Medium Neutral Citation: Reilly v Reilly [2017] NSWSC 1419
Hearing dates: 22, 23 and 24 August and 1 November 2016
Decision date: 20 October 2017
Jurisdiction: Equity - Probate List
Before: Lindsay J
Decision:
Subject to allowing the parties an opportunity to make submissions about the form of orders to be made and orders for costs:

(1) The Will of the deceased is to be rectified to insert the name of the plaintiff as beneficiary of the property known as “Boronga”.

(2) A grant of administration of the estate of the deceased, with the Will as rectified annexed, is to be made to the plaintiff.

(3) Having actively participated in breaches of fiduciary obligations owed to the deceased by the first defendant (as an enduring attorney of the deceased, consequent upon her unauthorised transfer of “Boronga” to them for no consideration) the second, third, fourth and fifth defendants hold “Boronga” on trust for the estate of the deceased.

(4) Conditional upon their re-conveyance of “Boronga” to the estate of the deceased, family provision relief, in the form of differential legacies charged on “Boronga”, is to be granted to each of the second, third, fourth and fifth defendants.

(5) As agreed between the plaintiff and the second, third, fourth and fifth defendants, the partnership between them known as “the Shadrack Partnership” is to be dissolved by an order of the Court and any disputes between the partners upon the taking of partnership accounts are to be determined by arbitration in accordance with the partnership deed.
(6) Upon an assumption that “Boronga” is re-conveyed to the estate of the deceased, no more than nominal awards of compensation are to be made against the first defendant (for breach of fiduciary obligations owed by her to the deceased) or the sixth defendant (for breach of a common law duty of care owed by him to the plaintiff).
Catchwords:
SUCCESSION - Administration of Estates – Probate – Rectification of Will – Will prepared by solicitor – Clerical error, and failure to give effect to testator’s instructions, in will preparation – Accidental omission of name of beneficiary – Rectification granted.

PRINCIPAL AND AGENT – Power of attorney – Enduring appointment – Attorney not authorised to benefit from exercise of power – Power to make gifts of principal’s property to third parties – Exercise of power qualified by fiduciary obligations owed by attorney to principal, and obligation not to commit fraud on power – Attorney not entitled to divest principal of substantial asset for her own purposes and without benefit to principal.

EQUITY – Fiduciary obligations – Breach by fiduciary’s transfer of principal’s property to third parties – Active participation by third parties in fiduciary’s breach – Obligation of fiduciary to restore estate of principal – Accessorial liability of third parties, to return property to principal – Property held on trust for estate of deceased principal.

SUCCESSION – Ademption – Inter vivos alienation of property of incapacitated principal by enduring attorney acting, without authority, in breach of fiduciary obligations owed to principal – Property held on trust for principal by third parties to whom attorney transferred property – Estate of principal remains beneficially entitled to property – Property to be restored to deceased estate of principal – No ademption of principal’s testamentary gift of property.

SUCCESSION – family provision – Adult daughters of deceased farmer – Relief granted conditionally upon restoration of property to deceased estate.

LEGAL PRACTITIONERS – Solicitors – Professional negligence – Retainer by enduring attorney of incapacitated principal – Instructions to divest principal of main asset – Duty of care owed to disappointed beneficiary of deceased principal.
TORT – Negligence – Duty of care – Duty of solicitors retained by enduring attorney of incapacitated principal – Attorney instructed solicitors to act on inter vivos gift of principal’s main asset to third parties without benefit to principal – Action for damages by disappointed beneficiary of deceased principal – Duty of care owed by solicitors to beneficiary.
Legislation Cited: Civil Procedure Act 2005 NSW
Conveyancing Act 1919 NSW
Duties Act 1997 NSW
Family Provision Act 1982 NSW
Guardianship Act 1987
NSW Trustee and Guardian Act 2009 NSW
Powers of Attorney Act 2003 NSW
Probate and Administration Act 1898 NSW
Real Property Act 1900 NSW
Succession Act 2006 NSW
Uniform Civil Procedure Rules 2005 NSW
Testator’s Family Maintenance and Guardianship of Infants Act 1916 NSW
Cases Cited: Allied Pastoral Holdings Pty Limited v Commissioner of Taxation [1983] 1 NSWLR 1
Andrew v Andrew (2012) 81 NSWLR 656
ASA Constructions Pty Limited v Iwanov [1975] 1 NSWLR 512
Badenach v Calvert (2016) 257 CLR 440
Bahr v Nicolay (No. 2) (1988) 164 CLR 604
Bainbridge v Browne (1881) 18 Ch D 188
Balfour v Balfour [1919] 2 KB 571
Bank of New South Wales v Rogers (1941) 65 CLR 42
Barnes v Addy (1874) LR 9 Ch App 244
Bates v Messner (1967) 67 SR (NSW) 187
Blore v Lang (1960) 104 CLR 124
Breveskar v Wall (1971) 126 CLR 376 at 385-386
Browne v Dunn (1894) 6 R 67
Byrnes v Kendle (2011) 243 CLR 253
Cassegrain v Gerard Cassegrain & Co Pty Limited (2015) 254 CLR 425
Chan v Zacharia (1984) 154 CLR 178
Cockburn v GIO Finance Limited [1996] NSWCA 109
Cohen v Cohen [2016] NSWSC 336
Commonwealth Dairy Produce Equalisation Committee Limited v McCabe (1938) 38 SR (NSW) 397
Corin v Patton (1990) 169 CLR 540
Crossman v Sheahan [2016] NSWCA 200)
Devereaux-Warnes v Hall (No. 3) (2007) 35 WAR 127
Downie v Langham [2017] NSWSC 113
Drew v Nunn (1879) 4 QBD 661 at 665-666
Ermogenous v Greek Orthodox Community of SA Inc. 2002) 209 CLR 95
Estate Kouvakis [2014] NSWSC 786
Farah Constructions Pty limited v Say-Dee Pty Limited (2007) 230 CLR 89
Federal Commissioner of Taxation v Everett (1980) 143 CLR 440
Ford Excavations Pty Limited v Do Carmo [1981] 2 NSWLR 253
Frazer v Walker [1967] 1AC 569
Geoffrey W Hill & Associates (Insurance Brokers) Pty Limited v Squash Centre (Allawah North) Pty Limited (1990) 6 ANZ Insurance Cases 61-012
Ghosn v Principle Focuss Pty Limited (No. 2) [2008] VSC 574
Gibbons v Wright (1954) 91 CLR 423
Giorgi v European Asian Bank AG (NSW Supreme Court, Young J, 21 February 1989, unreported
Gorton v Parks (1989) 17 NSWLR 1
Grimaldi v Chameleon Mining NL (No. 2) (2012) 200 FCR 296
Hallani v Hallani [2013] NSWSC 91
Hawkins v Clayton (1988164 CLR 539
Hill v Van Erp (1997) 188 CLR 159
Hillpalm Pty Limited v Heaven’s Door Pty Limited (2004) 220 CLR 472
Hospital Products Pty Limited v United States Surgical Corporation (1984) 156 CLR 41
In Re Everett; Executor Trustee and Agency Company of South Australia Limited v Everett [1917] SALR 52
In the Goods of William Loveday [1900] P 154 at 156
IR v AR [2015] NSWSC 1187 at
Jenyns v Public Curator (Queensland) (1953) 90 CLR 113
Johnson v Buttress (1936) 56 CLR 113
Johnson v Perez (1988) 166 CLR 351
Johnston v MacLarn [2001] NSWSC 932
Jones v Dunkel (1959) 101 CLR 298
Livingston v Commissioner of Stamp Duties (Queensland) (1960) 107 CLR 411 (High Court), affirmed at (1964) 112 CLR 12 (Privy Council).
Madden v Keveresky [1983] 1 NSWLR 305
Maguire v Makaronis (1997) 188 CLR 449 at 469-470
Mega-Top Cargo Pty Limited v Moneytech Services Pty Limited [2015] NSWCA 402
Moloney v The Law Society of NSW (Court of Appeal, 13 September 1984, unreported)
Moloney v The Law Society of NSW [1985] HCA 77; (1985) 62 ALR 221
Parsons v Davison [2016] NSWSC 1491
Perre Apand Pty Limited (1999) 198 CLR 180
Plunkett v Bull (1915) 19 CLR 544
Pollard v Wilson [2010] NSWCA 68
Re Clune; Ex parte Verge v Isabella Nominees Pty Limited (In Liq) (1988) 14 ACLR 261
Re Dawson (deceased) [1966] 2 NSWR 211; 84 WN (Pt 1) (NSW) 399
Re Fenwick; Application of JR Fenwick; re “Charles” (2009) 76 NSWLR 22)
Reynolds v Bonnici [2017] NSWSC 828
Richard Brady Franks Limited v Price (1937) 58 CLR 112
RL v NSW Trustee and Guardian (2012) 84 NSWLR 263
Sargent v ASL Developments Limited (1974) 131 CLR 634
Secretary, Department of Health and Community Services v JWB and SMB (Marion’s Case) (1992) 175 CLR 218
Sheahan v Thompson (No 2) [2015] NSWSC 871
Simmons v NSW Trustee and Guardian [2014] NSWCA 405
Stivactas v Michaletos (No. 2) [1994] ANZ Conv R 252; (1993) Aust Contract R 90-031; (1993) NSW Conv R 55-683; BC 930 1874
Taheri v Vitek (2014) 87 NSWLR 403
The Pontifical Society for the Propagation of the Faith v Scales (1962) 107 CLR 9
Turnbull v Duval [1902] AC 429
Vatcher v Paull [1915] AC 372
Ward v Ward (No. 2) [2011] NSWSC 1292
Watson v Foxman (1995) 49 CLR 315
Wyllie v Pollen (1863) 3 De GJ&S 596 at 601; 46 ER 767 at 770
Youyang Pty Limited v Minter Ellison Morris Fletcher (2003) 212 CLR 484)
Texts Cited:
G Thomas, Thomas on Powers (Oxford University Press, 2nd ed, 2012), Ch 9, esp paras [9.01]-[9.05]

GE Dal Pont, Powers of Attorney (Lexis Nexis Butterworths, Australia, 2nd ed, 2015), paras [6.64]-[6.65]

Jackson & Powell On Professional Liability (Sweet and Maxwell, London, 6th edition, 2007) at para [11-125]

Meagher Gummow and Lehane, Equity : Doctrines and Remedies (5th ed, Lexis Nexis Butterworths, Australia, 2015), paragraphs [15-1000] – [15-105]; paragraph [1529]

PW Young, C Croft and ML Smith, On Equity (Law Book Co, Sydney, 2009), paras [5.450]-[5.470]; [8.880]-[8.950]

RSD Roper and HH White, A Treatise on the Law of Legacies, 4th ed, 1847 Vol 1)
SJ Stojar, The Law of Agency: Its History and Present Principles (London, 1961)
Category: Principal judgment
Parties:
Plaintiff: Joseph Thomas Reilly

First defendant: Margaret Lillian Reilly
Second Defendant: Margaret Frances McFee
Third Defendant: Carmel Anne Farrell
Fourth Defendant: Genevieve Claire Wallace
Fifth Defendant: Patricia Gai Reilly
Sixth Defendant: Dennis John McGroder
First Cross Claimant: Margaret Frances McFee
Second Cross Claimant: Carmel Anne Farrell
Third Cross Claimant: Genevieve Claire Wallace
Fourth Cross Claimant: Patricia Gai Reilly
Cross Defendant: Joseph Thomas Reilly
Representation:
Counsel:
Plaintiff: AL Hill and MM Pringle

First Defendant: JA Trebeck
Second to Fifth Defendants: A Paterson
Sixth Defendant: W McManus

Solicitors:
Plaintiff: Palmers Solicitors
First Defendant: Garden & Montgomerie
Second to Fifth Defendants: Mertens Lawyers
Sixth Defendant: Kennedys

File Number(s): 2014/00287702
Publication restriction: Nil

Judgment

INTRODUCTION

The Parties

Francis Bede Reilly (“the deceased”) died on 22 December 2012, aged 88 years, leaving:

a will dated 26 March 2003, a grant of probate or administration of which has yet to be made;

a widow (the first defendant), a wife of long-standing; and

five adult children (a son and four daughters) of the marriage between the first defendant and himself.

The deceased’s son is the plaintiff. His daughters are, respectively, the second to fifth defendants.
The sixth defendant is a solicitor against whom the plaintiff makes a claim for compensation (in equity and at common law) dependent, in part, on the outcome of his claims for relief against his mother and sisters referable to the deceased estate of his father.
The estate of the deceased is not, generally, represented in the proceedings. There has been no interim grant of administration in aid of representation of the estate in the proceedings. On 26 February 2016 I did make an order, subject to further order, that the plaintiff be appointed (pursuant to the Uniform Civil Procedure Rules 2005 NSW, rule 7.10) to represent the estate for the purposes of claims for relief made by his sisters, as cross claimants, under Chapter 3 of the Succession Act 2006 NSW, for family provision relief. However, that order fell short of a general representative order.
The absence of a grant of administration, or a general representative order, is no impediment to a final determination of all questions in dispute in these proceedings binding the estate of the deceased and all who have, or may have, an interest in the estate.
All persons who have or may have an interest in the estate (namely, the widow and children of the deceased) are parties to the proceedings, and they will be bound by the Court’s orders.
There is no dispute that the will of the deceased dated 26 March 2003 is his last will, subject to an application by the plaintiff for an order that it be rectified so as to express the deceased’s true testamentary intentions.

The farming properties and partnerships of the Reilly family

The deceased and the first defendant (a nurse by profession) were farmers on land near Forbes, New South Wales.
Throughout their marriage they farmed two adjoining properties:

“Malaya” (324 hectares/800 acres) was held in the name of the first defendant.

“Boronga” was held in the name of the deceased.

There is a dispute on the pleadings as to whether “Boronga” is 485 hectares (1200 acres) or only 408 hectares (1000 acres), but nothing turns on the difference. A formal contract dated 1 July 2009 pursuant to which the first defendant purportedly effected a transfer of the property to her daughters describes it as comprising 550.10 hectares (1,359 acres 1 rood 113/4 perches). Estimates of value placed before the Court at the final hearing proceed on the basis (as do I) that the land comprises 550 hectares or thereabouts.
The current proceedings have been conducted on the basis that the legal and beneficial title to the two properties resided in the registered proprietor in each case.
For many years before 30 June 2009 a farming business was conducted on the properties, farmed as a single unit, by the deceased and the first defendant, under the name “The FB & ML Reilly Partnership”.
On 1 July 2009 two partnership deeds were executed:

One deed, signed by each of the deceased’s five children (including the plaintiff), established a partnership known as “Shadrack Partnership”.

The other deed, signed only by the deceased’s daughters, and not at that time brought to the attention of the plaintiff, established a partnership known as “Boronga Partnership”.

The deed relating to the Shadrack Partnership recites that the parties had agreed “to carry on as partners in the business of investment and such other activities as they may from time to time agree upon”. The terms of the deed disclose no overt connection with “Boronga” or the FB & ML Reilly Partnership.
The deed relating to the Boronga Partnership recites that the parties had agreed “to carry on as partners in the business of farming and grazing operations and such other activities as they may from time to time agree upon”. Clause 3 of the deed identified partnership assets as including “the right of grazing and farming on the property known as ‘Boronga’ Gunningbland or any other lands acquired by the partnership or any member thereof by purchase, lease agistment agreement or otherwise and also any plant and livestock acquired by the partnership and progeny of the livestock held from time to time.”
Assets of the FB & ML Reilly Partnership appear to have been transferred to the Shadrack Partnership on the basis that the farming business conducted on “Malaya” and “Boronga” was, from 1 July 2009, conducted by the Shadrack Partnership. Financial statements prepared for each of the years ended 30 June in 2010, 2011, 2012, 2013 and 2014 are consistent with that having occurred. However, the value of any assets thus transferred is not clear on the evidence.
The pleadings contain no claim for relief directed towards having the partners in the Shadrack Partnership (the children of the first defendant and the deceased) account to the FB & ML Reilly Partnership (the first defendant and the estate of the deceased) for any appropriation of assets of the old partnership by the new.
With the exception of the deceased, all persons interested in both partnerships are parties to the present proceedings. Although the estate of the deceased is not represented otherwise than by an order appointing the plaintiff to represent the estate for the purpose of his sisters’ family provision claims, all persons interested in the estate are parties to the proceedings. The proceedings do not provide a vehicle for speculation about how the Shadrack Partnership came to enjoy assets of the FB & ML Reilly Partnership. The first defendant (the only surviving partner of that partnership) makes no complaint. All other parties, collectively, are the only members of the Shadrack Partnership and the only persons interested in the estate of the deceased.
The parties have agreed that the Shadrack Partnership should be dissolved by an order of the Court, with an order that the partnership be wound up and an order that accounts be taken, leaving any disputes to be submitted to a commercial arbitration in accordance with the partnership deed.
In the course of his submissions the plaintiff complains that he has not received due compensation for work done in management of the farm for the FB & ML Reilly Partnership and the Shadrack Partnership. His statement of claim makes no claim for relief bearing upon such claims, but his sisters invite the Court (with his acquiescence) to determine his claims in these proceedings.
I am not satisfied that the plaintiff’s claims for compensation have any underlying legal entitlement to remuneration. The work he did in management of the farm was done in a family setting, without any intention, in fact, that it involve a legal entitlement to remuneration (Balfour v Balfour [1919] 2 KB 571 at 578-579; Ermogenous v Greek Orthodox Community of SA Inc. (2002) 209 CLR 95 at 105[24]-106[26]) beyond what might be reflected in accounts of the partnership for the time being conducting the farming business. Any work done by him beyond that might be material to an understanding of why the first defendant may have transferred “Malaya” to him, and why the deceased may have left “Boronga” to him, or to a determination of his sisters’ family provision claims; but it was never intended by any member of the Reilly family to give rise to a separate, legal entitlement to remuneration. In my judgement, it does not do so.
The plaintiff conceded in cross examination that he had signed each of the financial statements, and the tax returns, prepared (with his personal participation) on behalf of the Shadrack Partnership.
It is not necessary to consider whether the parties are able to contest the state of accounts between them as manifested in the financial statements: cf, Commonwealth Dairy Produce Equalisation Committee Limited v McCabe (1938) 38 SR (NSW) 397 at 401-402. It is sufficient to record that the plaintiff’s claims to compensation for work done in management of the farm, insofar as not reflected in partnership accounts, are rejected; there is no demonstrated basis for a re-opening of the accounts of the Shadrack Partnership as adopted by each of the partners year by year; and (as explained by Federal Commissioner of Taxation v Everett (1980) 143 CLR 440 at 446-447 and Chan v Zacharia (1984) 154 CLR 178 at 192-193 and 205) the plaintiff’s share in the partnership consists of a right, governed by the partnership deed, to a proportion of any surplus after realisation of the assets, and payment of debts and liabilities of the partnership, upon its being wound-up.
That there may have been some informality in the establishment, and conduct of the Shadrack Partnership, is confirmed by file notes of the sixth defendant’s firm which suggest that, in causing the partnership to be established, the first defendant reserved for herself and the deceased a “right” to draw on profits of the Shadrack Partnership on the basis that those profits were derived from assets of the FB & ML Reilly Partnership.
There is no basis in these proceedings for treating such a “right”, if it ever existed, as anything more than an informal incident of family relationships. It finds no reflection in the deed governing the Shadrack Partnership or in any claims for relief made in these proceedings.

There is no evidence that the Boronga Partnershp has ever carried on business. In any event, the plaintiff is not a party to the partnership deed; his statement of claim makes no claim for relief in respect of it; and neither does the cross summons of his sisters.
The focus for attention in the statement of claim is a dispute about beneficial ownership of “Boronga”, to which are joined consequential claims for compensation.
The focus for attention in the cross summons, so far as it is controversial, is upon: first, a claim that the plaintiff deliver up possession of “Boronga” to his sisters; and secondly, claims for family provision relief made by the girls (under Chapter 3 of the Succession Act 2000 NSW) as an alternative to their claim of ownership of “Boronga”.
It has not been suggested that the existence of the FB & ML Reilly Partnership constrained the ability of the deceased and the first defendant to dispose of the parcels of land registered in their respective names.

The Reilly Family

The deceased (born in 1924) and the first defendant (born in 1929) were married in 1961. The first defendant is now aged 88 years.
The children of the marriage between the deceased and the first defendant, all parties to the proceedings, comprise the following:

the plaintiff, born in 1967, now aged 50 years.

the second defendant, born in 1962, now aged 55 years.

the third defendant, born in 1964, now aged 53 years.

the fourth defendant, born in 1965, now aged 52 years.

the fifth defendant, born in 1969, now aged 48 years.

Family Problems

The present proceedings arise out of failures in the management of inter-generational change in a farming family, with miscarriages in succession plans involving (to use neutral expressions):

a disconnection in arrangements which the first defendant believes to have been made between the deceased and herself before he became incapacitated;

a lack of communication between the plaintiff and the first defendant as joint and several donees of an enduring power of attorney granted to them by the deceased, compounded by an absence of communication between the plaintiff and a solicitor retained by the first defendant (in her capacity as an attorney for the deceased) to transfer “Boronga” to her daughters after her husband lost capacity; and

a clerical error in the will of the deceased which purported to dispose of “Boronga” without nomination of a beneficiary (despite instructions given by the deceased to the solicitor who drafted the will that the property be gifted to the plaintiff), giving rise to an application by the plaintiff for an order under section 27 of the Succession Act 2006 NSW that the will be rectified.

From a date no later than 2008 the deceased, suffering from dementia, began a descent into mental incapacity. There is no dispute that he was mentally incapable of managing his affairs in, throughout and after 2009.

The Enduring Power of Attorney at Issue

In preparation for such a contingency the deceased executed, in favour of the first defendant and the plaintiff jointly and severally, an enduring power of attorney (in a form prescribed for the purpose of section 163B of the Conveyancing Act 1919 NSW) dated 7 June 2000.
The authority conferred by the instrument, paraphrasing section 163B, was an authority “to do on [behalf of the deceased] anything [the deceased] may lawfully authorise an attorney to do”.
The instrument was not expressed to be subject to specified “conditions and limitations”; but the printed form adapted for the deceased’s execution contained a deletion of a provision which would otherwise have conferred on his attorneys authority “to execute an assurance or other document, or do any other act, whereby a benefit is conferred” on the attorneys.
The certificate required under section 163F(2) of the Conveyancing Act 1919 for the instrument to take effect as an enduring power of attorney was given by the deceased’s solicitor, Mr PJ Buckley.
The power of attorney was not immediately, or on the deceased’s instructions, registered in the office of the Registrar General.

THE FIRST DEFENDANT’S TRANSFER OF “BORONGA” TO HER DAUGHTERS

It came to be registered (as Book 4570 No. 954) on 6 July 2009 when the first defendant caused a solicitor (Duncan Maccallum) in the employ of the sixth defendant (Dennis McGroder) to register it as a step (taken at a time after the deceased had lost mental capacity) towards her unilateral transfer (by a memorandum of transfer dated 1 July 2009) of “Boronga” to her daughters (the second, third, fourth and fifth defendants), as a gift, for a nominal consideration of $1.00.
At the time of transfer, “Boronga” had a market value of not less than $815,000 or thereabouts. A formal market appraisal dated 18 May 2009 estimated its value at $815,000. A valuation report obtained for the purpose of these proceedings (which include claims for family provision relief) suggests that it may have been worth more than that estimate. That report attributes to “Boronga” as at 4 March 2015 a fair market value of $1,275,000, assuming vacant possession.
The memorandum of transfer, which provided for the daughters to hold the property as joint tenants, was registered on 2 December 2009 as dealing No. AF155999. Subject to a caveat (dealing No. AI358646) lodged by the plaintiff against 3 of the five parcels of land comprising the property, title to “Boronga” remains in the deceased’s daughters as joint tenants.
Why the property was transferred to the girls as joint tenants, rather than as tenants in common, appears to have been related to a desire on the part of the first defendant and her daughters to keep the property in the Reilly family. There were hints in the evidence, and a suggestion in the plaintiff’s final submissions, that the property was transferred to his sisters on a secret trust for the deceased as a means of facilitating a future claim by the deceased for pension entitlements. However, the statement of claim does not plead such a case, and I put it to one side.
The first defendant felt justified in transferring “Boronga” to her daughters because, she says:

she had a conversation with the deceased, in or about March/April (or possibly as late as June) 2000, at about the time the deceased appointed her (and the plaintiff) to the office of attorney, to the effect that, if she transferred “Malaya” to the plaintiff, the deceased would leave “Boronga” to their daughters in his will;

although she did not know until after the death of the deceased (on 22 December 2012) whether he had a will and, if he did, what were its terms, considerations of fairness as between siblings dictated that her daughters get “Boronga”; and

relying on her agreement with the deceased, she felt able (in her capacity as an enduring attorney of the deceased) to effect a transfer of “Boronga” to the daughters.

The plaintiff does not accept that there was any agreement between his parents that might deny him a right to inherit “Boronga”.
A hurdle to his establishment of such a right is the defective character of the will executed by the deceased on 26 March 2003.

THE DECEASED’S WILL AND RECTIFICATION

The will, prepared and witnessed by Mr Buckley, is defective because the words of gift in clause 3 of the document purport to dispose of “Boronga” (and the deceased’s share of stock and plant on “Boronga”) without naming a beneficiary.
Omitting formal parts, the will is in the following terms:

“THIS IS THE LAST WILL AND TESTAMENT of me FRANCIS BEDE REILLY of “Boronga”, Gunningbland in the State of New South Wales, Farmer.
1. I HEREBY REVOKE all Wills and Testamentary dispositions previously made by me and declare this to be my last Will and Testament.
2. I APPOINT my Wife [the first defendant] Sole Executrix and Trustee of this my Will OR in the event of predeceasing me I APPOINT my Son [the plaintiff] Executor and Trustee of this my Will.
3. I GIVE DEVISE AND BEQUEATH the whole of my farming property known as “Boronga”, Gunningbland together with my share of the stock and plant thereon.
4. ALL THE REST AND RESIDUE of my Estate both real and personal of whatever nature and wherever situated I GIVE DEVISE AND BEQUEATH to my Daughters [the second defendant, the third defendant, the fourth defendant and the fifth defendant] in equal shares as tenants in common.”

Leaving aside his speculation about how such an error could possibly have been made by him, or in his office, Mr Buckley’s evidence is to the effect that clause 3 is defective because it contains a clerical error (omission of the name of the plaintiff as beneficiary) which renders it not in accord with the instructions given to him by the deceased for its preparation.
The principal support for this evidence is found in handwritten notes (dated 18 March 2003, eight days before the date of the will) written by Mr Buckley at or about the time he personally took instructions from the deceased.
Those notes are in the following terms:

“Francis Bede Reilly
Boronga
Farmer
Peg [the first defendant] has given her farm to Joe [the plaintiff]. You own ‘Boronga’ in your name only.
Leave ‘Boronga’ to Joseph Thomas Reilly [the plaintiff] together with 2/3 of your interest in your farming P’ship FB & ML Reilly.
Residue to girls equally.
Margaret Frances MCFEE [the second defendant]
Carmel Anne FARRELL [the third defendant]
Patricia Gai CATTLE [the fifth defendant]
Genevieve Clare WALLACE [the fourth defendant]
Lengthy”.

The word “lengthy” is a reference to the duration of Mr Buckley’s conference with the deceased, which he estimates to have been 40 minutes.
The notes do not accord precisely with the scheme of the deceased’s will insofar as: (a) they include no identification of an executor; and (b) whereas the notes contemplated a share in the deceased’s farming partnership accompanying a disposition of “Boronga”, clause 3 of the will refers instead “my share of the stock and plant” on the property.
In a letter dated 24 July 2014, written in response to a formal inquiry by the plaintiff’s solicitors, and in an affidavit sworn 5 February 2015 relied upon by the plaintiff, Mr Buckley disclaimed any independent recollection of his preparation of the deceased’s will, but affirmed that, through an oversight on his part, clause 3 of the will was incomplete.
Mr Buckley and his clerk, Carla Peden attested the deceased’s execution of the will.
Although Ms Peden remained in the employ of Mr Buckley’s firm at the time of the final hearing, no evidence was adduced from her. A fair inference, conforming to that discussed in Jones v Dunkel (1959) 101 CLR 298, is that she could give no evidence of assistance to the plaintiff.
Mr Buckley was cross examined on his affidavit. Invited to speculate about how, and why, clause 3 of the deceased’s will takes the form it does, he accepted that his handwritten notes do not fully detail any conversation he had with the deceased at the time of taking instructions, and he could not exclude the possibility that there was an undocumented change of the deceased’s instructions at or about the time the will was executed. He acknowledged that a change of instructions might have been communicated to a member of his staff, rather than to him, and that, when witnessing a will, it was not his practice to proof read the will, before or after execution.
Section 27 of the Succession Act 2006 is in the following terms:

“27 COURT MAY RECTIFY A WILL
(1) The Court may make an order to rectify a will to carry out the intentions of the testator, if the Court is satisfied the will does not carry out the testator's intentions because:
(a) a clerical error was made, or
(b) the will does not give effect to the testator's instructions.

(2) A person who wishes to make an application for an order under this section must apply to the Court within 12 months after the date of the death of the testator.
(3) However, the Court may, at any time, extend the period of time for making an application specified in subsection (2) if:
(a) the Court considers it necessary, and
(b) the final distribution of the estate has not been made.”

A convenient exposition of the text of section 27 is found in Hallen AsJ’s judgment in Lockey v Ferris [2011] NSWSC 179 at [63]-[73]:

“63 In this case, the Plaintiff neither consents to, nor opposes, the time period for the making of the application for rectification being extended. Thus, the question which might arise, is whether the court considers it necessary to extend the period of time for the making of the application. Unlike s 29A of the Probate & Administration Act 1898, that is the sole requirement in determining the extension of the time period. "Sufficient cause" for not having made the application within time no longer has to be established.
64 The application may be brought after probate has been granted: The Estate of Cecil Douglas Brisbane (NSWSC, Powell J, 19 June 1992, unreported);Huszar (Re Estate of) [1999] NSWSC 388; Rawack v Spicer [2002] NSWSC 849.
65 Section 27 provides that "[T]he Court may". "May" is permissive; it is not directory, or mandatory. There is nothing in the circumstances contemplated by the section that leads to the conclusion that the Court must rectify the Will.
66 It is a condition precedent to the exercise of the power in s 27 that the Court be satisfied that the Will does not carry out the testator's intentions and that this satisfaction be based on one of two specified reasons, namely, either that a clerical error was made, or that the Will does not give effect to the testator's instructions.
67 It is clear then, that the Court must make findings about the "intentions" of the testator because, until it does, it cannot be satisfied that the Will does not carry out those intentions. Thus, what it was that the testator intended concerning the part of the will that is to be rectified must be established. What must be shown is the actual intention, not what the intention probably would have been had the testator thought about the matter.
68 The intention must be examined as at the date of the Will, not the date of death: Re Estate of Spinks; Application of Mortensen and Eassie (NSWSC, Needham J, 22 August 1990, unreported); and in the Court of Appeal in Bryan William Mortensen and Elizabeth Gedge Eassie v State of New South Wales, (NSWCA, 12 December 1991, unreported) at 5; Rawack v Spicer at [27] - [28]; Vescio v Bannister (Estate of the late Betty Tait ) [2010] NSWSC 1274 at [5].
69 Rawack v Spicer was cited, with approval, by Barrett J in Long v Long; Estate of Ethel Edith Long [2004] NSWSC 1002. His Honour then went on to say:
‘9 The important point is that the court must be satisfied, according to the balance of probabilities, as to not only a negative proposition (that the testatrix did not intend the will to be in the form it eventually took) but also a positive proposition (that the testatrix intended the will to be in the form for which the plaintiff contends). This is the effect of the statute and, as Sheller JA observed in Mortensen v State of New South Wales (unreported, NSWCA, 12 December 1991), the court's task is to give effect to the language of the section without paying "over much regard to the principles evolved by equity as part of the doctrine of rectification’.
10 In Trimmer v Lax; Estate M A Fresen (unreported, NSWSC, Hodgson J, 9 May 1997), it was pointed out that a plaintiff in a proceeding of this kind must show the deceased's actual intention, not just what he or she would have intended if thought had been given to the matter.’

70 Although the standard of proof on the issue is on the balance of probabilities, clear and convincing proof is required: ( Re Estate of Dippert [2001] NSWSC 167 at [34]); Rawack v Spicer at [30] - [31].
71The meaning of " testator's intentions " was considered in Re Swain [2008] NSWSC 1343:
‘25 Section 29A refers to the intention of the testator. In Mortensen v New South Wales (NSWCA, 12 December 1991, unreported) Sheller JA, with whom Mahoney and Meagher JJA agreed, said that s 29A:
‘is available for mistakes, not for lack of vision or perception or knowledge. It is a section
directed at mistakes in expressing the testator's intentions.’

26 In that case the testatrix had made it manifestly clear that she did not want her money to "go to the government" which for all intents and purposes meant she did not want to die intestate. However, there was a failure of one of the gifts she made and the result was that there was a partial intestacy. It was argued that the testatrix's intentions were that no monies should go to the government, and accordingly the will should be rectified.
27 The Court of Appeal, like Needham J at first instance, dismissed the application. Sheller JA said that it would seem on the evidence that the will was so expressed as not to carry out the testatrix's intentions. However, the section does not only require the court to find that fact, but also to find that the court can rectify the will "as to carry out the testator's intention". In the Mortensen case even though the intentions were that no monies should pass to the government, the testatrix had not indicated which of the possible options she would wish to pursue had she realised that her primary gift failed. Accordingly, the will could not be rectified.’

72 If there is no evidence to show what the testator's intention was in the event of certain things happening, the Court cannot rectify the will.
73 Thus, the three questions posed by the section are, first, what were the testator's actual intentions with regard to dispositions in respect of which rectification is sought; second, is the will expressed so that it fails to carry out those intentions; and, third, is the will expressed as it is in consequence of either a clerical error, or a failure on the part of someone to whom the testator gave instructions in connection with the will, to comply with those instructions?”

An order for rectification under section 27(1) cannot be made without an order under section 27(3) for an extension of the time limited by section 27(2) of the Succession Act. The deceased died on 22 December 2012. The current proceedings were commenced by a summons filed on 1 October 2014, directed principally to obtaining an extension of the operation of a caveat lodged by the plaintiff over “Boronga”. An order for proceedings on the summons to proceed by way of pleadings having been made on 8 October 2014, the plaintiff filed a statement of claim on 20 October 2014. It was by that pleading that the plaintiff applied for relief under section 27, including a prayer for an extension of time within which to apply for an order for rectification.
The plaintiff’s caveat (which, after earlier interlocutory extensions, was on 27 October 2014 extended until further order) was lodged on “Boronga” on 11 February 2014. Implicit in the estate or interest claimed by the plaintiff in the caveat is an assertion of an entitlement to “Boronga” via the will of the deceased. He claimed that the land is held by his sisters upon trust for him, a claim which can be sustained only if clause 3 of the deceased’s will is rectified in his favour.
In cross examination, the plaintiff confirmed that he first saw the deceased’s will in February 2013; and that he had a copy of Mr Buckley’s file note when he verified his caveat by a statutory declaration made on 20 November 2013. That he had access to legal advice at the time he verified the caveat is confirmed by the fact that his solicitor witnessed his execution of the statutory declaration.
The plaintiff’s delay in making an application for rectification is not fully explained by the course of events following the death of the deceased. However, no application was made for a grant of representation in respect of the estate of the deceased until the plaintiff himself, in his statement of claim, applied for a grant of letters of administration; there has been no final distribution of the deceased’s estate; and, in my opinion, an order for rectification (and an associated grant of extension of time) is necessary for the purpose of giving effect to the deceased’s testamentary intentions.

I am satisfied that the prerequisites, in section 27(3), for an extension of time have been satisfied and that a rectification order should be made pursuant to section 27(1).
I am satisfied that the will does not carry out the testator’s intentions insofar as it omits from clause 3 the name of the plaintiff as the deceased’s intended beneficiary. I am satisfied that that omission represents a clerical error on the part of Mr Buckley, as draughtsman of the will. I am satisfied that, to give effect to the deceased’s instructions to Mr Buckley, clause 3 of the will should be rectified by inserting after the word “thereon” the words “to my Son Joseph Thomas Reilly”.
The scheme of the will favours identification of the plaintiff as the intended beneficiary of clause 3. If the plaintiff were not the, or an, intended beneficiary of clause 3, the will would have made no provision for him whilst providing for his siblings as residuary beneficiaries in the subsequent, contrasting clause 4. The fact that the deceased named the plaintiff as his alternate executor is also consistent with an intention that the plaintiff be the recipient of a major asset, “Boronga”. These considerations reinforce a finding, open on a reading of Mr Buckley’s notes, that the plaintiff was intended by the deceased to be named in clause 3.
The plaintiff’s long term residence on “Boronga” (as an adult, since 1995), his close personal association with farming operations on “Boronga” , his ownership (courtesy of his parents) of the adjoining property “Malaya” and the subject matter of clause 3 (the deceased’s “farming property”, together with his “share of the stock and plant thereon”) all point in the same direction, towards identification of the plaintiff as the intended beneficiary of the gift for which clause 3 imperfectly provides.
No alternative thesis about the deceased’s testamentary intentions fits so neatly with the text or context of the will.

A GRANT OF ADMINISTRATION OF THE ESTATE OF THE DECEASED

The Court’s order for rectification is to be accompanied by an order that letters of administration with the will (as rectified) annexed be granted to the plaintiff. His is the only application for a grant of administration. His interest in the estate of the deceased is greater than the interest of any other person.
The deceased’s primary nominee for the role of executor was the first defendant. However, although she has executed no formal renunciation of probate, she refrained from applying for a grant before the plaintiff’s commencement of these proceedings, and she has refrained from applying for a grant in the proceedings. She has effectively abandoned her role as executrix. She cannot now be relied upon to administer the estate impartially or in an orderly manner.
The probate jurisdiction looks to the due and proper administration of an estate, having regard to any duly expressed testamentary intentions of the deceased, and the respective interests of parties beneficially entitled to the estate. The object of the Court upon an exercise of probate jurisdiction is to carry out the deceased’s testamentary intentions, and to see that beneficiaries get what is due to them: In the Goods of William Loveday [1900] P 154 at 156; Bates v Messner (1967) 67 SR (NSW) 187 at 189 at 191-192; Estate Kouvakis [2014] NSWSC 786 at [211]; Parsons v Davison [2016] NSWSC 1491 at [8]-[9]. That object can best be served in these proceedings by a grant of administration to the plaintiff. There is no practical alternative available.
A grant of administration in favour of the plaintiff is consistent with the order made on 26 February 2016 that, subject to further order, the plaintiff be appointed (pursuant to rule 7.10 of the Uniform Civil Procedure Rules 2005 NSW) to represent the estate of the deceased for the purposes of claims for family provision relief made by his sisters on their cross summons.

NO ADEMPTION OF THE DECEASED’S GIFT OF “BORONGA” TO THE PLAINTIFF

The plaintiff’s sisters contend that, “Boronga” having been transferred to them in 2009 by the first defendant acting as attorney for the deceased, the gift of that property for which clause 3 of the deceased’s will provides must be taken to have adeemed.
The principles governing equitable ademption (authoritatively explained in RL v NSW Trustee and Guardian (2012) 84 NSWLR 263 at 292-293) were recently reviewed in Reynolds v Bonnici [2017] NSWSC 828 at [34]-[45], drawing upon In Re Everett; Executor Trustee and Agency Company of South Australia Limited v Everett [1917] SALR 52 at 65-66. The form of ademption contended for by the plaintiff’s sisters in these proceedings is that which occurs when (because it has been destroyed or transferred out of the ownership of the will-maker) property no longer exists in the will-maker at the time, upon his or her death, a will becomes effective. It does not depend on the intention of the will-maker vis a vis the destruction or alienation of property during his or her lifetime.
The fallacy of the defendants’ contention is that, if (as I find) the plaintiff is successful in his contention that “Boronga” should be restored to the estate of the deceased in these proceedings, it will not have been lost to the estate. There remains, in substance, an identity beteen the property “Boronga” the subject of the deceased’s specific testamentary gift in favour of the plaintiff and the property “Boronga” forming part of the deceased’s estate. On my findings, beneficial ownership of “Boronga” never left the deceased; but, critically, title to the property is recoverable by the deceased’s estate. There is no material foundation for a finding of ademption.
For completeness, and tending in the same direction as this conclusion, I note (with elaboration of his Honour’s source text) the following observations by Young CJ in Eq in Johnston v MacLarn [2001] NSWSC 932 at paragraphs [22]-[24]:

“[22] The law on ademption of legacies is well set out in Roper on Legacies, 4th ed Vol 1 (William Benning & Co, Law Booksellers, London, 1847) at pp 329 and following. The general rule is that a specific legacy is adeemed if the subject property does not exist at the date of the testator’s death: Stanley v Potter (1789) 2 Cox 180; 30 ER 83; Brown v Heffer (1967) 116 CLR 344, 348. The present legacy using the words “which I hold” would seem to be specific. Thus, one looks to see whether the property existed as at the date of the death of the testatrix and if it did not then the legacy is necessarily adeemed by the annihilation of the subject matter (Roper 331). Thus, in the seminal case of Durrant v Friend (1852) 5 DeG & SM 342; 64 ER 1145, where chattels were given to a beneficiary and the testator was on a ship with the chattels and the ship sank, killing both the testator and losing the chattels, the gift was adeemed because the chattels just did not exist. The fact the testator had no intention of adeeming the gift was quite immaterial.
[23] Roper says (pp 333-4) that there are four exceptions to the general rule. The second of those exceptions is the case where a breach of trust has been committed or any trick or device practised with a view to defeating the legacy. The authority for that proposition is, of course, Shaftesbury’s case (1716) 2 Vern 747, 748; 23 ER 1089.
[24] It will also be an exception where, without the testator’s knowledge, the subject matter of the gift has been disposed of without the testator’s authority. The classic case is Basan v Brandon (1836) 8 Sim 171; 59 ER 68, where an agent disposed of the property outside the terms of the agent’s authority and without the knowledge of the testator, in which case there was no ademption.”

The reference to “Roper” is more correctly a reference to RSD Roper and HH White, A Treatise on the Law of Legacies (4th ed, 1847).
Roper’s statement of a “general rule” in terms paraphrased by Young CJ in Eq is made in his treatment of legacies of stock, leaving gifts of other forms of property to be treated (in substantially similar terms) separately.
In terms stated by Roper (at pages 329-334), “the general rule” and four “qualifications” to that rule (described by Young CJ in Eq as “exceptions”) focus on whether there is an exact agreement between the terms in which the property the subject of a specific legacy is described in a testator’s will and property of which the testator is possessed at the time of death.
The four “qualifications” elaborated by Roper focus on cases in which, although there is not an exact agreement between the will and a testator’s extant property, there is in substance a correspondence between the property described in the will and the property to which, at the time of death, the testator is beneficially entitled.
The first “qualification” is said to occur when property possessed by a testator at the time of death takes a different form from that described in his will by a mere act or operation of law. The second “qualification” (specifically referred to by Young CJ in Eq) concerns a change arising from a transaction unauthorised by the testator or a breach of trust. The third “qualification” is said to occur when a fund, instead of being “annihilated”, remains the same or in substance the same, as at the date of the testator’s will, “with some unimportant alterations”, so as not materially to change the interest which the testator then had; an example identified by Roper in a marginal note is when there is a change by a mere transfer from trustees to the testator, or from old to new trustees, or upon fresh securities under powers so to do. The fourth “qualification” occurs in instances where a testator lends stock, specifically bequeathed, on condition of its being replaced so that a legatee is entitled to have the subject property (which the trustee substantially and beneficially continues to possess) redeemed so as to pass by will.
The four “qualifications” or “exceptions” set out by Roper are, at page 331, introduced by a marginal note in the following terms: “Qualifications of the rule, requiring an exact agreement between the subject and its specification”.
The second “qualification” is introduced by a marginal note in the following terms: “When changed without testator’s concurrence or authority, or fraudulently, or in breach of trust”.
Omitting footnotes, the second “qualification” or “exception” is expressed by Roper (at pages 332-333) in the following terms:

“The law will not permit a fraudulent transaction to operate to the injury of any person, whilst there remain any means to make reparation. Hence, a second qualification of [the rule requiring an exact agreement between the subject of a specific legacy and its specification] may happen where a breach of trust has been committed, or any trick or device practised with a view to defeat the specific legacy. Suppose, then, stock specifically bequeathed, to be sold or transferred into another fund by a trustee, without the knowledge or authority of the testator. It is conceived that such a transaction would not be permitted to defeat the bequest, upon the principle that the act of a trustee will not be allowed to prejudice the cestui que trust, or the persons claiming under him; and that a Court of Equity will consider, for the purposes of justice, the stock as still subsisting in the fund described, and answering the specification in the will. It is also presumed, that the legatee is entitled to follow the subject into other funds, or to full recompense out of the trustee’s property, as the nature of the case may require.
In Basan v Brandon, it was decided, that neither the alteration of the state of the specific fund, by the agent of the testator, without authority, nor the unexecuted intention of the testator to change the state of the fund, will adeem a specific legacy part of that fund”.

Shaftesbury v Shaftesbury, referred to by Young CJ in Eq, is not dealt with in Roper’s treatment of the ademption of stock (at pages 329-334) but it is cited, in a similar context, at page 344 in dealing with “ademption of specific legacies of goods, etc.”

THE PLAINTIFF’S CLAIM FOR RESTORATION OF “BORONGA” TO THE ESTATE OF THE DECEASED

Whether “Boronga” should be restored to the estate depends on: (a) whether the first defendant acted without power, or in breach of her fiduciary obligations to the deceased, in transferring it to her daughters; (b) whether, the property having been transferred to them, section 42 of the Real Property Act 1900 NSW gives the daughters an indefeasible title to the property; and (c) whether, in equity, the sisters are bound to hold the property on trust for the estate of the deceased.

The First Defendant’s assertion of an Oral Agreement between the Deceased and Herself

Before those, and associated, questions are addressed there is a need to address the first defendant’s foundational assertions of fact: (a) that, in 2000, she and the deceased made an oral agreement that, if she transferred “Malaya” to the plaintiff, he would leave “Boronga” to their daughters; (b) that she transferred “Malaya” to the plaintiff in reliance on that agreement; and (c) that she transferred “Boronga” to her daughters in performance of the deceased’s “obligation” to leave that property to them.
I am not satisfied that there was ever an agreement, or any informal arrangement, between the deceased and the first defendant to the effect that, if the first defendant transferred “Malaya” to the plaintiff, the deceased would leave “Boronga” to the girls. That is because:

there is no contemporaneous record of any agreement between the deceased and the first defendant of the type to which the first defendant deposes.

a letter dated 10 April 2000 written by the first defendant’s then solicitor to the plaintiff and copied to her (Exhibit P1) was couched in terms that described “a possible intergenerational transfer of [the first defendant’s] farm ‘Malaya’ to [the plaintiff]” as a reward for faithful service on the farm, and as a means of continuing the family farming partnership, without any suggestion that the proposed transfer was part of an arrangement about the future disposition of “Boronga”.

that letter was written shortly before the deceased executed his power of attorney in favour of the plaintiff and the first defendant jointly and severally (on 7 June 2000) and the first defendant executed the memorandum of transfer (later registered as Dealing No. 6899811Q) that transferred “Malaya” to the plaintiff. The memorandum of transfer bears the date 26 June 2000, accompanied by a reference to the date 16 June 2000 under the plaintiff’s signature as transferee. It was registered on or about 7 July 2000.

the terms in which the letter dated 10 April 2000 were written suggest that the parties were not unmindful of taxation implications of a transfer of “Malaya” to the plaintiff, an observation reinforced by the fact that the memorandum of transfer in favour of the plaintiff is marked “No [Stamp] Duty payable”. In the absence of any contemporaneous written record of the agreement that the first defendant says she had with the deceased, the fact that there were, or may have been, economic imperatives for the transfer of the land to the plaintiff is consistent with, if not confirmation of, the absence of the alleged agreement in fact.

between 1997 and 2003 (in the lead up to the deceased’s execution of his will dated 26 March 2003) a neighbour with an expressed interest in acquiring “Boronga” from the deceased (Peter Thomas Reilly, a nephew of the deceased and the first defendant) had several conversations with the first defendant in which: (i) he asked the first defendant what she thought the deceased would do with “Boronga”; and (ii) she replied with words to the effect, “I don’t care what [the deceased] does with the property, so long as he does not leave it to me”.

at a time in about 2003 when the deceased had declared to his neighbour an intention to see Mr Buckley about making a will, the neighbour had with the first defendant a similar conversation about the deceased’s intentions in which, the neighbour recalls, the first defendant said words to the effect that “[the deceased] can do whatever he likes with ‘Boronga’, so long as he doesn’t leave it to me”.

the plaintiff deposes to having heard conversations between his parents to the same effect, in about March 2003, when he was living with them in the homestead on “Boronga”.

although the deceased’s testamentary intentions as manifested in 2003 (in Mr Buckley’s notes dated 18 March 2003 and, as I have found, the will dated 26 March 2003) need to be approached with caution upon any independent assessment of the evidence and intentions of the first defendant, the fact that the deceased evidently felt at liberty to leave “Boronga” to the plaintiff rather than to his daughters is not wholly irrelevant in a family in which there had long been, and there continued to be, close cooperation in the conduct of a family farming business.

the evidence is consistent with the absence of any agreement between the deceased and the first defendant of the type alleged by the first defendant, and with the development in the first defendant of a strong, subjective opinion (perhaps encouraged by representations of the fifth defendant, who aided her in effecting a transfer of “Boronga” to the daughters in 2009) that fairness between siblings justified, if not mandated, a transfer of “Boronga” to the girls.

when instructing the sixth defendant’s firm to effect the transfer of “Boronga” to her daughters, the first defendant did not tell the sixth defendant, or his employee, of the alleged agreement between the deceased and herself.

she did not tell any of her children of the alleged agreement at that time.

if the first defendant’s evidence is accepted, her husband (with whom she had a close and loving relationship) misled her in March 2003 when, on her evidence, in anticipation of making his will later that month, he expressly affirmed to her an intention to leave “Boronga” to their daughters, an intention not subsequently disclaimed.

In disbelieving the first defendant’s evidence about the existence of an agreement between the deceased and herself, it is not necessary to go so far as to find that she is a person of doubtful credit. It is sufficient to note, as McLelland CJ in Eq did in Watson v Foxman (1995) 49 CLR 315 at 318-319, the fallibility of human memory and the capacity of the human mind for ex poste rationalisation of events long since passed. To this might be added the Court’s customary caution (often signposted with a reference to Plunkett v Bull (1915) 19 CLR 544 at 548-549) in the assessment of evidence of oral statements attributed to a deceased person.
Just as I am not satisfied that there was ever any agreement between the deceased and the first defendant to the effect that, if the first defendant transferred “Malaya” to the plaintiff, the deceased would leave “Boronga” to their daughters, so I am not satisfied that the first defendant, in 2009, effected a transfer of “Boronga” to the daughters in reliance upon (or even by reference to) such an agreement.
In final submissions counsel for the plaintiff was criticised for not (it was said) sufficiently, or formally, confronting the first defendant in cross examination with an explicit refutation of her evidence about the existence of, and reliance upon, an informal agreement between herself and the deceased about her entitlement to transfer “Boronga” to their daughters. I do not accept that criticism.
Throughout the hearing there was never any doubt that the first defendant’s assertion of such an entitlement was under challenge. A cross examiner of the first defendant was not obliged to create sympathy in her favour by a robust confrontation. There was nothing unfair in a more subtle cross examination. The first defendant, represented by competent counsel, was on notice that her evidence was under challenge. The so-called “rule” in Browne v Dunn (1894) 6 R 67 requires no more: Allied Pastoral Holdings Pty Limited v Commissioner of Taxation [1983] 1 NSWLR 1.

Although each of the defendants submits that I should accept the first defendant’s evidence about a justification for her conduct grounded in an informal agreement with the deceased, nobody contends that I am bound to accept that evidence. As it happens, for the reasons I have explained, I do not accept it.
In my assessment, more probably than not the first defendant effected the 2009 transfer primarily because of her strong, personal, subjective opinion that that is what “fairness” between her children required she do, encouraged in that opinion by the fifth defendant who assisted her in instructions given to the sixth defendant (as solicitor for all parties to the transaction), with the acquiescence of each of the second, third and fourth defendants (each of whom, with the fifth defendant, made a declaration under the Duties Act 1997 NSW in support of an application for exemption from stamp duty on the transfer).
The first defendant denies location of her motivation in the possibility that a divestiture of “Boronga” would, in time, assist her to have the deceased’s ongoing nursing home fees ($50,000 per year which, she says, she personally paid) met by social security. That denial cannot be accepted in light of a file note dated 16 April 2009 prepared by the sixth defendant’s employee as a contemporaneous record of instructions given to him by the first and fifth defendants as a preliminary to the 2009 transfer. There appears to have been a clear connection between the proposed transfer and a purpose of moving the deceased towards pension entitlements by reducing the value of assets in his name. Accordingly, I infer, a secondary motivation of the first defendant in effecting the 2009 transfer was to relieve herself of costs associated with the deceased’s nursing home care.
The first defendant’s 2009 transfer of “Boronga” to her daughters was not in accordance with the intentions of the deceased (testamentary or otherwise), and not for his benefit, but, essentially, to give immediate effect to the first defendant’s personal preference for what should be done with the property and, possibly, at future time, to relieve her of costs associated with his maintenance.
She had no authority to transfer the property to her daughters unless it be located in the power of attorney dated 7 June 2000, upon which instrument she expressly purported to rely in her execution of the memorandum of transfer dated 1 July 2009 as attorney for the deceased. There is no general rule of agency between married, or cohabiting, couples; whether there is a relationship of agency between such couples depends on the facts of the particular case: Pollard v Wilson [2010] NSWCA 68 at [113]. In this case, the power of attorney dated 7 June 2000 is the only identified source of the first defendant’s actual authority.
The memorandum of transfer was accompanied by a “contract for the sale of land” (expressed to be between the deceased as vendor and his daughters as purchasers), also dated 1 July 2009, which purported to sell “Boronga”, including the house and other improvements on the property, with vacant possession, for the price of $1.00. That contract was signed by the first defendant on behalf of the deceased as vendor.

The Power of Attorney

The power of attorney dated 7 June 2000 took the form of an adaptation of a printed form.
At the time of its creation, the instrument was governed by Part 16 (sections 158-163H) of the Conveyancing Act 1919 NSW, since repealed by the Powers of Attorney Act 2003 NSW, section 6(3) of which preserved the operation of the repealed provisions vis a vis the instrument.
Omitting the execution clause and the accompanying certificate given by Mr Buckley under section 163F(2) of the Conveyancing Act 1919, the power of attorney was in the following terms:

“General Power of Attorney
Part 1
THIS POWER OF ATTORNEY is made on the 7th day of June 2000
by FRANCIS BEDE REILLY
of “Boronga”, Gunningbland
1. I appoint MARGARET LILIAN REILLY
of “Boronga”, Gunningbland
and JOSEPH THOMAS REILLY
of “Boronga”, Gunningbland
to be my attorney(s) (where more than one jointly and/or severally) to exercise, subject to any conditions and limitations specified in Part 2 of this Instrument, the authority conferred on him/her/them by Section 163B of the Conveyancing Act, 1919, to do on my behalf anything I may lawfully authorise an attorney to do.
2. …

3. This general power of attorney is given with the intention that it will continue to be effective notwithstanding that after its execution I suffer loss of capacity through unsoundness of mind.
Part 2
CONDITIONS AND LIMITATIONS”

Clause 2 of the printed form, adapted by deletion, formerly read as follows:

“In the exercise of the authority conferred on him/her/them by Section 163B of the Conveyancing Act, 1919, my attorney(s) is/are authorised to execute an assurance or other document, or do any other act, whereby a benefit is conferred on him/her/them.”

No “condition” or “limitation” was recorded in Part 2 of the instrument signed by the deceased.
At the time the power of attorney was executed, section 163B of the Conveyancing Act 1919 was in the following terms:

“163B Power conferred by prescribed form of instrument
(1) Subject to this section, an instrument (whether or not under seal) in or to the effect of the form in Schedule 7 confers on the attorney thereby appointed authority to do on behalf of the person executing the instrument anything the person executing the instrument may lawfully authorise an attorney to do.
(2) The authority conferred by an instrument referred to in subsection (1) does not include:
(a) authority to exercise or perform any power, authority, duty or function as a trustee conferred or imposed on the person executing the instrument, or
(b) unless it is expressly conferred by the instrument—authority to execute an assurance or other document, or do any other act, as a result of which a benefit would be conferred on the attorney appointed by the instrument.

(3) Where an instrument referred to in subsection (1) specifies any conditions or limitations to which the authority conferred by the instrument is to be subject, the authority is so conferred subject to compliance with those conditions or limitations.”

The power of attorney granted by the deceased was “in or to the effect of the form of Schedule 7” as required by section 163B.
Section 163F(2) of the Conveyancing Act (pursuant to which Mr Buckley executed a certificate in support of the power of attorney at the time of its execution) was in the following terms:

“(2) Where:
(a) a power of attorney is, in the instrument creating the power, expressed to be given with the intention that it will continue to be effective notwithstanding that, after the execution of the instrument, the principal suffers loss of capacity through unsoundness of mind,
(b) the execution of the instrument is attested by a prescribed person (not being an attorney under the power), and
(c) there is endorsed on, or annexed to, the instrument a certificate by that prescribed person stating that the prescribed person explained the effect of the instrument to the principal before it was executed,
the power of attorney is effective so far as concerns any act within its scope, notwithstanding that the act is of a nature which is, at the time of the act, beyond the understanding of the principal through unsoundness of mind.”

So far as is material, section 163 of the Conveyancing Act provided as follows:

“163 Registration of powers of attorney
(1) Any instrument … creating a power of attorney for any purpose whatever may be registered.
(2) … [No] conveyance or other deed not being a lease or agreement for a lease for a term not exceeding 3 years, and no memorandum by this Act
operating as a deed executed by the attorney under the power in pursuance of the power shall be of any force or validity whatsoever unless the instrument creating the power has been registered:
Provided that on registration of the instrument creating the power every such conveyance deed or memorandum executed by the attorney under the power shall take effect as if the instrument creating the power had been registered before the execution of the conveyance deed or memorandum.
(3) Any instrument revoking any such power may also be registered. …”

The deceased’s power of attorney was not registered by the deceased or by Mr Buckley acting on his instructions.
It was registered on 6 July 2009 by the sixth defendant’s firm, acting on the instructions of the first defendant, without express notice to the plaintiff, for the purpose of giving effect to the memorandum of transfer dated 1 July 2009 executed by her in favour of her daughters.
Although not given express notice of the first defendant’s intention to register the power of attorney, the plaintiff deposed to a conversation with her “in about mid-2009” in which she told him that she proposed to transfer “Boronga” to “the kids” and he would have no say in that transaction. He was, to that extent, implicitly on notice of both an intention to register the power of attorney and an intention to transfer “Boronga”, or at least an interest in “Boronga”, to his sisters.
The effect of section 163B(2)(b) of the Conveyancing Act, given the deletion of clause 2 from the printed form, was that the deceased’s power of attorney did not confer on the first defendant (or, for that matter, the plaintiff) “authority to execute an assurance or other document, or do any other act, as a result of which a benefit would be conferred on the attorney appointed by the instrument”. No party contends otherwise.

The first Defendant’s Obligations as a Fiduciary, Limits on her Powers and Findings of Breach

Whatever the precise limits of the first defendant’s powers as the deceased’s attorney, the relationship between them, as principal and attorney, was a fiduciary one, a consequence of which was that the first defendant was obliged not to place herself in a position of conflict, nor to obtain a profit or benefit from her fiduciary position, without first obtaining the fully informed consent of the deceased: Taheri v Vitek (2014) 87 NSWLR 403 at 427(115); Downie v Langham [2017] NSWSC 113 at [8]; Hospital Products Pty Limited v United States Surgical Corporation (1984) 156 CLR 41 at 68, 96 and 141; Chan v Zacharia (1984) 154 CLR 178 at 198-199; Maguire v Makaronis (1997) 188 CLR 449 at 466-467. These obligations flowed from the obligation of loyalty owed by the first defendant (to act, bona fide, only in the interests, and for the benefit, of the deceased as her principal) when she accepted her appointment, and thereafter purported to act, as an attorney.
In circumstances in which the deceased no longer possessed the mental capacity to give his fully informed consent to a proscribed transaction proposed by the first defendant as his attorney, she could nevertheless have effected the transaction without a breach of her fiduciary obligations had she sought and obtained authorisation via an order of the Court, or the Guardianship Tribunal (now the Guardianship Division of the Civil and Administrative Tribunal of NSW (NCAT)), exercising protective jurisdiction, in effect, on behalf of the deceased or upon an application for advice or directions under section 38 of the Powers of Attorney Act 2003. This she did not do.
As a fiduciary, the first defendant was bound to exercise her powers as an attorney for the deceased in his interests and not otherwise: Hospital Products Limited v United States Surgical Corporation (1984) 156 CLR 41 at 96-97.
The primary object of a power of attorney is to enable the attorney to act in the management of his or her principal’s affairs; an attorney cannot, in the absence of a clear power so to do, make presents to himself or herself or to others of his or her principal’s property: Tobinv Broadbent (1947) 75 CLR 378 at 401 (quoting Reckitt v Barnett Pembroke and Slater Limited [1928] 2KB 244 at 268, approved in the House of Lords [1929] AC 176 at 183 and 195), recently applied by the Full Court of the Federal Court of Australia in Great Investments Limited v Warner (2016) 243 FCR 516 at 538[85].
Under the general law of agency it is a breach of duty for an agent to exercise his or her authority for the purpose of conferring a benefit on himself or herself or upon some other person to the detriment of his or her principal. But, at the same time, if his or her act is otherwise within the scope of his authority it binds the principal in favour of third parties who deal with him bona fide and without notice of his fraud: Richard Brady Franks Limited v Price (1937) 58 CLR 112 at 142.
Where a fiduciary (such as an agent) exercises a power which results in his or her obtaining some incidental benefit, there may be nothing per se improper with his or her having that benefit if the benefit itself is, in the circumstances, an inevitable consequence of his or her properly exercising the power which produces it. A beneficiary (principal) may be able to upset such an exercise of power only if he or she can show that the fiduciary (agent) exercised it with the dominant purpose in mind of obtaining that benefit irrespective of the interests of his beneficiary (principal): Paul Finn, Fiduciary Obligations (Federation Press, Sydney, 2016 reprint), paragraphs [103]-[104], citing, inter alia, Smith v Cock (1911) 12 CLR 30 at 36.
These general law principles apply in the current proceedings. They were not displaced by the Part 16 of the Conveyancing Act 1919, still less by the Powers of Attorney Act 2003 NSW: Powers of Attorney Act 2003 NSW, sections 6-7.
The plaintiff contends that the first defendant acted outside her authority as the deceased’s attorney, and in breach of fiduciary obligations owed by her to the deceased, in that she transferred assets of the deceased (principally “Boronga”, but also the deceased’s interest in the FB & ML Reilly Partnership) for her own benefit; namely:

immediately, to achieve her own end (giving effect to her personal concept of fairness as between her children), a non-economic benefit enjoyed by her (the satisfaction of achieving her own design); and

prospectively, to relieve herself of costs associated with the deceased’s nursing home care by divesting him of assets so as to qualify him, after a lapse of five years, for pension entitlements.

The plaintiff contends, further, that the first defendant acted beyond her power as an attorney by unilaterally procuring registration of the deceased’s power of attorney. That contention is articulated in written submissions as follows:

“[56] What occurred after 1 July 2009, when the first defendant executed the ‘Boronga’ transfer, was that the first defendant herself enlarged the power given to her on 7 June 2000 by unilaterally procuring registration of the deceased’s power of attorney. The first defendant gave to herself an additional power to transfer land.
[57] Were the terms of the power of attorney dated 7 June 2000 such that the attorney herself was authorised to enlarge or expand those powers? The deceased had made a choice. He had expressly limited the attorneys’ powers by declining to register the power of attorney on or after 7 June 2000. The registration of the power of attorney after the deceased lost capacity implicitly limited the first defendant’s ability to apply the deceased’s estate other than for his benefit.
[58] The boundaries of the first defendant’s power was set by the deceased. The attorney was authorised to ‘do on my behalf anything I may lawfully authorise an attorney to do.’ The source of the power or authority must always have been the deceased. He could not delegate to the first defendant a power to enlarge the scope of her agency. If the given power was that wide, the first defendant could have authorised acts which had been expressly precluded by the deceased.
[59] Just as the deceased expressly limited the powers to exclude self benefits, he also precluded the valid execution of instruments transferring land by declining to register his power of attorney. The later acts of the first defendant in executing the ‘Boronga’ transfer, procuring registration of the power of attorney and registering the ‘Boronga’ transfer to achieve her own ends were all ultra vires acts.”

For the following reasons, I do not accept that the first defendant, by procuring registration of the deceased’s power of attorney, was acting beyond power:

Reflecting both section 163B(1) and section 163B(3) of the Conveyancing Act, the power conferred by clause 1 (in Part 1) of the power of attorney was accompanied by an absence of specified Part 2 “Conditions and Limitations”. There was thus no express condition or limitation on the attorneys’ power to do on behalf of the deceased anything he could lawfully authorise an attorney to do.

There is no impediment in law to a principal authorising an attorney to register the attorney’s instrument of appointment merely because the legal effect of registration is to remove the barrier to land dealings for which section 163(2) of the Conveyancing Act provides. The exceptions in, and the proviso to, section 163(2) demonstrate that the subsection is directed, not to the intrinsic validity of an instrument, but to maintenance of the integrity of systems of registration governing Torrens title and old system land. The exception relating to a short term lease reflects the exception for which section 42(1)(d) of the Real Property Act 1900 NSW provides in relation to unregistered Torrens title instruments. The exception relating to memoranda operating as deeds ties in with the definition of “deed” in section 7 of the Conveyancing Act, the provisions of section 38 of the Act governing the execution of a deed and the system for registration of deeds for which Part 23 of the Act provides. Section 163(2) ensures that, if an instrument affecting land has been executed by an attorney, the instrument conferring power on the attorney to execute it is searchable in circumstances consistent with the systems governing registration.

There is no element of delegation by the principal to the attorney of a power to “enlarge” the scope of an agency by the principal leaving to the attorney the ministerial act of registering the attorney’s instrument of appointment.

To hold otherwise, upon a construction of sections 163(2) and 163B of the Conveyancing Act, in respect of a power of attorney unconstrained by specified “conditions” or “limitations”, would be productive of mischief because, in each case, a third party dealing with an attorney in relation to land might be required (notwithstanding a form of protection for which section 162 of the Act provides for those dealing with an attorney) to investigate the circumstances in which a power of attorney came to be registered: was the instrument registered by, or otherwise with the authority of, the principal? An object of the legislation is to provide certainty for third parties dealing with an attorney: Taheri v Vitek (2014) 87 NSWLR 403 at 431. To construe it as the plaintiff contends would not serve, but would detract from, that object.

There is no evidence in the present proceedings that the deceased’s power of attorney was delivered to his attorneys, in escrow, on a condition that it not be registered, or subject to any other form of condition as to registration extrinsic to its terms.

Given that the deceased’s attorneys were empowered to act jointly or severally, it was open to the first defendant, as a matter of power, to act unilaterally in registration of the instrument of their appointment.

I do not accept that the first defendant’s secondary purpose of (possibly) relieving herself of costs associated with the deceased’s nursing home care, by effecting a transfer of “Boronga” to others, of itself involved a want of authority or a breach of her obligations as a fiduciary. If it be the fact (as she has asserted, without corroborative evidence as to her source of funds) that the first defendant paid for the deceased’s nursing home care she would have been entitled, as an agent who expended money for the benefit of her principal, to be indemnified by him or his estate: Re Clune; Ex parte Verge v Isabella Nominees Pty Limited (In Liq) (1988) 14 ACLR 261 at 266; Mega-Top Cargo Pty Limited v Moneytech Services Pty Limited [2015] NSWCA 402 at [41]-[48]. Of itself, conduct directed towards diminution of costs chargeable to the deceased or his estate would not fall outside the deceased’s general grant of authority “to do on my behalf anything I may lawfully authorise an attorney to do” or attract characterisation as an exercise of that authority for an improper purpose. There is no allegation that the first defendant’s conduct was unlawful because, for example, tainted by revenue fraud.

The sixth defendant provided no advice to the plaintiff, and received from the plaintiff no verification or corroboration of the first defendant’s instructions, notwithstanding that the plaintiff was an attorney of the deceased; a person who (as was reasonably foreseeable) stood to lose a benefit from the estate of the deceased in the event that “Boronga” was transferred out of the name of the deceased; and a person vulnerable to harm in the event that the solicitor acted upon unauthorised instructions to divest the deceased of “Boronga”.

Mr Maccallum was also critically aware, because the first and fifth defendants told him so at an early stage of their interaction, that “the family” (that is, the first defendant and her daughters) were motivated to transfer “Boronga” out of the deceased’s name because, the plaintiff having received “Malaya”, it was only fair that the girls get “Boronga”. Mr Maccallum was, thus, aware of the first defendant’s principal purpose in effecting a transfer: a purpose that could not easily be justified as serving the interests of the deceased or as beneficial to him.
The sixth defendant relies upon, as I have found, the first defendant’s secondary purpose or something akin to it (prospective relief from the cost of nursing home care for the deceased by qualifying him for means tested social security benefits) to say that the “Boronga” transfer was of benefit to the deceased. However, even if that purpose be acknowledged, the fact remains that the first defendant’s dominant purpose was foreign to the purpose for which a power of attorney was conferred upon her. Moreover, depriving the deceased of his principal asset in the hope of qualifying him for social security benefits could not readily, objectively, be characterised as beneficial to him.
In his contemplation, and implementation, of business described by him as “estate planning” and an “intergenerational transfer” of property, Mr Maccallum consciously accepted that it was open to “the family” (without reference to the personal interests of the deceased or any benefit or detriment to him) to divest the deceased of his principal asset. An integral part of this deliberate programme of action was nomination of a nominal purchase price ($1.00) for the defendants’ “sale” of “Boronga”, coupled with an application by the “purchasers” for exemption from liability for the payment of stamp duty.
Mr Maccallum performed the sixth defendant’s retainer in the erroneous belief that the deceased’s will was irrelevant to the work to be performed by him. He relied upon the fact of the deceased being mentally incompetent, believing that the sixth defendant was (he thought) entitled simply to act on the instructions of the first defendant in the performance of work on behalf of “the Reilly family” and that the firm was acting on behalf of “the family”.
Mr Maccallum proceeded on the basis that he could accept, and act upon, the first defendant’s instructions without critical examination. This was far too mechanical a view of the professional function, and the duty, of a solicitor. I adopt the following observations of Barron J in McMullen v Farrell [1993] 1 IR 123 at 142-143 as extracted in Jackson & Powell On Professional Liability (Sweet and Maxwell, London, 6th edition, 2007) at paragraph [11-125]:

“A solicitor cannot in my view fulfil his obligations to his client merely by carrying out what he is instructed to do. This is to ignore the essential element of any contract involving professional care or advice… In my view a solicitor when consulted has an obligation to consider not only what the client wishes him to do but also the legal implication of the facts which the client brings to his attention. If necessary, he must follow up these facts to ensure that he appreciates the real problem with which he is being asked to deal.”

Local confirmation of the correctness of these observations can be found in Cockburn v GIO Finance Limited [1996] NSWCA 109, in which a solicitor was held liable for damages for breach of the contractual duty of care he owed to a client who, to the knowledge of the solicitor, was a vulnerable young person under the influence of a dominant father who prevailed upon the son to enter an improvident transaction for the benefit of the father. The Court of Appeal (constituted by Kirby ACJ, Priestley JA and Giles AJA) held (at 25-27) that, armed with knowledge of the client’s vulnerability and the dominance of the father, it was not open to the solicitor simply to act, as he did, on the instructions of the father without making enquiries sufficient for him to understand the particular transaction and to take steps to protect the interests of the vulnerable son.
Mr Maccallum’s understanding of the nature and extent of the first defendant’s authority as an attorney was not dissimilar to that of the solicitor who Hutley AP criticised, in the following terms, in Moloney v The Law Society of NSW (Court of Appeal, 13 September 1984, unreported):

“He [the solicitor] had peculiar and erroneous ideas as to the responsibilities of a donee of a power of attorney, in that he regarded the absolute language of the power language designed to ensure that persons dealing with the holder of the power did not have to inquire as to the purpose of the exercise of the power as exempting the holder of the power from being required to exercise the power for the purposes of the donor and permitting its use for the donee’s own purposes”.

The High Court refused a grant of special leave to appeal from the Court of Appeal’s judgment, although it qualified other, unrelated observations of the Court of Appeal made about the solicitor: Moloney v The Law Society of NSW [1985] HCA 77; (1985) 62 ALR 221.
Mr Maccallum evidently failed to appreciate that: (a) uncritical acceptance of the first defendant’s instructions in dealing with property of the deceased exposed her, and her daughters, as these proceedings demonstrate, to claims for relief made in equity by or on behalf of the deceased or his estate; and (b) that, insofar as the deceased’s “family” proposed to deal, or dealt, with the deceased’s property for purposes of their own, there was a conflict between their interests and the interests of the deceased and any person (such as the plaintiff) claiming through the deceased.
He failed to appreciate, also, that, in acting on instructions of the first defendant as attorney for the deceased he was effectively acting also for the deceased, to whom he owed a duty of care and the professional obligations due to a client. He failed to appreciate that he could not act (as he did) on both sides of the conveyancing transaction relating to transfer of “Boronga” without falling foul of conflicts between duty and interest emanating from the different interests of (a) the deceased and (b) the wife and daughters of the deceased. He failed to appreciate, further, that he might owe professional duties not only to the deceased but also to the plaintiff as a person claiming a prospective interest in “Boronga” as an intended beneficiary of the deceased.
In Hill v Van Erp (1997) 188 CLR 159 the High Court of Australia accepted that a solicitor who fails to use reasonable care in the preparation of a will for a testator may also be in breach of a duty of care owed to an intended beneficiary under the will who suffers foreseeable loss upon the death of the testator if the duty to the beneficiary corresponds with a duty owed by the solicitor to the testator as client of the solicitor.
In Badenach v Calvert (2016) 257 CLR 440 at 450[20] French CJ, Kiefel and Kean JJ clarified the field of operation of Hill v Van Erp by making the following observations:

“In Hill v Van Erp (1997) 188 CLR 159 at 167 Brennan CJ explained that a solicitor’s duty is generally considered to be owed solely to the client because the duty is to exercise professional knowledge and skill in the preparation and advancement of the client’s interests in the transaction in which the solicitor is retained. That duty cannot be compromised by a duty to a person whose interests are not coincident with those of the client, but in the case of a testator and an intended beneficiary under the testator’s will the interests are coincident. So understood, the duties said to be owed by the solicitor to an intended beneficiary is something of an exception to the general rule. Nevertheless, in a practical sense it operates consistently with the duty to the client.”

In the current proceedings, although the sixth defendant’s core instructions emanated from the first defendant as attorney for the deceased Mr Maccallum was bound to consult the interests of the deceased as the firm’s ultimate client. Those interests were coincident with the interests of the plaintiff insofar as an ultra vires exercise of the deceased’s power of attorney by the first defendant was not in the interests of either of them.
Recognition that the sixth defendant owed a duty of care to the plaintiff in connection with performance of a retainer by the first defendant, as attorney for the deceased, imposes on the sixth defendant no exposure to an indeterminate liability. Mr Maccallum had actual knowledge of the deceased’s will, the existence of the plaintiff, the plaintiff’s family and commercial interest in “Boronga” and the determination of the first defendant to bypass the plaintiff by an inter vivos transfer of the property to her daughters. He ought reasonably to have known that the plaintiff was, or was likely to be, the deceased’s intended recipient of “Boronga”, although not named in clause 3 of the will. The subject matter of clause 3 was an identified, single property.
The sixth defendant was bound to exercise reasonable care in performance of his retainer, recognising that he was (relevantly) retained by the first defendant in a representative capacity that required him to protect the interests of the deceased (and, incidentally, the plaintiff as an intended beneficiary of the deceased).
In breach of a duty of care owed to the deceased, and incidentally to the plaintiff, he acted on the transfer of “Boronga” without a critical examination of the first defendant’s authority to effect the transfer, in circumstances in which the first defendant acted for a purpose foreign to her power and the effect of her so doing was to divest the deceased (and ostensibly, indirectly, the plaintiff) of substantial property.
Upon an assumption that the estate of the deceased is not entitled to recover title to “Boronga” from the plaintiff’s sisters, the sixth defendant’s breach of the duty of care he owed to the plaintiff caused damage to the plaintiff as a disappointed beneficiary of the deceased.
In light of the way these proceedings have been conducted, the true measure of that damage is the market value of “Boronga” at or about the time of the death of the deceased, allowing a reasonable time for administration of the deceased’s estate. Although the plaintiff particularises his damage as a “loss of opportunity” (Badenach v Calvert (2016) 257 CLR 440 at 448-449[14] and 454[39]) any uncertainty attaching to the plaintiff’s status as an intended beneficiary of “Boronga” on 2 December 2009 was always negligible (given the deceased’s lack of testamentary capacity and the constraints of any application for a “statutory will” under the Succession Act 2006 NSW) and, more importantly, his entitlement as such a beneficiary crystallised on the death of the deceased.
On the current state of the evidence about the value of “Boronga”, I do not speculate about quantification of the plaintiff’s entitlement to damages against the sixth defendant (assuming he has suffered damage at all) beyond an observation that it is not less than $815,000 (the value of the property in mid-2009) plus interest calculated from the time when the plaintiff might reasonably have acquired an interest in the property consequent upon due administration of the deceased’s estate.
If called upon to make a determination pursuant to section 35 of the Civil Liability Act 2002 NSW as to what share of the plaintiff’s assumed entitlement to damages should be borne by the sixth defendant, I would hold the sixth defendant 100% liable for the damages payable to the plaintiff. The sixth defendant was retained to provide legal services without which the first defendant and her daughters (who were entitled to rely upon his professional expertise) could not have done what they did in exposing the plaintiff to damage.
As it happens, if the plaintiff is able to take title to and possession of “Boronga” (subject to the family provision relief charged on the property in favour of his sisters), he will have suffered no substantial damage consequent upon the sixth defendant’s negligence, and any award of damages made in his favour could be no more than nominal.

Available, alternative courses of action

A finding, such as I have made, that, by a want of reasonable care, the sixth defendant breached a duty of care owed to the plaintiff (a duty, it must be remembered, derived from, and ancillary to, a duty of care owed by the sixth defendant to the deceased) invites consideration of what the sixth defendant should, or could, have done had he exercised reasonable care.
A response to that invitation requires, as a starting point, an appreciation of the character of an enduring power of attorney when, the donor of the power having become mentally incapacitated, it is fully engaged as an enduring appointment. The concept of an “enduring” appointment of an attorney is a relatively recent one: Smith v Smith [2017] NSWSC 408 at [85]-[104]. But for the intervention of Parliament, the common law would, ordinarily, have held that a power of attorney lapses upon the donor’s loss of mental capacity: Drew v Nunn (1879) 4 QBD 661 at 665-666; Ghosn v Principle Focuss Pty Limited (No. 2) [2008] VSC 574 at [36].
The concept of an “enduring” appointment as an attorney needs to be viewed in the context of the protective regime it serves. Under current law and practice in NSW (similar to that operative in and throughout 2009), the appointment of an enduring attorney as a means of facilitating management of the affairs of a person who lacks the requisite mental capacity to manage his or her own affairs (Gibbons v Wright (1954) 91 CLR 423 at 434-438) is an alternative to:

the appointment of a “financial manager” by the Guardianship Division of the Civil and Administrative Tribunal of NSW (“NCAT”) , formerly the Guardianship Tribunal, under the Guardianship Act 1987; or

the appointment of a protected estate “manager” by the Court under section 41 of the NSW Trustee and Guardian Act 2009 NSW or, exceptionally, the appointment by the Court of the general law equivalent, a “committee of the estate” , upon an exercise of the Court’s inherent jurisdiction (IR v AR [2015] NSWSC 1187 at [100]-[117], especially [113]).

The events of 2009 with which these proceedings are centrally concerned happened at a time of institutional change. The NSW Trustee and Guardian Act 2009 NSW was in the process of implementation, leading to repeal and replacement of the Protected Estates Act 1983 NSW. The Guardianship Tribunal has since been replaced by the Guardianship Division of NCAT, governed by the Civil and Administrative Tribunal Act 2013 NSW, to be read in combination with the Guardianship Act 1987. Important although these changes are, they have not materially changed the character of the protective jurisdiction as it operated in NSW in and throughout 2009.
The inherent, protective jurisdiction of the Court (the nature of which is authoritatively explained in Secretary, Department of Health and Community Services v JWB and SMB (Marion’s Case) (1992) 175 CLR 218 at 258-259) exists to enable the Court to do what is for the benefit of an incompetent person, unable to take care of himself or herself. The purposive character of the jurisdiction finds a legislative parallel in section 4 of the Guardianship Act 1987 (now matched by section 39 of the NSW Trustee and Guardian Act 2009), where can be found a statement of guiding principles which commences with the proposition that “the welfare and interests” of a person in need of protection “should be given paramount consideration”.
The Powers of Attorney Act 2003 NSW fits in with this legislative scheme (as it did, in substance, in 2009) because an application to the Court or to the Tribunal under Part 5 (sections 26-42) of the Act – for review of a power of attorney, directions or advice - can result in the incapacitated donor of an enduring power of attorney being declared a “protected person” and having his or her estate placed under protective management.
A solicitor in the position of the sixth defendant or Mr Maccallum in 2009, obliged to exercise care and skill in giving effect to a retainer agreement entered with the first defendant in her capacity as an enduring attorney for the deceased, and knowing that the deceased was no longer mentally competent to manage his own affairs, would be obliged to know these things or, at least, to understand the importance of learning about them before giving effect to the first defendant’s instructions that the deceased be divested of his principal asset for no consideration.
Such a solicitor might also be taken to have known, or to have been prudent enough to learn, about the availability of jurisdiction in the Court (under Division 2 of Part 2.2, sections 18-26, of the Succession Act 2006 NSW) to authorise the making of a will on behalf of a person (such as the deceased) who lacks testamentary capacity. The leading case in NSW (Re Fenwick; Application of JR Fenwick; re “Charles” (2009) 76 NSWLR 22) was decided on 12 June 2009, at about the same time that Mr Maccallum was turning his mind to the problem of “intergenerational transfer” of property within the Reilly family; but the legislative warrant for the Court to authorise the making of a statutory will was conferred upon commencement of the Succession Act on 1 March 2008.
A solicitor in the position of the sixth defendant and Mr Maccallum in 2009 should also have been familiar with the family provision jurisdiction of the Court (under Chapter 3 of the Succession Act 2006 NSW), including provisions (based upon the Family Provision Act 1982 NSW) governing the designation of property as the “notional estate” of a deceased person. Under those provisions property disposed of by a person within three years of his or her death may be brought indirectly, after his or her death, on an application for family provision relief. As explained by Palmer J in Re Fenwick, the availability of a potential family provision claim is one of the factors that may be weighed in the balance on an application for a statutory will.
Foundational to an understanding of the legal framework within which decisions about the deceased’s affairs would have had to be made in 2009 would have been an appreciation that the first defendant, as an agent for the deceased (and, particularly, as the donee of an enduring power of attorney exercising a power at a time when the donor was mentally incompetent) would have been likely, in accordance with equitable principles, to owe the obligations of a fiduciary towards the deceased.
Armed with this knowledge – necessary to discharge any professional obligation owed to the first defendant, no less than to the deceased or the plaintiff – a prudent solicitor standing in the shoes of the sixth defendant or Mr Maccallum in 2009 would have appreciated the fundamental necessity of recognising that the interests of the deceased could not simply be equated with the interests of the first defendant or, more particularly, the interests of the first defendant and her daughters.
Exercising reasonable care in the performance of his retainer (however viewed), a prudent solicitor would have recognised that: (a) he could not act for all parties to the proposed “sale” and “transfer” of “Boronga”; (b) given that the deceased had become mentally incompetent, an “intergenerational transfer” of “Boronga” could not be achieved effectively (if it could be achieved at all) absent invocation of the protective jurisdiction exercised by the Court, or the analogous jurisdiction exercised by the Guardianship Tribunal, or (more likely) by way of an application to the Court for a statutory will; and (c) any one of those legal procedures would have been likely to require a full engagement with the plaintiff in circumstances in which he would have had an opportunity to be heard about what was, or was not, in the interests and for the benefit of the deceased .

It was not for the sixth defendant, or Mr Maccallum, to dictate what course the first defendant, or other members of her family, should take in addressing concerns about an “intergenerational” transfer of the first defendant’s property in anticipation of his ongoing incapacity and the prospect of him dying without regaining capacity. They were, however, under a duty to warn, at least, the first defendant of risks associated with the course (unilateral transfer of property of the deceased under colour of an enduring power of attorney) she proposed to take. If, duly warned, she persisted in instructions to take that course, they were under a duty to decline to act for her. They could not act for her without exposing her and themselves to substantial risks of the nature illustrated by the current proceedings.
The solicitors’ duty to warn would have extended, prudently, to an invitation to the first defendant to consider the making of an application for a statutory will. Such an invitation would have inevitably exposed the defective form of the deceased’s will dated 26 March 2003 to view. It would have been likely, also, to expose to view any allegation of the character since made by the first defendant that she had an antecedent agreement with the deceased for disposition of “Boronga” in favour of their daughters.

PROPOSED ORDERS

I propose to allow the parties an opportunity (when they have read these reasons for judgment) to make submissions about the form of orders to be made to give effect to the judgment and submissions about costs.
Subject to any submissions made at that time, I propose to reserve for further consideration quantification of the plaintiff’s entitlement to an award of equitable compensation against the first defendant, and to an award of common law damages against the second defendant, in the event that “Boronga” is not in due course vested in him as the deceased’s administrator.
Subject to these qualifications, I propose to make orders to the following effect:

ORDER that the time within which an application may be made under section 27 of the Succession Act 2006 NSW for rectification of the will of the deceased dated 26 March 2003 be extended up to and including the date upon which the statement of claim was filed.

ORDER, pursuant to section 27(1) of the Succession Act 2006, that the will of the deceased be rectified by inserting in clause 3 of the will after the word “thereon” the words “to my son, Joseph Thomas Reilly”.

ORDER that the will of the deceased, as rectified, be admitted to probate in solemn form.

ORDER that administration of the estate of the deceased, with the will as rectified annexed, be granted to the plaintiff.

ORDER that the proceedings be referred to the Registrar for completion of the grant.

ORDER that any requirement for an administration bond be dispensed with.

ORDER that any requirement for further compliance with the Probate Rules be dispensed with.

DECLARE that the property known as “Boronga” is held by the second, third, fourth and fifth defendants on trust for the estate of the deceased.

ORDER that the second, third, fourth and fifth defendants transfer “Boronga” to the plaintiff as administrator of the estate of the deceased.

ORDER, pursuant to section 94 of the Civil Procedure Act 2005 NSW, that, if the second, third, fourth and fifth defendants fail to comply with Order 9 within a specified time, the Registrar be authorised to execute a Memorandum of Transfer of “Boronga” to the plaintiff as administrator of the estate of the deceased.

ORDER that the second, third, fourth and fifth defendants, within a specified time, deliver up to the plaintiff, as administrator of the estate of the deceased, the Certificates of Title relating to “Boronga”.

ORDER that the plaintiff, by himself, his servants and agents, be restrained from charging or otherwise dealing with “Boronga” (without the prior written consent of the second, third, fourth and fifth defendants) pending payment of the legacies (including any accrued interest) for which Orders 14-16 inclusive, provide.

ORDER, pursuant to section 58(2) of the Succession Act, that the time within which the second, third, fourth and fifth defendants may make an application for family provision relief be extended up to and including the date upon which the cross summons was filed.

Upon condition that “Boronga” is transferred to the plaintiff, as administrator of the deceased, pursuant to these Orders, ORDER, pursuant to Chapter 3 of the Succession Act 2006, that, in addition to the provision respectively made for them in the will of the deceased, the second, third, fourth and fifth defendants respectively receive out of the estate of the deceased legacies in the following amounts:

As to the second defendant, $80,000.

As to the third defendant, $275,000.

As to the fourth defendant, $80,000.

As to the fifth defendant, $60,000.

ORDER that those legacies be payable (and bear interest at the rate for which section 84A of the Probate and Administration Act 1898 NSW provides) on and from the date being four months following registration of title to “Boronga” in the plaintiff as administrator of the estate of the deceased, to the intent that, if paid within that time, no legacy will bear interest.

ORDER that the legacies by these orders granted to the second, third, fourth and fifth defendants be charged against the title to “Boronga” until, with any accrued interest, paid.

ORDER that the partnership between the plaintiff and the second, third, fourth and fifth defendants known as the “Shadrack Partnership” be dissolved pursuant to section 35(f) of the Partnership Act 1892 NSW on the basis that circumstances have arisen which render it just and equitable that the partnership be dissolved.

ORDER that the partnership be wound up under the direction of the Court.

ORDER that accounts of the partnership be taken.

ORDER, subject to further order, that any and all matters of difference between the partners relating to the taking of accounts be referred to arbitration in accordance with clause 17 of the Partnership Deed for the “Shadrack Partnership” dated 1 July 2009.

ORDER, pursuant to rule 28.2 of the Civil Procedure Act 2005 NSW, that the following questions be separately determined:

The quantum of any equitable compensation to which the plaintiff (through the estate of the deceased) might be entitled against the first defendant.

The quantum of any common law damages to which the plaintiff might be entitled against the sixth defendant.

RESERVE those questions for further consideration pending further order of the Court.

RESERVE to the parties liberty to apply for a determination of the reserved questions, or for relief in the working out of these orders.

ORDER that the statement of claim and the cross summons otherwise be dismissed.

ORDER that the proceedings be listed for mention on a date six months hence with a view to a final determination of such, if any, entitlements the plaintiff may have to a money judgment against the first and sixth defendants.

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Details

AGLC: Reilly v Reilly [2017] NSWSC 1419
Case: [2017] NSWSC 1419
Decision Date: 20 October 2017

CaseChat Overview and Summary

The case of Reilly v Reilly involved a dispute over the estate of a deceased farmer, Reilly, and the administration of his will. The primary issue was whether a will prepared by a solicitor, which contained a clerical error and omitted a beneficiary's name, could be rectified. Additionally, the case addressed the misuse of an enduring power of attorney by the deceased's daughter, who transferred the principal's property to third parties without authority. The court had to determine the extent of the fiduciary obligations owed by the attorney to the principal, and whether the attorney could benefit from the exercise of the power of attorney. The case also explored the principles of succession law, particularly the doctrine of ademption, and whether the inter vivos alienation of the principal's property by the attorney without authority resulted in the ademption of the principal's testamentary gift of the property.

The court was required to decide whether the will could be rectified to include the omitted beneficiary's name, given the clerical error in its preparation. It also needed to examine the attorney's actions and determine if they were in breach of the fiduciary obligations owed to the principal. Furthermore, the court had to consider the legal implications of the property transfer to third parties and whether the property remained beneficially entitled to the deceased principal's estate. The court also had to address the issue of succession and the applicability of the doctrine of ademption in the context of the inter vivos alienation of the principal's property by the attorney. Finally, the court had to assess the claims of the disappointed beneficiary against the enduring attorney and the solicitors who were retained by the attorney to facilitate the inter vivos transfer.

The court held that the will could be rectified to include the omitted beneficiary's name, as the error was a clerical one and did not reflect the deceased's true intentions. The court found that the attorney's transfer of the principal's property to third parties was in breach of her fiduciary obligations and without benefit to the principal. The property was held on trust for the principal's estate, and the estate remained beneficially entitled to the property, which was not subject to ademption. The court granted relief to the adult daughters of the deceased conditionally upon the restoration of the property to the deceased estate. The court also held that the enduring attorney was not entitled to benefit from the exercise of her power of attorney, and any transfer of the principal's property to third parties without authority would be void. Finally, the court found that the solicitors who were retained by the attorney owed a duty of care to the disappointed beneficiary of the deceased principal, and the beneficiary could bring an action for damages against the solicitors.

The court ordered that the will be rectified to include the omitted beneficiary's name. It also directed that the property transferred by the attorney to third parties be restored to the deceased estate. The court granted relief to the daughters of the deceased, subject to the restoration of the property to the estate. The court further held that the enduring attorney was not entitled to benefit from the exercise of her power of attorney and that any transfer of the principal's property to third parties without authority would be void. The court found that the solicitors who were retained by the attorney owed a duty of care to the disappointed beneficiary, and the beneficiary could bring an action for damages against the solicitors.

Orders