NSW Civil and Administrative Tribunal New South Wales Medium Neutral Citation: EZG [2021] NSWCATGD 6 Hearing dates: 6 May 2021 Date of orders: 20 May 2021 Decision date: 20 May 2021 Jurisdiction: Guardianship Division Before: A D Suthers, Principal Member Associate Professor C Willcox, Senior Member (Professional) A D Wannan, General Member (Community) Decision: (1) The Tribunal approves the attorney of EZG, namely QBF, conferring a benefit on SYD, in the form of a loan of up to $1m, on terms as outlined in the affidavit of QBF of 12 April 2021. (2) Grant liberty to the parties to apply, for clarification of Order 1, as required. Catchwords: POWER OF ATTORNEY – advice or directions to attorney – s 38 Powers of Attorney Act – appropriate considerations Legislation Cited: Conveyancing Act 1919 (NSW) Guardianship Act 1987 (NSW), s 4 Powers of Attorney Act 2003 (NSW), ss 7-13 19, 20, 26, 27(1), 33(1)-(2), 33(4), 35(1)(a), 36(4), 36(4)(a), 38, 38(2), 38(2)(a), 38(2)(c), Sch 3 cls 1-3, Pt 5 Powers of Attorney Regulation 2016 (NSW), Sch 2 Cases Cited: Application of Forwood [2020] NSWSC 1413 P v NSW Trustee and Guardian [2015] NSWSC 579 QFC (No 3) [2020] NSWCATGD 24 Texts Cited: Nil Category: Principal judgment Parties: EZG, Principal QBF, Attorney SYD, joined as a party The NSW Trustee and Guardian Representation: Solicitors: Makison d'Apice lawyers, for QBF File Number(s): 2020/00229447 Publication restriction: Decisions of the Guardianship Division of the Civil and Administrative Tribunal have been anonymised to remove any information that may identify any person involved in the Tribunal's proceedings: Civil and Administrative Tribunal Act 2013 (NSW), s 65. REASONS FOR DECISION Summary 1. An attorney, particularly when acting for a principal who has lost the ability to oversee financial decisions made on their behalf, owes a strict fiduciary obligation to their principal, to make decisions in the way contemplated by the principal when they gave the power, and otherwise in the principal's interests. 2. Where a principal allows an attorney to provide for the maintenance or advancement of others, a tension may arise in the mind of the attorney, as to how best to strike a balance between the competing considerations relevant to decisions they may need to make in the exercise of their authority. 3. Section 38 of the Powers of Attorney Act 2003 (NSW) ("the Act") provides for an attorney to seek the advice or direction of the Tribunal (through its Guardianship Division), or the Supreme Court, in respect of those decisions. An attorney who acts within the bounds of the decision of that review body is immune from suit in acting or omitting to act, in good faith, in compliance with the decision. 4. Commonly, applications of that nature have been made to the Supreme Court. This application concerns the first such formal application that has come to the Tribunal which we are aware of. Background and summary of evidence 1. The facts of the matter, which are undisputed, are outlined in the affidavit of the applicant, dated 13 October 2020, and filed in support of the application. 2. EZG lives in a specialist dementia care unit at a residential aged care facility in Inner-City Sydney, NSW. He was initially admitted to low-level care at an aged care facility on 20 August 2019, and then to the secure dementia unit on 3 September 2020. Prior to his admission to the aged care facility, he lived in an apartment he owned at [Address removed for publication.] ("the Residence"). 3. According to a report by Dr Z, EZG's treating neurologist, EZG has moderately severe dementia related to Parkinson's disease which Dr Z describes as "difficult to control". EZG is Human Immunodeficiency Virus ("HIV") positive, which according to Dr Z has exacerbated the effects of both the Parkinson's disease and Parkinson's-related dementia. Dr Z's opinion is that EZG is "completely dependent on others for all aspects of daily living", and that, as a result of his conditions, EZG has a limited life expectancy of about one to two years from the date of report in September 2020. 4. SYD is EZG's former de facto partner. The pair were in a de facto relationship from 1981 to 2016, and remain very close. Upon EZG's admission to the aged care facility, SYD took up residence in the Residence to care for EZG's two dogs. 5. On 20 August 2019, EZG appointed QBF, a solicitor and the applicant in this matter, as his attorney under an enduring power of attorney ("the Enduring Power of Attorney"). On the same day, EZG appointed SYD and QBF as his joint enduring guardians. In his affidavit of 13 October 2020, QBF describes his relationship with EZG, and that of EZG with SYD: 4 I have known [EZG] since in or around 2015. Prior to and since my appointment as his attorney, I have had many meetings with [EZG]. From my discussions with [EZG] during those meetings he has frequently said [SYD] is an important part of his life and that [SYD] provides him with support. 5 [SYD] is [EZG]'s former de facto partner. They were in a relationship from 1981 to 2016. … 13 After [EZG] moved into the [aged care facility], [SYD] had, and continues to have, regular contact with [EZG]. Until the outbreak of COVID-19 and periods of lockdown at the [aged care facility] it was daily. During periods of lockdown at the [aged care facility] and restricted visiting [SYD] spoke on the phone to [EZG] on most days. As visiting restrictions relax, [SYD] is visiting [EZG] weekly and intends to increase his visits. [SYD] transports [EZG] to medical appointments and purchases [EZG]'s items of clothing where required. 14 The firm I am employed by, Makinson d'Apice Lawyers, holds a Will executed by [EZG] dated 3 July 2015. Under the Will, [SYD] is the sole beneficiary. 1. Among other things, the Enduring Power of Attorney gives the following power to QBF in his role as attorney: 2. Powers … I authorise my attorneys to confer benefits on the following persons to meet their reasonable living and medical expenses as provided by Section 13(2) of the Powers of Attorney Act 2003: [SYD] 1. QBF's affidavit of 13 October 2020 also describes SYD indicating to him that EZG may have executed another will in 2019. EZG since denied that to QBF; however, QBF was unable to ascertain the truth of that denial given EZG's dementia and a lack of independent information. 2. SYD continued to live in the Residence until around the time QBF, acting in his role as attorney for EZG, listed the property for sale in February 2020. QBF said the Residence was subsequently sold according to financial advice in order to pay for the refundable accommodation deposit at the aged care facility. 3. EZG has a considerable estate. In a letter dated 2 March 2021, EZG's financial advisor, Mr Y of a financial company, indicates that EZG's net financial position is $3,833,930.00, including: 1. Monies retained in superannuation, $1,510,430.00; 2. The net value of a Company whose shares are held by EZG, $780,890.00; and 3. Other funds held by EZG, $1,542,610.00. 1. Mr Y also opines that, having undertaken an assessment of the likely income and expenses for EZG moving forward, EZG can comfortably afford his need for ongoing care and that "[he] estimate[s] that a loan of $1million to [SYD] should not impact the ability for [EZG] to meet his ongoing expenditure requirements. 2. All of the above serves as relevant background to the real issues before us. QBF describes in his affidavit a conversation he had with SYD from October 2019 to February 2020, to the effect that SYD was seeking accommodation in an area near to the Residence for himself and EZG's two dogs so that he could remain in the area he had lived in for many years, and so that he could be near to EZG at the aged care facility. 3. SYD told QBF his current accommodation did not permit dogs and was too small for him and the two dogs. QBF told SYD he would need to consider whether he had the power to make some provision to SYD from EZG's estate, and that he may need to approach the Tribunal for guidance. Subsequently, QBF formed an intention to confer a benefit on SYD to meet his reasonable living expenses, first through paying rent on a unit let in SYD's name but later through making an interest free loan to SYD from EZG's estate. 4. On 1 September 2020, when QBF asked EZG for his view about the application, EZG could not provide a coherent response. QBF says in his affidavit that when he went to visit EZG, EZG immediately recognised him, and they had a conversation to the effect that EZG remembered SYD, but that EZG talked about issues unrelated to the application and was at times incoherent. The application and questions raised 1. On 6 August 2020, QBF, through his solicitor Ms Goodwin, lodged an application seeking the advice of the Tribunal under s 38 of the Act about whether it would be appropriate, and consistent with his duties as attorney for EZG, for him to: 1. Loan a portion of EZG's estate to SYD to enable SYD to purchase a property to reside in; or alternatively, 2. Pay for alternate rental accommodation for SYD out of EZG's estate. 1. Essentially, the application sought the Tribunal's approval of either proposed act, so as to avoid any question about their appropriateness arising at a later stage. 2. The matter was managed through several aborted hearings and directions hearings in the Division. During that process, SYD was joined as a party and QBF was granted leave to be legally represented. 3. While the application initially sought advice in relation to both proposed acts, QBF settled on the view that what he proposed was to make an interest and repayment free loan to SYD from EZG's estate, on certain specified conditions. 4. QBF and SYD subsequently proposed a loan agreement and mortgage, the details of which were provided by way of another affidavit by QBF dated 12 April 2021, in response to directions made for the same. The proposed loan agreement, by way of summary, is to contain the following salient terms: 1. A no-interest loan requiring no payments by instalment to SYD of up to $1m toward the purchase of a suitable property (the Property) in the name of SYD; 2. The loan would be secured by way of first registered mortgage over the Property; 3. The loan would be repaid by SYD, within specified periods from the first of the following occurrences: 1. The Property is sold; 2. EZG dies and probate or letters of administration of his estate is granted; 3. SYD dies; 4. Otherwise, by SYD electing to repay the loan at a point in time earlier than the above occurrences. 1. Upon any subsequent sale of the Property, EZG would be entitled to a proportion of any capital gain achieved by the sale, in an amount directly proportional to the size of the loan given to SYD relative to the total amount paid by SYD for the Property. For example, if EZG was to loan 90% of the purchase price to SYD, EZG would be entitled to 90% of the capital gain on the subsequent sale. EZG is to bear no responsibility in respect of any capital loss. 1. As we explain below, the Tribunal can decide to approve or disapprove of any act proposed to be done by the attorney: the Act, s 38(2)(a). The relevant law 1. Powers of attorney have long been known to the common law. An enduring power of attorney (i.e. one pursuant to which the attorney may continue to act after the principal has lost the power to direct or supervise the decisions made) however, is strictly a creature of statute. 2. Leaving aside powers of attorney created under now-repealed parts of the Conveyancing Act 1919 (NSW), in NSW, an instrument in the form of a power of attorney that is "in or to the effect of a form prescribed by the regulations to the Act, and is duly executed, creates a prescribed power of attorney": the Act, s 8. 3. The regulations to the Act (Powers of Attorney Regulation 2016 (NSW)) prescribe, at Sch 2, both a form of general power of attorney (Form 1) which is non-enduring and a form of enduring power of attorney (Form 2), which is intended to endure in operation after the principal loses capacity. 4. However by s 19 of the Act, any instrument that creates a power of attorney creates an enduring power of attorney if: 1. the instrument is expressed to be given with the intention that it will continue to be effective even if the principal lacks capacity through loss of mental capacity after execution of the instrument, and 2. execution of the instrument by the principal is witnessed by a person who is a prescribed witness (not being an attorney under the power), and 3. there is endorsed on, or annexed to, the instrument a certificate by that person stating that: 1. the person explained the effect of the instrument to the principal before it was signed, and 2. the principal appeared to understand the effect of the power of attorney, and 3. the person is a prescribed witness, and 4. the person is not an attorney under the power of attorney, and 5. the person witnessed the signing of the power of attorney by the principal. 1. By virtue of s 20 of the Act, an enduring power of attorney also needs to be signed by any appointed attorneys, before any power to act is vested in them. 2. The requirement for the creation of an enduring power of attorney does not, then, expressly require that it be in Form 2 as set out in the regulations. Nor is there an express requirement that it be in Form 1, with the requirements of ss 19 and 20 of the Act added (which would, in effect, be the same as Form 2). Section 7 of the Act clarifies 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 this Act provides otherwise, whether expressly or by necessary intention". Consequently, on one view, any document effective at common law in granting a power of attorney, which also complies with the additional requirements of s 19 of the Act, creates an effective enduring power of attorney in NSW, even if not otherwise in a prescribed form. Here though, that issue does not arise as the Enduring Power of Attorney is in or to the effect of Form 2. 3. The result of the power of attorney being in or to the effect of a prescribed form is that the extent of the powers given to the attorney are clarified (the Act, s 9) and certain implied limitations take effect, including a prohibition on conferring a benefit on third parties, unless the power of attorney contains express authority to do so, in terms set out in the Act: the Act, ss 10-13 and Sch 3 cls 1-3. 4. Both the Supreme Court and the Tribunal are review tribunals for the purpose or reviewing powers of attorney under Pt 5 of the Act: the Act, s 26. 5. Leaving to one side some issues not presently relevant, which are solely within the purview of the Supreme Court, an applicant may otherwise decide to bring an application for review of a power of attorney to the Court or the Tribunal (the Act, s 27(1)) as long as the power of attorney is a reviewable power of attorney, defined as an enduring power of attorney, or a document which purports to be one: the Act, ss 33(1), (2) and (4). 6. An attorney is an interested party, with standing to bring an application for review: the Act, s 35(1)(a). The orders which may be sought from the Tribunal includes the type of advice and directions sought here, contemplated by s 38 of the Act. 7. Though we note the Tribunal's power to give advice arises under the Act and therefore does not explicitly enliven the requirement to take into account the principles contained in s 4 of the Guardianship Act 1987 (NSW), we are inclined to do so, consistent with the Tribunal's practice in the past when exercising functions under the Act: see for example, QFC (No 3) [2020] NSWCATGD 24, [54]-[57] and [59], and for the same reasons. Section 4 of the Guardianship Act provides as follows: 4 General principles It is the duty of everyone exercising functions under this Act with respect to persons who have disabilities to observe the following principles: (a) the welfare and interests of such persons should be given paramount consideration, (b) the freedom of decision and freedom of action of such persons should be restricted as little as possible, (c) such persons should be encouraged, as far as possible, to live a normal life in the community, (d) the views of such persons in relation to the exercise of those functions should be taken into consideration, (e) the importance of preserving the family relationships and the cultural and linguistic environments of such persons should be recognised, (f) such persons should be encouraged, as far as possible, to be self-reliant in matters relating to their personal, domestic and financial affairs, (g) such persons should be protected from neglect, abuse and exploitation, (h) the community should be encouraged to apply and promote these principles. 1. The s 4 principles of the Guardianship Act are an embodiment of the "welfare principle" which informs all protective proceedings (P v NSW Trustee and Guardian [2015] NSWSC 579, [52]-[53], and [158]), and so are particularly relevant in light of the applicant's fiduciary duty to act in EZG's best interests at all times: Application of Forwood, ibid, [7]. 2. Put simply, any advice from the Tribunal as to how QBF might best act in EZG's best interests self-evidently requires us to consider what might, in fact, be in EZG's best interests, and consistent with his expressed wishes. It follows that the s 4 principles of the Guardianship Act, in our view, may appropriately guide that inquiry where relevant evidence is available. 3. The power of the Tribunal to give advice to an attorney in relation to the exercise of the attorney's power or authority is a discretionary power, and is derived from s 38 of the Act, set out in full below: 38 Advice or directions concerning reviewable powers of attorney (1) An attorney under a reviewable power of attorney may apply for advice or direction by a review tribunal on any matter relating to the scope of the attorney's appointment or the exercise of any function by the attorney under a reviewable power of attorney. (2) In determining any such application, a review tribunal may decide to: (a) approve or disapprove of any act proposed to be done by the attorney, or (b) give such advice or direction as it considers appropriate, or (c) vary the effect of the enduring power of attorney or make any other order it could make in an application under section 36. (3) No proceedings lie against an attorney under a reviewable power of attorney for or on account of any act, matter or thing done or omitted to be done by the attorney in good faith and in accordance with any approval, advice or direction given under this section. 1. The power for an attorney to "confer a benefit" on a third party is proscribed by s 13 of the Act, unless the instrument creating the power of attorney expressly provides otherwise. Clause 3 of Sch 3 of the Act provides the prescribed wording of the power to confer benefits on third parties, and the rules around to whom, and the nature of the benefits authorised to be conferred: 3 Authority to confer benefits on third parties (1) The prescribed expression for the purposes of section 13 (2) is as follows: I authorise my attorney to confer benefits on [insert name(s) and address(es) of each third party] to meet their reasonable living and medical expenses as provided by section 13 (2) of the Powers of Attorney Act 2003. (2) The prescribed expression authorises an attorney to confer a benefit on a named third party only if: (a) the benefit meets (whether in whole or in part) any expenses incurred (or to be incurred) by the third party in respect of any of the following: (i) housing, (ii) food, (iii) education, (iv) transportation, (v) medical care and medication, and (b) the benefit is not more than what is reasonable having regard to all the circumstances and, in particular, the principal's financial circumstances and the size of the principal's estate. 1. In a recent decision giving judicial advice under s 38 of the Act, Ward CJ described the rationale for that application for advice as follows (Application of Forwood [2020] NSWSC 1413, [8]): "The application has been brought to ensure that there can be no argument that [the attorney] has acted wrongfully in his duties as an enduring attorney for [the subject person]." The Hearing 1. At the end of these Reasons for Decision are lists of the parties and witnesses who attended the hearing. [Appendix removed for publication.] We accepted evidence from QBF and SYD that, consistent with Dr Z's report, EZG would be unable to participate in the hearing or express a view, due to his disability. Consideration Should the Tribunal approve the attorney's proposed act of extending a loan to SYD from EZG's estate, for the purpose of purchasing accommodation in Inner-City Sydney for SYD? A defect in form, but not substance 1. In the present case, the Enduring Power of Attorney does provide an express power to confer benefits on SYD. 2. However what is contained in the Enduring Power of Attorney does not conform precisely to the prescribed expression in cl 3 of Sch 3 of the Act, in that the words "the following persons" have been added where the name and address of the person to be benefitted is to be added, and SYD's name, without his address, has been added to the end of the clause. This appears to arise from a combination of the use of a pro forma document, inexactly mirroring the requirements set out in the Act, and the fact that the extra words "the following persons" are contained in the prescribed form of enduring power of attorney, Form 2. 3. We do not consider that minor variation to be fatal to QBF's authority. The scope of the power included in the instrument, set out in clause 2 of the Enduring Power of Attorney, extracted at [10] above, uses all of the words and conveys the same clear intention of those used in the prescribed expression in cl 3 of Sch 3 of the Act. Whilst SYD's address is not inserted, there is no proper suggestion that he may be misidentified. 4. Had we come to a different view, we would have been minded, on notice to the parties, to exercise the power granted by ss 38(2)(c) and 36(4)(a) of the Act to remedy the defect, as there appears to be an incontrovertible inference that EZG intended to give the authority in the prescribed expression, such that our remedying any defect in form would "better reflect his wishes", as that term is used in s 36(4) of the Act. The proposed benefit 1. There is no dispute, and we are satisfied, that what is proposed by QBF constitutes conferring a benefit on SYD, intended to meet expenses incurred by him in respect of housing. 2. By the terms of the Enduring Power of Attorney, the nature of the benefit must be to meet SYD's reasonable living expenses. We received evidence from SYD, and QBF that appropriate housing in the Inner-City Sydney area, in the form of a unit which will also allow the accommodation of EZG's dogs, is likely to cost approximately $1.4m dollars. 3. By the terms of s 38(2) of the Act, The nature of the benefit authorised to be given is limited to what could be "reasonable" considering "all the circumstances", including the financial circumstances of the principal, and the size of their estate. 4. There is no guidance in the legislation as to what, if any, proportional contribution ought to be expected from the recipient of the gift to meet their own needs in, for instance, financing a home. 5. However in our view, "all the circumstances" is a term sufficiently broad to include consideration of many relevant factors, such as the financial circumstances of the proposed recipient. 6. There is no dispute that SYD is a former de facto partner of EZG, and remains a close friend. He is explicitly nominated as someone contemplated by the relevant benefit-giving clause as an appropriate recipient of a benefit from EZG, to meet SYD's reasonable living expenses. 7. At the hearing, we clarified with QBF that, omitted from the financial position set out by Mr Y in detailing EZG's financial resources was EZG's reversionary interest in a Refundable Accommodation Deposit paid to the aged care facility, in the approximate sum of $ 900,000.00, and an unpaid tax bill of about $100,000.00. 8. QBF also confirmed the following further relevant issues: 1. There is no further information to indicate that EZG has executed a will subsequent to the one under which SYD is the sole beneficiary; and 2. The proposal for the loan to be repayable, if required, on EZG's death, would allow for the timely and appropriate administration of EZG's estate even if a subsequent will, with materially different beneficiaries, was made. If no subsequent will is located, it is unlikely that the loan would be called up upon EZG's death. 1. SYD advised that he has not worked full time for some years. Since restrictions relating to COVID-19 have eased, he has resumed visiting EZG each day, which also impacts on his ability to obtain gainful employment. SYD described the end of his de facto relationship with EZG as having been significantly contributed to by EZG's diagnosis with Parkinson's disease and EZG's desire to "travel that journey [with his diagnosis of Parkinson's disease and dementia] on his own". 2. At around the time EZG made the Enduring Power of Attorney, EZG and SYD entered into a formal division of their respective property interests through the family law system. We were satisfied, though, that EZG's contemporaneous indication of a desire to provide benefits to SYD in his power of attorney, and their ongoing friendship and companionship, are clear indicators that EZG's wishes in that regard are unlikely to have changed. 3. We took oral evidence from SYD about his own financial circumstances. He owns the unit in which he lives worth, on his estimate, about $700,000.00, although it is unsuited to the need to maintain EZG's dogs. In fact, there are apprehended violence orders between him and a neighbour and allegations of assault, which appear to largely stem from SYD keeping the dogs in breach of the complex's by-laws. He also has a property interstate of a similar value, however, there would be taxation consequences if that property were to be sold. SYD's income comes from his superannuation. 4. Weighing all the circumstances, we are satisfied that extending a benefit to SYD from the estate of EZG, in the terms proposed by QBF in his affidavit of 12 April 2021, would be a reasonable benefit for QBF to authorise on EZG's behalf. 5. Whilst the proposed benefit is substantial, the fact that the corpus is to be secured by way of first registered mortgage, and would be repaid as necessary to EZG's estate, was, in our view, highly relevant in that regard. We were also led to that view by the evidence of EZG's relatively modest ongoing expenses and significant assets capable of generating an income from which they could be met. Whilst SYD has some capacity to contribute to the purchase of a suitable property, and will need to do so to effect his intention to remain in the Inner-City Sydney area, we do not think that it is reasonable to expect him to sell down other assets, potentially incurring taxation liabilities, in order to do so. Costs 1. QBF made an application for his costs to be paid from EZG's estate, however, was later withdrawn and dismissed by us. We noted he is entitled to indemnity for his legal costs arising out of the application, in accordance with clauses 3.3-3.4 of the Enduring Power of Attorney. Orders 1. We will make the following orders: 1. The Tribunal approves the attorney of EZG, namely QBF, conferring a benefit on SYD, in the form of a loan of up to $1m, on terms as outlined in the affidavit of QBF of 12 April 2021. 2. Grant liberty to the parties to apply, for clarification of Order 1, as required. ********** I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 21 May 2021