NPG (Review Enduring Power) - [2011] TASGAB 9

GUARDIANSHIP & ADMINISTRATION BOARD
BURNIE

NPG (Review of Enduring Power)

Neutral citation: NPG (Review Enduring Power) [2011] TASGAB 9

REASONS FOR DECISION

C. F. McKenzie (Deputy President)

11 July 2011

Enduring power of attorney -suspension of enduring power of attorney
Powers of Attorney Act 2000 section 33

Guardianship and Administration Act 1995 section 65(2)

Background

By Section 33 of the Powers of Attorney Act 2000 the Guardianship and Administration Board is empowered to review enduring powers of attorney.
Such a review may be instigated upon formal application or by the Board of its own motion. In this instance there is no formal application so the Board must consider whether circumstances warrant the Board proceeding under s33(1)(a) to hold a hearing.
When proper to do so by reason of urgency, s33(4) empowers the Board to suspend an EPA and make consequential orders. The duration of suspension may not exceed 28 days or be renewed more than once for a further period not exceeding 28 days.
In my view the power to suspend should not be used unless there is a prima facie basis for concluding that the Board on a formal hearing under s33 might have occasion to exercise the powers under s33(2). That is to say the power in s33(4) is in aid of the powers in s33(2).
The EPA given by NPG came to the attention of an officer of the Board on 6 July 2011 when he received an email from a real estate agent outlining circumstances of concern to the agent regarding the actions of NPG’s attorney in connection with the sale of a property belonging to NPG.

Is the PA an EPA over which the Board has jurisdiction?

The Act defines an enduring power of attorney as an “enduring power of attorney created under s 30” of the Act.
The Board has obtained a copy of the EPA in this case from the Land Titles Office and confirmed that on the face of it, it complies with the requirements of an EPA created under s 30(1)(c) and 30(2)(c) of the Act.
It is not apparent on the face of the EPA that the additional requirements relating to the donor’s understanding of the EPA provided by s30(2)(a)and 30(3) are satisfied. Given the powers of the Board under s33 the Board must be intended to have jurisdiction over powers of attorney that purport to be EPAs within the meaning of the Act but which may be found to be invalid for one of the reasons set out in s 33(2).
The EPA in this case is an EPA over which the Board has jurisdiction.

Circumstances warranting review

NPG is registered proprietor of property known as XXXX, XXXX, TAS, XXXX (the property);
NPG as donor appointed TLN of XXXX & XXXX (TLN) to be her attorney pursuant to an Enduring Power of Attorney executed and registered on 18 January 2011(the EPA);
A real estate agent provided a detailed statement to the Board detailing the following relevant events.
During May 2011 TLN, engaged View Shoreline as real estate agent (the agent) to sell the property. As a result of undertaking a routine property search the agent ascertained that TLN was not the owner of the property but that it was registered in the name of NPG. TLN informed the agent that she was selling the property as attorney for NPG.
TLN gave instructions to the agent to market the property with an asking price in the range $165,000 to $175,000;
On 9 June 2011 an offer of $150,000.00 was received by the agent from an independent prospective purchaser subject to conditions, (the offer). The offer was communicated by the agent to TLN in her capacity as attorney for NPG.
On Tuesday 14 June 2011 TLN informed the agent that she had secured a private purchaser who had made a cash offer which had been accepted.
This development aroused the agent’s suspicion, as in the agent’s experience it was most unusual for a solicitor to secure a private purchaser independently of the appointed real estate agent.
The agent spoke to the prospective purchasers and informed them of the cash offer.
The prospective purchasers increased their offer to $160,000.00, based upon the same conditions, (the second offer).
Prior to the counter offer being communicated to TLN by the agent, TLN informed the agent that a different party would be contacting the agent to formalise a cash offer.
It is not clear from the agent’s statement how this communication occurred but it appears to have been by means other than direct conversation because it was apparently not a two-way communication.
Next, the agent was contacted by phone by a person who introduced herself as KNL (KNL). When KNL attended the offices of the agent she used the name of KNL. She informed the agent that she had made an oral agreement with TLN for unconditional, cash purchase of the property for $145,000.00 (the unconditional contract) and had come to the agent’s office to execute a written contract of sale to that effect.
The agent informed KNL of the second offer but KNL maintained that her offer at $145,000 had been accepted. She required the contract to name her as KNL, rather than KNL, she gave a XXXX PO Box as her address and said she would be doing the conveyancing herself.
The agent contacted TLN to attempt to persuade her to authorise the agent to negotiate further with the prospective purchaser who had made the second offer in an effort to persuade them to waive or favourably modify the conditions so that NPG would obtain a higher price. TLN declined. The agent’s statement does not reveal whether any reason was advanced by TLN for refusing to negotiate for a higher sale price.
In the agent’s opinion the second offer was highly likely to become unconditional.
TLN arranged for NPG to execute the contract of sale to KNL. The agent was present when NPG executed the contract and was not privy to any advice or discussion between NPG and TLN regarding the sale.
The agent stated that she suspected that there was a family relationship between TLN and KNL because they appeared to the agent to be of similar ethnicity, had similar names, KNL did not want her full name on the contract, KNL had no independent solicitor or conveyancer, TLN had not executed the contract using the EPA and the property was being sold at substantially less than the best price available, when there was no apparent reason for doing so.
The agent stated that the property could still be sold to the prospective purchasers for $160,000.
The officer of the Board made further enquires.
The officer contacted TLN on 7 July 2011by phone.
The officer referred to sections 31 and 33 of the Powers of Attorney Act 2000 and informed TLN that an allegation had been made with respect to TLN with respect to her role as the attorney for donor, NPG. He noted that the Board was contemplating whether or not to have a hearing with respect to the allegations raised and he was conducting a preliminary investigation as to whether or not to hold such a hearing. He asked if NPG was living at the property that is the subject of sale and was advised that she is residing at a Nursing home. TLN stated that NPG was suffering from diabetes and not a disability that would preclude giving instructions
The officer informed TLN of his summary of the allegation that the property was being sold for $145,000 to TLN by an unconditional contract when there was a conditional offer available at $160,000.
The officer stated that TLN;

categorically denied that she was making a gift, as she stated that she did not like the building inspection condition on the offer;
after some prompting admitted that the purchaser for the property was in fact her daughter;
said that her daughter noticed a real estate pamphlet and decided upon her own volition to purchase the property;
claimed that it was not her “instructions”, rather it was NPG’s ‘instructions” that accepted the offer from her daughter;
denied that it was her ‘instructions” to accept the offer of her daughter for the property at a lesser amount;
noted that the contract of sale was executed by NPG; and
maintained that it was the real estate agent that was trying to sell to a family friend;
did not see that a discount was a “gift”, or benefit to her daughter;
denied there was potential for any perceived conflict of interest; and
asked to see a copy of document that brought about the allegation.

The officer then contacted the Nursing home at Hobart and was informed by a staff member that NPG was diagnosed as suffering from frontal executive syndrome which rendered her unable to plan, and she lacked flexibility of thinking. In the opinion of the staff member NPG does not have the capacity to make or any insight into the decision to sell her property. She was described as “a very affable person who would go with the flow”.
On 8 July 2011 the officer visited NPG at the Nursing home where she was apparently a resident. She informed the officer that she had been informed of only one offer to purchase the property. She believed the purchaser to be TLN’s daughter. TLN had informed NPG of the offer a week before and had recommended she accept the offer. TLN had informed NPG that the offer had been made by TLN’s daughter only the day before the officer’s visit. NPG also told the officer that she trusted TLN implicitly and that she had left the property furnished but understood the furniture was now gone which “was a concern”.
The officer obtained a copy of the client record from the Nursing home which stated;
NPG was born in 1937 and was admitted due to the effects of diabetes caused collapse and;
MMSE of 28/30 is not necessarily indicative of cognitive impairment sufficiently severe to amount to incapacity to appoint or give instructions to an attorney.
The records disclosed to the officer also included the transfer summary relating to discharge from the Royal Hobart Hospital to the Nursing home on 18 January 2011, the day she executed the EPA. The record included the following entry;
This entry raises the possibility that NPG, is vulnerable to influence and has impaired capacity to give instructions to her attorney due to “frontal dis-executive syndrome, limited insight and capacity for complex decisions”.
The witnesses to execution of the EPA were a law clerk and a person whose name appears to be BTN, and whose address is Hobart.
The Board has access to 2002 and 2007 telephone directories which both contain an entry for “TLN and BTN” at that address. The only similar entry in the 2011 directory is for TLN at her business address.
The Board cannot conclude that the witnesses had a connection to the attorney, and the Act does not require the witnesses to be independent of the attorney, but in the circumstances of this case the above facts provide additional reason for disquiet without further evidence for the validity of the EPA and the sale transaction.

Evaluation

The above evidence raises the following concerns;

It appears that NPG’s property is being sold at less than the best attainable value;
That the attorney has been instrumental in arranging the sale to her daughter
That the attorney has a conflict of interest in the transaction in that the purchaser of the property is her daughter;
That the reason given by the attorney does not sufficiently explain why sale for a lower price to her daughter is the NPG’s best interests.
The EPA was executed at a time when the donor was suffering a degree of mental impairment.
The contract was apparently executed by the donor without knowing about the higher offer.

If the above concerns were proven to the requisite degree in a hearing under s33 the Board would have a basis for considering revocation of the EPA and appointment of an administrator for NPG.

Suspension of the EPA by reason of urgency

The Board may, in addition to holding a hearing under s33, suspend the operation of the EPA. The Board must be satisfied that it is proper to do so by reason of urgency.
In this case urgency arises from the following;

The agent has informed the Board’s officer that the sale to KNL is due to settle on 20 July but that there has been some indication that it could settle earlier. No further details of the “indication” have been given.
If the sale settled early and a transfer of title were registered and it was subsequently proven that the sale should be impugned the costs and inconvenience to NPG could be substantial
Upon settlement and registration further transactions could occur involving innocent third parties.
The potential purchaser at $160,000 may choose to purchase other property and be lost to NPG as a buyer with the consequent loss of about $15,000.

The Board does not know whether KNL has evidence that she is a bona fide purchaser for value without notice.
TLN did not inform the Board’s officer of any inconvenience, cost or disadvantage to NPG which would flow from suspension of the EPA.
If the EPA is suspended TLN, KNL or NPG can apply to the Board advancing reasons why the Board should lift the suspension and they will be heard on short notice.
Taking into account the urgency factors and the balance of convenience in so far as it can be discerned by the Board at this stage the Board has determined that it is appropriate to preserve the status quo pending further enquiry or submission from the parties to the contract by suspending the EPA.
Section 33(4) appears to create an internal inconsistency in that it gives the Board certain powers with regard to the exercise of a power which it has suspended. This could be resolved by inferring various interpretations of the process intended by parliament. However it is desirable to avoid uncertainty. In this case suspension is not sufficient alone because of the risk that the sale might proceed independently of the use of the EPA.
The Board has power under s65(2) of the Guardianship and Administration Act 1995 to make orders if there are reasons of urgency, “in respect of a person who is not a represented person but in respect of whom the Board considers that there may be grounds for making a guardianship order or an administration order, … to make an order appointing the Public Trustee as administrator.”
The statutory grounds for making an administration order are set out in section 51 of the Guardianship and Administration Act 1995 are that the relevant person

(a) is a person with a disability; and
(b) is unable by reason of the disability to make reasonable judgements in respect of matters relating to all or any part of his or her estate; and
(c) is in need of an administrator of his or her estate

The Board has already noted that evidence raises the possibility that NPG is vulnerable to influence and has impaired capacity to give instructions to her attorney due to “frontal dis-executive syndrome, limited insight and capacity for complex decisions”. That she suffers from this condition also raises the possibility that she is unable by reason of the disability to make reasonable judgements in respect of matters relating to all or any part of her estate.
Accordingly the Board finds that that there may be grounds for making an administration order. Urgency has already been found to be made out.
In order to avoid uncertainty orders will be made under s 65(2) of the Guardianship and Administration Act with respect to appointment and powers for the Public Trustee.

Orders

THE BOARD ORDERS;

That pursuant to s 33(4) of the Powers of Attorney Act 2000 the operation of Enduring Power of Attorney registered number PA XXXX, registered 18 January 2011 is suspended for 28days.
That pursuant to s 65(2) of the Guardianship and Administration Act 1995 the Public Trustee is appointed as administrator for the estate of NPG during the period of suspension of the Enduring Power of Attorney number PA XXXX.
That Pursuant to s65(2) of the Guardianship and Administration Act 1995 the Public Trustee is directed to;

i.Deliver a copy of this order to NPG and provide her with details, and a copy if she requires it, of any document in its possession relating to this review.
ii.Take such action as it considers appropriate to prevent the registration of transfer or other dealing with regard to NPG’s property without the consent of the Public Trustee.
iii.Inquire into the merits and enforceability of the contract of sale to KNL.
iv.Inquire into the merits of sale of NPG’s property at XXXX, XXXX, TAS, XXXX.
v.Report to the Board with regard to the above actions and inquiries within 21 days.

That notice of these orders and copies of the documents provided to the Board through its officer, be given to TLN, KNL and the agent.
That The Public Trustee, TLN, KNL and NPG each have liberty to apply to the Board with respect to the suspension.
That the Registrar give notice of a hearing under s 33(1) to review the Enduring Power of Attorney registered number PA XXXX.

11 July 2011