Smith v Smith - [2017] NSWSC 408

Supreme Court

New South Wales

Amendment notes

Medium Neutral Citation: Smith v Smith [2017] NSWSC 408
Hearing dates: 24, 25 and 26 November 2015; 2 and 3 February 2016; and written submissions culminating in written submissions dated 1 December 2016
Decision date: 13 April 2017
Jurisdiction: Equity
Before: Lindsay J
Decision:
Subject to allowing the parties an opportunity to be heard as to orders to be made:

(1) The First Defendant (the holder of an enduring power of attorney on behalf of her husband, an incapable person, now deceased) held liable to account to the estate of the deceased for her mismanagement of his property in breach of fiduciary obligations.

(2) The second defendant (executor of the deceased’s estate) held not liable, in devastavit, for wilful default in performance of his duties, for a failure or refusal to institute proceedings against the first, third and fourth defendants.

(3) Declaration to be made that the first, third and fourth defendants hold on trust for the estate of the deceased (prima facie, for the benefit of the plaintiffs as beneficiaries of the estate) property acquired by them in the names of the third and fourth defendants, using funds of the deceased applied by the first defendant in breach of fiduciary obligations she owed to the deceased as his attorney
(4) Further consideration to be given to questions of remedy, and consequential relief, to be granted.
Catchwords:
FIDUCIARY DUTIES — Scope of power of attorney – Absence of authority to give gifts or to confer benefits on others– Attorney bound to act in best interests of principal without unauthorised personal benefits – Attorney bound to act within limits of authority as defined by instrument of appointment.

EQUITY — Equitable remedies — Accounts and inquiries — Whether enduring attorney of incapacitated person should be ordered to account to his deceased estate — Whether attorney acting under power of attorney after the principal has become incapable has any, and if so what, obligation to account.

EQUITABLE DEFENCES – Laches and acquiescence – Management of incapable person’s estate — Obligation of enduring attorney to account — Failure to apply for management orders to clarify limits of authority — No defence to order for account where attorney fails to confirm own authority and actively delays and dissuades enquiries.
PROTECTIVE JURISDICTION — Law of agency – Enduring power of attorney.
Legislation Cited: Civil Procedure Act 2005 NSW
Conveyancing Act 1919 NSW
Evidence Act 1995 NSW
Guardianship Act 1987 NSW
Law Reform (Miscellaneous Provisions) Act 1944 NSW
Married Persons (Equality of Status) Act 1996 NSW
Married Persons (Property and Torts) Act 1901 NSW
Trustee and Guardian Act 2009 NSW
Powers of Attorney Act 2003 NSW
Probate and Administration Act 1898 NSW
Real Property Act 1900 NSW
Relationships Register Act 2010 NSW
Supreme Court Act 1970 NSW
Succession Act 2006 NSW
Uniform Civil Procedure Rules 2005 NSW
Cases Cited: Abela v Public Trustee [1983] 1 NSWLR 308
Angelina Spina v Permanent Custodians Limited [2008] NSWSC 561
Armory v Delamirie (1722) 1 Stra 505; 93 ER 664.
Ashton v Pratt (No 2) [2012] NSWRSC 3
Balfour v Balfour [1919] 2 KB 571
Barnes v Addy (1874) 9 Ch App 244
Bird v Bird (No 4) [2012] NSWSC 648
Black v S Freedman & Co (1910) 12 CLR 105
Brady v Stapleton (1952) 88 CLR 322
Bridgewater v Leah (1998) 194 CLR 457
Briginshaw v Briginshaw (1938) 60 CLR 336
Brown v Smith (1878) 10 Ch D 377
Bryson v Bryant (1992) 29 NSWLR 188
Byrnes v Kendle (2011) 243 CLR 253
C v W (No. 2) [2016] NSWSC 945
Chan v Zachara (1984) 154 CLR 178
City Bank of Sydney v McLaughlin (1909) 9 CLR 615
Clay v Clay (2001) 202 CLR 410
Commonwealth v SCI Operations Pty Limited (1998) 192 CLR 285
Consul Development Pty Limited v DPC Estates Pty Limited (1975) 132 CLR 373
Corin v Patton (1990) 169 CLR 540
Coshott v Sakic (1998) 44 NSWLR 667
Countess of Bective v Federal Commissioner of Taxation (1932) 47 CLR 417
Crescendo Management Pty Limited v Westpac Banking Corporation (1988) 19 NSWLR 40
Crossingham v Crossingham [2012] NSWSC 95
Daily Telegraph Newspaper Co. Limited v McLaughlin (1904) 1 CLR 479
Darnanin v Cowan [2010] NSWRSC 1118
Dart Industries Inc. v The Décor Corporation Pty Limited (1993) 179 CLR 101
Downie v Langham [2017] NSWSC 113
Drew v Nunn (1879) 4 QBD661 at 665-666
Edward v Cheyne (No 2) (1888) 13 App Cas 371
Estate Polykarpou; re a Charity [2016] NSWSC 409
Farah Constructions Pty Limited v Say-Dee Pty Limited (2007) 230 CLR 89
Fistar v Riverwood Legion and Community Club Limited (2016) 91 NSWLR 732 at 746
Gibbons v Wright (1954) 91 CLR 423
Ghosn v Principle Focus Pty Limited (No. 2) [2008] VSC 574
Hawksford v Hawksford [2005] NSWSC 463
Helou v Nguyen (with Addendum) [2014] NSWSC 22
Heperu Pty Ltd v Belle (2009) 76 NSWLR 230
Hepworth v Hepworth (1963) 110 CLR 309
Hoddinott v Hoddinott [1949] 2 KB 406
Hospital Products Limited v United States Surgical Corporation (1984) 156 CLR 41
Houghton v Immer (No. 155) Pty Limited (1997) 44 NSWLR 46
Hungerfords v Walker (1990) 171 CLR 125 at 148
In re Allingham [1932] VLR 469
In the marriage of Wagstaff (1990) 14 Fam LR 78
In the matter of Anglican Development Fund Diocese of Bathurst (Receivers and Managers Appointed) [2015] NSWSC 440 at [22]-[30]
Keith Heney & Co Pty Limited v Stuart Walker & Co Pty Limited (1958) 100 CLR 342
Lamru Pty Ltd v Kation Pty Ltd (1998) 44 NSWLR 432
Maguire v Makaronis (1997) 188 CLR 449
Marshall v Crutwell (1875) LR 20 EQ 328
McLaughlin v Daily Telegraph Newspaper Co. Limited (1904) 1 CLR 243
McLaughlin v Fosbery (1904) 1 CLR 546
McLaughlin v Freehill (1908) 5 CLR 858
McLaughlin v the City Bank of Sydney (1912) 14 CLR 684
O’Malley v The Public Trustee [1956] VLR 194
Orr v Ford (1989) 167 clr 316 AT 337-341; (1989) 167 CLR 316 at 337-341
Plunkett v Bull (1915) 19 CLR 544
Pollard v Wilson [2010] NSWCA 68
Protective Commissioner v D (2004) 60 NSWLR 513
R v Heyde (1990) 20 NSWLR 234
Ramage v Waclaw (1988) 12 NSWLR 84
Rasmanis v Jurewitch (1969) 70 SR (NSW) 407
Raso v NRMA Insurance Limited (Court of Appeal, 14 December 1992, unreported) BC 9201418
Re Atkinson, deceased [1971] VR 612
Re Dawson (Deceased) [1966] 2 NSWR 211; 84 WN (Pt 1) (NSW) 399
Re Eve [1986] 2 SCR 388 at 408; (1986) 31 DLR (4th) 1
Richardson v Gill (1997) 141 FLR 314
Ronald Allen Smith and Anor v Joyce Smith and Ors [2014] NSWSC 582
Russell v Scott (1936) 55 CLR 440
Scott v Scott [2009) NSWSC 567
Secretary, Department of Health and Community Services v JWB and SMB (Marion’s Case) (1992) 175 CLR 218
Sprott v Harper [2000] QCA 391
Steinberg v Federal Commissioner of Taxation (1975) 134 CLR 640
Sze Tu v Lowe (2014) 89 NSWLR 317
Szozda v Szozda [2010] NSWSC 804 at [40]
Taheri v Vitek (2014) 87 NSWLR 403 at 425
The City Bank of Sydney v McLaughlin (1909) 9 CLR 615
The Trustees of the Property of Cummins v Cummins ( 2006) 227 CLR 278
Vadasz v Pioneer Concrete (SA) Pty Limited (1995) 184 CLR 102
Warman International Limited v Dwyer (1995) 182 CLR 544
Williams v Hensman (1861) 1 J&H 546
Woodward v Woodward [2015] NSWSC 1793
Youyang Pty Limited v Minter Ellison Morris Fletcher (2003) 212 CLR 484
Texts Cited:
A L Tyree Banking Law in Australia (LexisNexis Butterworths, Australia, 8th ed, 2014), paragraph [4.7.2]

Australian Law Reform Commission, Matrimonial Property, Report No 39 (1987), recommendation 24 and paragraphs 53 and 508

BA Helmore, The Law of Real Property in New South Wales (2nd ed, Law Book Co, Australia, 1966), pages 267-268

GE Dal Pont, Powers of Attorney (Lexis Nexis Butterworths, Australia, 2nd ed, 2015), [8.31]-[8.44] and [8.48]-[8.58]

GE Dal Pont and KF Mackie, Law of Succession (Lexis Nexis Butterworths, Australia 2013), paragraph [1.4]

F Jordan, Chapters on Equity in NSW (6th ed, 1947), pages 65-67

HS Theobald, The Law Relating to Lunacy (Stevens and Sons, London, 1924)

LI Rotman, Fiduciary Law (Thomson, Canada, 2005), page 729

Meagher, Gummow & Lehane’s Equity: Doctrines and Remedies (5th ed, 2015), pages 185-186

PW Young, C Croft and ML Smith, On Equity (Law Book Co, Sydney 2009), paragraphs [15.560]-[15.600])

Paper published by Rosalind Atherton as chapter 11 in Diane Kirkby (Ed), Sex, Power and Justice: Historical Perspectives of Law in Australia (Oxford University Press, 1995) at page 168

P Butt, Land Law 6th ed, Law Book Co., 2010), paragraph [1472]

Paget’s Law of Banking (LexisNexis, UK, 14th ed, 2014), paragraph [5.21]

PW Young, C Croft and ML Smith, On Equity (Law Book Co, Australia, 2009), paragraphs [6.890] and [6.910]

Report on powers of attorney (LRC 18, August 1974)

Report on powers of attorney and unsoundness of body or mind (LRC 20, February 1975)

RS Geddes, CJ Rowland and P Studdert, Wills, Probate and Administration in NSW (LBC, Sydney, 1996), paragraphs [3.01]-[3.03] and [3.05]

Shakespeare, As You Like It, Act II Scene vii

S J Stoljar in The Law of Agency: Its History and Present Principles (Sweet and Maxwell, London, 1961) chapter 7

SR Derham, Setoff (Oxford, 1987), Chapter 9

The Law relating to Lunacy (Stevens & Sons, London, 1924), page 380
Weerasooria’s Banking Law and the Financial System in Australia (LexisNexis Butterworths, Australia, 6th ed, 2006), paragraphs [21.95]-[21.97]
Category: Principal judgment
Parties: First Plaintiff: Ronald Allen Smith
Second Plaintiff: Neville Roland Smith
First Defendant: Joyce (Joy) Smith
Second Defendant: Michael Bingham (Executor)
Third Defendant: Rosemary Ann Danby
Fourth Defendant: Derek George Danby
Representation:
Counsel:
Plaintiffs: A Bulley
Defendants: J Mitchell
Solicitors:
Plaintiffs: Andreyev Lawyers
Defendants: Low Doherty & Stratford Solicitors

File Number(s): 2012/00276891

Judgment

INTRODUCTION

The Core Case

These proceedings focus upon claims by the two surviving adult children (sons) of a testator’s first marriage (each of whom is a residuary beneficiary of the testator) that his second wife (his widow, also a residuary beneficiary) should account to his deceased estate for her dealings with his property inter vivos, purportedly pursuant to an enduring power of attorney, or otherwise with his authority, during the last four years or so of his life (2008-2012), after the time, suffering dementia, he became incapable of managing his affairs.
In that period the widow (the first defendant) dealt with the deceased’s property, and mixed it with her own, as if entitled to deal with it as she wished. She rushed, headlong, into the cash economy, liquidating all property owned by the deceased or in which he had an interest; dissipating the deceased’s property as if entitled to do so in disregard of his interests, having entrusted his primary care to a nursing home; and taking refuge, in these proceedings, in an absence of auditable records necessary for her to be called fully to account.
She was not an unattentive wife, before or after the deceased’s entry into nursing home accommodation. She personally cared for him until the necessity for such accommodation forced itself upon them both. Thereafter, she continued to be, according to her own lights, a dutiful wife. She visited her husband regularly and, so far as she was able or required, attended to his needs, most of which were, however, attended to by professional carers apparently funded by his pension entitlements.
As the deceased moved towards the nursing home world, she prevailed upon him to allow her to control his affairs and, increasingly, she did, de facto at least, control them.
A core difficulty of the parties’ present situation is that she did so without due authority for what she did, and what she did routinely sacrificed the deceased’s property interests to her own agenda. Freed, in fact, from a financially conservative mindset exhibited by her husband when he was mentally competent, she kicked her heels up more than a bit after he became incompetent. At his expense, she enjoyed holiday cruises with her side of the family, bought an expensive car and expensive jewellery, gambled and enjoyed regular entertainment.
Critically to any practical outcome of the present proceedings, she used her husband’s money to fund the purchase of a residence in the names of her daughter by an earlier marriage and the daughter’s husband, her son-in-law (the third and fourth defendants) and, a little later, to fund the construction of a granny flat for herself on that property.
The plaintiffs, products of the deceased’s first family, have taken objection to the first defendant’s dissipation of their father’s wealth, and her diversion towards her side of the family of so much of that wealth that remains, on their case, identifiable: the present residence of the first, third and fourth defendants.
This is a case which requires both close attention to detail, and a broader perspective of the legal framework, because the outcome, whatever it might correctly be, bears heavily upon the lives of all parties, all of them in their senior years. It is, in every sense, a hard case that has been bitterly fought. Despite a simple story-line, it bristles with complexity.
In justification of her dealings with property in the deceased’s name, the first defendant relies upon: (a) a written authority dated 1 November 2007 executed by the deceased authorising her to sell shares and securities held by him; (b) an enduring power of attorney dated 10 January 2008 granted in her favour by the deceased; (c) a Will made by the deceased on 10 January 2008 substantially, but not exclusively, in her favour; (d) an instrument dated 18 January 2008 executed by the deceased appointing her, for limited purposes, his enduring guardian, governed by the Guardianship Act 1987 NSW; (e) a transfer of the matrimonial home of the deceased and herself (a home unit at Emu Plains), on or about 14 February 2008, from the name of the deceased into the names of the deceased and herself as joint tenants; (f) private conversations allegedly had by her with the deceased contemporaneously with particular transactions in 2008 and 2010; (g) her channelling of proceeds of sale of property through a joint account, in the names of the deceased and herself, opened with the Commonwealth Bank on 26 October 2007; (h) entitlements alleged to flow from the fact of her marriage to the deceased; (i) a financial contribution of approximately $120,000 she alleges she made to the acquisition of property in the name of the deceased, in 1998, shortly after her marriage to him in 1997; and (j) her provision of care for the deceased in his years of declining health.
The plaintiffs do not challenge the validity of the documents executed by the deceased on 10 and 18 January 2008 with the first defendant’s encouragement: a Will that favoured her interests over those of the plaintiffs; an enduring power of attorney in her favour; and an enduring guardianship appointment.
Nor do they challenge the validity of the transfer of the matrimonial home into the names of the first defendant and the deceased as joint tenants on or about 14 February 2008.
They allege breaches of fiduciary obligations by the first defendant; a failure by the executor of the deceased’s Will (the second defendant) to discharge the duties of his office by suing the first defendant; and a knowing receipt of trust property by the third and fourth defendants, as volunteers. Underlying all claims are the plaintiffs’ claims for family provision relief under chapter 3 of the Succession Act 2006 NSW.
They do not challenge the effectiveness, at law, of any transaction purportedly entered by the first defendant as attorney for the deceased with any third party. They seek to enforce obligations said to arise in equity.

Context of the Case

Unlike Taheri v Vitek (2014) 87 NSWLR 403 at 425 at [105]-431[131], this case is not concerned with a power of attorney which expressly includes authority to do an act as a result of which a benefit would be conferred on the attorney: 87 NSWLR 413[41] and 426[106].
In that case the Court of Appeal concluded that an instrument which included a “benefits clause” (in accordance with section 163(2)(b) of the Conveyancing Act 1919 NSW) authorised the attorney to act other than in the interests or for the benefit of the donor of the powers. In the present case, the power of attorney is subject to restrictions on the extent of the attorney’s authority found in sections 11(1), 12(1) and 13(1) of the Powers of Attorney Act 2003 NSW. Section 12(1), relevantly, provides that “[a] prescribed power of attorney does not authorise an attorney to execute an assurance or other document, or to do any other act, as a result of which a benefit would be conferred on the attorney…”.
In the context of a prescribed, enduring power of attorney governed by sections 8-13 of the Powers of Attorney Act 2003 (rather than that of a prescribed, enduring power of attorney governed by section 163B of the Conveyancing Act 1919), it is necessary to focus fresh attention on questions such as “What are the metes and bounds of an attorney acting ‘for the benefit of’ the principal?” and “What is a ‘moral obligation’ to provide support for a family member who happens to be an attorney?”
These questions were put to one side by the Court of Appeal in Taheri v Vitek. In a different context, they must be confronted in the current proceedings.
As recognised in Downie v Langham [2017] NSWSC 113, they are questions which reflect issues that arise on an exercise of the Court’s protective jurisdiction, 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 by reference to Wellesley v Duke of Beaufort (1827) 2 Russ 1 at 20; 38 ER 236 at 248, Wellesley v Wellesley (1828) 2 Bli NS 124 at 131, 136 and 142; 4 ER 1078 at 1081, 1083 and 1085 and the historical exposition of the jurisdiction found in in Re Eve [1986] 2 SCR 388 at 407-417; (1986) 31 DLR (4th) 1 at 14-21.
The law of agency (an amalgam of common law rules and equitable principles) needs to accommodate the protective jurisdiction when, a principal having lost the mental capacity requisite to managing his or her own business, an enduring power of attorney (not known to the general law of agency) comes into operation as such. Until that time, an enduring power of attorney may operate in a manner indistinguishable from other forms of agency. After that time, allowance generally has to be made for the physical presence, but mental absence, of a principal who, unable to make independent decisions, needs empathetic protection.
The following observations of White J (now a justice of appeal) in Downie v Langham [2017[ NSWSC 113 at [8]-[12] mark out territory occupied by these proceedings:

“[8] The question as to whether an attorney in these circumstances should be required to provide an account is not a straightforward issue. Whilst it can be said that generally because the relationship between principal and attorney under power is that of principal and agent, where the agent is required to act for the principal's benefit, it should follow that money that comes into the attorney's hands must be applied exclusively for the benefit of the principal, and the principal can be required upon to account. However, as Lindsay J explained in C v W (No 2) [2016] NSWSC 945, there are attorneys and attorneys. An attorney who acts under an enduring power of attorney after the principal has become incapable, undoubtedly stands in a fiduciary relationship with the principal. But that is not a relationship of trustee and
beneficiary and the law does not always impose an obligation on such a person to account.
[9] The principles expounded by Dixon J in Countess of Bective v FCT(1932) 47 CLR 417 ; [1932] HCA 22 at 420-421 and 422-423, and in Brown v Smith (1878) 10 Ch D 377, may well mean that no account from an attorney should be required. Moreover, even where an account is required, it will not necessarily follow that an attorney who is unable to give an account of particular items of expenditure, because, for example, receipts may not have been kept, will necessarily be required to account to the principal or the principal's estate for such expenditure.

[10] But in the present case the defendant, as I understand her submissions, accepts that she did spend money for her own benefit that she should not have spent. It does seem that there will be some money payable by her to the estate. If that did not appear, then that would be a ground in itself for not imposing an obligation to account (Woodward v Woodward [2015] NSWSC 1793 at [9]). But in this case there were numerous withdrawals, some of which at least could be classified as being substantial, from which it can be inferred, at least in the light of the defendant's admission, that the moneys were not applied for the deceased's benefit.
[11] It follows that an account should be ordered. As I have said, it will not necessarily follow that the defendant will be required to pay moneys to the estate if she is unable to identify how particular withdrawals were applied. Nonetheless, she should make an affidavit on oath or affirmation that, to the best of her ability, will state how the moneys withdrawn from the accounts were applied. That will require her to prepare a list of the items which are asterisked on the bank statements which are an exhibit to the plaintiff's affidavit and to say, as best she can, how the moneys withdrawn were applied.
[12] Particularly as the defendant is self-represented, I would add that her affidavit can also include any matters in relation to things which she has done for the deceased on the basis of which she might be entitled to claim an allowance, or to claim relief, in what Lindsay J has said in C v W (No 2) is the inherent jurisdiction of the Court analogous to relief available to a trustee, to be excused from breaches of trust if the trustee, or in this case fiduciary, has acted honestly and reasonably and ought fairly to be excused”.

Foundations of the Plaintiffs’ Case

The plaintiffs have built a case grounded upon:

a contention that the deceased’s appointment of the first defendant as his attorney on 10 January 2008 imposed upon her the fiduciary obligations owed by an agent to his, her or its principal: GE Dal Pont, Powers of Attorney (LexisNexis Butterworths, Australia, 2nd ed, 2015), [8.31]-[8.44] and [8.48]-[8.58]; and

a contention that the deceased lacked any capacity to acquiesce in the first defendant’s dealings with his property from at least 13 May 2008, upon which date:

at the request of the first defendant, the deceased’s general medical practitioner (Dr Dixon) certified that the deceased was no longer able to conduct his financial affairs and needed a registered power of attorney to oversee the safe management of his funds; and

for her part, the first defendant proceeded to deal with the deceased’s property on the basis that he had been “declared as of unsound mind” and was unable to sign cheques on his own behalf.

Foundations of the Defendants’ Case

The defendants’ general denials of liability include, at their core, a contention that the relationship between husband and wife, where it involves the sharing of income or capital (as they contend is here the case), does not ordinarily, or here, give rise to an obligation to account in one spouse vis-a-vis the other: Edward v Cheyne (No 2) (1888) 13 App Cas 371 at 398; O’Malley v The Public Trustee [1956] VLR 194 at 197.
The defendants reinforce this contention by reference to:

a rebuttable presumption against a finding of an intention to affect legal relations in intra-family dealings: Balfour v Balfour [1919] 2 KB 571 at 578-579; Hoddinott v Hoddinott [1949] 2 KB 406 at 411 and 414; Ashton v Pratt (No 2) [2012] NSWRSC 3 at [32]; Darnanin v Cowan [2010] NSWSC 1118 at [206];

the qualified obligation to account applied to guardians and the like appointed to manage the person or property of a member of their household under their care: Countess of Bective v Federal Commissioner of Taxation (1932) 47 CLR 417 at 420-423; Clay v Clay (2001) 202 CLR 410 at 428-430; Crossingham v Crossingham [2012] NSWSC 95 at [15]-[36]; and

an obligation they contend the deceased had (arising from section 72 of the Family Law Act 1975 Cth and “the law of lunacy”) to maintain her as his wife, dependent upon him.

An Intention to Affect Legal Relations. There is no factual basis for a conclusion that the deceased did not intend, by the enduring power of attorney he executed on 10 January 2008, to affect legal relations between the first defendant and himself. The instrument was prepared, and subsequently registered, by a solicitor. It was prepared in a form, with attendant formality, governed by the Powers of Attorney Act 2003. In accordance with the Act, the first defendant formally endorsed her acceptance of her appointment on the instrument the same day it was executed by the deceased.
Execution of the instrument was accompanied by the execution of a Will on the same day. Both documents were followed up, a month later, by the deceased’s transfer of his matrimonial home into the names of himself and the first defendant as joint tenants, a transaction consistent with the terms of the Will.
A more deliberate course of conduct designed to have legal effect, or to affect legal relations between the first defendant and the deceased, would be difficult to imagine.
The Liability of a Guardian to Account. More difficult questions attend an assessment of the first defendant’s liability to account to the deceased, and his estate, as his attorney. The Countess of Bective Case lies at the heart of those questions.
Except in a general way, as confirmation of the deceased’s conferral of authority on the first defendant to make decisions affecting his person (as well as his estate), little independent significance attaches to the first defendant’s appointment as enduring guardian. The instrument of appointment did not confer on the first defendant authority to deal with the deceased’s property. It authorised her to exercise functions specifically enumerated as relating to where the deceased lived, what health care he received, what kinds of personal services he received, and consents for medical or dental treatment. The guardianship appointment is an important contextual fact, but primary focus is on the enduring power of attorney.
The defendants contend that the purpose of the first defendant’s appointments as an enduring attorney and enduring guardian was to facilitate “the care and maintenance of the deceased and the first defendant to the standard to which they had become accustomed prior to the deceased’s incapacitation”.
Even if the purpose of the instruments were to be characterised as facilitation of the care and maintenance of the deceased and the first defendant (a debateable proposition), a flaw in the defendants’ case is that the first defendant engaged in a pattern of expenditure more extravagant than can be justified by reference to the deceased’s lifestyle. The first defendant’s extravagance extended to lavish expenditure on jewellery, for example. The defendants concede that that expenditure, at least, went beyond anything enjoyed during the deceased’s capacity.
Properly understood, the purpose of the enduring power of attorney executed by the deceased on 10 January 2008 is to be inferred from its character and text (including explanatory notes incorporated in the instrument), in the factual context in which the instrument was executed, including the fact that the deceased then anticipated his descent into dementia and death.
That he anticipated death, and was mindful of claims upon his estate other than those of the first defendant, is confirmed by the limitations of authority for which the text of the power of attorney provided and the deceased’s execution of a Will contemporaneously with his execution of the power of attorney.
Although post-dating those instruments, the deceased’s execution of an enduring guardianship instrument on 18 January 2008 and his execution of a memorandum of transfer on 14 February 2008 are not inconsistent with the intention of the deceased manifested in the instruments he executed on 10 January 2008. In combination, the documentation he signed in January - February 2008 might, not inappropriately, be characterised as evidencing an estate planning scheme designed by the deceased to make provision for management of his estate during incapacity and distribution of it upon death.
So viewed, the purpose of the power of attorney was not, as the first defendant would have it, to empower her to treat the deceased’s property as her own or, without express authority otherwise duly granted, to subvert the deceased’s formally declared intention. Its purpose was to empower the first defendant to manage the deceased’s estate for his benefit during his incapacity for self-management. Any benefit she might derive from her management of his estate could not, without a breach of duty on her part, be anything more than incidental.
The first defendant’s appointment as the deceased’s enduring attorney did not empower her, during any period of incapacity on the part of the deceased, to deal with the deceased’s property in a manner not specifically authorised by the terms of the instrument pursuant to which she was appointed to that office.
As an enduring power of attorney, the instrument was protective in character. Subject to its terms, it existed for the benefit of the deceased as donor.
Section 72 of the Family Law Act 1975, upon which the defendants rely, is in the following terms:

“72. Right of spouse to maintenance
(1) A party to a marriage is liable to maintain the other party, to the extent that the first-mentioned party is reasonably able to do so, if, and only if, that other party is unable to support herself or himself adequately whether:
(a) by reason of having the care and control of a child of the marriage who has not attained the age of 18 years;
(b) by reason of age or physical or mental incapacity for appropriate gainful employment; or
(c) for any other adequate reason;
having regard to any relevant matter referred to in subsection 75(2).
(2) The liability under subsection (1) of a bankrupt party to a marriage to maintain the other party may be satisfied, in whole or in part, by way of the transfer of vested bankruptcy property in relation to the bankrupt party if the court makes an order under this Part for the transfer.”

Section 72 appears in Part VIII of the Family Law Act (entitled “Property, Spousal Maintenance and Maintenance Agreements”) as a precursor to express statutory powers to award maintenance, determine property rights and enforce agreements relating to maintenance. Outside the framework of the Act, it adds little, if anything, to a resolution of the current proceedings. No claim is, or ever has been, made by the first defendant against the deceased, or his estate, under the Act.
As an enduring power of attorney, the power of attorney dated 10 January 2008 became fully operative when the deceased became incapable of managing his own affairs, substantially the same point at which the Court’s protective jurisdiction (and analogous legislative provisions) became engaged. That jurisdiction, rather than jurisdiction under the Family Law Act not invoked, may bear upon the first defendant’s claimed “entitlement” to “maintenance” at the expense of the deceased’s estate.
The Protective Jurisdiction : Maintenance of an Incapacitated Person’s Family. Independently of section 72 of the Family Law Act, the defendants rely upon the jurisdiction of the Court, grounded in the protective jurisdiction (formerly known as the lunacy jurisdiction) or analogous equity jurisdiction:

to make provision for maintenance of the family of an incapacitated person out of his or her estate, whether by way of an allowance or by an ex gratia payment for past care (H S Theobald, The Law Relating to Lunacy (London, 1924), chapters 52 and 65; Protective Commissioner v D (2004) 60 NSWLR 513 at 540-542);

to protect from a liability to account a fiduciary who, for the benefit of an incapacitated person, has without authority done an act which he or she might have done with authority of the Court if sought in advance of the act (McLaughlan v City Bank of Sydney (1912) 14 CLR 684 at 698-699 and 704); or

to excuse a fiduciary from a personal liability to account arising from an act done by the fiduciary in the interests, and for the benefit, of an incapacitated person in circumstances in which the fiduciary ought fairly to be relieved, in whole or part, from personal liability (C v W (No. 2) [2016] NSWSC 945 at [45]-[47]; Trustee Act 1925 NSW, section 85).

The defendants have not formally applied for relief under section 85 of the Trustee Act 1925, but an invocation of that section is implicit in their submissions, particularly those made by reference to C v W (No. 2) [2016] NSWSC 945.
The Trustee Act, section 85 empowers the Court to relieve a trustee, wholly or partly, from personal liability for a breach of trust for which the trustee is or may be liable. A grant of relief requires that it appear to the Court that the trustee has acted honestly and reasonably, and ought fairly to be excused for the breach of trust, and for omitting to obtain the direction of the Court in the manner in which the trustee committed the breach. Section 5 of the Act defines “trustee” as having a meaning corresponding with that of “trust” and including a “legal representative”, separately defined as an executor or administrator. Subject to an exception not presently material, section 5 also defines a “trust” as including “implied and constructive trusts, and cases where the trustee has a beneficial interest in trust property, and the duties incident to the office of legal representative of a deceased person”.
Although there are nuanced differences between the various heads of jurisdiction relied upon by the defendants, the case sought to be made by them by reference to alternative heads of jurisdiction is very similar to the case sought to be made by them by reference to the Countess of Bective case.
The defendants contend that, if the first defendant would otherwise be held liable to account to the estate of the deceased for breaches of fiduciary duty, in the process of accounts being taken an allowance should be made in the first defendant’s favour for:

her claimed entitlement, as the wife and widow of the deceased, to maintenance from his estate;

effort expended by her in caring for the deceased during his incapacity; and

benefits said to have accrued to the plaintiffs from her, rather than them, having to bear the burden of caring for the deceased during his incapacity.

The last category of these claims does less than justice to the plaintiffs, whose willingness to bear burdens associated with the deceased’s care and maintenance in his final years was thwarted by warnings of the first defendant to stand aside from him and her management of his affairs. In deference to him, and resigned to (misplaced) reliance on her goodwill, they gave the deceased and his wife space. At no time did they abandon their father or any familial obligation owed to him. No material benefit can be said to have accrued to them from their being relieved of a burden of caring for the deceased.
The case at hand not being a commercial one, it does not lend itself to a discussion of “just allowances” in quite the same terms as those in which Warman International Limited v Dwyer (1995) 182 CLR 544 discussed a fiduciary’s liability to account for profits. Nevertheless, if and to the extent that the deceased or his estate benefited from conduct of the first defendant or was under an unfulfilled obligation to the first defendant, justice and equity might require an allowance to be made in favour of the first defendant. Seeking equity, the estate ought to do equity, or recognition of the broader operation of the Court’s protective jurisdiction might be required.
In substance, the defendants contend that, the first defendant having discharged her wifely duties to the deceased, she should, by one means or another, be excused from any breach of fiduciary attending her dealing with his property. They submit that, having ensured that his needs were catered for in a nursing home environment, she was at liberty to apply his property as her own whether or not she consulted him in her disposition of it .
Viewed thus, alternative formulations of the defendants’ case are substantially the same as the case sought to be made by reference to the Countess of Bective case.
Implicit in the defendants’ case generally, at some level, is a contention that, upon a determination, now, of whether (and, if so, to what extent) the first defendant should be held liable to account as a fiduciary, the Court can, and should, protect the first defendant from any liability which she could have avoided had she, during the lifetime of the deceased, sought and obtained the authority of the Court, upon an exercise of protective jurisdiction, to manage the affairs of the deceased as she did.
That contention is grounded in the fact that a determination of what, if any, orders are to be made to enforce a liability to account that the first defendant may have as a defaulting fiduciary (or that the third and fourth defendants might have as constructive trustees) falls to be considered, in accordance with general principles, at the time of judgment, taking into account all the circumstances of the case then known material to whether, and to what extent, she (or they) should be held to account: Helou v Nguyen(with Addendum) [2014] NSWSC 22 at [139]; LI Rotman, Fiduciary Law (Thomson, Canada, 2005), page 729.
An impediment to the defendants’ case is, however, that upon an exercise of protective jurisdiction the Court generally has to measure what is done, or not done, by reference to an assessment whether it is in the interests, and for the benefit, of the incapable person, in this case the deceased, under protection (GAU v GAV [2014] QCA 308; [2016] 1 Qd R1 at [48]), a hurdle not insurmountable but necessarily to be approached with caution after the death of the incapable person and engagement with the separate interests of beneficiaries of his or her deceased estate.

A hint of a “Community of Property” in Marriage?

The defendants’ submissions have expressly disclaimed any suggestion that Australian law embraces the civil law concept of “community property” embedded in some European systems of family law, although, at times, their submissions appear only barely to have stopped short of embracing the concept.
The civil law concept of community of ownership arising from marriage has no place in Anglo-Australian common law: Hepworth v Hepworth (1963) 110 CLR 309 at 317-318; Bryson v Bryant (1992) 29 NSWLR 188 at 195-196.
In a report that canvassed the law in “community of property regimes”, the Australian Law Reform Commission in 1987 recommended against the introduction of such a regime in Australia, preferring to maintain (with statutory modifications, embracing discretionary powers, where required) the system of “separate property during marriage” characteristic of the English tradition: Australian Law Reform Commission, Matrimonial Property, Report No 39 (1987), recommendation 24 and paragraphs 53 and 508 et seq. In doing so, the Commission recognised that, under the separate property regime operative in Australia, each spouse may own and deal with property in exactly the same way as an unmarried person.
A summary of Australian law, strengthened by subsequent legislative developments, may be taken from a paper published by Rosalind Atherton as chapter 11 in Diane Kirkby (ed), Sex, Power and Justice: Historical Perspectives of Law in Australia (Oxford University Press, 1995) at page 168:

“In Australia today there is no legal concept of ‘family property’ as such, in the sense of assets that are considered to be owned jointly in some way between or among individuals because of their being related to each other as a ‘family’. While such a concept exists in European jurisdictions, jurisdictions which have their legal roots in English law have generally preferred an individualistic system of property ownership, expressed in such principles as ‘freedom of contract’, ‘freedom of property’ and its offshoot, ‘freedom of testation’. Generally speaking, this has meant that ownership of things is determined, not by virtue of the relationship between people, but because of purchase, gift or inheritance by individuals.…”

This orientation of the law is reinforced, in the context of the present proceedings, by enactment of the Married Persons (Equality of Status) Act 1996 NSW.
A mixing of funds in a stable, nuclear family, in which the parties to a domestic relationship are each in full command of their faculties and consent to, or acquiesce in, informal transactions affecting property owned jointly or severally, lends itself (as the defendants contend) to an analysis of the law resistant to the imposition of an obligation to account as between family members.
Such an analysis might be thought less authoritative, however, in a case, such as the present, in which:

one of the parties to a relationship executes in favour of the other, and the other accepts, an enduring power of attorney, with all the formality (including involvement of a solicitor in the provision of a statutory certificate) that that entails;

the power of attorney is granted to authorise the donee, on specific terms that include limitations on the powers of the attorney, to effect business affecting property the legal title to which is held in the name of the donor alone;

the donor of the power then descends into mental incapacity, the fog of dementia; and

the donor’s family is not simply a stable, nuclear family but, rather, a blended family in which different sides (extending beyond a single household) are openly in conflict, with divergent loyalties on display.

The principles to be applied are sufficiently flexible to accommodate what are, generally, fact-sensitive cases that require transactional analysis, albeit informed by empirical observations about personal relationships.

The Nature of Principles Applicable

In a case such as the present, the principles to be applied may draw upon diverse branches of the Court’s jurisdiction (at Law, in Equity and upon an exercise of Protective jurisdiction), the general law and legislation.
This can be demonstrated by reference to McLaughlin v The City Bank of Sydney (1912) 14 CLR 684 at 698-699 and 704 (per Griffith CJ and Barton J respectively in the majority) and 716-718 (per Isaacs J in dissent).
That judgment is the culmination of a string of cases in the High Court of Australia involving a solicitor who was temporarily insane and who, upon regaining his sanity, challenged the validity of transactions effected by his wife in reliance upon a power of attorney later found to have been invalid. The principal related judgments are McLaughlin v Daily Telegraph Newspaper Co. Limited (1904) 1 CLR 243 and The City Bank of Sydney v McLaughlin (1909) 9 CLR 615. Other judgments to which reference might also be made to place the litigation in context are Daily Telegraph Newspaper Co. Limited v McLaughlin (1904) 1 CLR 479; McLaughlin v Fosbery (1904) 1 CLR 546 and McLaughlin v Freehill (1908) 5 CLR 858.
In McLaughlin v The City Bank of Sydney (1912) 14 CLR 684 the majority held, inter alia, that:

a wife charged with the burden of maintaining the family of a husband of unsound mind might, by reason of the necessity of the case and the relationship of husband and wife, have authority to transact business on behalf of the husband as an “agent of necessity”; and

in Equity, where a person (had he or she applied to the Court in its Protective jurisdiction for authority to transact particular business on behalf of an incapable person) would have been granted that authority, the Court might protect that person from personal liability arising from having transacted the business without authority.

In dissent, Isaacs J insisted that a wife, without the express or implied authority in fact of her husband, cannot deal with his property; and that the common law should not be enlarged beyond the principle that, where a husband is insane, the wife, if not otherwise provided for by him, has authority by law to pledge his credit for her necessary maintenance.
More than caution is required in dealing with older cases about “agency of necessity” in the context of family relationships, a point made by SJ Stoljar in The Law of Agency: Its History and Present Principles (Sweet and Maxwell, London, 1961), chapter 7. Changes in law and practice have been too large to accommodate a direct application of earlier statements of principle to current factual scenarios. As Professor Stoljar observed at page 160:

“We can see now that to express the relevant rules in terms of agency only obscures the true reasons for [the rights of a wife]. In fact…, to speak of her as an agent [of her husband] is merely a survival from the time when the courts were committed to the concepts of agency and authority because of the exigencies of the forms of action under which the husband would, at common law, have to be made liable in contract if he was to be made liable at all. Of course, there was in this an element of agency in the sense that one person would become vicariously liable for the price of goods bought by another. But this was at best an agency sui generis, which did not derive from normal agency principles, but was founded upon a separate duty that bids a husband to support and maintain his wife and his family.”

Still, more recently than the observations of Professor Stoljar, section 7 of the Married Persons (Equality of Status) Act 1996 NSW abolished, as between spouses, what might be called (as it was called in Hawksford v Hawksford [2005] NSWSC 463 at [73]) “the (common law) doctrine of agency of necessity”.
The tendency of the modern law, towards transactional rather than relational analysis of the rights and obligations of marriage partners, can be observed in Part 2 (sections 4-13) of the Married Persons (Equality of Status) Act 1996 NSW, a contemporary update of the Married Persons (Property and Torts) Act 1901 NSW, which the 1996 Act repealed and replaced.
Sections 4-13 are in the following terms:

“Part 2 - Equality of status
Division 1 General rule
4 Spouses have legal capacity as if they were not married
(1) A married person:
(a) has legal capacity for all purposes and in all respects as if that person were unmarried, and
(b) has a legal personality that is independent, separate and distinct from that of the person’s spouse.

(2) This section does not affect any specific laws in relation to a minor.
Division 2 - Specific examples
5 Spouses can sue each other in tort
A husband and wife each has a right of action in tort against the other as if they were not married.
6 Criminal and civil action in respect of spouse’s property
A married person is entitled to civil and criminal redress against the person’s spouse for the protection of his or her property as if that person were not married.
7 Married person has no authority to act as agent of necessity
A married person does not, by reason only of the person’s status as a spouse, have the authority to pledge the credit of the other spouse for necessaries or to act as agent for the other spouse for the purchase of necessaries.
8 Married person not liable for debts of spouse incurred before marriage
Subject to any agreement to the contrary, a married person is not liable for any debt incurred by the person’s spouse before their marriage.
9 Spouses as beneficiaries
A husband and wife are to be treated as two separate persons for the purposes of the construction of a will, trust, or other instrument in relation to a gift or other disposition of real or personal property to the husband and wife, unless a contrary intention appears.
10 Instruments restricting anticipation or alienation are void
An instrument executed after the commencement of this section is void to the extent that it purports to attach any restriction on anticipation or alienation to the enjoyment of property by a woman that could not have been attached to the enjoyment of property by a man.
11 Effect of Division
Nothing in this Division affects the generality of Division 1.
Division 3 - Other matters
12 Housekeeping payments and allowances held as joint tenants
If a married person makes a payment or allowance to the person’s spouse to pay their joint household expenses or for similar purposes, any property bought with the payment or allowance and any money not spent from the payment or allowance is, in the absence of any agreement to the contrary between the person and his or her spouse, taken to belong to the person and the person’s spouse as joint tenants.
13 Fraudulent investment of spouse’s money
(1) If a married person invests money belonging to the person’s spouse without obtaining the consent of the spouse, the spouse can apply to the Supreme Court to have the money transferred to him or her.
(2) The Supreme Court has jurisdiction to order such a transfer and to make any ancillary orders.”

The parties have not directly engaged any of these provisions in the current proceedings. The plaintiffs have not, for example, framed a cause of action in tort for conversion based on section 6 of the 1996 Act (relied upon by Young J in Richardson v Gill (1997) 141 FLR 314 at 319-320) and section 2 of the Law Reform (Miscellaneous Provisions) Act 1944 NSW, governing survival of a cause of action on death. Their core claims, rather, invoke principles of equity attaching to the execution and deployment of an enduring power of attorney governed by the Powers of Attorney Act 2003 NSW.
Nevertheless, the realignment in the legal incidents of a marriage effected by legislation such as the Married Persons (Equality of Status) Act 1996 may render a spouse who becomes an enduring attorney more amenable to a finding of fiduciary obligations than otherwise.
Greater significance, in the present proceedings, may attach though to an interplay between the Court’s Protective and Equity jurisdictions.
Griffith CJ cited, as an instance of that interplay, the judgment of the English Court of Appeal in Brown v Smith (1878) 10 Ch D 377, a case also cited with approval by the High Court in Countess of Bective v Federal Commissioner of Taxation (1932) 47 CLR 417 at 421.
Brown v Smith involved the maintenance of an infant rather than a lunatic, but both types of case are generally regarded as exemplars of parens patriae jurisdiction, the principles governing which have been largely assimilated: Secretary, Department of Health and Community Services v JWB and SMB (Marion’s Case) (1992) 175 CLR 218 at 258-259, citing Re Eve [1986] 2 SCR 388 at 408; (1986) 31 DLR (4th) 1 at 14-15.
When engaged, directly or (as suggested by Griffith CJ in McLaughlin v The City Bank of Sydney) by analogy, the Protective jurisdiction empowers the Court (and, in some cases, may require it) to allow from the estate of an incapable person an allowance for the past or present care of an incapable person or for the maintenance of his or her family. That jurisprudence has been approved by the Court of Appeal, in this State, in Protective Commissioner v D (2004) 60 NSWLR 513 at 540 [149] - 542 [156]. It is dealt with in HS Theobald’s classic text, The Law Relating to Lunacy (Stevens and Sons, London, 1924) under the rubric of “Past Maintenance” (chapter 52) and “Gifts and Allowances” (chapter 65).
In the present judgment a distinction is drawn, for analytical purposes, between the Court’s equity and protective jurisdictions. That is not only analytically useful, but historically correct: see, for example, Estate Polykarpou; re a Charity [2016] NSWSC 409 at [138]-[158] and [161]-[164] and [166]-[181].
However, an acknowledgement needs to be made, consistently with current administrative arrangements for conduct of the business of the Court, that, in modern parlance, the protective jurisdiction is generally seen to have been absorbed within, so as to become a subset of, the Court’s equity jurisdiction.
So too, when section 7(1) of the Powers of Attorney Act 2003 declares that the 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.”
Historically, different lines of demarcation can be discerned; but the expression “any principle or rule of the common law or equity” can reasonably be taken as intended to preserve, and to call in aid where necessary, that branch of jurisdiction known by a variety of names other than “the common law” or “equity”: the protective jurisdiction, the lunacy jurisdiction, parens patriae jurisdiction.
In short, section 7(1) preserves the general (non-statutory) law administered by the Court, and the jurisdictional categories by reference to which it is administered, so far as they bear upon powers of attorney.

Accounting for management of funds in “Guardianship” cases

In presentation of their case the defendants laboured the point (not conceded by the plaintiffs) that the first defendant was attentive in her care for the deceased before he entered nursing home accommodation, and hardly less so afterwards.
In part, this reflects an endeavour to attract attention to the following statements of principle found in the Countess of Bective Case at 47 CLR 420-421 (with emphasis added):

“… An obligation to apply moneys in the maintenance of children or others does not involve the liability which arises from an ordinary trust. It is a general rule that guardians of infants, committees of the person of lunatics, and others who are entrusted with funds to be expended in the maintenance and support of persons under their care are not liable to account as trustees. They need not vouch the items of their expenditure, and, if they fulfil the obligation of maintenance in a manner commensurate with the income available to them for the purpose, an account will not be taken. Often the person to be maintained is a member of a family enjoying the advantages of a common establishment; always the end in view is to supply the daily wants of an individual, to provide for his comfort, edification and amusement, and to promote his happiness. It would defeat the very purpose for which the fund is provided, if its administration were hampered by the necessity of identifying, distinguishing, apportioning and recording every item of expenditure and vindicating its propriety.”

It is as well to record, however, that the quotation continues (again with emphasis added):

“Although these considerations furnish an independent foundation for the general rule, yet, after all, it is a doctrine regulating the application of moneys payable under an instrument, whether a will, a settlement or an order of a Court of equity, and the operation of the doctrine must depend upon the provisions contained in the instrument, both express and implied. But the effect of the instrument will often be governed by the circumstances in which it was intended to apply, and, in particular, by a consideration of the nature of the actual abode, the condition of the household and the state of the family of the infant or other person to be maintained. Courts of equity have not disguised the fact that the general rule gives to a parent or guardian dispensing the fund an opportunity of gaining incidental benefits, but the nature and extent of the advantages permitted must depend peculiarly upon the intention ascribed to the instrument.… Statements to be found in some authorities that any surplus remaining after adequate maintenance has been provided belongs to the person having the care of the infant or of the lunatic cannot be safely used unless careful attention is given to the scope and purpose of the instrument under which the moneys arise and the conditions to which its operation is directed.… [The] difficulty relates to the application rather than to the nature of the rule, and in any case it is evident that to reach the conclusion that savings belong to the guardian is much easier if the allowance is meant to include some inducement to the recipient to undertake the care of the person to be maintained, or if the intention is that the guardian should be associated with a child in a mode of life, or standard of living or in the enjoyment of pursuits which, otherwise, he would not adopt. The conclusion is less easy when the fund is meant simply to provide the proper charges of the infant.
A guardian is not permitted to receive moneys for maintenance without liability to account except upon the condition that he discharges his duty adequately to maintain and not otherwise. Upon his default the Court will administer the fund or intercept the payments and has jurisdiction to order an account or an inquiry.… Where, however, the condition is performed the Court does not inquire whether the money has been completely expended or whether the recipient has spent small sums for his personal benefit, but, nevertheless, it remains an allowance to a person in a fiduciary capacity and for a definite purpose.”

The plaintiffs, in their submissions, emphasise contentions that: (a) the first defendant did not confine herself to a deployment of the deceased’s funds for his maintenance and only, incidentally, for her own benefit; (b) neither were the sums applied for her personal benefit small; and (c) much of her dissipation of the deceased’s property occurred after he entered nursing home accommodation, no longer in her day-to-day care.
The principles expounded in the Countess of Bective Case do not, in terms, contemplate a situation in which a person manages “the estate” (property) of an incapable person under an enduring power of attorney or “the person” of such a person under an appointment as an enduring guardian.
The concept of an “enduring” appointment as an attorney or guardian was introduced by statute in an era that post-dates the Countess of Bective Case, and the English case law upon which it stands. But for the intervention of Parliament, the common law would, ordinarily, have held that such an appointment lapses upon the appointor’s loss of mental capacity: Drew v Nunn (1879) 4 QBD 661 at 665-666; Ghosn v Principle Focus Pty Limited (No. 2) [2008] VSC 574 at [36]. The concept of “enduring” appointments entered NSW law in the 1980s (with the benefit of recent English experience with law reform) after reports of the NSW Law Reform Commission: Report on Powers of Attorney (LRC 18, August 1974); Report on Powers of Attorney and Unsoundness of Body or Mind (LRC 20, February 1975); Angelina Spina v Permanent Custodians Limited [2008] NSWSC 561 at [162]-[163]; Szozda v Szozda [2010] NSWSC 804 at [40].
The concept of an “enduring” appointment as an attorney or guardian needs to be viewed in the context of the protective regime it serves. The Court and various statutory authorities exercise jurisdiction which, historically, was known by various names including, at a high level of abstraction, the parens patriae jurisdiction of the Crown.
In NSW, enduring powers of attorney are presently governed by the Powers ofAttorney Act, and the appointment of an enduring guardian is governed by the Guardianship Act 1987 NSW. Both types of instrument are actively promoted by government agencies, including the NSW Trustee, as a “self help” alternative to more formal regulatory appointments of an office holder to manage the affairs (the estate and/or the person) of a person who, unable to manage his or her own affairs, is in need of protection.
When of sound mind (as McLaughlin v Daily Telegraph Newspaper Co Limited (1904) 1 CLR 243 cautions), individuals in our community are entitled, to execute an instrument appointing an attorney or a guardian of choice on the basis that an appointee to that office will occupy it, with a continuing authority, beyond a loss of mental capacity by the appointor. The appointment, thus, “endures”.
The nature of the office of an enduring attorney or an enduring guardian is such that it is likely, if not bound, to be a fiduciary one: Taheri v Vitek (2014) 87 NSWLR 403 at 427[115]; Downie v Langham [2017] NSWSC 113 at [8]. It is difficult to imagine the holder of an office designed to manage the affairs, and to protect the interests, of a person lacking capacity for self-management that would not, in an appropriate case, attract the intervention of equity.

Under current law and practice in NSW, the appointment of an enduring attorney 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]).

Under current law and practice in NSW the appointment of an enduring guardian is an alternative to:

the appointment of a “guardian” by the Guardianship Division of NCAT under the Guardianship Act; or

exceptionally, the appointment by the Court of the general law equivalent, a “committee of the person”, upon an exercise of the Court’s inherent jurisdiction (IR v AR [2015] NSWSC 1187 at [100]-[117], especially [114]).

An appointment of a financial manager or of a protected estate manager engages an administrative regime, which empowers the NSW Trustee and Guardian (also known, simply, as the NSW Trustee) to manage or supervise management of an incapable person’s estate, under the NSW Trustee and Guardian Act 2009: M v M [2013] NSWSC 1495 at [11]-[14]; P v NSW Trustee and Guardian [2015] NSWSC 579 at [25]-[41].
This does not happen, without more, if an incapable person’s estate is managed under an enduring power of attorney.
Another difference is that, whereas the making or revocation of a management order is a formal act by a public institution, recorded as such, as and when required, and justified by an examination of the capacity for self-management of a person in need of protection, the appointment or removal of an attorney under an enduring power of attorney may be an entirely private act in the absence of intervention by the Court, NCAT or the Mental Health Review Tribunal, the institutions in which a power to intervene is or may be vested. The validity of an appointment or revocation of a power of attorney generally falls, then, to be determined ex post facto in private litigation.
Three practical consequences may flow from this, particularly when families are in conflict over care for, or control of, the person or estate of a person in need of protection:

in the absence of a financial management order or a protected estate management order: As a person descends into incapacity for self-management, there may be a free-for-all in the execution of enduring powers of attorney (and/or enduring guardianship appointments) as competing interests persuade, or impose upon, a person in need of protection to execute a competing instrument;

where an incapable person’s estate is managed by an enduring attorney, rather than a financial manager or a protected estate manager, there is no systemic regime for an insistence upon, or supervision of, prudential accounting practices on a day-to-day basis; and

third parties who deal with an enduring attorney (or an enduring guardian) on the basis of a private instrument, albeit one that may have been registered with the Land Titles Office of the Registrar General to facilitate dealings in land, have no assurance (as they have if dealing with an order of the Court, NCAT or the MHRT) that there is no competing appointee lurking in the shadows to challenge or interfere with transactions effected on behalf of the appointor.

The management of an incapable person’s estate by an enduring attorney is, however, subject to review:

on an application for review made to the Guardianship Division of NCAT, or to the Court, under the Powers of Attorney Act, sections 35-36, in circumstances which may enliven the respective, broader powers that NCAT and the Court have to make other protective orders; or

on an application to the Court for an exercise of its protective, parens patriae jurisdiction or the general jurisdiction of the Court.

Had they chosen to do so, it would have been open to any of the parties to these proceedings (particularly the first plaintiff and the first defendant, those most actively engaged in care of the deceased) to make, during the lifetime of the deceased, an application for a review of the powers of attorney granted by him (or an application for a manager of his estate or for the appointment of a guardian) in order to clarify his status and the authority of each person involved in management of his affairs. Such an application could have served as the equivalent of a trustee’s application for judicial advice, protective of all concerned: confirming, extending or limiting powers according to what might be required in the best interests of the deceased.
An appointment of a guardian by the Guardianship Division of NCAT engages an administrative regime which permits NCAT, on a routine basis, to review the needs of a person in need of protection, and to call upon the services of the Public Guardian, with whom the NSW Trustee works in close proximity and generally in harmony.
The present proceedings involve references to both enduring powers of attorney and the appointment of enduring guardians. The primary focus is on powers of attorney because the proceedings involve a dispute about the property, not about the person, of the deceased. Whether under the care of the first defendant, in hospital or a nursing home, or in contact with the plaintiffs, there is no suggestion that “the person” of the deceased was otherwise than safe and secure.
An enduring power of attorney needs to be located in the context of the general protective jurisdiction of the Court if its nature and limitations are to be properly understood. An enduring attorney can, by the nature of his, her or its office, comfortably fit within the “general rule” (of which the Countess of Bective Case and Clay v Clay speak) “that guardians of infants, committees of the person of lunatics, and others who are entrusted with funds to be expended in the maintenance and support of persons under their care are not liable to account as trustees”.
If they are to do so, however, care needs to be taken to notice the High Court’s warning that the terms and purpose of the appointment of a “guardian” (using that expression generically) must be consulted in deciding whether such a person should be called upon to account for dealing with the property of a person under protection.
Locating an enduring power of attorney in this world may require recognition that:

the protective jurisdiction (and, semble, depending the terms of the instrument, an enduring power of attorney engaged after a donor’s loss of mental capacity) exists for the benefit of the person in need of protection, the donor, but takes a large and liberal view of what that benefit is: Theobald, The Law relating to Lunacy (1924), page 380; but

parties need to understand that, in a case involving any doubt, the means exist for the protection of all concerned by a timely application (usually, most cost-effectively) to the Guardianship Division of NCAT, or (exceptionally) to the Court, for a review of the case or by engagement with the NSW Trustee.

Although the Court (or, exercising statutory jurisdiction, NCAT or the NSW Trustee) may take a “liberal” view of what is for the benefit of an incapable person on an exercise of protective jurisdiction, that, of itself, provides no licence for a fiduciary to enjoy (in, and for, the due performance of his or her fiduciary obligations towards an incapable person) anything other than a small benefit incidental to the incapable person’s enjoyment of his or her own property. Upon an exercise of protective jurisdiction, the Court is always mindful (as must be NCAT and the NSW Trustee) of preserving the estate of a person under its protection for the use and enjoyment of that person: W v H [2014] NSWSC 1696 and JPT v DST [2014] NSWSC 1735, citing Ex parte Whitbread in the Matter of Hinde, a Lunatic (1816) 2 Mer 99; 35 ER 878.
Ultimately, in the interplay between the Court’s protective and equitable jurisdictions, the scope of a fiduciary duty attaching to the performance of the office of an enduring attorney must be moulded according to the nature of the relationship between principal and attorney and the facts of the case: Clay v Clay (2001) 202 CLR 410 at 432-433[46], citing Hospital Products Limited v United States Surgical Corporation (1984) 156 CLR 41 at 102 and Maguire v Makaronis (1997) 188 CLR 449 at 463-464; Downie v Langham [2017] NSWSC 113.

The central point: A fiduciary and accounting obligations

Without losing sight of other issues in the proceedings, the central focal point of the proceedings is upon the questions:

whether (as the deceased’s attorney, in the particular circumstances of this case) the first defendant owed to the deceased (and, now, to his deceased estate) the obligations of a fiduciary, including an obligation to account for dealings with his property; and

if so, whether the first defendant, as a fiduciary, should account for her use of the deceased’s property to the extent that it has been applied, in whole or part, otherwise than for his benefit or, more particularly, for her own benefit.

Another focal point: an allegation of accessorial liability

Contingent upon affirmative answers to these questions, the plaintiffs’ claims against the third and fourth defendants depend upon those defendants being:

characterised as volunteers in receipt of trust money paid to them or at their direction by the first defendant in breach of trust (Black v S Freedman & Co (1910) 12 CLR 105 at 109 and 110); or

brought within the first limb of Barnes v Addy (1874) 9 Ch App 244 at 251 (as expounded in Consul Development Pty Limited v DPC Estates Pty Limited (1975) 132 CLR 373 and Farah Constructions Pty Limited v Say-Dee Pty Limited (2007) 230 CLR 89 at [111]-[113]) by proof on the part of the plaintiffs that:

funds acquired by the first defendant through a breach of fiduciary duty have been received by the third and fourth defendants; and

the third and fourth defendants received those funds with “knowledge” that they were received in breach of a fiduciary duty.

These proceedings have been conducted upon an assumption (which I accept as correct) that, in the circumstances of this case, the first limb of Barnes v Addy (“knowing receipt” of trust property) applies to receipt of property of the deceased by the third and fourth defendants if they received it with notice that the first defendant’s transfer of it to them was in breach of fiduciary obligations owed by her to the deceased: Cf, Say-Dee at 230 CLR 141 [113].
There is no dispute between the parties that (in accordance with principles articulated in PW Young, C Croft and ML Smith, On Equity (Law Book Co, Australia, 2009), paragraphs [6.890] and [6.910] and in Farah Constructions Pty Limited v Say-Dee Pty Limited (2007) 230 CLR 89 at 163 [174]-164 [178]) the element of “knowledge” may be satisfied by proof of:

actual knowledge;

wilful blindness, shutting one’s eyes to the obvious;

wilfully and recklessly failing to make such enquiries as an honest and reasonable man would make; or

knowledge of circumstances which would indicate the facts to an honest and reasonable man.

Having regard to the observations of the High Court in Say-Dee, it is not sufficient, to establish constructive notice of a breach of fiduciary obligations, that the third and fourth defendants simply had “knowledge of circumstances which would put an honest and reasonable man on inquiry”. Nevertheless, as the High Court put it, the fourth category of knowledge (derived from Baden’s Case [1993] 1 WLR 509 at 575-576) accommodates “the proposition that the morally obtuse cannot escape by failure to recognise an impropriety that would have been apparent to an ordinary person applying the standards of such persons”.
In judging the existence and nature of knowledge in the third and fourth defendants of any breach of fiduciary obligations owed by the first defendant to the deceased, a notable feature of the case is that the defendants say that any funds of the deceased found to have been received by them via the first defendant were received by them in circumstances in which they were engaged in taking up the mantle of carers for the first defendant, at a time when she claims to have occupied the office of “carer” vis-a-vis the deceased. The third and fourth defendants were intimately involved in the day-to-day affairs of the first defendant and the deceased as, and consequentially upon, the deceased transitioning to nursing home accommodation.
The focus of the plaintiffs’ claims against the third and fourth defendants is upon an alleged use of funds by the first, third and fourth defendants:

in June-July 2008, to acquire in the names of the third and fourth defendants (for a purchase price of $347,500) a residence at Emu Plains, closer to where the first defendant then lived; and

in March-June 2010, to construct as an adjunct to the third and fourth defendants’ Emu Plains residence (for $124,800 plus fit out and ancillary expenses about $200,000 in total) a “granny flat” addition as living quarters for the first defendant.

The $124,800 figure for construction of the granny flat comes from paragraph 24(a) of the first defendant’s defence (filed 3 July 2013); it is said to have been paid to “a builder, for the purposes of constructing” the granny flat. The $200,000 figure comes from paragraph 8 of the first defendant’s affidavit sworn 13 July 2015, and paragraphs 43 and 45(c) of her affidavit sworn 28 October 2013.
The plaintiffs contend that the third and fourth defendants “received” as volunteers the funds of the deceased used for their acquisition of the residence. The defendants contend that funds provided to them by the first defendant for the purpose of the acquisition were provided to them by way of a bridging loan, pending their sale of their former residence, and that they, substantially, repaid the loan (with interest neither sought nor paid) on or about 23 March 2009.
The first defendant, for her part, includes in her justification for the provision of funding for the third and fourth defendants’ acquisition of the Emu Plains residence, and for construction of the granny flat, contentions that the funds applied for those purposes comprised mixed funds of herself and the deceased, and that he voluntarily acquiesced in her use of the funds as a means of fulfilment by him of a spousely duty to provide and care for her. She contends that, notwithstanding his descent into dementia, he retained capacity sufficient (upon an application of the law stated in Gibbons v Wright (1954) 91 CLR 423 at 434-438), contemporaneously with events, to consent to, and thereby to authorise, what was done.
Although the parties’ written submissions have canvassed broader territory, both sides of the record have insisted that the other adhere to their pleadings, without amendment to accommodate submissions beyond the pleadings. I note, accordingly, that the defendants have not pleaded reliance upon section 42 of the Real Property Act 1900 NSW (causing the plaintiffs to invite the Court to proceed in disregard of it, as the Court of Appeal did in Heperu Pty Ltd v Belle (2009) 76 NSWLR 230 at 268 [167]) and, in their submissions, the defendants have objected to the plaintiffs endeavouring to circumvent section 42 by relying upon the “fraud” exception to indefeasibility. In the ultimate, the case must live within the pleadings.
It is common ground that a person (such as the third and fourth defendants) who has an indefeasible title, by virtue of section 42, may nevertheless hold title subject to “personal equities”, rights in personam as distinct from rights in rem: Hillpalm Pty Limited v Heaven’s Door Pty Limited (2004) 220 CLR 472 at 491[54]. It is common ground that, on the pleadings as they stand, it is open to the plaintiffs (suing on behalf of the deceased’s estate) to establish that the third and fourth defendants hold their legal title to the Emu Plains residence subject to in personam equitable obligations owed to the estate.

A defence of laches, acquiescence and delay

The defendants also contend that the plaintiffs should be denied any entitlement they might otherwise have to equitable relief because, the defendants contend, the plaintiffs have been guilty of laches, acquiescence and delay in asserting those entitlements.
This contention is based upon the plaintiffs’ reluctant deference to the first defendant’s management of the affairs of the deceased (when warned off by the first defendant from interfering with her management of the deceased’s person and property) and their alleged failure to apply for guardianship and financial management orders under the Guardianship Act as a means of challenging her control of the deceased’s affairs.
Having warned the plaintiffs off any dealings with their father save through her, and having failed herself to obtain financial management or other orders designed to confirm her authority to manage the deceased’s estate as she did, it does not lie in the mouth of the first defendant (or the third and fourth defendants, whose interests she shares) to complain of laches in these proceedings.
I leave to one side delays in prosecution of the plaintiffs’ claims associated (as they were) with an inability or unwillingness on the part of the defendants to provide discovery bearing upon their dealings, inter vivos, with property of the deceased.
If, as I determine, the plaintiffs are otherwise entitled to relief, the defendants’ “laches defence” provides no impediment to a grant of relief. It lacks any substantial factual foundation: see Orr v Ford (1989) 167 CLR 316 at 337-341; (1989) 167 CLR 316 at 337-341; Byrnes v Kendle (2011) 243 CLR 253 at [79]-[80]. The plaintiffs cannot be said to have engaged in calculated (deliberate and informed) inaction in the face of an open assertion by the first defendant of an entitlement to dispose of the deceased’s property at will. Nor can they be said to have encouraged her in a belief that she could exercise such a power of disposition. At no time did she keep the plaintiffs informed of her intentions, or her conduct, in management of their father’s estate. On the contrary, she kept them in the dark as she sought pre-emptively to spend their inheritance.

Questions of credit

A determination of the questions in dispute involves large questions relating to the credit of the principal witnesses: the first plaintiff, the first defendant, the third defendant and the fourth defendant.
In the nature of the questions in dispute, this is especially the case upon an assessment of: (a) the evidence of the first defendant, who deposed to private conversations with the deceased, and to informal, undocumented dealings with the third and fourth defendants; and (b) the evidence of the third and fourth defendants about those informal dealings and their knowledge of the source of funds applied for their benefit by the first defendant.
The evidence of the first, third and fourth defendants about their informal arrangements and knowledge of the source of funds applied for the benefit of the third and fourth defendants presents particular difficulties because it lacks reliable, independent corroboration; their supposed recollections of events, including extraordinary cash transactions, appear, at the highest, to be a reconstruction of events; their explanations of events require an acceptance that large amounts of money were held, or dealt with, by them in cash; their figures cannot be reconciled; and their presentation of accounting information, such as it is, patently involves guesswork.
I have substantial reservations about the truthfulness, and reliability, of the evidence of the defendants, other than the second defendant. Each of the first, third and fourth defendants gave evidence in what appeared to be a defensive manner. Making allowance for their ages – none of them are young – and the nature of the criticism directed at them, I nevertheless harbour doubts about the quality of their evidence such as to require it to be closely scrutinised.

However, even now, in deciding whether (and, if so, to what extent) the first defendant should be held to account for a breach of her fiduciary obligations, the Court needs to consider the interplay between its protective and equity jurisdictions as illustrated by Countess of Bective v Federal Commissioner of Taxation (1932) 47 CLR 417 at 420-423, McLaughlin v The City Bank of Sydney (1912) 14 CLR 684 at 698-699 and 704 and Downie v Langham [2017] NSWSC 113.
In this case, this is best done in logical sequence, considering: (a) whether the first defendant was a fiduciary, as has been found; (b) the nature and scope of her obligations as a fiduciary in the particular factual setting, here done; (c) what, if any, findings of breach of fiduciary obligations are apt, the topic next to be addressed; and (d) an appropriate remedial response to any finding of breach, a topic that requires an holistic review of the case.

Breaches of Fiduciary Obligations

There was an element of “breach” in almost everything the first defendant did in management of the deceased’s affairs, in reliance on the power of attorney dated 10 January 2008, after 13 May 2008. She routinely preferred her own interests over those of the deceased. She did not consistently act only for his benefit, save to the extent that she saw benefit to him through the prism of benefit to herself. She generally treated his property as her own. Without authority, she appropriated his property for her own benefit, and for that of her side of the family, with the intent of diminishing any prospective inheritance of the plaintiffs from the estate of the deceased.
She never kept any auditable records, preferring, as she did, to live within an opaque cash economy.
She was not unmindful of a need to ensure that the first defendant was comfortable in his nursing home accommodation but, financially, she proceeded upon an assumption that, provided his nursing home bills were paid, she was free to do as she wished with his property without exposure to any liability to account for it.
Illustration of this can be found in her realisation of capital assets in June 2008, March-April 2010 and June 2010; in her pattern of expenditure between mid-2008 and mid-2012; and in her approach to record-keeping.
In June 2008 the first defendant realised the sum of $442,183.15 from sales of securities made from the deceased’s Investment Portfolio.
In March-April 2010 the first defendant realised the sum of $377,610.00 in sales of securities made from the deceased’s Investment Portfolio.
In June 2010 the first defendant realised the sum of $400,159.12 from sale of the Emu Plains home unit of the deceased and herself.
In an affidavit sworn (on 13 July 2015) for the purpose of providing reconstructed estimates of income and expenditure the first defendant expressly recorded that she did not include estimates of pension money received by the deceased and herself, or interest received on term deposits. Even with broad, uncorroborated estimates of her expenditure, she professed herself unable to account for $58,655.00 of moneys received from asset sales.
Without independent corroboration her reconstructed accounts are not reliable. On her own admission, they are incomplete.
During the period she managed the deceased’s affairs as his enduring attorney (13 May 2008-17 May 2012) the first defendant’s pattern of expenditure (as summarised by her, without corroboration, in her affidavit sworn 13 July 2015) included substantial expenditure on jewellery, holidays, poker machines and other entertainment.
The payments made by the first defendant in June and July 2008, at the direction of the third and fourth defendants, for purchase of the Emu Plains residence in their names, using funds of the deceased, were made by way of a gift, not a loan by the first defendant to the third and fourth defendants as a means of diverting funds away from any prospective inheritance of the plaintiffs from the deceased’s estate. They were not made for the benefit of the deceased or in his interests.
The payments made by the first defendant in 2010, at the direction of the third and fourth defendants, for construction of a granny flat on the Emu Plains property, were likewise made by way of a gift by the first defendant to the third and fourth defendants, as a means of cutting out the plaintiffs, but with an expectation common to the first, third and fourth defendants that the first defendant would reside in the granny flat. The payments were not made for the benefit of the deceased or in his interests.
I am not satisfied that the first defendant expended any of her own funds in acquisition of the Emu Plains residence or construction of the granny flat. The funds she used were funds of the deceased. She used his funds without any authority to do so.

The First Defendant’s Failure to Account

During her period of ascendancy, in de facto management of the deceased’s affairs, on and after 13 May 2008, the first defendant appears to have eschewed record-keeping of any kind that might facilitate a chapter and verse review of her activities.
Where an accounting party fails to keep proper accounts, and thereby renders problematic any exercise of accounting by the Court, the Court generally proceeds on a presumption against that party, resolving doubtful questions against the party whose actions have made an accurate determination problematic: Houghton v Immer (No. 155) Pty Limited (1997) 44 NSWLR 46 at 59D, applying Armory vDelamirie (1722) 1 Stra 505; 93 ER 664. This principle may require moderation in its application to the facts of the particular case in order to serve the interests of justice; but, in a case in which an accounting party has deliberately put it out of the power of an adversary to obtain an accounting to which there is an entitlement, the accounting party cannot complain if the Court presumes the worst against him, her or it.
Pointing in the same direction is the principle that, where a fiduciary has mixed trust funds with his, her or its own so as to render identification impossible, the whole fund will be treated as trust property except so far as the fiduciary may be able to distinguish what is his, her or its own: Brady v Stapleton (1952) 88 CLR 322 at 336-337; Hospital Products Limited v United States Surgical Corporation (1984) 156 CLR 41 at 109-110; Warman International Limited v Dwyer (1995) 182 CLR 544 at 561-562; Cf, In the marriage of Wagstaff (1990) 14 Fam LR 78 at 86. The accounting party bears the onus of proving what, if any, part of a mixed fund is his, her or its own.
It is for the errant fiduciary to establish that it would be inequitable for the Court to make against the fiduciary an order for an account of the entire profits, gain or benefits derived by the fiduciary from a breach of fiduciary obligations: Warman International Limited v Dwyer (1995) 182 CLR 544 at 556-562, especially 559 and 561-562.
An application of these principles requires that the first defendant bear the onus of proving (which she has not done) that, insofar as the proceeds of the sale of the Emu Plains home unit funded the construction of her granny flat, that funding was provided by her (so that she might hold a personal, beneficial interest in her current residence) rather than by the deceased (on whose behalf she might be found, if she spent his share of the home unit sale proceeds on construction work, to hold whatever interest she may have in the land at Emu Plains registered in the names of the third and fourth defendants).
A need for flexibility in the application of a strict accounting standard is recognised in Countess of Bective v Federal Commissioner of Taxation (1932) 47 CLR 417 at 420-423 where, for example, a “guardian” and a person under the care of the guardian are members of the same household and care is provided on a day-to-day basis. Different considerations may apply to such a case than apply, for example, in a case such as the present where the guardian has placed the person under care in nursing home accommodation, guardian and patient occupy separate residences and the patient is not under the day-to-day care of the guardian.
What marks these examples out as potentially different is not necessarily membership of a single household or responsibility for the day-to-day care of an incapable person, but considerations of the purpose for which property is placed under the management of a fiduciary and whether the purpose has been fulfilled: Crossingham v Crossingham [2012] NSWSC 95 at [18] et seq, citing Countess of Bective, Jodrell v Jodrell (1851) 14 Beav 397; 51 ER 339, Brown v Smith (1878) 10 Ch D 377 and Clay v Clay (2001) 202 CLR 410 at 430.
The relaxed, purposive approach in Countess of Bective to the accounting obligations of a “guardian” can be applied to the first defendant as the deceased’s attorney and guardian (Downie v Langham [2017] NSWSC 113), but it does not operate retrospectively as a licence for the first defendant to disregard the deceased’s interests. Her appointment to fiduciary office was for the purpose of management of the deceased’s estate for his benefit, not for her own benefit, during his incapacity for self-management. Her dissipation of his property for her own benefit deprives her of any entitlement she might otherwise have had, by reference to Countess of Bective, to escape an order for an accounting: Woodward v Woodward [2015] NSWSC 1793 at [56].
In the absence of proper accounting records, the parties appear to have approached accounting questions: first, by recording in the aggregate the first defendant’s receipts from realisation of property of the deceased ($1,219,952.27, the sum of $442,183.15, $377,610.00 and $400,159.12); secondly, by allowing in favour of the first defendant one half of the proceeds of sale of the Emu Plains home unit ($200,079.56, one half of $400,159.12); and thirdly, by testing, so far as practicable, the veracity of the first defendant’s estimates of how it was that she expended the balance ($1,019,872.71), recognising that this process will not have brought to account interest that was, or ought to have been, earned on the deceased’s investments or his pension entitlements.
Accepting this methodology, rough though it is (Warman International Limited v Dwyer (1995) 182 CLR 544 at 556-557, 558 and 567), and for the time being leaving interest and pension entitlements unaccounted for, the first defendant has an obligation to account for not less than $1,019,872.71 of the deceased’s funds insofar as not applied for his benefit.
The first defendant’s expost facto rationalised, reconstructed estimates of expenditure provide no reliable basis for an assessment of the amount of money expended by her on the maintenance of, and care for, the deceased in the period between 13 May 2008 and 17 May 2012. On her own admission, she has not accounted for all of the property of the deceased under her management. She says she is unable to do better than she has done and, through current impecuniosity, she says she is unable from her own resources to make good any property of the deceased which she might be held liable to restore to his estate.
Unable to accept the veracity and reliability of her evidence, I conclude that any application by her of the property of the deceased towards his care and maintenance, or otherwise for his benefit, was de minimus, sufficiently covered by her failure to account for his pension entitlements and interest earned on bank deposits funded by his estate.
Having regard to the quantum of property involved in the first defendant’s dealings with the deceased’s property, and her failure to account for significant components of the deceased’s income, I am not satisfied that it is appropriate, in these proceedings, to bring to account against the deceased’s estate (or the plaintiffs) capital gains tax liabilities the first defendant says she paid, on the deceased’s account, from her sales of his assets, assuming that those payments can properly be characterised as having been made for his benefit.
All in all, the first defendant has not discharged the onus she bears to prove that she applied the deceased’s property for his benefit.
Furthermore, I am not satisfied that the first defendant used any of her own funds, as distinct from funds of the deceased, in acquisition of the Emu Plains residence or in construction of the granny flat on that property. I find that the property was acquired, and developed, using funds of the deceased which the first defendant was not authorised by the deceased to expend.
The financial circumstances of the first defendant are ostensibly such that, but for any interest she has in the Emu Plains residence, she has no resources to meet a judgment for the payment of compensation to the estate of the deceased.
Unless some allowance is to be made for the first defendant upon an exercise of the Court’s Protective Jurisdiction or by analogy with it (by reference to McLaughlin v The City Bank of Sydney (1912) 14 CLR 684 at 698-699, Theobald, The Law Relating to Lunacy (1924), chapters 52 and 65 and Protective Commissioner v D (2004) 60 NSWLR 513 at 540-542; C v W (No. 2) [2016] NSWSC 945 at [45]-[47], Downie v Langham [2017] NSWSC 113 or the like), there presently appears to be no basis upon which, in defining the unauthorised benefit for which the first defendant must be held liable to account to the estate of the deceased, there should be a “just allowance” made in her favour. There is no allowance that should be made by the deceased’s estate in favour of the first defendant simply on the footing that one who seeks equity should do equity: Meagher, Gummow & Lehane’s Equity: Doctrines and Remedies (5th ed, 2015), pages 185-186.

The first defendant’s liability to account

Unattended by any application to the Court or NCAT to grant her enhanced authority to deal with the deceased’s estate or to apply it for her own maintenance or benefit, the first defendant’s wilful breaches of fiduciary obligations owed by her to the deceased as his attorney (in combination with her inability to account for her management of his property, and her dissipation of it, for the benefit of herself and her side of the family), after the deceased’s full-time care was entrusted to a nursing home, stand in the way of any grant to her of relief dispensing, in whole or part, with her liability to account. She cannot reasonably be allowed such a dispensation, whether presented as an allowance for past care or maintenance or purely as relief against personal liability.
She cannot be found to have acted honestly or reasonably so as to warrant an order (upon an exercise of protective jurisdiction or under section 85 of the Trustee Act) that she ought fairly to be excused from personal liability for her misapplication of the deceased’s property.
Crystallisation of the plaintiffs’ entitlements under the Will of the deceased, on his death, provides a further obstacle to any dispensation in favour of the first defendant. She cannot be granted, or allowed, such a dispensation except at the expense of the plaintiffs. They cannot, in justice, be called upon to bear that burden in circumstances in which part of her object in dissipation of the deceased’s property, in breach of her fiduciary obligations, was to diminish, if not extinguish, their rights of inheritance.

The rule in Cherry v Boultbee

Notwithstanding any failure to account on the part of the first defendant, the defendants contend that, should the Court order that the defendants’ Emu Plains residence or any interest in it be restored to the estate of the deceased, the first defendant should enjoy a beneficial one half share in that property as a residuary beneficiary under the deceased’s Will.
However the rule in Cherry v Boultbee might be formulated (In the matter of Anglican Development Fund Diocese of Bathurst (Receivers and Managers Appointed) [2015] NSWSC 440 at [22]-[30]; SR Derham, Setoff (Oxford, 1987), Chapter 9; PW Young, C Croft and ML Smith, On Equity (Law Book Co, Sydney 2009), paragraphs [15.560]-[15.600]), the first defendant cannot, in conscience, participate in the deceased’s residuary estate unless and until she has fulfilled her duty to restore property to the estate or borne the financial consequences of her failure to do so.
Given her professed inability to restore to the estate property which she diverted from the estate for her own purposes, and the quantum of her liability to the estate, the practical effect of an application of the rule in Cherry v Boultbee appears (upon an assumption that no executorial duties attend administration of the deceased’s estate after recovery of the Emu Plains residence on behalf of the estate) to be that, if and to the extent that the defendants’ Emu Plains residence is held beneficially for the estate of the deceased, it will be held for the plaintiffs, as tenants in common in equal shares, to the exclusion of the first defendant. Any entitlement she has to participation in the deceased’s estate as a residuary beneficiary will be taken, upon an application of the rule in Cherry v Boultbee, to have been satisfied from that part of the deceased’s estate for which she has not, and says she cannot, account.

Remedies : Provisional Observations

Prima facie, the first defendant’s obligation as a defaulting fiduciary is to restore the deceased’s estate: Re Dawson (Deceased) [1966] 2 NSWR 211; 84 WN (Pt 1) (NSW) 399; Maguire v Makaronis (1997) 188 CLR 449 at 461; Youyang Pty Limited v Minter Ellison Morris Fletcher (2003) 212 CLR 484.
Before making a determination about what is required, by way of equitable relief, to do what is “practically just” between the parties (Vadasz v Pioneer Concrete (SA) Pty Limited (1995) 184 CLR 102 at 113-114; Bridgewater v Leahy (1998) 194 CLR 457 at 493-494), attention needs to be given to the position of the third and fourth defendants.

THE THIRD AND FOURTH DEFENDANTS: RECEIPT OF TRUST PROPERTY AS VOLUNTEERS, KNOWLEDGE, REMEDIES

In June-July 2008 the third and fourth defendants received from the first defendant, by way of gift, a combination of bank and private cheques, using funds of the deceased (which the first plaintiff was not authorised by the deceased to expend), to pay for the whole of the cost of acquisition of the Emu Plains residence in the names of the third and fourth defendants.
The third defendant knew that the first defendant had no financial means of her own (other than a pension) and that the deceased had maintained her financially. She knew that the first defendant had agreed to fund, and had funded, the whole of the purchase price, an amount beyond the first defendant’s personal resources. She was present when, at the request of the conveyancer who acted on the purchase, the first defendant drew cheques on the Macquarie Bank “Portfolio Account” of the deceased in anticipation of settlement of the purchase. She knew that the deceased was transitioning from hospital to nursing home accommodation, no longer capable of independent living. She had a close relationship with the first defendant as her mother and imagined herself in the role of a carer for her mother. A fair inference from the facts is that the third defendant shared the first defendant’s belief, that, the deceased having been consigned to a nursing home, the first defendant, as his wife, was morally entitled to treat his property as her own without consultation with him.
In this factual setting the third defendant must be taken, at least, to have had knowledge of circumstances which would indicate to an honest and reasonable person that the first defendant was using funds of the deceased without the deceased’s authority in circumstances in which he was incapable of authorising any such usage. If and to the extent that the third defendant did not have actual knowledge that the first defendant was using the deceased’s funds without authority, she wilfully and recklessly failed to make inquiries which an honest and reasonable person would have made.

The evidence stops short of support for a finding that the third defendant had actual knowledge of the first defendant’s unauthorised use of the deceased’s funds. However it supports a finding (which I make) that she had constructive knowledge.
The fourth defendant also had constructive knowledge of the first defendant’s unauthorised use of the deceased’s funds, for much the same reasons. However, his evidence (involving calculated denials) bears the character of wilful blindness, a deliberate shutting of his eyes to the obvious. If he did not have actual knowledge of the first defendant’s unauthorised use of the deceased’s funds, it may have been because he deliberately eschewed that knowledge.
He was not at the office of the conveyancer when the first defendant drew settlement cheques on the deceased’s Macquarie Bank “Portfolio Account” in anticipation of settlement of the purchase of the Emu Plains residence. However, he knew that the first defendant had agreed to fund, and purportedly funded, the whole of the purchase price of the property. He knew, or had the means of knowledge readily to hand, that the first defendant had no financial means of own (other than a pension) and that she had been maintained by the deceased. He knew that the deceased was transitioning from hospital to nursing home accommodation, and was no longer capable of independent living. He was, as he remains, on close terms with the first defendant as his mother-in-law, as he is with the third defendant as his wife. His knowledge of the personal circumstances of the first defendant and the deceased was, in substance, no less than that of the third defendant.
An ordinary person in the position of the third and fourth defendants could not have failed to recognise impropriety in the first defendant’s disposition of a substantial amount of the deceased’s property, whether by way of gift or unsecured interest-free loans, without reference to the deceased as he, enfeebled by dementia, transitioned to full-time care in nursing home accommodation.
As volunteers, with constructive notice of the first defendant’s unauthorised use of the deceased’s funds and her breach of fiduciary obligations giving rise to a constructive trust over those funds (Keith Heney & Co Pty Limited v Stuart Walker & Co Pty Limited (1958) 100 CLR 342 at 350; Chan v Zachara (1984) 154 CLR 178 at 198-199; Hospital Products Limited v United States Surgical Corp (1984) 156 CLR 41 at 107-108), the third and fourth defendants are bound in conscience to recognise the deceased’s estate’s equitable entitlement to those funds (Black v S Freedman & Co (1910) 12 CLR 105 at 109 and 110; F Jordan, Chapters on Equity in NSW (6th ed, 1947), pages 65-67).
As they had constructive notice of the deceased’s beneficial entitlement to the funds at the time of their receipt of the funds (before settlement of their purchase and their registration as proprietors of the Emu Plains property, section 42 of the Real Property Act (if pleaded) would not operate to confer an indefeasible title upon them upon registration, to the exclusion of their in personam equitable obligation to the estate of the deceased: Sze Tu v Lowe (2014) 89 NSWLR 317 at 345[141] - 346 [150] and 361[238]-[243]; Fistar v Riverwood Legion and Community Club Limited (2016) 91 NSWLR 732 at 746[64] and 749[82].
The third and fourth defendants’ liability to the estate of the deceased in equity is essentially the same, in the present factual setting, whether the claim made by the plaintiffs on behalf of the estate is articulated by reference to Black v Freedman (1910) 12 CLR 105 or the first limb of Barnes v Addy (1874) LR 9 Ch App 244. As recipients of trust property (otherwise than as bona fide purchasers for value without notice), they were, and are, bound in conscience to account for that property, not to apply it to their own use: Fistar (2016) 91 NSWLR 732 at 742[44]-[45].

REMEDY

Having made findings as to liability, I propose to allow the parties an opportunity to make further submissions about a remedial response, with such assistance as may be available in the provisional observations which here follow.
The Court is required to do what is practically just in the grant of equitable relief to the plaintiffs: Vadasz v Pioneer Concrete (SA) Pty Limited (1995) 184 CLR 102 at 113-114. Once the Court has determined upon the existence of a necessary equity to attract relief, its moulding of relief may produce a final result not exactly representing what either side would have wished, balancing competing interests to justice: Bridgewater v Leahy (1998) 194 CLR 457 at 494.
The object of the Court’s orders enforcing obligations to account is not to punish the defendants, but to prevent their unjust enrichment at the expense of the deceased’s estate, approaching that task with due regard to substance over form: Dart Industries Inc. v The Décor Corporation Pty Limited (1993) 179 CLR 101 at 111 and 114.
All things considered, I am inclined to the view that the first defendant’s liability to account should be quantified in the sum of $1,019,872.71, with interest to accrue from a date no later than the date of the deceased’s death (17 May 2012) at the Court’s usual rates for pre-judgment interest, calculated by reference to the Civil Procedure Act 2005 NSW, section 100. Prima facie, interest should accrue from the dates of particular asset sales in 2008 and 2010, compensating the deceased’s estate for being kept out of funds consequent upon those sales. Section 100 does not authorise an award of compound interest. As presently advised, there appears to be no occasion to resort to independent, equitable jurisdiction to award compound interest; cf, Hungerfords v Walker (1990) 171 CLR 125 at 148; Commonwealth v SCI Operations Pty Limited (1998) 192 CLR 285 at 316.
This quantification may fall short of what the first defendant might be compelled to do if, by deployment of compulsory processes, additional factual inquiries were to be made. However, there appears to be little utility in insisting upon such inquiries in circumstances in which the evidence before the Court is that, absent a lottery win, the first defendant cannot, from her own resources, restore to the deceased’s estate anything more than a nominal amount of the property she misapplied in the period between 2008-2012.
To the extent that quantification of the first defendant’s liability to account at $1,019,872.71 (plus interest) falls short of what might be required of her, the difference may be justified as a margin for error in the Court’s determination that she failed to establish that she had misapplied property of the deceased for his benefit.
The primary focus of the parties on a remedial response to the first defendant’s misapplication of the deceased’s property is upon beneficial entitlements to the defendants’ Emu Plains residence. It provides the only known “fund” against which the plaintiffs can enforce a proprietary remedy.
To the extent that property of the deceased, misapplied by the first defendant in breach of her fiduciary obligations, can be traced into the Emu Plains residence, the first defendant’s liability to account is enforceable by way of a constructive trust in favour of the deceased’s estate over the residence.
The deceased’s property is readily traceable into the residence, purchased as it was with funds paid to the third and fourth defendants by the first defendant in breach of her obligations. As they received those funds as volunteers, and with constructive notice of the first defendant’s breach of duty, the third and fourth defendants have no defence to the estate’s claim that they hold their interest in the residence on trust; they did not acquire their title to the residence as bona fide purchasers for value without notice.
They should, however, be allowed an opportunity to claim an allowance for any capital improvement they have effected to the property with their own funds: Cf, In the marriage of Wagstaff (1990) 14 Fam LR 78 at 86.
Counterbalancing allowances may need to be made relating to the defendants’ use, occupation and maintenance of the residence, together with orders for delivery up of possession, and sale, of the property. All this lies in the realm of “consequential relief”, predicated on a declaration, or declarations, of right.
Prima facie, the estate of the deceased (represented by the plaintiffs in their derivative suit, with the deceased’s executor, the second defendant, bound as a party to the proceedings) is entitled to a declaration that the Emu Plains residence is held on trust for the estate, with consequential relief designed to vest title to the land in the estate or perhaps, in circumstances in which the estate has been administered, the beneficiaries of the deceased entitled to it.
It is open to the Court to mould the relief to be granted in these proceedings without requiring that there be a separate administration suit to accommodate the fact that property recovered from the defendants is recovered by the plaintiffs, in the first instance, on behalf of the estate of the deceased; and on behalf of themselves personally, as beneficiaries of the estate, only after due consideration is given to what is required to finalise administration of the estate.
The proceedings having been conducted on the basis that: (a) the deceased’s estate is, in substance, devoid of property save for what might be recoverable against the defendants in the proceedings; and (b) the only beneficiaries of the deceased with an interest in the estate so far as it has not been distributed are the plaintiffs and the first defendant as residuary beneficiaries, the operation of the rule in Cherry v Boultbee may work out as follows:

as residuary beneficiaries in the estate of the deceased (each with a one quarter share), the plaintiffs should be found beneficially entitled, as tenants in common in equal shares, to the Emu Plains residence, with little or no further recourse against the estate of the deceased in equity; and

as a residuary beneficiary of the deceased (with an entitlement to a one half share in the residue), the first defendant’s share in the residue should be taken to have been satisfied from the property of the deceased which she has misapplied and not accounted for.

The arithmetic underlying this conclusion is imprecise but it may be near enough to correct to meet the justice of the case. The Emu Plains residence was purchased, with the deceased’s funds, in 2008 for $347,500.00. In 2010, the first defendant applied a further $124,000.00 of the deceased’s funds in the construction of her granny flat. With fit-out costs on top of the $124,000.00 paid to a builder, she says that she spent about $200,000.00 in total. Not all of that larger sum represented the acquisition of a capital asset, the real property presently available for distribution to the plaintiffs. Leaving aside any change in the value of the land, in historical cost terms the amount of the deceased’s funds “invested” in the land is somewhere between $471,500.00 ($347,500.00 plus $124,000.00) and $547,500.00 ($347,500.00 plus $200,000.00).
This is, or may be, near enough to one half of the amount for which the first defendant must be held liable to account ($1,019,872.71 plus interest).
I do not propose to act upon any such calculations without allowing the parties an opportunity to make submissions about the form of orders to be made in final disposition of the proceedings. However, they are indicative of my preliminary assessment of what orders might reasonably be made.
There is no utility in a close examination of the plaintiffs’ claims for family provision relief, under chapter 3 of the Succession Act 2006 NSW, in circumstances in which there is, for all practical purposes, no estate or notional estate against which an order for provision can be made. The family provision claims should be formally dismissed.
Prima facie, with costs following the event, the first, third and fourth defendants should pay the plaintiffs’ costs of the proceedings, with an allowance referable to the plaintiffs’ failed claim against the second defendant.
Having published these reasons for judgment, I propose to direct that the plaintiffs bring in short minutes of orders designed to give effect to them and, via that process, to allow each party to be heard on orders to be made. If further inquiries must be made, directions can be given for that purpose.

ADDENDUM (23 May 2017)

Having allowed the parties an opportunity to make further submissions, on 23 May 2017 Lindsay J made the following orders in final disposition of the proceedings:

DECLARE that the first defendant is indebted to the Estate of Ronald James Smith (“the deceased”) in the sum of $1,602,595.81, representing:

a principal sum of $1,019,872.71; plus

an award of interest under section 100 of the Civil Procedure Act 2005 NSW in the sum of $582,723.16.

ORDER that the first defendant pay the sum of $1,602,595.81 to the second defendant as the legal personal representative of the deceased.

ORDER, pursuant to section 101 of the Civil Procedure Act 2005, that interest accrue on that sum ($1,602,595.81), or any unpaid balance of that sum, from 1 August 2017 if not earlier paid.

DECLARE that each of the first defendant, the third defendant and the fourth defendant holds on trust for the estate of the deceased any right, title or interest he or she has in the property (contained in Folio Identifier 32/708555) known as 85 Brougham Street, Emu Plains in the State of New South Wales (“the land”).

ORDER that the land vest in the second defendant as legal personal representative of the deceased.

ORDER that the first defendant, the third defendant and the fourth defendant, no later than 1 August 2017, deliver up vacant possession of the land to the second defendant as the legal personal representative of the deceased.

ORDER, subject to further order, that the second defendant, as legal personal representative of the deceased, sell the land by public auction.

ORDER, subject to these orders and to any further order of the Court, that the proceeds of sale of the land be applied as follows:

first, in payment of the costs of sale of the land;

secondly, in reduction of the indebtedness of the first defendant to the estate of the deceased; and

thirdly, in distribution of the estate of the deceased to those beneficially entitled thereto under the Will of the deceased dated 8 January 2008.

ORDER that the solicitors for the defendants (Low Doherty & Stratford), no later than 30 May 2017, pay to the second defendant, as the legal personal representative of the defendant, all funds held by them being property of the estate of the deceased.

DECLARE that the first defendant is not entitled to participate as a beneficiary in any distribution of the estate of the deceased unless and until she pays or allows to the estate the full amount of her indebtedness to the estate.

RESERVE to all parties liberty to apply for directions concerning the implementation or working out of these orders.

ORDER that the first defendant, the third defendant and the fourth defendant jointly and severally, pay all costs associated with preparation of the Report of Mr Carl Dumbrell of DFK Laurence Varnay dated 20 May 2015.

RESERVE to Mr Carl Dumbrell liberty to apply for orders for the payment of his costs by the plaintiffs in the event that those costs are not paid by the first defendant, the third defendant and the fourth defendant.

ORDER that the first defendant, the third defendant and the fourth defendant, jointly and severally, pay the plaintiffs’ costs of these proceedings, on the ordinary basis until 4 October 2013 and on the indemnity basis thereafter.

ORDER that the plaintiffs pay the second defendant’s costs of these proceedings.

RESERVE to the second defendant liberty to apply for orders for the payment out of the estate of the deceased of his costs or commission.

ORDER that exhibits and subpoenaed material may be returned forthwith; any exhibits returned must be retained intact by the party or person that produced the material until the expiry of the time to file an appeal, or until any appeal has been determined.

ORDER that these orders be entered forthwith.

**********

Amendments

18 April 2017 - Coversheet, Solicitors for the Plaintiffs changed from Andreyev Doman to Andreyev Lawyers.

Para. 61 Griffiths CJ changed to Griffith CJ; Isaccs J changed to Isaacs J.

Para 64 Isaccs J changed to Isaacs J.

Para 65 the SJ Stoljar changed to SJ Stoljar

Para 91(b) nswsc 1187 changed to NSWSC 1187

Para 469 Baultbee changed to Boultbee.

23 May 2017 - Addendum (23 May 2017)

Orders.

Decision last updated: 23 May 2017

Medium Neutral Citation:	Smith v Smith [2017] NSWSC 408
Hearing dates:	24, 25 and 26 November 2015; 2 and 3 February 2016; and written submissions culminating in written submissions dated 1 December 2016
Decision date:	13 April 2017
Jurisdiction:	Equity
Before:	Lindsay J
Decision:	Subject to allowing the parties an opportunity to be heard as to orders to be made: (1) The First Defendant (the holder of an enduring power of attorney on behalf of her husband, an incapable person, now deceased) held liable to account to the estate of the deceased for her mismanagement of his property in breach of fiduciary obligations. (2) The second defendant (executor of the deceased’s estate) held not liable, in devastavit, for wilful default in performance of his duties, for a failure or refusal to institute proceedings against the first, third and fourth defendants. (3) Declaration to be made that the first, third and fourth defendants hold on trust for the estate of the deceased (prima facie, for the benefit of the plaintiffs as beneficiaries of the estate) property acquired by them in the names of the third and fourth defendants, using funds of the deceased applied by the first defendant in breach of fiduciary obligations she owed to the deceased as his attorney (4) Further consideration to be given to questions of remedy, and consequential relief, to be granted.
Catchwords:	FIDUCIARY DUTIES — Scope of power of attorney – Absence of authority to give gifts or to confer benefits on others– Attorney bound to act in best interests of principal without unauthorised personal benefits – Attorney bound to act within limits of authority as defined by instrument of appointment. EQUITY — Equitable remedies — Accounts and inquiries — Whether enduring attorney of incapacitated person should be ordered to account to his deceased estate — Whether attorney acting under power of attorney after the principal has become incapable has any, and if so what, obligation to account. EQUITABLE DEFENCES – Laches and acquiescence – Management of incapable person’s estate — Obligation of enduring attorney to account — Failure to apply for management orders to clarify limits of authority — No defence to order for account where attorney fails to confirm own authority and actively delays and dissuades enquiries. PROTECTIVE JURISDICTION — Law of agency – Enduring power of attorney.
Legislation Cited:	Civil Procedure Act 2005 NSW Conveyancing Act 1919 NSW Evidence Act 1995 NSW Guardianship Act 1987 NSW Law Reform (Miscellaneous Provisions) Act 1944 NSW Married Persons (Equality of Status) Act 1996 NSW Married Persons (Property and Torts) Act 1901 NSW Trustee and Guardian Act 2009 NSW Powers of Attorney Act 2003 NSW Probate and Administration Act 1898 NSW Real Property Act 1900 NSW Relationships Register Act 2010 NSW Supreme Court Act 1970 NSW Succession Act 2006 NSW Uniform Civil Procedure Rules 2005 NSW
Cases Cited:	Abela v Public Trustee [1983] 1 NSWLR 308 Angelina Spina v Permanent Custodians Limited [2008] NSWSC 561 Armory v Delamirie (1722) 1 Stra 505; 93 ER 664. Ashton v Pratt (No 2) [2012] NSWRSC 3 Balfour v Balfour [1919] 2 KB 571 Barnes v Addy (1874) 9 Ch App 244 Bird v Bird (No 4) [2012] NSWSC 648 Black v S Freedman & Co (1910) 12 CLR 105 Brady v Stapleton (1952) 88 CLR 322 Bridgewater v Leah (1998) 194 CLR 457 Briginshaw v Briginshaw (1938) 60 CLR 336 Brown v Smith (1878) 10 Ch D 377 Bryson v Bryant (1992) 29 NSWLR 188 Byrnes v Kendle (2011) 243 CLR 253 C v W (No. 2) [2016] NSWSC 945 Chan v Zachara (1984) 154 CLR 178 City Bank of Sydney v McLaughlin (1909) 9 CLR 615 Clay v Clay (2001) 202 CLR 410 Commonwealth v SCI Operations Pty Limited (1998) 192 CLR 285 Consul Development Pty Limited v DPC Estates Pty Limited (1975) 132 CLR 373 Corin v Patton (1990) 169 CLR 540 Coshott v Sakic (1998) 44 NSWLR 667 Countess of Bective v Federal Commissioner of Taxation (1932) 47 CLR 417 Crescendo Management Pty Limited v Westpac Banking Corporation (1988) 19 NSWLR 40 Crossingham v Crossingham [2012] NSWSC 95 Daily Telegraph Newspaper Co. Limited v McLaughlin (1904) 1 CLR 479 Darnanin v Cowan [2010] NSWRSC 1118 Dart Industries Inc. v The Décor Corporation Pty Limited (1993) 179 CLR 101 Downie v Langham [2017] NSWSC 113 Drew v Nunn (1879) 4 QBD661 at 665-666 Edward v Cheyne (No 2) (1888) 13 App Cas 371 Estate Polykarpou; re a Charity [2016] NSWSC 409 Farah Constructions Pty Limited v Say-Dee Pty Limited (2007) 230 CLR 89 Fistar v Riverwood Legion and Community Club Limited (2016) 91 NSWLR 732 at 746 Gibbons v Wright (1954) 91 CLR 423 Ghosn v Principle Focus Pty Limited (No. 2) [2008] VSC 574 Hawksford v Hawksford [2005] NSWSC 463 Helou v Nguyen (with Addendum) [2014] NSWSC 22 Heperu Pty Ltd v Belle (2009) 76 NSWLR 230 Hepworth v Hepworth (1963) 110 CLR 309 Hoddinott v Hoddinott [1949] 2 KB 406 Hospital Products Limited v United States Surgical Corporation (1984) 156 CLR 41 Houghton v Immer (No. 155) Pty Limited (1997) 44 NSWLR 46 Hungerfords v Walker (1990) 171 CLR 125 at 148 In re Allingham [1932] VLR 469 In the marriage of Wagstaff (1990) 14 Fam LR 78 In the matter of Anglican Development Fund Diocese of Bathurst (Receivers and Managers Appointed) [2015] NSWSC 440 at [22]-[30] Keith Heney & Co Pty Limited v Stuart Walker & Co Pty Limited (1958) 100 CLR 342 Lamru Pty Ltd v Kation Pty Ltd (1998) 44 NSWLR 432 Maguire v Makaronis (1997) 188 CLR 449 Marshall v Crutwell (1875) LR 20 EQ 328 McLaughlin v Daily Telegraph Newspaper Co. Limited (1904) 1 CLR 243 McLaughlin v Fosbery (1904) 1 CLR 546 McLaughlin v Freehill (1908) 5 CLR 858 McLaughlin v the City Bank of Sydney (1912) 14 CLR 684 O’Malley v The Public Trustee [1956] VLR 194 Orr v Ford (1989) 167 clr 316 AT 337-341; (1989) 167 CLR 316 at 337-341 Plunkett v Bull (1915) 19 CLR 544 Pollard v Wilson [2010] NSWCA 68 Protective Commissioner v D (2004) 60 NSWLR 513 R v Heyde (1990) 20 NSWLR 234 Ramage v Waclaw (1988) 12 NSWLR 84 Rasmanis v Jurewitch (1969) 70 SR (NSW) 407 Raso v NRMA Insurance Limited (Court of Appeal, 14 December 1992, unreported) BC 9201418 Re Atkinson, deceased [1971] VR 612 Re Dawson (Deceased) [1966] 2 NSWR 211; 84 WN (Pt 1) (NSW) 399 Re Eve [1986] 2 SCR 388 at 408; (1986) 31 DLR (4th) 1 Richardson v Gill (1997) 141 FLR 314 Ronald Allen Smith and Anor v Joyce Smith and Ors [2014] NSWSC 582 Russell v Scott (1936) 55 CLR 440 Scott v Scott [2009) NSWSC 567 Secretary, Department of Health and Community Services v JWB and SMB (Marion’s Case) (1992) 175 CLR 218 Sprott v Harper [2000] QCA 391 Steinberg v Federal Commissioner of Taxation (1975) 134 CLR 640 Sze Tu v Lowe (2014) 89 NSWLR 317 Szozda v Szozda [2010] NSWSC 804 at [40] Taheri v Vitek (2014) 87 NSWLR 403 at 425 The City Bank of Sydney v McLaughlin (1909) 9 CLR 615 The Trustees of the Property of Cummins v Cummins ( 2006) 227 CLR 278 Vadasz v Pioneer Concrete (SA) Pty Limited (1995) 184 CLR 102 Warman International Limited v Dwyer (1995) 182 CLR 544 Williams v Hensman (1861) 1 J&H 546 Woodward v Woodward [2015] NSWSC 1793 Youyang Pty Limited v Minter Ellison Morris Fletcher (2003) 212 CLR 484
Texts Cited:	A L Tyree Banking Law in Australia (LexisNexis Butterworths, Australia, 8th ed, 2014), paragraph [4.7.2] Australian Law Reform Commission, Matrimonial Property, Report No 39 (1987), recommendation 24 and paragraphs 53 and 508 BA Helmore, The Law of Real Property in New South Wales (2nd ed, Law Book Co, Australia, 1966), pages 267-268 GE Dal Pont, Powers of Attorney (Lexis Nexis Butterworths, Australia, 2nd ed, 2015), [8.31]-[8.44] and [8.48]-[8.58] GE Dal Pont and KF Mackie, Law of Succession (Lexis Nexis Butterworths, Australia 2013), paragraph [1.4] F Jordan, Chapters on Equity in NSW (6th ed, 1947), pages 65-67 HS Theobald, The Law Relating to Lunacy (Stevens and Sons, London, 1924) LI Rotman, Fiduciary Law (Thomson, Canada, 2005), page 729 Meagher, Gummow & Lehane’s Equity: Doctrines and Remedies (5th ed, 2015), pages 185-186 PW Young, C Croft and ML Smith, On Equity (Law Book Co, Sydney 2009), paragraphs [15.560]-[15.600]) Paper published by Rosalind Atherton as chapter 11 in Diane Kirkby (Ed), Sex, Power and Justice: Historical Perspectives of Law in Australia (Oxford University Press, 1995) at page 168 P Butt, Land Law 6th ed, Law Book Co., 2010), paragraph [1472] Paget’s Law of Banking (LexisNexis, UK, 14th ed, 2014), paragraph [5.21] PW Young, C Croft and ML Smith, On Equity (Law Book Co, Australia, 2009), paragraphs [6.890] and [6.910] Report on powers of attorney (LRC 18, August 1974) Report on powers of attorney and unsoundness of body or mind (LRC 20, February 1975) RS Geddes, CJ Rowland and P Studdert, Wills, Probate and Administration in NSW (LBC, Sydney, 1996), paragraphs [3.01]-[3.03] and [3.05] Shakespeare, As You Like It, Act II Scene vii S J Stoljar in The Law of Agency: Its History and Present Principles (Sweet and Maxwell, London, 1961) chapter 7 SR Derham, Setoff (Oxford, 1987), Chapter 9 The Law relating to Lunacy (Stevens & Sons, London, 1924), page 380 Weerasooria’s Banking Law and the Financial System in Australia (LexisNexis Butterworths, Australia, 6th ed, 2006), paragraphs [21.95]-[21.97]
Category:	Principal judgment
Parties:	First Plaintiff: Ronald Allen Smith Second Plaintiff: Neville Roland Smith First Defendant: Joyce (Joy) Smith Second Defendant: Michael Bingham (Executor) Third Defendant: Rosemary Ann Danby Fourth Defendant: Derek George Danby
Representation:	Counsel: Plaintiffs: A Bulley Defendants: J Mitchell Solicitors: Plaintiffs: Andreyev Lawyers Defendants: Low Doherty & Stratford Solicitors
File Number(s):	2012/00276891