SFKD (Review Enduring Powers)
[2014] TASGAB 12
•16 January 2014
GUARDIANSHIP AND ADMINISTRATION BOARD
HOBART
SFKD - Review of an enduring power of attorney of Board’s own motion
SFKD (Review Enduring Powers) [2014] TASGAB 12
REASONS FOR DECISION
Anita Smith (President)
Wendy Hudson (Member)
Ken Stanton (Member)
Date of hearing: 16 January 2014
Review of enduring power of attorney of Board’s own motion – assessment of capacity to execute instrument – statutory test vs. ‘mental capacity’ - role of solicitors in assessing capacity – role of expert medical evidence – solicitor ignoring adverse medical opinion in his possession
Powers of Attorney Act 2000 s. 30, 33, 38
Guardianship and Administration Act 1995 s. 51, 53
Authorities relied on:
Gibbons v Wright (1954) 91 CLR 423
Scott v Scott [2012] NSWSC 1541
Szozda v Szozda[2010] NSWSC 804
Ranclaud v Cabban [1988] ANZ ConvR 134
Legal Services Commissioner v Ford [2008] LPT 12
Legal Services Commissioner v de Brenni [2011] QCAT 340
Authorities distinguished:
Wharton v Bancroft [2011] EWHC 3250
Zorbas v Sidiopoulous (No 2) [2009] NSWCA 197
Fischer v Howe [2013] NSWSC 462
SFKD, the donor, is an 82 year old widower who had enjoyed a successful career as a senior public servant. At the time of these proceedings, SFKD had recently moved to an aged care facility and was in possession of a significant estate. He purportedly executed an enduring power of attorney on 22 November 2013 in favour of EB, with QX as an alternative. The Board reviewed that power of its own motion pursuant to section 33(1)(a) of the Powers of Attorney Act 2000 (the Act) with regard to the validity of the purported instrument.
Key Provisions:
Section 33(2) of the Act allows that on the review the Board may, by order:
“(a) vary a term of, or a power conferred by, the enduring power of attorney; or
(b) appoint a substitute attorney; or
(c) appoint an administrator of the estate of the donor if he or she is over the age of 18 years; or
(d) declare that the donor did or did not have mental capacity to make a valid enduring power of attorney; or
(e) declare that the enduring power of attorney is invalid if the Board is satisfied that –
(i) the donor did not have the mental capacity to make it; or
(ii) it does not comply with the other requirements of this Act; or
(iii) it is invalid because the donor was induced to make it by dishonesty or undue influence or invalid for any other reason; or(f) revoke the enduring power of attorney and, if the donor is over the age of 18 years and the Board thinks fit, appoint an administrator of his or her estate; or
(g) make such other order as to the exercise of the power, or the construction of its terms, as the Board thinks fit.”
The Act sets no conditions for the exercise of the Board’s powers. However, with respect to subsections 33(2)(d) and 33(2)(e)(i), section 30 is relevant as it sets out the requirements for a valid enduring power of attorney, including:
“(2) A deed or instrument is not effective to create an enduring power of attorney unless –
(a) the donor understands the nature and effect of the deed or instrument;
(b) …
(c) …
(3) For the purposes of subsection (2)(a), a donor is taken to understand the nature and effect of a deed or instrument only if he or she understands the following matters:
(a) that the donor may, in the enduring power of attorney, specify or limit the power to be given to an attorney and instruct an attorney about the exercise of the power;
(b) when the power begins;
(c) that, once the power for a matter begins, the attorney has power to make, and will have full control over, the matter subject to terms or information about exercising the power included in the enduring power of attorney;
(d) that the donor may revoke the enduring power of attorney at any time when he or she has the mental capacity to do so;
(e) that the power the donor has given continues even if the donor subsequently loses his or her mental capacity;
(f) that the donor is unable to oversee the use of the power if he or she subsequently loses mental capacity.”
Section 38 of the Act states:
“Except as provided by this Part [Part 4 – Enduring Powers of Attorney], nothing in this Part is taken to derogate from the law relating to powers of attorney.”
The Reasons for the Review of Board’s Own Motion:
On 29 October 2013, the Board received an application for appointment of an administrator under Part 7 of the Guardianship and Administration Act 1995 (the Act) for SFKD from the Social Work Department of the Royal Hobart Hospital (the Board’s proceedings). That application was accompanied by a medical report by Dr. Kylie Butcherine dated 28 October 2013 which contained an unequivocal assessment that SFKD had vascular dementia, experienced a number of cognitive deficits as a result of that dementia and that he was incapable of making reasonable judgments about his estate.
After issuing notices of the hearing of the application, on 21 November 2013 EB, a solicitor, contacted a staff member of the Board and indicated that he was acting for SFKD. He requested copies of the papers before the Board and an adjournment of the hearing due to his impending absence from the State. He was provided with the application, the medical report and a report by the Aged Care Assessment Team (ACAT). The hearing was adjourned pending EB’s availability for the hearing.
In response to an email from the Board’s staff member dated 29 November 2013, EB replied on 2 December 2013, stating:
“I have asked X Lawyers to assist in dealing with SFKD’s affairs. As a result of their involvement, SFKD gave them certain instructions which included the granting to me of an enduring power of attorney which was registered on 25 November 2013.”
Twenty minutes later QX, a principal of X Lawyers Pty Ltd, sent an email to the staff member attaching the power and outlining his assessment as to SFKD’s capacity to execute the instrument. This stated:
“Together with another lawyer from my firm, LN, I spent over three hours with SFKD on 22 November 2013.
It is my strong view that he has capacity to give instructions.
He was alert, thoughtful and reflective about a number of issues he discussed with me. … It may be that SFKD’s capacity was affected during his recent hospitalisation, but in my view, having spent the length of time I did with SFKD on the day, he appeared to have good cognitive abilities and capacity to give instructions.”
At the request of one of the Board’s staff Dr. Martin Morrissey, Old Age Psychiatrist, visited SFKD and made an assessment of his capacity to appoint an enduring attorney on 4 December 2013. He provided a report which was consistent with Dr. Butcherine’s opinion [cf. paragraph 3] and concluded that at the date of execution SFKD would not have been able to make informed decisions regarding appointing an enduring power of attorney.
The existence of a valid enduring power of attorney means that it is not competent for the Board to make an administration order in respect of SFKD’s estate so long as the enduring power of attorney is in force (section 53 Guardianship and Administration Act 1995). Unable to reconcile the opinions as to SFKD’s capacity between solicitors, on one hand, and medical practitioners on the other, the President considered that the purported enduring power of attorney ought to be reviewed of the Board’s own motion with regard to the validity of the instrument. Notice of the review was given to the donor and attorneys on 5 December 2013 with advice from the Board that the attorneys should limit transactions in the estate to day-to-day expenses and not to make any substantial changes to the nature of the estate without the written approval of the Board until such time as the power was examined by the Board in a hearing.
The terms of the purported instrument:
The purported instrument is a 12 page document. It was registered on 25 November 2013 as PAXXXX. It appears to be a standard precedent for enduring power of attorney which has been printed blank with details filled in later by hand. QX referred to the blank instrument as part of a ‘kit’ that his firm has assembled. Various clauses in the precedent have been ruled out. The effect of the document is that EB is appointed as an attorney. If he should suffer a ‘terminating event’ as defined in clause 3.1 of the document, resigns or temporarily or permanently lacks the capacity to act as attorney, QX is appointed as attorney.
Clause 4.1 of the purported instrument sets out the powers of the attorney in considerably more detail than the forms in Schedule 1 of the Act. Clause 5.1 allows for incapacity to be deemed without further proof. By clause 6.1, the donor undertakes to ratify everything that the attorney does by virtue of the enduring power of attorney if he is called upon and is not suffering from incapacity. Clause 7 includes a reporting requirement that EB, as attorney, must report to QX about any transaction he has carried out on behalf of the donor, on request and not less frequently than each 6 months. Clause 8 revokes all former powers of attorney. LN, a solicitor, and DB, a friend, witnessed the instrument and certified and declared inter alia that, at the time of signing, the donor appeared to understand the nature and effect of the instrument. The attorneys acknowledged and accepted appointment as attorneys.
The Hearing:
The review was heard on 16 January 2014 and the following persons were present:
SFKD – donor
EB – attorney
QX – alternate attorney and supervisor of first attorney
LI – legal representative of SFKD and employee of QX
WQ – SFKD’s aunt
IO – WQ’s daughter and SFKD’s first cousin
FO – WQ’s granddaughter and SFKD’s second cousin
LIM – SFKD’s neighbour and close friend
QS – brother of SFKD’s deceased wife, QD
WQ – QS’s wife and QD’s sister-in-law
QQ – friend of SFKD (was not available for the whole hearing)
LN – solicitor, employee of QX
Tamika Holton – Social Worker at the Royal Hobart Hospital and the applicant for administration
Megan Benier – Social Worker at the Royal Hobart Hospital
Jessica Watson – Representative of the Public Trustee
Lee Perry – GAB Compliance Officer and staff member referred to above at [7]Dr. Martin Morrissey and Dr. Kylie Butcherine were telephoned consecutively from the hearing and gave expert evidence on the question of SFKD’s mental capacity.
Appearances:
On 14 December 2013, EB advised the Registrar by email:
“I advise that I intend to exercise my challenged power of attorney by entering into a retainer agreement with X Lawyers for the provision of legal services to SFKD in respect of the proceedings before the Board. If you have any objection or concern about my intention, please advise me by email by close of business on Monday 16 December 2013.”
This email was sent in acknowledgement of the advice that the Board issued to the attorney which is referred to in paragraph 10 above. The Registrar replied:
“The Board doesn’t have objection, but perhaps some consideration might be given to the issue of whether that firm has a conflict of interests for the following reasons:
(i)being that the firm has taken instructions for the impugned instrument, and
(ii)that the principal of that firm is one of the attorneys, and
(iii)the principal of that firm has given a witness statement to the Board about the donor’s capacity at the time of execution of the impugned instrument.”
At the commencement of the hearing, solicitors appearing were asked to clarify their roles with respect to the application. LI said that she had received instructions directly from SFKD and that she considered that he had capacity to give those instructions. EB stated that he was representing himself as an attorney and a party to the application and QX agreed that he also was representing himself, adding “as is quite proper.” Interestingly, when QX introduced himself to witnesses during the hearing, he referred to himself as “SFKD’s lawyer.”
The Board remains concerned that LI was in an unenviable position in representing SFKD while being under the employ of an attorney of an impugned instrument who was also a witness to the proceedings that challenged that instrument. LI owed her client a duty to give full and frank advice, but would, in the Board’s view, have been highly conflicted by the interests of her employer, QX. QX’s interests included being validated in the judgments he made and the advice he gave to SFKD. Why QX described himself as ‘SFKD’s lawyer’ during the hearing is a matter for him, but it had two effects. First, it undermined LI’s role as SFKD’s legal representative and, second, it had great potential to confuse the witnesses. The Board recommends that firms involved in the execution of future impugned instruments give careful consideration to ensuring that the donor has access to independent legal representation.
Evidence as to the purported execution of the enduring power of attorney:
Evidence as to the circumstances of the purported execution of the instrument is derived from extensive file notes supplied by EB and X Lawyers and from evidence given at the hearing.
According to his file note, EB visited SFKD at [the Aged Care Facility] where SFKD had recently moved from the Royal Hobart Hospital on 21 November 2013. SFKD asked EB – whom he regarded as an old friend - to assist him with regard to the administration application, primarily to oppose the appointment of the Public Trustee to manage his affairs. He also mentioned that he would like to alter his will. EB offered to obtain QX’s services for SFKD.
X Lawyers supplied notes of the attendance on SFKD on 22 November 2013. These notes were scribed by LN, a solicitor, who attended the appointment with SFKD, QX and EB at [the Aged Care Facility]. EB’s file note is consistent with those notes, but less detailed. Accordingly the Board prefers LN’s notes. Those notes indicate the following course of discussion:
(a)The conference commenced at 12.25pm. QX explained that the solicitors were present to review SFKD’s will and notes that EB said ‘… you are OK mentally’.
(b)At 12.28pm the Board’s proceedings were briefly mentioned, but EB indicated an adjournment had been secured. QX then embarked on a series of questions which drew upon SFKD’s long-term memory. Having questioned SFKD about his family members, shortly after 12.40pm (15 minutes), QX expressed “Will pass any test in my opinion”. QX continued asking questions about friends and relatives.
(c)At 12.48pm QX discussed the existing will.
(d)At 1.00pm (35 minutes) QX said: “I think you are competent to tell people what to do. Don’t need Public Trustee.” EB then left the meeting. There was a brief discussion again about the Board’s proceedings, but at 1.02pm discussion reverted to the will.
(e)At 1.19pm while LN drafted the will, a visitor (DB) arrived and discussion did not resume until 2.15pm, presumably at this stage the visitor left the room. LN noted that there was “general conversation,” mostly about relationships. At 2.35pm QX returned after a brief absence from the room and SFKD confirmed that he was happy with the will. Sometime after 2.35pm but before 3.10pm (less than 35 minutes) LN’s notes indicate:
“QX: Explains POA –purpose, revocation, general use
See notes on legislation
SFKD:I understand. Want EB to manage my finances. He is the best independent person.
DB:Joins conference.
SFKD:Signs POA
DB/LNSigned as witnesses”
(f)There was further conversation about the will and an acknowledgement about the handwritten will was signed. The conference ended at 3.15pm (2 hours 50 minutes[1]).
[1] Note, QX’s email dated 2 December 2013 indicated he had spent ‘over three hours’ with SFKD
The notes on the legislation referred to in LN’s notes above are an extract from section 30(3) and the following notes were made against each subsection:
“(a) that the donor may, in the enduring power of attorney, specify or limit the power to be given to an attorney and instruct an attorney about the exercise of the power;
SFKD: No restrictions. QX: EB to report to QX.
(b) when the power begins;
SFKD: Need it now.
(c) that, once the power for a matter begins, the attorney has power to make, and will have full control over, the matter subject to terms or information about exercising the power included in the enduring power of attorney;
SFKD: EB best person, want him to act now
(d) that the donor may revoke the enduring power of attorney at any time when he or she has the mental capacity to do so;
SFKD: Once I put it in place I won’t be changing it.
(e) that the power the donor has given continues even if the donor subsequently loses his or her mental capacity;
SFKD: yes I understand
(f) that the donor is unable to oversee the use of the power if he or she subsequently loses mental capacity.
SFKD: Just want someone to help me and LIM”
The Board accepts these notes as an accurate record of the events on 22 November 2013. The Board accepts LN’s explanation that she was unable to record all words spoken as she was undertaking other activities during the attendance.
Assessing ‘Mental Capacity’:
The Act sets up two distinct tests with respect to capacity to execute an instrument. The first, in section 30, establishes the necessity for the donor ‘to understand the nature and effect of a deed or instrument.’ However in section 33(2) the Board can declare an instrument invalid because the donor did not have ‘mental capacity,’ which is a different test. The words ‘mental capacity’ are not defined in the Act, by reference to section 30, or otherwise.
In Scott v Scott [2012] NSWSC 1541 Lindsay J. considered whether a power of attorney was invalid because the donor lacked the mental capacity to grant the power when she executed the instrument. At [173] His Honour noted:
“A resolution of that dispute must commence with recognition of its parameters. First, the instrument at the heart of the controversy is and was at all material times governed, largely but not exclusively, by a statute; specifically, the Powers of Attorney Act 2003. Secondly, as confirmed by s 7, that Act “does not affect the operation of any principle or rule of the common law or equity in relation to powers of attorney except to the extent that [the Act] provides otherwise, whether expressly or by necessary intention”. Thirdly, there is no statutory definition of the expression “mental capacity to make a valid power of attorney” found in the provisions of the Act (including s 36) governing a challenge to the validity of a power of attorney. Fourthly, the concept of “mental capacity” in the context of the Act is informed by the concept of “mental capacity” under the general law: Szozda v Szozda[2010] NSWSC 804 at [12]–[19] and [27]–[42]. Fifthly, the question of “mental capacity to make a valid power of attorney” must, in each case, be directed to the terms, and process of execution, of the particular instrument under review: Gibbons v Wright (1954) 91 CLR 423 at 437–438.”
Section 38 of the Tasmanian Act has the broadly same effect as section 7 of the NSW legislation. The Board considers that while section 30 of the Act sets out basic parameters for establishing that a donor understands the ‘nature and effect’ of a document, the issue of ‘mental capacity’ must be assessed within the broader parameters recognised by Lindsay J.
After setting out the well-known passages from Gibbons v Wright, in Scott v Scott Lindsay J. noted:
“What follows from this statement of principle is that each case must be considered on its own facts. Care needs to be taken not to over-generalise. There is no rule of general application relating to all powers of attorney without regard to particular facts. Attention must be focussed on all the circumstances of the case, including the identities of the donor and donee of a disputed power of attorney; their relationship; the terms of the instrument; the nature of the business that might be conducted pursuant to the power; the extent to which the donor might be affected in his or her person or property by an exercise of the power; the circumstances in which the instrument came to be prepared for execution, including any particular purpose for which it may ostensibly have been prepared; and the circumstances in which it was executed.” [199]
At [200] Lindsay J. Stated:
“An exploration of all the circumstances of the case will, not uncommonly, call for consideration of events leading up to, and beyond, the time of execution of the disputed power of attorney, as well as on the focal point of the time of execution itself. A longitudinal assessment of mental capacity, along a time line extending either side of the focal point, may be necessary, or at least permissible, in order to examine the subject’s mental capacity in context. Medicos and lawyers, alike, tend to embrace that approach. It is difficult to do otherwise. Context has a temporal as well as spacial and relational dimensions.
…
[204] An Enduring Power of Attorney limited in its terms, or effect, to authorisation of acts for the benefit of the principal may require consideration of factors different from those considered upon an assessment of mental capacity for the making of a valid will.
[205] It is not, literally, a matter of imposing, or recognising, a different “standard” of mental capacity in the evaluation of the validity of different transactions. What is required, rather, is an appreciation that the concept of “mental capacity” must be assessed relative to the nature, terms, purpose and context of the particular transaction. Nothing more, or less, is required than a focus on whether the subject of inquiry had the capacity to do, or to refrain from doing, the particular thing under review.”
The carefully researched judgment of Lindsay J. is apposite to this review and it is tempting continue to quote it at length, but for the sake of brevity the Board indicates that the authorities referred to above and also in paragraphs [208] – [211] of that judgment are directly relevant to the Board’s determination of this application and have been taken into consideration.
Medical evidence as to SFKD’s capacity to execute the instrument:
The Board had available to it a report by registered nurse, Rowena Leitch, who completed an ACAT assessment and the report of Dr. Butcherine which predated the purported execution of the instrument, being written 31 and 25 days before the purported execution respectively. It also had the report by Dr. Morrissey who assessed SFKD 12 days after the purported execution. The Board considers that these reports were sufficiently contemporaneous with the purported execution to be relevant to the issue of SFKD’s capacity to execute an enduring power of attorney on 22 November 2013.
The Aged Care Client Record completed 22 October 2013 by Rowena Leitch of the Aged Care Assessment Team (ACAT) within the Department of Health and Human Services, noted SFKD as having the following diagnosed diseases and disorders (where No. 1 should identify the condition that has the greatest impact on the person’s need for assistance with activities of daily living and social participation):
1. Delirium secondary to low haemoglobin and gastrointestinal bleed (Voltaren use)
2. Functional decline/falls/falls risk and weight loss
3. Disorientation (confusion) and hallucinations
4. Vascular dementia
5. Cerebral palsy with left sided weakness – congenital
6. Osteoarthritis Knees
7. Long term Gastro-Oesophageal Reflux Disease/Duodenal ulcer
8. Functional Urinary Incontinence
9. Bowel/faecal incontinence/occasional
Ms. Leitch’s ACAT assessment notes that Dr. Alison Cleary, Geriatrician, has diagnosed SFKD with vascular dementia and delirium. Most of Ms. Leitch’s report relates to SFKD’s level of dependence for activities of daily living and his lack of insight into the dangers if he should return home.
Dr. Butcherine has been a registered medical practitioner for 21 years and is currently an advanced trainee in geriatric medicine. She completed the requisite Health Care Professional Report which accompanied the original application for administration. Dr. Butcherine’s report reflects the issues at hand at the time of its writing, being that SFKD wished to return to his home and that he would be unsafe there. She indicated that SFKD had vascular dementia and that he experienced deficits in a number of key decision making areas. She noted that:
“SFKD lacks the understanding and planning to make decisions re finances and accommodation. He does not understand the need or risks. … SFKD is confused about his assets and how his RACF [Residential Aged Care Facility] will be funded”
Her report indicated that SFKD had no capacity for any financial or personal decisions except about relationships, visits by friends or relatives and employment. (Both Dr. Butcherine’s report and the ACAT assessment were supplied to EB with the application on 21 November 2013.)
Dr. Butcherine’s evidence at the hearing confirmed the contents of her report. Her evidence was not seriously challenged at the hearing. Her assessment of SFKD’s capacity was not specific to his capacity to execute an enduring power of attorney, but to his general ability to make judgments about his person and circumstances or his estate. She noted that she would not have assessed him for capacity if she considered him to be suffering delirium, which is an acute event whereas dementia is a pattern of decline over a longer period of time.
Old Age Psychiatrist, Dr. Martin Morrissey, has 15 years’ experience in that specialist role and frequently is asked to give opinions as to the decision making capacity of elderly persons. Dr. Morrissey is a former member of the Guardianship and Administration Board and is a current member of the Mental Health Tribunal. Dr. Morrissey spent approximately one hour with SFKD and additional time with staff at the nursing home. Dr. Morrissey did not give SFKD notice of his visit. In his report of 4 December 2013, he reviewed the notes from the Royal Hobart Hospital and nursing notes from [the Aged Care Facility] to which SFKD had recently transferred. He noted:
“On basic cognitive testing, SFKD had evidence of deficits across a number of domains. He was partly disorientated to time and place, he had difficulty following a three step task and he had impaired short term memory. He scored 20/30 on MMSE (Mini Mental State Examination, a commonly used screening tool for cognitive impairment). I would note however that this test score probably overestimates SFKD’s cognitive capacity. Specifically, I believe SFKD had significant deficits with regards to planning and judgement which are areas of functioning not well assessed with an MMSE. For example, despite needing assistance with all activities of daily living including toileting and feeding, SFKD told me that he believed that he would be able to manage to care for himself in his own home with minimal outside assistance. He told me that he would be able to walk using a frame in his own home and that he would be able to hop in and out of his bath unassisted.
When I asked SFKD if he had ever completed an Enduring Power of Attorney document he told me that he had not. I asked him what an Enduring Power of Attorney meant and he told me that he was not sure but he guessed that it was something that gives authority for someone else to manage ones financial affairs. I asked SFKD if, in the event he was unable to manage his financial affairs whom he would want to do so and he said he would want LIM to do this. SFKD was unable to tell me what powers and Enduring Attorney might have over his finances not the circumstances which this power could be taken away. I told SFKD that I believed in recent weeks he had signed such a document and he told me he had no recollection of this. I asked him if he was happy that such a document had been completed and he responded assertively “No”. SFKD added that at the present time he believed he was capable of managing his financial affairs with the informal assistance of LIM.
In summary SFKD is an 81 year old gentleman with at least 6-12 months history of physical and cognitive decline against a back ground of congenital brain injury (cerebral palsy). Despite his physical limitations, for much of his adult life SFKD has functioned at a very high level as a [public servant]. …
SFKD has a very limited understanding of what an Enduring Power of Attorney entails or its powers. He has no recollection of having recently completed such a document and is in fact distressed with the suggestion that this is the case. Today he did indicate that were he to hand over some form of financial control to anyone else it would be to his neighbour and carer, LIM. It is my opinion that SFKD is both unable to make informed decisions regarding his financial affairs and in addition I believe he is unable to make informed decisions regarding appointing an Enduring Attorney. History obtained from the Royal Hobart Hospital notes and the information provided by nursing staff at [the Aged Care Facility] would suggest that SFKD’s functioning has only deteriorated in the time that he has been there and therefore I would raise serious doubts regarding his capacity with the above matters at any stage between his recent hospitalisation and my assessment today.”
At hearing, Dr. Morrissey clarified that the use of the word ‘only’ in the final sentence above, meant that his condition had continued to deteriorate, not that the deterioration was limited to the time at [the Aged Care Facility]. He stated that delirium can be a cause of fluctuation in capacity. Dr. Morrissey agreed that, while some persons with dementia can fluctuate in their capacity over the course of a day (i.e. may have better functioning at particular times of day), the nursing notes revealed consistently poor cognitive performance in hospital and no periods when SFKD had shown any significant improvement in capacity.
Dr. Morrissey acknowledged that SFKD retained ‘eloquent’ language skills and could ‘appear plausible’ in understanding concepts (for example, he said, to a ‘cocktail party’ level), but his cognitive processes were significantly impaired, including his capacity for planning and judgment. He noted as an example that, while in hospital, SFKD was unable to make practical day to day decisions about matters that directly affected him and his desire to return home (in particular his failure to participate in physiotherapy although it would have enhanced his chances of returning home). Dr. Morrissey considered this as a concrete example of his inability to project into the future and make appropriate decisions based on future needs.
When questioned by QX, Dr. Morrissey conceded that the test he administered, the Mini Mental State Examination (MMSE), is a screening tool only and people can have very poor MMSE scores but retain capacity. Dr. Morrissey indicated that the MMSE was of assistance in finding a level of cognitive impairment, but it did not assist him in assessing planning, judgment and reasoning, for which he relied on other evidence and observations. He said that he did not rely upon the MMSE ‘to a huge amount’ in making his assessment.
Dr. Morrissey also noted a difference between a person’s ability to appoint an enduring power of attorney and the ability to manage one’s financial affairs. He noted that when he saw him, SFKD could ‘make a [good] guess’ about what an enduring power of attorney was, but was ‘unable to grasp’ the nature of the power or any of the broadly described elements in section 30. Additionally SFKD could not recall having made the power and, when asked who he would appoint, he nominated a different person to those he had so recently appointed. Dr. Morrissey noted that SFKD’s neighbour had been assisting him with financial matters for some time.
Dr. Morrissey stated that the core of SFKD’s deficits was an inability to think about who would be the best person to act as attorney and what would be the ‘pros and cons’ of any such decision. He noted that SFKD’s failure to recall who he had appointed indicated a short term memory loss but that, of itself, did not necessarily mean that he lacked requisite capacity. He noted it was a marker of his cognitive impairment but was not the whole picture. A more important aspect was his planning and judgment, where he has profound deficits.
The solicitor’s opinions regarding SFKD’s capacity:
On 2 December 2013, absent any request from the Board, QX emailed the Board’s officer with the opinion set out in paragraph [6] above.
The Registrar of the Board wrote to both purported attorneys on 5 December 2013 asking inter alia for information relating to their qualifications and experience to assess person’s cognitive abilities and capacity to give instructions. EB responded on 18 December 2013 that he is a legal practitioner. He notes that he has had some training in ‘the area,’ but his primary expertise is in unrelated areas. He stated:
“I am completely satisfied that on 22 November 2013, SFKD was able to provide instructions regarding matters affecting him. I was not present at the time of SFKD signing the enduring power of attorney but when I visited SFKD on 6 December 2013 he readily acknowledged that he had done so.”
A file note dated 21 November 2013 indicated that EB refreshed his understanding of capacity by reading the Capacity Toolkit, in particular the operation of the presumption of capacity. His file note of 22 November outlines the conversation he overheard between QX and SFKD and states:
“I formed the opinion that SFKD had capacity to make appropriate decisions about his will and about other personal arrangements.”
LN’s file note from 22 November 2013 states:
“At all times SFKD was responsive.”
She also signed, as the witness to the execution, the acknowledgement on the purported instrument as noted in paragraph [10] above. At the hearing, LN asserted a level of expertise in assessment of capacity from 18 months’ experience of working as a legal practitioner with QX. She acknowledged that there had not been a case where her assessment of a client’s capacity had differed from QX’s.
QX stated in his response dated 23 December 2013 to the Registrar that he has over 35 years’ experience in private legal practice, has written two extensive papers on testamentary capacity and is aware of the test in section 30 of the Act.
According to that same response, QX was unaware of Dr. Butcherine’s report when he attended SFKD on 22 November 2013. He did acknowledge receipt of the application for appointment of an administrator and Ms. Leitch’s ACAT assessment. At the hearing, LN confirmed that QX had also received Dr. Butcherine’s report as all three documents were stapled together when she handed them to QX. QX did not dispute this.
From his evidence at hearing, QX conceded that he misunderstood a reference to a congenital brain injury in the application (which referred to SFKD’s cerebral palsy that resulted in a physical impairment only). QX admitted that he ‘could see matters of adversity in there (being the documents in his hand)’ but preferred his own judgment of the circumstances to informing himself of the reasons for adverse views. QX cited authority of Wharton v Bancroft [2011] EWHC 3250 as the reason why he did not seek medical opinion before, during or after the attendance on SFKD, although he also noted that his firm had intended to seek Dr. Morrissey’s opinion and supplied the draft request which was not sent once they have received the report Dr. Morrissey provided to the Board.
It does not appear to the Board that either EB or QX has drawn a distinction between SFKD’s capacity to give instructions to a solicitor and his capacity to execute an enduring power of attorney and the two issues appear to be conflated in their evidence.
LI offered evidence, during her closing submissions, that SFKD was capable of giving instructions to her.
Findings about SFKD’s capacity to execute the purported instrument:
Considering all of the authorities referred to above and, after careful examination of the circumstances of the interview between the solicitors and SFKD at [the Aged Care Facility] on 22 November 2013, the Board has adopted a longitudinal assessment of SFKD’s mental capacity.
The Board notes that QX talked SFKD through the tests in section 30 of the Act. The statements recorded for SFKD are responsive to the general discussion of the legislative issues, but they do not necessarily demonstrate an understanding of making such an appointment. They demonstrate a level of insistence because SFKD wanted matters sorted quickly, but are not reflective of the meaning of the subsections. It does not appear that SFKD was asked any ‘open questions’ where he might actively demonstrate his understanding of the instrument. Equally, SFKD did not appear, from the notes, to ask a question or seek advice about the proposed power of attorney.
The Board observes in particular that the notes do not disclose any discussion as to the effect of clauses 5, 6, 7 (including the possible costs associated with clause 7) or 8 of the document, all of which have a significant effect on the operation of the attorney and the future rights of the donor.
Although QX stated at the hearing that there had been a discussion as to QX’s retainer at the commencement of the meeting, the notes do not disclose this. Confusingly, EB offered that he had signed the fee agreement – though at what point (i.e. before or after his appointment as attorney) was unclear. When asked at the hearing whether SFKD had been informed of any fees for QX’s role in clause 7.1 of the instrument, QX indicated that there was no need to repeat the earlier retainer information, although that discussion (if it did occur) occurred over 2.5 hours previously and at a time when clause 7.1 had not been contemplated.[2]
[2] During closing submissions at the hearing, QX advised the Board that, should his appointment under the instrument be confirmed, it was not his intention to charge fees for supervising EB. He provided a written undertaking to that effect the following day.
The notes from the interview on 22 November 2013 show that SFKD could grasp the meaning of the words in section 30 of the Act as they were said to him. They do not show that in the broader sense he was able to apply judgment and reasoning to those words and, for instance, weigh up whether other persons should be considered for appointment other than EB and QX. This is evidenced by the fact that 12 days later when he thought he had not made any such appointment, he nominated LIM as a person suitable for appointment.
There was no reference in the notes of interview to instructions to register the purported enduring power of attorney, or to the payment of the fee for registration. (QX stated his belief that instructions to register are ‘self-evident’.)
For the reasons expressed in paragraph [47] to [50], the Board preferred the opinions of Dr. Butcherine and Dr. Morrissey (the medical witnesses) to the opinions of the solicitors EB, QX and, to the extent that her notes profess an opinion as to capacity, LN’s regarding SFKD’s capacity to execute the instrument. The Board notes the Statutory Declaration of LIM to the effect that SFKD’s mental state seemed to clear during his hospitalisation and that he ‘seemed more himself’ by the time he moved from hospital and that at times he was more mentally aware than prior to his hospitalisation, however, again, the Board does not consider that as detracting from the more precise evidence of Dr. Morrissey.
Unlike the psychiatrists referred to by Young JA in Zorbas v Sidiopoulous (No 2) [2009] NSWCA 197 at [89], both of the relevant medical opinions were derived from personal observations by the practitioners. The Board considers the medical practitioners’ evidence to be more valuable than the solicitors’ evidence for the following reasons:
(a)The medical witnesses are appropriately qualified and have specialist medical training in the assessment of capacity, particularly capacity of persons with dementia.
(b)The medical witnesses assessed SFKD for specific cognitive and executive functions and used accepted tests and indicators, whereas the solicitor’s questions mostly tested SFKD’s long term memory functions, which are not a reliable indicator of capacity to enter into legal relations.
(c)QX mistakenly believed that an assessment of 20/30 on an MMSE was ‘above the score that generally knocks people out on capacity.’ The MMSE is not a test of capacity, it screens for cognitive impairment. The relevant score which would rule out a cognitive impairment is 27/30. This statement belied QX’s assertions of his expertise in assessing capacity.
(d)The medical witnesses were independent, whereas EB and QX had pre-conceived ideas as to SFKD’s capacity as noted in QX’s opening statement to SFKD in their interview followed by his assertion after 15 minutes as to SFKD’s capacity.
(e)EB was possibly influenced by long term affection for SFKD towards a finding of capacity. Medical witnesses had no such influence.
(f)QX secured, from the interview, a remunerated position of reviewing annual reports and therefore had a financial interest in the transaction, in addition to the fees for drafting the instrument and the will, and possible fees for acting as an alternative attorney and assisting an executor at a future point in time. Medical witnesses, by contrast, are both in the employ of the State and had no possible financial incentive for their opinions.
(g)The circumstances of the appointment, including:
(i)The interview between solicitors and SFKD on 22 November 2013 primarily concerned the execution of a will.
(ii)References to the enduring power of attorney in the interview were rather scant and only presented in the context of avoiding the appointment of the Public Trustee as administrator.
(iii)It does not appear that certain important and conceptually complex clauses in the document were adequately explained to the donor (if at all) and if they were explained the recorded responses of SFKD do not indicate a complete understanding of those concepts.
(iv)The nomination of QX as an alternative attorney (with remuneration) appears to have arisen as a matter of immediate convenience rather than the product of rational consideration.
(v)It also does not appear that SFKD received any legal advice about the Board’s proceedings or possible outcomes from those proceedings as an alternative to the execution of an enduring power of attorney and, as such, he was not given an opportunity to make an informed choice (if that had been possible at that point).
(vi)There was no demonstration that SFKD had an opportunity or the capacity to ‘refrain from doing’ the act of execution (as per Lindsay J.) at any point in the almost 3 hour consultation. He was accompanied by between two or three other persons at all times and always by either QX or his employee. There was no evidence of an opportunity for SFKD to reflect on the limited advice he had been given about the instrument, or to consider alternatives, before it was presented for execution.
The Board accepts the opinion evidence of Dr. Butcherine and Dr. Morrissey as reliable evidence of SFKD’s incapacity before, during and after the execution of the instrument and the findings in paragraph [49] and [50] are based upon that evidence.
The Board notes QX’s view that, once he had established that the documents which related to the Board’s proceedings contained information that was ‘adverse’ to a finding of his client’s capacity, he could rely on his own assessment rather than seek medical opinion. QX’s position relied on the following authorities: Wharton v Bancroft [2011] EWHC 3250 and Fischer v Howe [2013] NSWSC 462. There were no significant circumstances of urgency which required SFKD to execute an enduring power of attorney. Further, his possible imminent demise (which was not in evidence at the time) could be of no effect because of the operation of section 27 of the Act. Therefore these cases have limited, if any, relevance. The Board emphasises, in this regard, the fundamental differences that attend the making of an enduring power of attorney and a will, see particularly Barrett J. in Szozda v Szozda [2010] NSWSC 804 at paragraph [32]. QX could have easily availed himself of a ‘complete overview of the evidence’ (as per Young J in Ranclaud v Cabban [1988] ANZ ConvR 134 at p.137) by reading Dr. Butcherine’s report more carefully. As Lindsay J. said with respect to solicitors making judgments about capacity in Scott v Scott at [209]:
“In particular, an acknowledgement should be made of the importance of expert medical evidence as a lens through which a myriad of facts can be seen in context, as a guide to correct decision-making and as a safeguard against error.”
The Board notes that circumstances similar to the current ones have been the subject of consideration in Legal Services Commissioner v Ford [2008] LPT 12 and in Legal Services Commissioner v de Brenni [2011] QCAT 340. The Board is not satisfied in light of these decisions that QX took an appropriate course in all of the circumstances.
The Board considers that SFKD had started to lose capacity to execute an enduring power of attorney from at least 9 October 2013 when he was admitted to the Royal Hobart Hospital, that the trajectory sadly deteriorated from that point, and at no point does it appear that he regained capacity prior to 22 November 2013, on that date or afterwards. There was no period of prolonged lucidity, in other words no fluctuation or improvement, where he may have had the mental capacity to execute an enduring power of attorney because the functions that he demonstratively lacked were those of reasoning and judgment.
The Board considers that, although he gave superficial answers to the tests in section 30 to QX during the attendance on 22 November 2014, SFKD did not have the mental capacity to exercise judgment about the elements of section 30, nor was he able to exercise reasoning and judgment about whom he was appointing, or the terms and the consequences of that appointment.
The consequences of a finding that SFKD lacked ‘mental capacity’ to execute the purported instrument:
As noted above, the Board concluded that SFKD lacked mental capacity to execute the instrument. Accordingly, the instrument is invalid pursuant to section 33(2)(e)(i) of the Act.
The Board gave consideration to the appointment of an administrator pursuant to section 33(2)(f) of the Act. On the basis of the medical evidence already noted, the Board was satisfied that SFKD is a person with a disability and, by reason of that disability, he is unable to make reasonable judgments about his estate. The Board also had received evidence that SFKD was in possession of a substantial estate which was in need of management. Therefore the matters in section 51 of the Guardianship and Administration Act 1995 have been satisfied, which makes an order pursuant to section 33(2)(f) of the Powers of Attorney Act 2000 appropriate.
The Board noted the long standing friendship between SFKD and EB and his wishes for EB to assist him. The Board also noted SFKD’s opposition to the appointment of the Public Trustee. (The Guardianship and Administration Act 1995 clearly empowers the Board to acknowledge the wishes of a proposed represented person, even where they lack capacity, so there is not an inconsistency between this finding and the finding of the Board with respect to SFKD’s incapacity.) EB indicated from an early point that he did not seek a fee for acting as administrator for SFKD.
The Board considers that making an administration order is the least restrictive of SFKD’s freedom of decision and action as is possible in the circumstances. The Board also considers that the appointment of EB is in the best interests of SFKD.
Conclusion:
After conducting a hearing to review an Enduring Power of Attorney (PA86240) registered 25 November 2013 (hereinafter ‘the power’) made by SFKD (hereinafter ‘the donor’) appointing EB as his attorney and QX as substitute attorney the Board was satisfied that the donor did not have the mental capacity to make a valid enduring power of attorney
THE BOARD DECLARES that pursuant to s33(2)(e)(i) of the Act the power is invalid.
FURTHER, pursuant to section 33(2)(f) the Board revokes the power and orders:
1. That E B be appointed as administrator of the estate of the donor.
2. That the powers and duties of the administrator be those conferred by Division 4 of Part 7 of the Guardianship and Administration Act 1995.
3. That the order remains in effect until 15 January 2017.
Post-Script:
Parties were notified of the Board’s decision on 17 January 2014. QX sought a statement of reasons by email on the same day. On 23 January 2014, EB informed the Board that SFKD had died. By letter the same day, EB also requested a statement of reasons. QX advised the Registrar by email dated 28 January 2014 that a statement of reasons may no longer be necessary, but he would consult with EB. By email dated 4 February 2014, EB withdrew his request for a statement of reasons. He noted that should another person request such reasons, he would seek a copy. On 10 April 2014, Mr. Zac Nicholson advised the Board that he is acting for QS and WQ with respect to SFKD’s estate. Subsequent to that letter, Mr. Nicholson inspected the Board’s file and on 19 May 2014, he requested a statement of reasons. Due to the President having taken leave in the interim, that statement of reasons has now been delivered on 23 July 2014.
Anita Smith Wendy Hudson Kenneth Stanton
PRESIDENT MEMBER MEMBER
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