MQN’s evidence at the hearing it is possible to discern what her wishes were in respect of at least some issues relating to her financial affairs at the time she made the EPOA. Firstly, MQN wanted DVN to manage her financial affairs. Secondly she specifically did not confer on DVN the power as her attorney to give reasonable gifts as provided in s 11(2) of the POA Act.

4. Prima facie, MQN’s testamentary intentions are clear that she wanted DVN to inherit the bulk of her estate. This is evidenced by the terms of MQN’s will which was executed on the same date as the EPOA. The will provides that DVN will inherit MQN’s estate except for a one third interest each in Unit X at Property A which NZG and MBL will inherit. As her attorney it is reasonable that DVN take steps to preserve the value of MQN’s estate. It also seems to us a prudent financial course for an attorney to take to try and minimise the risk of MQN’s income reducing significantly if the major commercial tenant at Property A was no longer paying rent by building up the amount in her savings account.

5. It is self-evident that both NZG and MBL are likely to be in less favourable financial circumstances than they are currently if they are evicted from Property A and have to pay market rent elsewhere. However our paramount concern must be the interests and welfare of MQN not those of NZG and MBL.

6. We accept that MQN undoubtedly benefits from having frequent visits and telephone contact with both NZG and MBL. This was conceded on behalf of DVN by his Counsel.

7. We should interfere with DVN’s appointment or powers as attorney only if it is established that he has acted improperly, in breach of his duties as attorney or is likely to do so in the future or if it is clear in some other way that MQN’s interests would not be served by a continuation of his current powers under the EPOA or his appointment as attorney. In our view, the evidence does not establish that there was any breach by DVN of his duties as attorney in seeking to evict NZG and MBL or that he has acted improperly in doing so. If he were to continue to allow NZG and MBL to live at the property either rent free or at less than market rent this would amount to a gift to NZG and MBL. This would be contrary to the express deletion of the power to confer gifts under the EPOA by MQN.

8. The fact that an amount of $500 per week for each of the units occupied by NZG and MBL is currently accruing as a debt (the debt) to the estate of MQN is, NZG and MBL say, a breach of fiduciary duty because DVN will inherit the majority of the estate. We do not agree that this gives rise to a breach of DVN’s fiduciary duty to MQN. The debt cannot be called up until MQN’s death. This was clearly an interim arrangement only agreed to by DVN, NZG and MBL in the CCD proceedings until the present proceedings are determined. Even if accepted that DVN will be the ultimate beneficiary of the money accruing to MQN’s estate we do not think this justifies the terms of the enduring power of attorney being varied to prevent the termination of the tenancies of NZG and MBL.

9. We are not persuaded that DVN’s decision to evict NZG and MBL was not made in good faith or that he was motivated by an intention he is alleged to have expressed to NZG to see her “broke and on the street”. We found DVN was a credible witness. We accept his evidence which is supported, at least in part, by the written quotes in evidence that repairs and maintenance on Property A are required including significant work on the roof of the property. It is in MQN’s clear financial interests that repairs and maintenance work be carried out to Property A. Such work will preserve the ability of the property to generate income for MQN to enable her current and future financial needs to be met.

10. Reasonable minds will differ as to the most appropriate way for MQN’s financial affairs to be managed. However there is no persuasive or compelling evidence that DVN is acting in a manner that is inconsistent with his fiduciary duties as attorney in seeking to evict NZG and MBL. There was also no evidence before the Tribunal that MQN has suffered any disadvantage as a result of any actions taken, or omitted, by DVN as attorney. We accept DVN’s uncontradicted evidence that MQN’s fees at her aged care facility are up to date. There was no evidence that MQN has been deprived of anything she has needed since she has been at the nursing home.

11. Reference is made by both NZG and MBL to the reasons for the decision of the Tribunal, differently constituted, of 28 March 2018 to dismiss the previous applications by NZG for review of the EPOA and a financial management order. In particular NZG refers us to the reference in the reasons suggesting that if there was a change to MQN’s circumstances which impacted adversely on the close and frequent contact she enjoys with all of her children that the outcome of a further application before a different panel might well be different (at [81] Reasons for Decision of 28 March 2018). We have determined the present application on the evidence available to us and we are not bound by the previous Tribunal’s findings or comments.

12. We accept that NZG and MBL might be worse off financially if they have to move from the Property A complex and pay market rent elsewhere. We also accept that they will be inconvenienced if they have to travel further to visit MQN. However this does not in our view justify the Tribunal varying how MQN wanted her financial affairs managed as provided for in the EPOA. Further in our view the evidence does not establish that MQN would not be able to see either NZG or MBL or that their close and continuing contact with MQN would necessarily be significantly reduced if NZG and MBL do not continue to live in the Property A. Depending on the choices made by NZG and MBL it seems to us that the impact on the frequency of MQN’s contact with them, if any, may be minimal.

46. For these reasons the application is dismissed.

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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

Amendments

28 May 2021 - Coversheet Amendment

Decision last updated: 28 May 2021