New South Wales Supreme Court CITATION : Adler v Singer [2009] NSWSC 500 HEARING DATE(S) : 15 May 2009 JURISDICTION : Equity Division Expedition List JUDGMENT OF : Brereton J EX TEMPORE JUDGMENT DATE : 15 May 2009 DECISION : Orders made transferring control of plaintiff's moneys held by the defendant to her current solicitors. CATCHWORDS : PROCEDURE - Application for interim regime to have plaintiff's moneys in control of defendants, her attorneys under power until recent revocation, transferred to plaintiff's solicitor - Whether arguable case of incompetence, incapacity or undue influence - Whether such a regime necessary and prudent - Where undertakings given by new solicitor to ensure moneys are adequately protected until proper determination of issues - Held: No triable case impugning the purported revocation on evidence currently available - Orders made for transfer of accounts moneys to control of plaintiff's solicitors. LEGISLATION CITED : (NSW) Powers of Attorney Act 2003 s 38 (NSW) Protective Estates Act 1983 CATEGORY : Procedural and other rulings Ethel Adler (plaintiff) PARTIES : David Singer (first defendant) Simon Singer (second defendant) FILE NUMBER(S) : SC 1548/09 COUNSEL : Mr D Cook Mr M Wilmott SC SOLICITORS : Makinson & D'Apice (plaintiff) Bamford Associates (defendants) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION EXPEDITION LIST BRERETON J Friday 15 May 2009 1548/09 Ethel Adler v David Singer & anor JUDGMENT (ex tempore) 1 HIS HONOUR: By her Summons filed on 18 February 2009, the plaintiff Ethel Adler claims a declaration that the General Power of Attorney given by her on 20 May 2003 to the first defendant David Singer was revoked on 31 January 2008, or alternatively 6 February 2008, or alternatively 11 July 2008, or alternatively 6 February 2009. Mrs Adler also seeks a declaration that the General Power of Attorney or such other Power of Attorney which she may have given the second defendant Simon Singer on or about 28 January 2008 has similarly been revoked. She seeks orders that the defendants deliver up to her all the General Powers of Attorney in question, and all documents belonging to her that are held by them or either of them. By their Second Amended Cross-Summons, the defendants seek a determination pursuant to (NSW) Powers of Attorney Act 2003, s 38, as to whether the purported revocation of various powers of attorney are invalid by reason that Mrs Adler was not free or competent to execute and give the instruments of purported revocation and, if appropriate, orders appointing substitute attorneys. Alternatively, they propose orders for an inquiry by the Protective Commissioner, a declaration that Mrs Adler is not capable of managing her affairs, and an order that her estate be subject to management under the (NSW) Protective Estates Act 1983. They say that they propose these outcomes essentially in the role of amicus curiae and not to adopt an adversarial position. 2 Before the Court are competing interlocutory applications as to how the substantial funds of Mrs Adler, which are presently under the control of the defendants or in their name, should be dealt with and held pending the hearing. Previously, an interlocutory injunction has been granted restraining the defendants from exercising any power under the Powers of Attorney in question and from dealing with the assets in question, save that provision was made for the transfer of one of the accounts to the control of Mrs Adler's present solicitors Makinson & d'Apice, from which provision could be made for her expenses. 3 The defendants' application proposes that they retain control of the funds in question, but be permitted to reinvest investments as they mature, and to pay Mrs Adler's accounts subject to the instructions and consent of her present solicitors. Mrs Adler's application, on the other hand, is that all funds be transferred to the control of Makinson & d'Apice immediately insofar as they are presently available, or promptly after they mature in respect of term deposits. 4 There does not seem to be any doubt that Mrs Adler has executed instruments of revocation, and has expressed wishes that the defendants no longer act as her attorneys. 5 One of the grounds upon which it is suggested that any such purported revocation might not have been effective is that her capacity and competence to make that decision is questioned. The material before me, on this application, does not raise a triable issue that she is incompetent or incapable of managing her affairs. She appears without a tutor; lawyers represent her and put her wishes before the Court; she has sworn a number of affidavits; Mr Singer's affidavit deposes to conversations with her which do not manifest a state of incapability or incompetence. That is far from saying that, on a final hearing, further material might not make good such a case, but that is not apparent at present. 6 A second ground on which it is suggested that the revocations might not be effective is that Mrs Adler might be acting under the undue influence of her son, Mr Rodney Adler. Again, the evidence before me at this stage does not raise a triable case that that is so. Once again, further evidence at a final hearing might well alter that position, but the fact that Mrs Adler, as some of the evidence before me plainly suggests, has paid from her assets substantial amounts for the benefit of Mr Rodney Adler, and in particular to discharge his legal fees, does not make a case of undue influence. 7 Thirdly, it is suggested that Mrs Adler, by making numerous very large payments from her assets to or for the benefit of Mr Rodney Adler, is acting in breach of a family agreement made in 1994, the purport of which is that she undertook to preserve her estate for the benefit of her daughters, and that Rodney was not to benefit. If I had to decide the question on this application, I would conclude that there was a seriously arguable case that she was acting in breach of that agreement. However, no party to that agreement seeks any relief in that respect. In particular, the daughters, who are the persons most obviously affected, having been offered an opportunity to intervene in these proceedings, have declined to do so. If anyone has a right to have Mrs Adler restrained from acting in the manner in which she has, prima facie that is her daughters, but I must conclude that they have chosen not to do so. I do not see how that fact can give Mrs Adler's erstwhile attorneys, even if they are still her attorneys or perhaps still attorneys, the ability to act as it were against her, on behalf of the daughters, by seeking to preserve her assets for the daughters' benefit. 8 It has also been suggested that, as Mrs Adler has obligations to the daughters under the family agreement, so her attorneys as her fiduciaries have some similar obligation. I simply do not understand that argument. Her attorneys owe fiduciary obligations to Mrs Adler, not to third parties. Any breach by them (like other disclosed agent) of their principal's obligation to a third party is the principal's, breach for which the principal and not the agent is liable. 9 Mr Willmott, for the defendants, understandably seized on two attractive arguments: the first was that no necessity for the making of the proposed orders was established, and the second was that the prudence of making them was doubtful. 10 So far as necessity is concerned, there is at least some evidence that Mrs Adler needs access to funds from which to pay her accounts and on which to live. Indeed, the defendants' own motion proposes as much. It is true the evidence does not demonstrate a necessity that she have access to all the funds, nor that all the funds be transferred to her present solicitors. But in the context of this case, which essentially is a dispute between principal and agent as to who should control the principal's funds, when no triable case of incompetence or undue influence has been shown, I do not think necessity is a significant consideration; prima facie right is more important. 11 So far as prudence is concerned, Mr D'Apice, who now acts for Mrs Adler, has offered undertakings to limit the amount which will be drawn from her assets on a monthly basis for accounts and living expenses to $40,000, plus legal expenses of these proceedings. If there were any imprudence otherwise involved in transferring Mrs Adler's assets from the hands of those whom she no longer wishes to control them to the hands of those whom she wishes to control them, then that undertaking, it seems to me, removes it. 12 Nonetheless, I would not see any imprudence on the evidence before me in leaving the assets where they were. Mr Cook has, I think quite legitimately, drawn attention to part of the evidence to found a submission that doubt should attend the safety of the assets in the solicitors' hands. It seems to me that that was an entirely legitimate submission to be made on this evidence, although ultimately I reject that submission, to the extent that I need to for the purpose of the present proceedings I am not persuaded the funds would be in any jeopardy if they remained in the hands of the Singers. 13 Ultimately the state of play is that Mrs Adler has, prima facie, revoked the Powers of Attorney. A triable case impugning that revocation has not been made out. The only triable case that has been made out is one which the Singers have no standing to advance, and those who have standing to advance have chosen not to agitate. In any event, it would not provide a basis for leaving the funds in the hands of those whom Mrs Adler no longer wishes to control them, as distinct from imposing some other constraint on how they should be managed. 14 Accordingly, I propose to make orders substantially as sought in the short minutes of order handed up on behalf of the plaintiff. However, I will vary paragraph 3 of the short minutes, by deleting the matter "five" and substituting the matter "14". I will vary paragraph 7, by deleting the words "to Makinson & d'Apice. I will vary paragraph 8, by inserting after the word "which" towards the end of the second line, the additional words "are requested by the plaintiff's solicitors and". 15 So far as the undertaking proffered by Mr D'Apice is concerned, I will make orders as I have indicated if he proffers that undertaking in the form proposed, with the following variations. In paragraph 1 of the undertaking, insert after the word "withdrawn", the additional words "or transferred", and insert after the words "Makinson & d'Apice account", the additional matter "or from any controlled moneys account to which such funds might be transferred in conformity with this undertaking". In the second line, delete the comma and the word "subject" and replace with the word "up". In paragraph 2 of the undertaking, after the word "solicitors" insert the words "and the Court". Insert an additional paragraph 3 of the undertaking, as follows: "To pay the reasonable costs and disbursements of the defendants in complying with the foregoing orders". As I have indicated prima facie it would seem that Mr D'Apice would be entitled to pay those costs from the funds in question, but ultimately that is a matter between him and his client. 16 Mr Willmott submitted that an undertaking as to damages should be required, but ultimately the defendants were not really able to identify any basis upon which they might become entitled to damages against the plaintiff. I will, therefore, not require an undertaking as to damages. 17 Subject to confirmation that the undertaking in the revised form will be given, I proposed will be given I make those orders. 18 The insubstantial nature of the matters that have been raised in opposition to the plaintiff's application have caused me to consider very closely making the cost orders sought by the plaintiff. However, it seems to me that the basis on which the defendants are acting, and whether the costs incurred by them have been incurred reasonably as an incident of their appointment as Mrs Adler's attorneys or unreasonably, is a matter which will be explored at the final hearing, and it would be premature to reach a conclusion on that topic and express it in a costs order now. I am however, satisfied that there are no circumstances in which the defendants should have their costs of the motion. The appropriate costs order is that costs of the application be the plaintiff's costs in the proceedings. 19 It now having been confirmed that Mr d'Apice will give the undertaking as amended, upon the undertaking of Mr Richard d'Apice, solicitor, by the plaintiff's counsel to the Court recorded in paragraphs 1, 2 and 3 of the document entitled Short Minutes of Order, initialled by me, dated this day and placed with the papers, as amended by me in red and as previously read by me on to the record, I make orders in accordance with paragraphs 1 - 9 inclusive of short minutes as likewise amended. I order that costs of the defendants' motion filed on 5 May 2009 and the plaintiff's motion filed today be the plaintiff's costs in the proceedings. 20 I direct that these orders be entered forthwith. 21 I direct that Exhibit RX02 may be returned. 22 I stand the proceedings over to 9.30am Friday 12 June 2009 for further directions. ********** 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.