GHA[2015] QCAT 262

REASONS FOR DECISION

1. [1]
   In April 2014, the Public Guardian received a referral containing allegations that an attorney had breached the Powers of Attorney Act 1998 (Qld) by undertaking transactions and by acting in other ways that were not in the interest of the principal. The attorney was RDD; the principal was her mother, GHA who, at that time was 82 years old.
2. [2]
   The Public Guardian investigated five allegations, that: (1) the attorney had influence GHA into changing her will; (2) the attorney acquired joint ownership by way of a gift of a property owned solely by GHA; (3) the attorney benefitted from GHA’s assets by using assets to renovate the property to which reference is made in (2) above; (4) the attorney had not consulted with other family members in regard to decisions affecting GHA; and (5) the attorney had taken possession of jewellery that was GHA’s property.
3. [3]
   Following its investigation and the production of a comprehensive report, the Public Guardian found that only one of the allegations was substantiated, namely, Allegation 2. Consequently, the Public Guardian lodged an application with the Tribunal seeking a decision concerning GHA’s capacity to transfer half-ownership of the property in question, to make a gift to another daughter, TTD, and to loan a significant amount of money to son GHS. The Public Guardian expressed concerns that these transaction might constitute conflict transactions.
4. [4]
   By way of background to this matter, GHA appointed RDD as her attorney on 26 August 2011. The appointment was for financial and personal/health matters and the powers relating to financial matters were to begin immediately. There is no contemporaneous medical evidence available to the Tribunal to suggest that GHA lacked capacity to execute the powers of attorney document. Medical evidence provided to the Tribunal originates in mid-2013.
5. [5]
   The primary issue considered during the hearing was the gift of half of the ownership in real estate by GHA to RDD. As part of their investigation, the Public Guardian sought medical reports to establish GHA’s capacity at the time of the transfer and additionally argued that ss 87 and 88 of Powers of Attorney Act 1998 (Qld) applied in this case; that conflict transactions had occurred and the attorney had exerted undue influence over the principal’s decisions. The Tribunal will deal with these matters beginning with GHA’s capacity to appreciate the effects of transferring ownership of the property.

Did GHA have capacity to understand the nature and effects of changing the ownership of the property?

6. [6]
   During the collection of evidence in the hearing, various arguments and counter-arguments were presented about GHA’s capacity to transfer ownership of her property along with gifting significant sums of money to son GHS and daughter TTD. At the conclusion of the hearing, the decision was reserved and active parties were provided with an opportunity to make final submission to the Tribunal by 19 May 2015, having provided copies to other active parties, and for any further responses to those submissions to be made by 25 May 2015.
7. [7]
   The representative of PF and GHJ and the representative of RDD both provided submission on 19 May 2015 on behalf of their clients.
8. [8]
   In her subsequent submission lodged through her legal representative, PF argued that there was evidence that GHA did not have capacity to make the decisions relating to the transfer of ownership of the property. I have slightly reordered and paraphrased the several points made in that submission to aid the consideration of each. It is stated that:

   1. RDD was present during the consultation with her solicitor, when the property transfer documents and a new Will were being discussed.
   2. The solicitor had acted for RDD and, therefore, independent advice was not afforded to GHA.
   3. While the geriatrician was satisfied that GHA had testamentary capacity on 30 July 2013, she did not have capacity for a financial decisions of the complexity that were made and, furthermore, the geriatrician does not speak Greek to enable him to converse with GHA in her first language.
   4. When in consultation with the geriatrician, GHA falsely undervalued her property assets.
   5. GHA achieved a cognitive score of 21/30 when tested by the geriatrician and expressed her wish to divide her estate on her death equally between her children.
   6. GHA was still grieving some six weeks following the death of her husband and conceded during the hearing that she was not well at the time of the relevant consultation with the solicitor.
   7. Even though GHA indicated her intention to benefit all of the children equally the final complex arrangement of percentages of her estate to be received by each child would have be beyond her comprehension to determine without the influence of another party.
   8. RDD clearly accepted the notion that her mother had Alzheimer’s disease as evidenced by RDD’s justification for signing an ACAT assessment application in February 2014, thus, casting doubt on GHA’s independent decision to make gifts to TTD and GHS.
   9. As beneficiaries of those gifts little or no weight should be given to TTD’s and GHS’s views on the matter or to two friends who had signed documents affirming GHA’s deceased husband and GHA’s intention to transfer the ownership of the property to RDD.
9. [9]
   I will address points 9(a) and 9(b) in the context of GHA’s consultation with the solicitor.
10. [10]
    On 30 July 2013, GHA met with her solicitor seeking his assistance to change her Will and transfer ownership of her property to RDD. In a declaration made under the Oaths Act 1867 to 1981^[1], the solicitor stated that he formed the opinion that at the first consultation GHA was mentally competent, understood her assets, the dynamics that existed within the family, and her testamentary intentions. Regardless, he recommended that she obtain a medical report relating to her capacity to carry out those tasks. This was prepared by the geriatrician in a report to the family physician and this is considered in [16] below.
11. [11]
    Oral evidence was given during the hearing by RDD and TTD who attended the initial consultation between their mother and the solicitor that they were asked to absent themselves from the consultation twice so that the solicitor could speak to GHA alone. They complied with that direction and the solicitor and GHA discussed the wisdom of her intentions for some time.
12. [12]
    In his 8 October 2014 declaration, the solicitor writes that he had provided advice to GHA’s deceased husband and GHA for some years. This included discussions of their financial transactions, the transfer of land in Greece to their children, and their agreed wish to transfer the GHA’s property upon their death to daughter, RDD. He writes that in 2008, “At the time of the conference they each had a clear understanding of their assets, their values and the instruction and I formed the opinion that they both had a clear understanding of what they were doing and had clear and obvious mental capacity to understand the effect and nature of the instructions”.
13. [13]
    The solicitor had further consultations with GHA’s deceased husband and GHA in 2009 and 2010.
14. [14]
    The solicitor’s recollections are repeated in correspondence dated 13 February 2015, apparently provided to the Public Guardian. He stated that GHA initially wished to transfer the property completely to RDD but he advised her to consider joint tenancy to protect her right of occupancy. She accepted this advice. The solicitor also made her aware of the value of the gift in comparison to the cost of assistance given by RDD. Additionally, the solicitor states that GHA insisted that he act for both her and RDD and he acceded to that request.
15. [15]
    On the basis of the oral and written evidence provided, the Tribunal is satisfied that GHA had the benefit of the solicitor’s advice given in confidence and that she accepted that advice. The solicitor had a history as GHA’s deceased husband and GHA legal consultant and took instructions from, and acted for, them. the solicitor’s written submission outline procedures he took to ensure that GHA understood the nature and effects of the action she intended to take in transferring half-ownership of her property to RDD.
16. [16]
    I turn now to points 9(c) though 9(f) as these relate to GHA’s consultation with the geriatrician. In his letter of 31 July 2013 to her general practitioner, the geriatrician states that he had a “long talk” with GHA about her possessions and properties and that she intended to leave the house … to RDD. Part of the discussion with GHA also dealt with her wish to change her Will. The geriatrician reported that GHA scored 21/30 (presumably on the Mini Mental State Exam, although this is not recorded in the letter). He added that she markedly underestimated the value of her property assets. The geriatrician speculated on their value, “in fact they [the properties] are probably worth closer to 2.5 million!”
17. [17]
    Having taken these issues into consideration, the geriatrician still writes, that GHA “certainly has the ability to do that [change her Will] as her wishes have been consistent all the way through.” He also writes “GHA wants to divide her estate equally between the 6 children but wants to leave the house in Boundary Rd to her daughter who has been her main carer over the last few years.” There is no indication in his report that she was, or appeared to be, grieving over the loss of her husband.
18. [18]
    There is also no indication in the geriatrician’s letter that GHA was influenced by RDD in any way during the consultation. He notes the stability of the situation in the last paragraph, and notes that there is no reason to consult with GHA again, unless the need arises.
19. [19]
    Although his comments are brief, the GP who is a Greek speaker, wrote on 29 July 2013 and 15 August 2013 that GHA has testamentary capacity.
20. [20]
    In regard to GHA’s evaluation of her property assets (as in 9d above), oral evidence was given during the hearing that GHA was not intimately involved in the family’s financial dealings. GHA’s husband appears to have managed the finances. It is questionable whether GHA might be expected to know the value of the properties she now owned in Australia or in Greece. It is not unreasonable, however, that she would have been fully aware of her husband’s wishes, and would have shared his views. Indeed, the solicitor’s declaration indicates that in 2008 GHA was familiar with the family’s financial situation.
21. [21]
    On several occasions during the hearing, GHA was asked why she had made the decision to transfer part-ownership of the property to RDD. On each occasion she explained that RDD had been her primary carer and that she wished to provide that benefit to her. At no time during the hearing was it apparent that GHA was seeking affirmation about her views from RDD, who sat beside her.
22. [22]
    In regard to 9(g), the distribution of percentages in the 2013 Will is curious. This by itself is no clear evidence of lack of capacity given that the solicitor was providing advice and taking instructions from GHA. It is notable that RDD is not listed as one of the beneficiaries. In her 19 May 2015 submission via her legal representative, RDD simply states that the new Will is consistent with the Adult’s intention to gift the GHA’s property to her. The manner in which the distribution was formulated was not canvassed during the hearing.
23. [23]
    As for the comment in 9(h), it is correct that RDD authorised the use and disclosure of personal information in the ACAT application on the basis that GHA was experiencing Alzheimer’s disease and this diagnosis is listed as the first disease or disorder in section 28.The ACAT assessment provides a RUDAS score of 17/30 and both short- and long-term memory loss is recorded. It is noted that this assessment was completed in February 2014. It is also noted that a psychiatrist’s health professional report of September 2014 completed for the Public Guardian indicates a significant cognitive deficit inconsistent with the geriatrician’s report.
24. [24]
    Point 9(i) in PF submission through her legal representative questions the weight that should be given to the evidence given by TTD and GHS, as they benefited from gifts. A further objection, to witnesses’ submissions is based upon the appearance that their letters originated from the same word processing device. The latter two recall the intentions of GHA’s husband to leave the GHA’s property to RDD. This impression was shared by a number of the parties at the hearing.
25. [25]
    In coming to a decision on this aspect of the matter, the Tribunal has placed considerable weight on the solicitor’s evidence in his statutory declaration, his submission to the Public Guardian, and also on the geriatrician’s report. The solicitor has a history of involvement as GHA’s deceased husband and GHA’s solicitor and wisely sought a medical report concerning GHA’s capacity to execute legal and financial document prior to their preparation. It is apparent from his submissions that he warned her of the possible consequences of her actions given the nature of the relationships between the siblings. These matters were expressed in RDD’s submission to the Tribunal of 19 May 2015 as evidence that GHA had capacity to transfer half-ownership of the GHA’s property to RDD.
26. [26]
    Oral evidence during the hearing attests to difficult relationships between siblings and to GHA’s deceased husband and GHA’s long-term intention to transfer ownership of the GHA’s property to daughter, RDD. Without other matters to consider, the Tribunal would accept this as evidence of GHA’s capacity to make gifts or loans, including the transfer of half-ownership of the GHA’s property. However, other concerns were raised in the Public Guardian’s investigation report and its application for a declaration of capacity. Notably, the Public Guardian drew attention to a gift of $100,000 to daughter, TTD, and a loan to son, GHS, for $330,000.

Did GHA have capacity independently to make a gift to a daughter and a loan to a son?

27. [27]
    From the written evidence provided to the Tribunal. GHA’s deceased husband and GHA were financially secure and were willing to support their children. It appears that the parents responded to their children’s needs in different ways depending upon their circumstances, for example, by way of a gift or loan and this appears to have contributed to some tensions among the siblings and disagreements about the conditions of financial arrangements. In his statutory declaration, the solicitor mentioned several examples of such financial support to the children as far back as 2008.
28. [28]
    In her submission of 19 May 2015, PF questions GHA’s capacity to execute the gift to TTD and loan to GHS. The presumption made is that RDD permitted this to occur.
29. [29]
    In her submission of 19 May 2015, RDD addressed GHA’s participation in this gifting process. She raises the family history of supporting children, making gifts, and providing cash advances to several children. The argument is made in that submission that GHA initiated, or facilitated, these transactions as evidenced by the solicitor’s discussion with his client in the context of the economic value of the assistance provided by RDD to her late father and mother.
30. [30]
    The Public Guardian raised the matter of the gift to TTD and loan to GHS on pp. 17-18 of its investigation report. And while such gifts/loans made by an elderly person might alert an observer to the potential for conflict transactions, the Public Guardian does not allege that this has occurred. The report reads, “There is no medical evidence which has been provided to the Public Guardian which confirms she had the capacity to make two substantial gifts whilst still alive on 28 November 2013 and 13 February 2014. That does not mean she did not have the capacity to enter into these transactions, it just means the medical evidence provided purely speaks to GHA’s testamentary capacity around that time. The presumption of capacity .. has not been rebutted”. The author continues on p. 18 that the gift of $100,000 was affordable, and the loan to GHS was secured by a mortgage over his property. That debt is to be forgiven when GHA dies.
31. [31]
    The ACAT assessment [in 23] was undertaken in February 2014. As indicated above, there were reports of short- and long-term memory problems. The Public Trustee conclusion, however, remains valid. There is no evidence to confirm a belief that GHA lacked an understanding of the nature and effects of a decision to execute the gift and the loan to her children. Given the parents’ history in supporting their children, these would be transactions that GHA could reasonably be expected to continue after her husband has passed away.
32. [32]
    Furthermore, no evidence has been presented to show that RDD was involved in the decision-making process in regard to the gift and loan.
33. [33]
    Notwithstanding the above, there is a remaining matter that was raised by the Public Guardian in its investigation report. Section 87 of the Powers of Attorney Act 1998 (Qld) states that there is a presumption of undue influence when a transaction is undertaken that involves a benefit to the attorney, a relation, business associate, or close friend of the attorney. The Tribunal, therefore, now turns its attention to the presumption of undue influence.

Is there evidence that the attorney exerted undue influence on GHA in regard to the transfer of ownership of property or gifts or loans to her children?

34. [34]
    This issue was raised during the hearing and discussed in the Public Guardian’s report concerning Allegation 2. Specifically, this is in regard to the lack of independent legal advice given to GHA as the solicitor appears to have acted for GHA and the recipient attorney, RDD.
35. [35]
    Several court decisions have addressed the issue of undue influence by attorneys over their respective principals. In his decision in Smith v Glegg^[2] at [40] McMurdo J stated that s 87 is engaged where there is a transaction between the principal and attorney regardless of whether the transaction was effected by the exercise of powers under an enduring power of attorney. At [61], His Honour noted that it is the attorney’s duty to manage the principal’s property only for the support, health, and comfort of the principal and at [62] wrote, “Even absent undue influence, I would hold that the defendant’s [the attorney’s] acceptance of this gift was in breach of duty.”
36. [36]
    More recently, Jackson J^[3] referred to a number of decisions relating to undue influence. His Honour considered: the inherent abuse of confidence based upon the relationship between the donor and the donee; the quality of the agreement by the principal to the gift; and the presence or absence of independent advice taken by the principal. He goes on in [96] that “The question whether the presumption is rebutted is one of fact, based upon the circumstances of the case at hand.” It is relevant to note that His Honour was dealing with a matter in which the principal was highly dependent upon the attorney for both physical and moral support.
37. [37]
    In the present case, there has been clear recognition by GHA’s deceased husband and GHA of RDD’s contribution to their welfare as they aged and of GHA’s continued reliance on her daughter subsequent to her husband’s death. This is somewhat a similar situation to the circumstances in Baker & Ors v Affoo & Ors [2014] QSC 46.
38. [38]
    The evidence in the present matter does not suggest that there was any abuse of confidence based upon the relationship between GHA and her daughter. There is considerable evidence that all members of the family benefitted from their parents’ support and/or generosity, albeit sometimes with conditions attached.
39. [39]
    In previous judgments, the issue of independent advice given to the principal has been important. In the present matter, the solicitor documented GHA’s wishes but presented alternative solutions to here, advice that she followed without consultation with any other party. Indeed, GHA was appraised of the consequences of transferring ownership of the GHA’s property to RDD. It was the solicitor’s view that GHA knew what the potential consequences might be.
40. [40]
    The evidence before the Tribunal does not suggest that GHA was induced by RDD to transfer half-ownership of the GHA’s property by her mother. It cannot be determined at this time if, or to what extent, RDD encouraged, or discouraged, her mother from taking the action that she did. It is clear, however, that GHA was acting in a way that was consistent with her late husband’s wish; one that was also her own as she expressed several times during the hearing.
41. [41]
    On the basis of the evidence presented, the Tribunal finds that GHA had decision-making capacity to transfer half-ownership in the property and to make a gift to a daughter and a loan to a son. The Tribunal finds no compelling evidence that the attorney influenced GHA in a way that constituted a conflict of interest or that she unduly influenced her mother’s decision in exercising the giving of a gift to TTD, or a loan to GHS. The Tribunal further finds that the presumption of undue influence contained in s 87 of the Act has been refuted.
42. [42]
    The Tribunal declares that GHA had capacity to transfer half-ownership of her property on 15 August 2013 to RDD, and to make a gift of $100,000 to TTD and a loan of $300,000 to GHS.