NPG (Review Enduring Power) - [2011] TASGAB 22

GUARDIANSHIP AND ADMINISTRATION BOARD
HOBART

NPG – Application for review of enduring power of attorney of Board’s own motion

Neutral citation: NPG (Review Enduring Power) [2011] TASGAB 22

REASONS FOR DECISION

Anita Smith (President)
Kim Barker (Member)
Wendy Hudson (Member)

Date of hearing: 16 September 2011

Enduring Powers of Attorney – Capacity of donor to execute – Responsibilities of legal practitioner in execution of instrument – relationship of solicitor and client vs. relationship of attorney and donor – indicia of instrument operating in enduring phase – duties of an attorney - best interests of the donor - responsibilities of attorney in selling donor’s property – attorney’s conflict of interest in assessing two offers for purchase of donor’s property

Powers of Attorney Act 2000 sections 30, 32, 33

NPG is 74 years of age. Upon moving to Tasmania in 2007 she became the client of TN, a legal practitioner, who acted for her in the purchase of a property at XXXX. In January 2011, NPG appointed TN as her attorney under an enduring power of attorney which had been drawn by TN. On 5 July 2011, the Board received an allegation from a Real Estate Agent that TN had entered into a contract for sale of NPG’s property to the legal practitioner’s daughter in circumstances unfavourable to NPG. On 11 July, after a brief investigation, the Deputy President of the Board made an emergency order suspending the power of attorney and appointing the Public Trustee as administrator. The Deputy President also initiated a review of the enduring power of attorney of the Board’s own motion. The Board reviewed the power on two bases: firstly, whether NPG (the donor) had capacity to validly execute the power and, secondly, whether TN (the attorney) had acted in accordance with the duties of an attorney.
Following an investigation where various documents and reports were requested by the Board’s Investigator, the Board had the following documents available to it:
a) Various requests by GAB Investigator for reports or information
b) Power of Attorney Registered Number XXXX
c) Bendigo Bank Statements 1 January 2011 to 31 July 2011
d) Care Summary for Residential Aged Care Facilities dated 4 January 2011
e) Aged Care Assessment form dated 6 January 2011
f) Aged Care Assessment outcome dated 7 January 2011
g) Royal Hobart Hospital Discharge Summary dated XXXX
h) Statement by BI dated 5 July 2011
i)   Reasons for GAB Decision dated 11 July 2011
j)   GAB Investigator’s file notes dated 18 July 2011 and 3 August 2011
k) Emails forwarded by PG to GAB Investigator on 18 July 2011
l)   Statement by Dr Wong dated 19 July 2011
m)   Letter from KL to the Board dated 25 July 2011 with attachments
n) GAB Investigator’s report dated 26 July 2011
o) Reports by the Public Trustee dated 29 July 2011 and 14 September 2011
p) Letter from the Public Trustee to Bendigo Bank dated 3 August 2011
q) Letter from the Attorney to the Board dated 3 August 2011 with attachments
r) Report by MN dated 4 August 2011
s) Letter from the Attorney to the Board dated 22 August 2011 with attachments
t)   Report by Dr Martin Morrissey dated 25 August 2011
u) Statement by BD dated 27 August 2011 with attachments
v) Letter from the Attorney to the Board dated 5 September 2011 with attachments
w)    Report by Dr Toby Croft dated 9 September 2011
x) Final submissions from TN dated 16 September 2011
The Board convened a hearing on 4 August 2011. This hearing was adjourned because the donor did not attend. An interim order was issued by the Board continuing the suspension of the power and the appointment of the Public Trustee as administrator. The hearing as reconvened on 16 September 2011. The following persons attended:
The Donor – NPG
The Attorney – TN
BD – View Real Estate
BI – View Real Estate
PG – the donor’s son (by telephone)
MN – Disability Advocate for the donor
DI – The Aged Care facility Nursing Home
Jessica Watson and Danielle Lansdell – the Public Trustee
Edmund Gale – GAB Investigator
The history and circumstances of execution of the power
Unfortunately, NPG’s recollection of the following events is now very vague and she was largely unable to assist the Board with evidence of these events.
According to TN, she and NPG remained friends after the 2007 settlement of the purchase of NPG’s property at XXXX. TN stated that she held some of NPG’s funds in her solicitor’s trust account and acted on NPG’s instructions from time to time to pay accounts on her behalf from the funds in trust. At the hearing, TN stated that she continues to hold approximately $27,000 of NPG’s funds in that account.
According to the health records and reports available to the Board, during 2010 NPG, who has diabetes, had multiple admissions to the XXXX Health Service due to poor diet and poor compliance with insulin.
TN’s letter to the Board dated 3 August 2011 stated:
“On the 16^th December 2010, I phoned her [NPG] at home; however she was unreachable. Being concerned, I called the XXXX Medical centre as I was aware that she had an extensive medical history. I came to know from the Nurse in charge that NPG was not well and was transferred to the Royal Hobart Hospital for further investigations.
On 20^th December 2011 (sic), I went to visit NPG at the RHH on ward XXXX. She was recovering well …
Our office was closed for the Christmas break from the 24^th December 2010, till the 06^th January 2011. I spent my whole annual break interstate. I resumed my office work on the 07^th January 2011.”
TN confirmed this statement at the hearing. However, NPG was not admitted to the Royal Hobart Hospital (RHH) until 24 December 2010. The Board then questioned TN about this discrepancy in dates and she replied that she had a file note at her office which would confirm that she spoke with a nurse or administration person named D who was arranging an ambulance to take NPG to the hospital. At the hearing, TN said that it may have been the 20^th or the 24^th that she visited.
TN supplied a copy of the hand written file note to the Board following the hearing. The file note is dated 16 December 2010 which loosely confirms the events that TN told the Board at the hearing. It seems curious to the Board that TN’s recollection of events given at the hearing, without the aid of notes, was so divergent from the statement made in her office on 3 August 2011 when she had access to all relevant documents.
NPG was admitted to the RHH on 24 December 2010 after she was found collapsed on the floor of her home due to diabetic keracidosis. She was experiencing renal failure and confusion. The Board considers it likely that in those circumstances her admission was a medical emergency and was not an admission that had been planned over several days.
On 6 January 2011, while still in the RHH, NPG was assessed by an Aged Care Assessor. The record of that assessment notes that she had occasional short term memory problems, regularly showed ‘at risk’ behaviours, and that she occasionally had depressive symptoms, confusion, and disorientation to place. A cognitive screening test, the MMSE, was performed in the Aged Care Assessment she scored 28/30 (which is a good score) but the report by NP noted frontal dysexecutive symptoms, poor initiation and planning, and decreased insight into care needs. The following day, psychologist, Dr Toby Croft, noted that she had moderate impairment of cognition.
TN visited NPG in hospital on Monday, 10 January 2011 (this was reported in TN’s statement on 3 August 2011; however she denied it at the hearing). Dr Croft also attended NPG on 10 and 13 January 2011. He noted that, on 13 January 2011, NPG had informed staff that her enduring power of attorney had been ‘sorted’.
On 14 January 2011, RHH social work staff emailed TN stating that NPG was hoping that TN would speak to PG and have an enduring power of attorney organised in the near future. Also on this date, TN was informed by them that NPG would be moving to The Aged Care facility Residential Aged Care facility at XXXX.
By 17 January 2011, because no enduring power of attorney had been made the RHH social work staff members were considering seeking an emergency administration order to facilitate the necessary financial requirements for NPG’s transfer to The Aged Care facility. At the same time, TN contacted PG and, in that telephone conversation, it was agreed between them that TN would act as NPG’s attorney until PG arrived in Tasmania. PG’s version of this conversation was that TN had told him that if an enduring power was not established then the Guardianship Board would take over and then neither he nor his mother would have any say about her affairs. As he was in Queensland and had very little knowledge of the role of an attorney he was reluctant to be an attorney, but he was not certain who had first suggested that TN become the attorney.
On 17 January 2011, a Residential Aged Care Agreement was prepared (but not signed) and NPG became a permanent resident of a Residential Aged Care facility.
The Board infers from the evidence discussed in the above paragraphs that TN most probably first visited NPG in the RHH on Monday, 10 January 2011 and on that occasion they discussed a power of attorney, leading NPG to tell Dr. Croft that it had been ‘sorted’. However, TN maintains that she first spoke about a power of attorney on 17 January 2011. There is no independent evidence before the Board that TN visited or telephoned NPG on 17 January 2011. If TN’s evidence on this point is correct, she took instructions, prepared the document, had it executed and then registered all within 24 hours. Although ‘cooling off’ time is not required under the Act it seems that, on TN’s version of events, there was an unseemly level of haste, perhaps aimed at avoiding the issue of an emergency administration order by the Board.
On 18 January 2011, TN attended NPG in the hospital with two employees of her firm, one of whom is her husband. She also had with her a prepared enduring power of attorney form. The enduring power of attorney appointing TN was executed by the parties and witnessed by the two employees. At 11 a.m. that day, NPG left the hospital and moved to The Aged Care facility.
With regard to NPG’s capacity to execute the enduring power of attorney on that day, TN considered it relevant that she had also executed a different document at the hospital. An exchange at the hearing proceeded as follows:
Hudson:During your discussion with NPG did you make your own assessment as to her ability to [Yes] execute the document?
TN: Yes, because from my perspective she was very responsive, like any other client, and she was aware what I was saying and she was responding and she signed her own residential agreement for The Aged Care facility, signed it and also …
Hudson:Did she ask you any questions? [No] or did she accept the information you were telling her?
TN: I was telling her.
After further discussion at the hearing, TN stated that the document that NPG signed was not the residential care agreement for The Aged Care facility (which the Board had noted was signed on 7 February 2011) but another document which had been prepared in handwriting by Sarah Booth at the hospital. TN agreed to supply the document to the Board after the hearing. The document subsequently supplied by TN on 20 September 2011 is a Statement of Assets to support a Residential Care Agreement. However, even that document is dated 24 January 2011 so it could not have been prepared and signed on the same day as the enduring power of attorney. Additionally, the document appears to have been prepared in TN’s handwriting and not Sarah Booth’s.
When questioned about the explanation that she gave to NPG about the enduring power of attorney, TN indicated that she explained some of the elements in section 30 of the Powers of Attorney Act 2000 and that NPG stated: “I understand and I have done in the past”.
At the hearing, TN did not know the difference between open and closed questions (or the value of asking open questions in such circumstances) and said she had not asked NPG to repeat back any part of the explanation about the document. It was clear to the Board that the conversation from which TN deduced that NPG had understood the document consisted of an explanation by TN followed by TN asking whether she understood and NPG replying only “I understand and I have done in the past”.
In written statements to the Board, TN relied on two matters as external support for a conclusion that NPG had capacity to execute the document: (i) that she had signed another agreement on that day and (ii) that she had seen a neuropsychologist (Dr Croft) and a Social Worker (Sarah Booth) on that day.
After questioning, the Board has ascertained that: (i) TN is mistaken in material respects about the signing of another document that day (see also paragraph 37 of this statement) and (ii) that although TN sighted Dr. Croft and Ms. Booth on 18 January 2011, she had no conversation with either about NPG’s capacity on that day to sign that document.
The Board does not consider that TN’s evidence of her interaction with NPG is sufficient to establish that NPG understood the nature and effect of the power in terms of the requisite level of understanding set out in section 30(3) of the Act. It is necessary to consider the contents of the medical reports in this regard.

Did NPG have capacity to execute the enduring power of attorney?

Dr Martin Morrissey, Old Age Psychiatrist, interviewed NPG on 20 August 2011. He reviewed her medical notes and assessed her current level of capacity. He concluded:
“NPG has evidence of significant impairment and this was documented during her admission to hospital from the 24/12/2010 to the 18/01/2011. In retrospect, it was evidence that NPG was unable to make appropriate decisions regarding her care needs, even prior to this. NPG currently has a very poor understanding of her care needs and clearly needs nursing home care. NPG has an extremely poor understanding of what the role of enduring power of attorney is. She appears to believe that appointing an attorney is for the purpose of decision making regarding her health care needs. She did not comprehend the extent of an attorney’s powers, nor could she tell me the circumstances in which an enduring power of attorney could be revoked. On the evidence provided in NPG’s medical notes from her most recent hospitalisation, I strongly suspect that her capacity to execute a valid enduring power of attorney, document around that time, would have been impaired.”
The Board notes that this is a retrospective suspicion concluded from a recent interview and historical notes. Dr Croft saw her at the time of execution. However he did not assess her specifically for her capacity to execute an enduring power of attorney. He states in his report:
“My examinations and review of the medical files around the 18^th January indicate a mixed picture in regard to NPG’s capacity to undertake a POA.
On the one hand she had some cognitive impairment sufficient to render her unable to manage her diabetes or understand the risks and impracticality of a return home with imminent dangers to herself. She certainly seemed a poor judge of these risks. She also appeared to have patchy understanding that the planned transfer to nursing home placement was permanent. I was not able to gain a thorough understanding of whether NPG understood all of the requisite elements of a POA, and the abilities of a POA once appointed, in the extremely short window of time I had with her on the morning of 18^th January.
On the other hand NPG had consistently wanted to hand her financial affairs over [to] TN throughout at least the week prior to the 18^th January, and had confirmed she wanted TN to run her financial affairs on the morning she signed the POA and was transferred to a nursing home.
I believe NPG wanted TN to take over her day to day financial affairs at the time she made the POA. I am simply unsure about whether NPG understood all of the functions and abilities of a Power of Attorney at the time she signed it.”
(The Board also notes that Dr Croft’s statement is consistent with the conclusion we have drawn in paragraph 16 above.)
In written submissions handed to the Board at the hearing, TN took issue with Dr. Morrissey’s conclusion above. She states:
“Dr. Morrissey in the third paragraph on Page 2 of his report has given NPG’s views on topics such as understanding of power of attorney and role of attorney. She gave the answers correctly according to her understanding and may be in brief and I quote –
‘… she told me that they make “general decisions” and added “maybe health”
It is evidence that NPG does understand the role of an attorney.”
The Board’s concern about this statement by TN is that NPG’s understanding, as reported by Dr. Morrissey, is incorrect in material respects. If TN shares (and shared) that misunderstanding with NPG, then TN’s evidence about whether or not NPG correctly understood the nature and effect of a power of attorney at the time of execution has very little weight. The Board might conclude that NPG lacked capacity to understand the enduring power of attorney either because she was advised by a solicitor who also misunderstood the role of an attorney or because of a lack of cognition.
If the Board were required to consider the enduring power of attorney solely in terms of the evidence of incapacity, this would be a very difficult decision to make. NPG presents exceptionally well and it would be very difficult for an untrained person on first or casual meetings to detect any deficits in her understanding and cognition. On balance, medical opinion suggests that NPG has demonstrated significant deficits over a period of time with regard to her medical care and the evidence would tend to suggest that those deficits were not limited to the health care domain but extended also into her understanding of an enduring power of attorney.
Objectively, the Board notes that:
·NPG was already noted to have significant deficits in her understanding of her medical condition,
·Trained staff at the RHH were considering applying for an emergency administration order for NPG at the time that the power was signed,
·The signing of the power was rushed into a morning where the main consideration was moving to permanent nursing home care (a move which NPG appeared not to fully appreciate),
·TN relied upon her own judgment as to NPG’s capacity and did not seek an assessment specific to that instrument from qualified professionals who were close to hand at that time, and
·The evidence suggests that TN’s advice to NPG about the instrument was likely to be inaccurate and incomplete.
Therefore, it is likely that NPG did not understand the nature and effect of the document for the purposes of section 30(2)(a) or 30(3) of the Powers of Attorney Act 2000 at the time she executed the document and the Board could declare the power invalid on that account. However, as discussed in the balance of this statement of reasons, the Board considers that there are additional reasons why the document ought to be revoked.

Activities by the Attorney under the Enduring Power:

For the balance of this decision, NPG is referred to as the donor and TN is referred to as the attorney.
An attorney acting under an enduring power has a very high duty. Section 32 of the Act states:
(1) An attorney under an enduring power of attorney, during any period of mental incapacity of the donor –
(a) is taken to be a trustee of the property and affairs of the donor according to the tenor of the power; and
(b) must exercise his or her powers as attorney to protect the interests of the donor –
and, if he or she fails to do so, is liable to compensate the donor for any loss occasioned by the failure.
The following history of the operation of the enduring power of attorney is derived from the written submissions by parties prior to the hearing, the evidence given at hearing and some material received from TN following the hearing. Like the evidence relating to the execution of the document, the donor now has limited recollection of events and was largely unable to assist the Board.

During the hearing, TN made reference to a number of documents that she had not provided to the Board and which she had not brought with her to the hearing. She undertook to provide those documents to the Board following the hearing. The Board documented each of these undertakings as they were given during the hearing and sent a letter the same day seeking copies described as follows:
1.A file note of TN’s conversation on 16 December 2010 with a person at the XXXX Medical Centre regarding the whereabouts of NPG.
2.The handwritten (by Sarah Booth) agreement signed by NPG on 18 January 2011 regarding her residential care.
3.A letter to NPG sometime after 24 January 2011 where TN explained the need to sell her house due to the nursing home fees.
4.The email from TN to PG on either 21 or 22 January 2011
5.The unsigned contract with the immigration client which was mentioned by TN to Mrs Courtenay on 14 June 2011 and 20 June 2011.
The Board received the following documents subsequent to the hearing (as described in TN’s letter dated 20 September 2011):
“
1.   File note dated 16 December – telephone conversation with Clare of XXXX Health Centre
2.   Handwritten agreement as mentioned during the hearing on 16 September 2011. Please note that I sighted this document at Royal Hobart Hospital on 18 January 2011 with NPG. Please note it was not signed on the date as mentioned in your letter. This agreement was signed on 24 January 2011.
3.   Letter to NPG was dated 14 April 2011 and not 24 January 2011 as mentioned in your letter, contents of which are self explanatory.
4.   I received an email dated 22 January 2011 from PG, which you had copied upon President’s instructions during the said hearing. I again enclose a copy of the same. Please note that I never wrote to PG on 21^st or 22^nd of January 2011.
5.   The unsigned contract from an overseas couple was hand delivered to GAB on 4^th August 2011 with conveyance file. As mentioned in my previous correspondence to GAB and also during the hearing I had clearly stated that this couple was only interested to purchase the property but not as my client. Please amend your records accordingly.”
The discrepancies in the descriptions of the documents during the hearing and the attorney’s description in the letter dated 20 September 2011 are relevant to the attorney’s credibility. The contents of these documents conflict with some of the accounts that were given by TN in her submissions and at the hearing (including accounts about the contents and nature of the documents). This complicates the Board’s understanding of events; however, the contents of the documents are noted in the following history where relevant.
On 18 June 2011, the power was registered immediately by the attorney. The following day, the attorney drove the donor to her house at XXXX in accordance with a request from the RHH Social Worker to obtain some of the donor’s belongings. According to a retainer letter sent by the attorney to the donor on 24 January 2011, the pair had discussions on 19 June 2011 about the work that the attorney would undertake on the donor’s behalf. It was apparently agreed that the attorney would continue to work on behalf of the donor as a solicitor (not an attorney) and charge for that work according to the scale in the Supreme Court Rules. The Board did not receive a copy of the original retainer (if one exists) for the work that TN did for NPG between the settlement of the property in 2007 and the execution of the enduring power in January 2011, but assumes that the letter sent 24 January 2011 was for the purpose of clarifying the terms of the relationship after the execution of the power.
At the hearing, the attorney indicated that, contrary to the understanding set out in the letter of 24 January 2011, shortly after its registration she had used the power of attorney to become a signatory of the donor’s bank account and to register her control of the donor’s affairs with Centrelink “because somebody has to pay the bills”.
On 22 January 2011, following a request from the attorney, PG emailed the attorney indicating his preference that the donor’s house be sold. When asked why the attorney found it necessary to make this request if she had a client with capacity, she said that as NPG’s next of kin it was important to “keep him in the loop”.
On 24 January 2011 the Statement of Assets to support the Residential Care Agreement was completed (in what appears to be TN’s handwriting) and signed by NPG with TN as witness. This is the document referred to in paragraphs 18 and 22 of this statement of reasons.
On 7 February 2011, the attorney witnessed the donor’s signature on the Residential Aged Care Agreement as her “Resident’s Representative”. The attorney’s signature as such was witnessed by BTN, the attorney’s husband.
Correspondence supplied by the attorney to the Board indicates that from 7 to 12 February 2011, the attorney was arranging a clean-up of the donor’s XXXX property including seeking a quote for the sale of some contents from an antiques dealer. The attorney also arranged appraisals from auction houses in April and May 2011 for the contents of the property.
Between 12 February 2011 and 14 February 2011, the attorney had received the following appraisals for the XXXX property:
15 February 2011       Roberts  $160-180,000.00
14 April 2011             Kate Storey  $205,000.00
14 April 2011             4One4   $120-140,000.00
14 April 2011             Fall  $185,000.00
On 14 April 2011, the attorney wrote to the donor setting out the donor’s ongoing expenses and unpaid accounts. The letter asks the donor to consider selling her property. At the hearing, the Board had the impression from the attorney’s evidence that this letter was sent close to the time that the attorney was corresponding with PG about possible sale of his mother’s house (22 January 2011). The letter was supplied to the Board subsequent to the hearing and indicates that the attorney raised the possibility of the sale of the house with the donor some 12 weeks later, indeed after quite considerable preparatory work had been done towards that end. If the relationship was one of solicitor/client then this work appears to have been unauthorised. If the relationship was one of attorney/donor, then clearly it was under the enduring phase of the power as NPG was not directing instructions to that end. However, the attorney maintains that NPG has and had capacity and that she was acting as a solicitor at her client’s instructions and not acting as an attorney under the enduring phase.
The Board did not receive independent evidence about when or how the donor indicated that she did want to sell the property. On the evidence now available to the Board, it would appear that it was later than 14 April 2011 although the donor states that she has never given that approval. According to the attorney, she discussed each appraisal with the donor; however the attorney’s evidence was not clear about when these discussions took place. No diary notes, file notes or correspondence have been produced to confirm that such discussions occurred.
On 14 May 2011, the attorney met BD of View Real Estate at an open home in XXXX. The attorney asked BD to conduct an appraisal of the donor’s property. The attorney was again in the company of her husband. At that stage, the attorney did not disclose the owner of the property, but on 16 May 2011 confirmed to BD that she was the attorney and that the donor owned the property after BD discussed the results of her title search of the property.
On 17 May 2011, the attorney entered into an agreement with View Real Estate with a sale price of $165,000.00 and the property was listed. The attorney stated that she saw the donor on the same day as she received the appraisal. Asked why she had selected the real estate company that offered the second lowest appraisal for the property, the attorney stated that it was the donor’s preference as the donor distrusted Roberts (following the interactions upon purchase of the property) and, with respect to the other quotes, that she did not believe that the property would sell at those higher prices as she had only purchased it for $110,000.00 in 2007. She apparently expressed concern about the house being on the market for an extended period of time if the price was too high. She also apparently gave instructions that she would only accept cash offers. Again no diary notes, file notes or correspondence confirm these conversations.
Between 23 May and 3 June 2011, the attorney oversaw the sale of some of the donor’s chattels by Armitage Auctions. The donor now states that this was without her knowledge.
The first open home at the donor’s property was held on 4 June 2011. BD states that when reporting the outcome of the open home on 6 June, the attorney instructed her she required a quick sale. The attorney has denied this statement.
On 8 June 2011, EC and BX (C and X) inspected the property and the following day they made an offer conditional on finance for $150,000.00. BD reports that when she informed the attorney, the attorney said she would only accept cash offers. BD then obtained documentary proof that C and X had pre-approval for finance, hoping to convince the attorney that the C and X offer was as good as a cash offer. BD was however then unable to contact the attorney until 14 June 2011. The attorney denies ever seeing C and X’ pre-approval as it was a long weekend and her computer systems were down.
On 14 June 2011, the attorney informed BD that she had “a cash offer for a higher price” (the second offer) than the C and X offer. As a result, BD handed the keys to the property back to the attorney and the contract with View Real Estate appeared to be at an end, subject to some consultation about the commission payable.
The attorney’s account of the second offer has altered during these proceedings. In her submission dated 3 August 2011 she stated:
“59. It is part of my job to arrange the purchase/sale of a business or property on behalf of new migrants to fulfil their visa requirements and refer them to agents. It is a part of visa requirements that clients must invest money in a business or property to qualify for a permanent visa. …
61. Our Firm has a data base of such clients and deals with various people and businesses to fulfil their requirements. …
64. I had an appointment with an overseas client, who had consulted me to see the prospect of investing her money into a property and in business, as a part of her business visa requirements. Being a temporary visa holder, she could only put a cash offer.
65. I suggested XXXX property. I gave her details of the property. I then asked her if she liked the property then a formal contract can be signed. She was very positive in relation to the sale price, in the sum of $155 000.
66. BD was informed about this and did not waste any time and came to our office. Whilst standing there, she gave the key and I interrupted her by stating that if the contract is signed, then her agency will get the full commission.
68. Since that time, I had been unable to contact the potential purchaser and neither had she contacted me. …
I would like to reiterate that as part of my profession I do arrange sale and purchase for my clients through agents. It is not new for me to tell her that I have a cash offer of $155,000 that was well above her conditional offer, but it could not go ahead due to uncontactability of this client, perhaps due to her change of business circumstances.”
However, at the hearing, the attorney stated that the person was not her client just a person who was visiting, or a person to whom she referred the property. She also stated that the offer failed because the ‘client’ (she) did not want to invest her money in such a poor construction and thereafter the attorney lost contact with her. In evidence, the attorney stated that she had merely sent the ‘client’ with the key to see the property with a draft contract prepared by the attorney. However the ‘client’ did not sign the contract and there was no cash offer. The attorney also said in evidence that she asked BD for a discount on commission.
At the hearing there was a conflict in the attorney’s written and verbal evidence regarding (i) whether the person was her client or not, (ii) the circumstances of the withdrawal of the ‘client’s’ interest in purchasing the property and (iii) the question of whether a full or partial commission would be paid to View Real Estate and who raised this issue. To exacerbate this, the draft contract supplied after the hearing notes two purchasers, BT and OT, despite all previous references being to an anonymous single female referred to as “she”, never “they”. The attorney’s evidence conflicted on a range of issues with BD’s evidence regarding this offer.
An open home that had been scheduled by View Real Estate for 18 June 2011 did not proceed due to the agency being cancelled. On 17 June 2011, BD rendered an account to the attorney for her commission.
In effect, the attorney rejected an offer of $150,000.00 which was likely to become unconditional on the basis of a possible interest by another person (or possibly persons) who at that stage had not seen the property but may pay an additional $5000.00. There was no explanation why the attorney could not have simply introduced that potential buyer to the agents. Indeed, as BD pointed out, had she been involved, she may have been able to negotiate with C and X to increase their offer to $160,000.00. Instead, the attorney cancelled the contract with the agents (and therefore an existing offer with C and X) on the strength of a possible offer.
On Sunday, 19 June 2011, the attorney resumed the contract with View Real Estate by giving the keys to agent, IQ. On 20 June 2011, the attorney informed BD that the second offer was ‘null and void’ and to resume marketing the property.
On the same day, KL arrived at View Real Estate and made a cash offer to purchase the property for $145,000.00. KL is the attorney’s daughter.
According to KL, she saw the pamphlet advertising the sale of the donor’s property in her mother’s office. (The attorney states that this occurred the day before, 19 June 2011.) Without her mother’s knowledge she went to see the property and upon return asked her mother about the property. Despite her statement that her mother told her she could not buy this property “due to underlying factors”, KL went to see BD and made a cash offer. The attorney’s version of this event is that KL said “I can buy it outright” to which she replied “No, I am acting for NPG” and that there was no further conversation about the matter.
The attorney stated that KL borrowed her car (which seems inconsistent with the statement that there was no further conversation about the house) on either the 19^th or the 20^th without the house key and viewed the property from the exterior. According to BD, KL told her she had not seen the property, leading her to give an explanation of the risks of buying a property without seeing it. BD also stated that she explained that there was another offer on the table, but KL said “Yes, but my offer has already been accepted” indicating to BD that the attorney had accepted the offer.
The attorney’s account is that she knew nothing of the offer until the draft contract was faxed to her by BD on the 20^th June. Contrary to the attorney’s protestations that she could not support the offer and had nothing to do with the offer, on the very same day that she was allegedly informed of the offer, she went to The Aged Care facility, presented the draft contract to the donor and had the donor sign the contract. The attorney stated that she had a duty as a solicitor to put an offer to her client. She was unable to explain why she could not remain at arm’s length from the offer by having the agent present the offer to the donor. The attorney did not give any evidence of the donor’s capacity to sign that contract and it is clear that she did not seek any medical assessments or opinion as to that capacity.
The attorney was a vague and evasive witness. BD was clear and concise in giving evidence. Where there are inconsistencies between her evidence and BD’s, the Board prefers BD’s.
The attorney’s evidence was unsatisfactory and often internally inconsistent. The Board has difficulty in accepting that she knew nothing of her daughter’s intentions to buy this property. Given the number of inconsistencies, it is difficult for the Board to obtain a clear picture of exactly what occurred. At worst, it is possible that the intervening contract from an immigration ‘client’ was a ruse (to avoid the second scheduled open home, discourage C and X from purchase and ensure that there were no other inspections of the property) designed to secure KL’s bid. At best, the attorney has a daughter who does not respect her professional boundaries and the attorney’s judgment is significantly overborne by her daughter to the extent that, without regard to her principles and professional responsibilities, she assisted her daughter by taking the offer to the donor.
In any event, neither the purported second offer from an immigration ‘client’, nor the contract with KL represented the donor’s best interests but the attorney was involved in facilitating both matters in different ways. The Board considers that an attempt to raise the C and X bid to $160,000.00 with pre-approved finance would have been the most obvious way to advance the donor’s interests, but this course was actively undermined by the attorney’s actions.
Following the contact by the Board’s Investigator on 7 July 2011, the attorney visited the donor at The Aged Care facility. When the Board’s Investigator met the donor the following day, the donor informed him that she had not previously known that the purchaser was the attorney’s daughter. On 8 July 2011, the attorney contacted PG and informed him that the purchaser was her daughter. On 10 July 2011, the attorney sent an email to PG stating: “To proceed with the cash sale. I would lik (sic) you to write to me – being the next of Kin of NPG you waive the conflict of interest as the cash offer of $145,000 was made by my daughter from Sydney, as discussed with you and your mum.”
The Board notes that the views of the “next of kin” had no legal effect and PG had no capacity to waive such a conflict of interest. In the Board’s view, this email demonstrates: (i) an ongoing commitment by the attorney to the contract to KL, (ii) a flawed view about the role of an attorney, the donor and the donor’s family and (iii) a hurried attempt to canvas support for her position.
KL provided a statement to the Board dated 25 July 2011. In that statement she indicated that she would withdraw her offer to purchase the property. By this stage, the Public Trustee had been appointed as administrator. The sale of the property has not progressed pending a decision by this Board.
Finally, the Board was surprised to learn at the hearing that the attorney continued to hold $27,000.00 of the donor’s funds, when the Public Trustee had made demands for an accounting or the balance funds from the donor’s estate and had not been advised that the attorney continued to hold those funds.

Conclusions

The Board does not accept that in this case the attorney was acting as a solicitor on instructions from an ordinary client with capacity. It is clear that a number of the attorney’s actions (such as becoming a bank signatory and arranging authority with Centrelink) were undertaken to actively work as her power of attorney. It is also clear from her various efforts to seek approval or direction from PG “as next of kin” (as early as 22 January 2011) that she was not content to rely upon the independent instructions from the donor. In seeking his views or instructions, rather than the donor’s, she acted in a manner which would suggest that she knew, or suspected, that the donor was lacking capacity to make such decisions. The Board concludes that almost as immediately as the document was registered it was, in effect, operating in its enduring phase.

As the power was being operated in its enduring phase, the attorney had the responsibilities set out in section 32 of the Act. Therefore the attorney had the duties of a trustee of the property and affairs of the donor and was bound to exercise her powers as attorney to protect the interests of the donor. As stated in previous decisions of the Board, a trustee (attorney) must exercise the care, diligence and skill that a prudent person of business would exercise in managing the affairs of another person. The trustee relationship imposes a fiduciary duty upon the attorney, that is, a duty to exercise rights and powers in good faith or for the benefit of the donor. A person in a fiduciary position ought not to make a personal profit or to put herself in a position where her duty and her interests conflict.
The Board concludes that the attorney knew that the donor had a significantly deflated view of the value of the property. The attorney also knew the range of external valuations spanned as high as $205,000.00. The attorney claims that the donor would only accept a cash offer and, for security reasons, did not want the property left on the market for an extended period. As an attorney, this knowledge imposed upon her a duty to (i) correct the client/donor’s misunderstanding about the value of the property and (ii) protect her from other persons who might exploit the donor’s lack of real estate expertise and purported sense of urgency regarding the sale.
The Board does not consider that the attorney protected the interests of the donor. The Board considers that the attorney did not exercise the care, diligence and skill that a prudent person of business would exercise in managing the affairs of another person in the following ways:
(i)Entered into an agreement with a real estate agent who offered the second lowest appraisal of the property.
(ii)Acted in such a manner as to cancel the C and X offer/negotiations on the basis of an unconfirmed and ultimately unsuccessful offer.
(iii)Presented the KL contract to the donor for signature knowing it was $60,000.00 less than the highest appraisal of the property.
The Board considers that the attorney had, in breach of her fiduciary duties, the following conflicts of her interests and duties:
(i)In acting or purporting to act on behalf of both the donor and BT and OT who were purportedly potential purchasers.
(ii)In providing her daughter’s offer for the purchase of the property to the donor when it was significantly below other valuations and below other available offers for the property, therefore enabling her daughter to profit from that bargain.
The Board reviewed the power on two bases: firstly, whether NPG (the donor) had capacity to validly execute the power and, secondly, whether TN (the attorney) had acted in accordance with the duties of an attorney. The Board concluded that the donor may have lacked capacity but did not make a final determination on that basis. The Board has, however, concluded that the attorney did not act in accordance with the duties of an attorney.

Having considered the report by Dr. Martin Morrissey, the Board is satisfied that the donor has a cognitive impairment which renders her incapable of making reasonable financial judgments and that she is in need of an administrator to manage her estate. There were no nominations for appointment of an administrator, so the Board is satisfied that the Public Trustee is the appropriate agency to appoint in these circumstances.

Accordingly, the Board considers it appropriate to revoke the enduring power and appoint the Public Trustee as administrator for NPG.

Anita Smith Kim Barker Wendy Hudson

PRESIDENT MEMBER MEMBER

Statement of reasons delivered: 30 September 2011