NKU

[2022] NSWCATGD 1

NSW Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

NKU [2022] NSWCATGD 1

Hearing dates:

17 May 2022

Date of orders:

17 May 2022

Decision date:

17 May 2022

Jurisdiction:

Guardianship Division

Before:

A R Boxall, Senior Member (Legal)
M Bain, Senior Member (Professional)
Dr J M Green, General Member (Community)

Decision:

001: Review of an Enduring Power of Attorney

In relation to the enduring power of attorney made by NKU on 27 November 2015 which appointed CJE as attorney(s) the Tribunal determines, orders or declares:

The proposals of the attorney to:

(1) pay agent’s GST inclusive commission and marketing expenses totalling $129,624 to [the Estate Agent], in accordance with that company’s invoice [Information removed for publication.] dated 14 January 2022, concerning the sale of NKU’s property at [Address removed for publication.];

(2) pay out of NKU’s estate legal costs and disbursements totalling on a GST inclusive basis $16,684.85 incurred in the making and conduct of the present application as set out in tax invoices 1255, 1264 and 1293 issued by Dunstan Legal, solicitors; and

(3) pay out of NKU’s estate Dr Z’s invoice number [Information removed for publication.] dated 19 April 2022 for $88, in connection with the provision of a report concerning NKU’s cognition for purposes of the present application are approved.

Application to be legally represented:

CJE is allowed to be represented by: Greg Dunstan, solicitor.

Catchwords:

REVIEW OF ENDURING POWER OF ATTORNEY – advice or directions to attorney – s 38 of the Powers of Attorney Act 2003 (NSW) – sale of property which is part of the principal’s estate – whether the agent is entitled to commission under an agency agreement – direction by the Tribunal – attorney to pay the agent’s commission out of the principal’s estate – attorney to pay disbursements and legal fees associated with the application out of the principal’s estate – order made.

Legislation Cited:

Civil and Administrative Tribunal Act 2013 (NSW), s 36

Land Acquisition (Just Terms Compensation) Act 1991 (NSW), ss 3(1)(e), 20(1), 20(1)(b)

Powers of Attorney Act 2003 (NSW), ss 26, 33, 35, 38

Transport Administration Act 1988 (NSW), s 3E, Sch 1, Sch 1 cl 11(1)

Cases Cited:

Sovereign Hills Project Pty Ltd & Ors v MMTR Pty Ltd & Ors [2012] NSWSC 763

Texts Cited:

None cited.

Category:

Principal judgment

Parties:

001: Review of an Enduring Power of Attorney

NKU (the person)
CJE (applicant, attorney)
NSW Trustee and Guardian

Representation:

Solicitor:
GJ Dunstan, for the Applicant

File Number(s):

NCAT 2022/00043330

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 THE REVIEW OF AN ENDURING POWER OF ATTORNEY

Background

1. NKU is 94 years old and has been a permanent resident at an aged care facility in northern Sydney since December 2015. He is reported to have Alzheimer’s dementia.

2. On 27 November 2015, NKU executed an enduring power of attorney (the EPA) appointing his accountant, CJE, as his enduring attorney. The EPA was registered on 1 December 2015 with the Registrar-General as [Information removed for publication.].

3. On 21 October 2021, CJE as NKU’s attorney executed an agency agreement (the Agency Agreement) appointing [the Estate Agent] to act as NKU’s estate agent in connection with the marketing and sale of certain land owned by NKU in another suburb of northern Sydney, being [the Property].

4. On 3 December 2021, CJE as NKU’s attorney executed a contract for the sale of the land (the Contract) to Transport for NSW (TFN) for a price of $6,570,000 which was more than double the initial estimated sale price provided by the Agent in the Agency Agreement.

5. The sale provided for in the Contract settled, and on 19 January 2022 TFN was registered as the registered proprietor of the Property.

6. On or about 14 January 2022, the Agent submitted to NKU’s solicitors, with a copy to CJE, its invoice for agent’s commission on the sale of the Property, and reimbursement of associated marketing costs, totalling $129,624 inclusive of GST, apparently calculated in the manner provided for in the Agency Agreement.

7. CJE has received advice from NKU’s solicitors that it is appropriate for him as attorney to pay the marketing expenses, amounting to $6,765. He made that payment on 31 January 2022.

8. CJE has received conflicting advice, however, as to whether the Agent is in fact entitled under the Agency Agreement to receive the agent’s commission invoiced by it.

9. CJE has lodged with the Tribunal an application for the review of the EPA, seeking orders under s 38 of the Powers of Attorney Act 2003 (NSW) to clarify his responsibilities concerning payment of the agent’s commission.

The hearing

10. 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.]

11. At a directions hearing on 6 April 2022, the Tribunal made certain orders concerning the conduct of this matter, including relevantly that:

1. The matter be listed for hearing on 17 May 2022; and

2. By 5pm on 8 April 2022, NKU and his solicitors be notified of that hearing date, provided with copies of all relevant evidence and submissions and invited to provide by 3 May 2022 any further evidence and submissions.

12. CJE provided evidence that he had done so, in the form of a copy of a letter to that effect and enclosing the relevant documents which was sent by email at 3:58pm on 8 April 2022 to NKU (at his aged care facility) and NKU’s solicitors.

13. Neither NKU nor his solicitors participated in the hearing or provided any evidence or submissions, despite being provided with this notice.

14. Moreover:

1. NKU’s doctor, Dr Z, provided a brief report dated 19 April 2022 indicating that NKU’s cognitive abilities were seriously impaired;

2. CJE’s oral and written (in the form of his affidavit dated 10 February 2022) evidence was that since the latter part of 2019 NKU was no longer able to recognise him nor did he take any interest in his financial affairs;

3. The central issue is a narrow technical question, rather than one on which NKU, as a non-lawyer whose cognition is significantly impaired, could be expected to formulate, hold or articulate a considered opinion; and

4. CJE indicated (and Ms X, representing the Agent, confirmed) that:

1. he had obtained the Agent’s agreement not to commence action against NKU for recovery of the commission claimed by the Agent pending the outcome of today’s hearing; but

2. if the hearing is delayed or adjourned the Agent intends to take legal action against NKU for the commission which it claims.

15. Having regard to these circumstances, the Tribunal considered that it was both appropriate and in NKU’s best interests that the matter be heard today even despite his absence and that of his solicitors.

Does CJE have standing to bring this application?

16. The effect of ss 26 and 33 of the Powers of Attorney Act is that:

1. the Tribunal has jurisdiction to review an enduring power of attorney; and

2. such a power of attorney is a reviewable power of attorney.

Under s 35 of that Act an attorney has standing to seek a review of the reviewable power of attorney under which he is appointed, and under s 38 of that Act an attorney under a reviewable power of attorney has an express statutory right to seek advice or direction from the Tribunal concerning the exercise of any function of the attorney under the reviewable power of attorney. As attorney under the EPA, therefore, the Applicant has standing to make the present application in connection with a course of action which is proposed for him to take as attorney.

Applicable general principles

17. Section 36 of the Civil and Administrative Tribunal Act 2013 (NSW) provides as follows:

“The ‘guiding principle’ for this Act and the procedural rules, in their application to proceedings in the Tribunal, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings.”

18. These principles inform the approach taken by the Tribunal in this hearing.

Reasoning

19. At the outset, the Tribunal was satisfied from the evidence as to several matters:

1. First, the EPA itself appeared on its face to have been properly executed, witnessed and certified as an enduring power of attorney in accordance with the requirements of the Powers of Attorney Act, and CJE equally appeared on 1 December 2015 to have accepted his appointment under it in accordance with the requirements of that Act, by signing the EPA;

2. Secondly, there is no evidence of any subsequent revocation of the EPA by NKU;

3. Thirdly, the EPA was expressed in clause 4(a) to have come into operation on CJE’s written acceptance of his appointment; since this occurred on 1 December 2015 there is no doubt that CJE was NKU’s attorney during the period from and including 21 October 2021 (when he executed the Agency Agreement) up to the present;

4. Fourthly, the authority conferred on CJE under clause 2 of the EPA is plenary, so that there is no question but that it encompasses the entry onto the Agency Agreement and the Contract and the taking of all steps (such as signing an instrument of transfer of the Property, paying agent’s fees and commissions and dealing generally for NKU with the proceeds of sale of the Property) necessary to consummate the transactions provided for in those agreements;

5. Fifthly, having regard to Dr Z’s letter, it is clear that NKU lacked “... capacity to understand, negotiate and enter into a contract for the sale of land as at the contract date of 3 December 2021”;

6. Sixthly, the relevant provision of the Agency Agreement (being clause 5 headed “Agent’s Remuneration”) is in the standard form – but for the inclusion in the blank spaces provided of the agreed commission percentage and the Agent’s estimated selling price - approved as at 21 October 2021 by the Real Estate Institute of New South Wales; in support of this there was provided to the Tribunal in accordance with its directions of 6 April 2022 a sample copy of that standard form in its then current version, which contains a copyright notice dated (and was presumably released for use in) April 2020;

7. Seventhly, as set out in CJE’s affidavit of 10 February 2022:

1. the decision in principle to sell the Property was made by CJE as attorney because NKU’s cash reserves were being depleted by the charges for his residence at the aged care facility, and had reached the point that they were sufficient to cover only a further 6 months of residence;

2. attempts to sell NKU’s other property in regional Queensland had proved unsuccessful;

3. the only option available in order to ensure that NKU had funds sufficient to meet the future costs of his accommodation at the aged care facility where he had been resident since 2015 was to sell the Property; and

4. this was a conclusion in which NKU’s solicitor (and prospective executor of his estate) concurred, and in the implementation of which the solicitor actively participated by preparing the sale contract and representing NKU on the sale;

8. Eighthly, the amount claimed as commission by the Agent (plus GST) and its marketing expenses appears arithmetically consistent with the terms of the Agency Agreement; and

9. In consequence, there are no apparent irregularities concerning the authority of CJE as attorney to engage agents or to sell the Property, nor are there any apparent concerns as to the underlying decision that the Property be sold and the net proceeds applied to fund NKU’s care.

20. The evidence from CJE in his affidavit (which was corroborated in her affidavit dated 6 April 2022 by Ms X, the principal of the Agent) was that:

1. From 3 November 2021, the Agent actively marketed the Property, which was listed for auction on 4 December 2022;

2. By 17 November 2021, there had been numerous enquiries and inspections of the Property by potential buyers, and nineteen potential buyers had requested draft contracts of sale;

3. On that date an officer of TFN contacted the Agent and indicated a desire to offer to purchase the Property at a price determined by an independent valuer;

4. There then ensued various discussions between the Agent and representatives of TFN, and between CJE and the Agent, directed at securing a suitable offer for the Property from TFN;

5. On 2 December 2021, TFN offered to purchase the Property for $6,570,000; on that same date, CJE instructed the Agent to accept that offer, which the Agent immediately did; and

6. On 3 December 2021 CJE signed the Contract as attorney for NKU.

21. The evidence (in the form of a copy of a Transfer of the Property, with dealing number [Information removed for publication.] dated 18 January 2022) is that the sale completed on or about that date and that TFN was registered as proprietor of the Property on 19 January 2022 (as recorded in a title search of the Property dated 8 February 2022).

22. The Agency Agreement provides relevantly as follows:

1. In clause 1, the Agent has exclusive selling rights of the Property during the period 21 October 2021 to 21 February 2022 (the Exclusive Agency Period); and

2. In clause 5(i) and (iv), the Agent is entitled to a fee of 1.7% (plus GST) of the sale price of the Property “... if during the Exclusive Agency Period the Property is sold either (a) by the Agent, (b) by any other agent or (c) by the Principal”. The term “Principal” is defined as CJE “as Enduring Power of [sic] Attorney for [NKU]”.

23. CJE says:

1. In his affidavit dated 10 February 2022 that he was advised by NKU’s solicitor to the following effect: “As the government is buying the property the agent is not entitled to payment for commission because they did not sell the property but they can be paid for the out of pocket expenses”; and

2. In his submissions to the Tribunal, that he was concerned by this advice and sought a second opinion, which was more consistent with his own assessment of the position, that the Agent’s entitlement to commission under the Agency Agreement was in fact satisfied in the circumstances of the sale of the Property.

24. The Tribunal agrees with CJE:

1. Clause 5(i) of the Agency Agreement predicates relevantly two circumstances in which, in the present case, a commission becomes payable: under sub-paragraph (a), if the Property is sold by the Agent during the Exclusive Agency Period or under sub-paragraph (c) if the Property is otherwise sold “by the Principal” during that period.

2. The evidence in CJE’s affidavit and that of Ms X (and the copies of various email communications appended to them) establishes that:

1. TFN’s initial approach concerning purchase of the Property was made to (and communicated by) the Agent: Ms X affidavit, clauses 11 to 16, CJE affidavit clause 12;

2. Negotiations with TFN concerning the purchase of the Property were conducted through the intermediary of the Agent: Ms X affidavit, clauses 18 to 23; CJE affidavit, clauses 12 to 14;

3. The inspection of the Property by TFN’s valuer was facilitated by the Agent, and Ms X accompanied the valuer on his inspection: Ms X affidavit, clauses 18 and 19;

4. TFN’s offer to purchase the Property was communicated initially to the Agent, who passed it on to CJE for instructions: Ms X affidavit, clauses 24 and 25; and

5. CJE’s acceptance of that offer was communicated to TFN via the Agent: Ms X Affidavit, clause 26.

3. All relevant transactions – from the initial expression of interest by TFN to completion of the sale – occurred during the Exclusive Agency Period.

4. What follows, in the Tribunal’s view, is that the sale was made “by the Agent” for purposes of clause 5(i)(a) of the Agency Agreement during the Exclusive Agency Period, thus enlivening the Agent’s claim to commission in accordance with that clause.

25. The words “sold ... by the Agent” might, perhaps, be considered as a little imprecise, thus leaving open some doubt as to precisely what needs to be done for a sale to be made by an agent. If this view is accepted, then clause 5(i)(c) comes into operation, and in the Tribunal’s view the Property, if not sold by the Agent for purposes of clause 5(i)(a), was sold by the Principal, as defined in the Agency Agreement.

26. Even if the argument were accepted (as to which see below) that the disposition (to use a deliberately neutral word) of the Property to TFN was pursuant to the compulsory purchase process set out in the Land Acquisition (Just Terms Compensation) Act 1991 (NSW), it does not follow that that disposition was not a sale by NKU for purposes of clause 5(i)(a) of the Agency Agreement. This, in the Tribunal’s view, is consistent with the reasoning of Nicholas J in Sovereign Hills Project Pty Ltd & Ors v MMTR Pty Ltd & Ors [2012] NSWSC 763, where His Honour observed at [51] that, in determining whether the compulsory purchase of land by a governmental agency amounted to a sale of the land in determining the meaning of “sale” in a security interest over sale proceeds, there was no reason to “... suggest that the ordinary meaning of the term “sale” requires that it be restricted to a voluntary sale “.

27. The reasoning underlying the view expressed by NKU’s solicitor appears, in summary, to be as follows:

1. Under s 3E of the Transport Administration Act 1988 (NSW), TFN has certain functions set out in Sch 1 to that Act;

2. Clause 11(1) of that schedule provides that TFN “... may, for the purpose of the exercise of [TFN]’s functions, acquire land (including an interest in land) by agreement or by compulsory process in accordance with the Land Acquisition (Just Terms Compensation) Act 1991”;

3. Since TFN acquired the Property, it follows a fortiori that TFN did so under such a compulsory process;

4. This is reinforced by several elements in the acquisition process:

1. in one communication to the Agent, an executive of TFN refers to the Property as being [underlining added] “.. required for the [northern Sydney suburb] Road upgrade”;

2. TFN’s offer to purchase refers [underlining added] to a price of $6,570,000:

3. “.. made up as follows:

Market value         $6,750,000

Total compensation       $6,750,000”; and

4. Unlike the pro forma sale contract issued to putative purchasers that refers to the Agent as being the vendor’s agent, the Contract itself omits any reference to the Agent, and in the space reserved for inclusion of the name and details of the vendor’s agent states “WITHOUT THE INTERVENTION OF THE AGENT”; and

5. Under s 20(1)(b) of the Land Acquisition (Just Terms Compensation) Act, the compulsory purchase of land frees the land from “... all estates, interests, trusts, restrictions, dedications, reservations, easements, rights, charges, rates and contracts in, over or in connection with the land”; the effect of this in the present case was is to release any obligation which NKU as vendor may have had to pay commission under the Agency Agreement.

28. The first weakness in this reasoning is that:

1. the Transport Administration Act in Sch 1, cl 11(1) clearly contemplates that TFN may acquire land by agreement; that is to say, the mere fact of TFN acquiring land does not necessarily mean that the land was acquired by compulsory purchase; and

2. the Land Acquisition (Just Terms Compensation) Act provides in s 3(1)(e) that one of its objects is “... to encourage the acquisition of land by agreement instead of compulsory purchase”; so, far from compulsory purchase being the norm for purchases of land by the State of New South Wales or its agencies, the relevant statute expressly prefers negotiated agreement over compulsion, so that it cannot be concluded from the simple fact that the land was purchased by a government body that the purchase was necessarily (or more likely to be) anything other than a normal purchase by agreement.

29. The second is that under s 20(1) of the Land Acquisition (Just Terms Compensation) Act, land which is compulsorily acquired vests by force of that Act in the relevant State authority on publication in the Government Gazette of an acquisition notice for the land approved by Her Excellency the Governor. CJE caused searches to be made in relation to the Property by a professional searching agency copies of which he provided to the Tribunal. These do not disclose any publication in the Gazette of such a notice in relation to the Property during the period 1 January 2021 to 8 February 2022, which leads to the conclusion that the Property was not acquired by TFN as a compulsory purchase.

30. The third weakness is that the linguistic considerations referred to above are in the Tribunal’s view insufficient to outweigh the evidence summarised above of Ms X and CJE as to the actual course of events and communication in dealings with TFL. This evidence demonstrates the centrality of the Agent to that process, and occasional linguistic infelicities do not trouble that conclusion. Moreover, according to CJE’s uncontested evidence the words set out in [27(4)(c)] were inserted on the initiative of NKU’s solicitors without either reference to him or being drawn to his attention. On that basis, they are of even less significance, since they would thus appear to reflect the solicitor’s personal preconception as to the nature of the sale to TFN rather than the parties’ objective description of it.

31. The fourth is that, even if the sale were a compulsory purchase, it is in the Tribunal’s view highly questionable whether the annihilating effect of s 20(1)(b) of the Land Acquisition (Just Terms Compensation) Act would extend to the obligation of the vendor of the Property to pay commission under clause 5 of the Agency Agreement, since this is a personal obligation imposed on the vendor which does not burden or run with the Property. Although:

1. the obligation is enlivened by a sale of the Property; and

2. its quantum is determined by reference to the sale price of the Property,

it is and remains a personal obligation of the vendor and thus, in the Tribunal’s view, not one which is reasonably considered as annihilated by paragraph 20(1)(b). Necessarily, the obligation is one which arises only upon (and by reason of) the vendor’s disposal of the Property, but this in the Tribunal’s view is insufficient to support a conclusion that the obligation’s nexus with the Property engages s 20(1)(b) of the Land Acquisition (Just Terms Compensation) Act.

32. The Tribunal is thus satisfied that the Agent is entitled to receive the commission provided for in clause 5 of the Agency Agreement and accordingly approves the proposal by CJE to pay a GST inclusive commission and marketing expenses totalling $129,624 to the Estate Agency, in accordance with that company’s invoice [Information removed for publication.] dated 14 January 2022, concerning the sale of NKU’s property at [Address removed for publication.].

33. At its direction hearing on 6 April 2022, the Tribunal directed CJE to provide detailed invoices as to the costs incurred by him in making this application. He has done so, providing the following invoices:

1. Invoices for legal costs and disbursements totalling on a GST inclusive basis $16,684.85 incurred in the making and conduct of the present application as set out in tax invoices [Information removed for publication.] issued by Dunstan Legal, solicitors; and

2. Dr Z’s invoice number [Information removed for publication.] dated 19 April 2022 for $88, in connection with the provision of a report concerning NKU’s cognition for purposes of the present application

34. It was in the Tribunal’s view a reasonable and proper request by CJE in his capacity as enduring attorney for advice concerning the proposal that he pay the Agent’s commission. CJE faces an invidious choice as attorney which can be resolved most effectively by a direction from this Tribunal:

1. on the one hand, he can pay the commission, but in doing so he exposes himself to possible claims in the future by NKU’s deceased estate for doing so contrary to the advice of NKU’s solicitors; and

2. on the other, he can decline to pay the commission based on that advice, but in doing so he places NKU at risk of legal action by the Agent, legal costs incurred in defending that claim and if unsuccessful an order to pay the Agent’s costs.

Presented with this dilemma, it is in the Tribunal’s view unfair and onerous that he personally bear the costs of obtaining a direction. Accordingly, the Tribunal also approves the payment by him out of NKU’s estate of those invoices.

35. Ms X asked whether the legal costs incurred by the Agent in making its submissions in connection with this application can be met out of NKU’s estate. The Tribunal is a jurisdiction in which participants normally bear their own costs. The Agent’s own commercial interests dictated its decision to seek legal advice and to make submissions, and the Tribunal can see no convincing reason why NKU’s estate, which is essentially an innocent bystander in this application, should bear the costs of that choice. The Agent’s position is distinguishable from that of CJE, who makes the present application as NKU’s attorney in order to resolve the dilemma described above in which he, as attorney, finds himself placed merely by attempting to perform his duties as attorney. Our approval in paragraph [35] is thus not, strictly speaking, a costs order; rather it is an order which approves CJE as attorney reimbursing expenditure incurred by him in that capacity from NKU’s estate.

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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: 25 May 2022