CJB[2023] QCAT 425

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL

REASONS FOR DECISION

1. [1]
   The application before this Tribunal is one for authorisation of a conflict transaction to be entered into by attorneys appointed under an enduring power of attorney document. Accordingly it falls under the Powers of Attorney Act 1998 (Qld) (the POA Act). Whilst that legislation itself empowers this Tribunal with relevant jurisdiction, the nature of the application is one made within the scope of s 115 of the Guardianship and Administration Act 2000 (Qld) (the GAA Act), and accordingly falls within the ambit of a guardianship proceeding under the GAA Act.^[1] For that reason, in satisfaction of s 114A of the GAA, the adult and other active parties are referred to herein in a de-identified format.

Overview

2. [2]
   At the time of the hearing CJB was 82 years of age, permanently residing in an aged care facility having been diagnosed with rapidly deteriorating dementia.
3. [3]
   In December 2022, AJB and SRB as CJB’s attorneys under an enduring power of attorney given in February 2012, applied to this Tribunal for approval of a conflict transaction. That transaction was proposed as one being to gift $250,000 to each of AJB’s sons, AB and RB, from their mother’s funds. It was said such gift was consistent with her wishes as they were expressed when she had capacity.
4. [4]
   For the reasons I have given herein, my conclusion is that it is in order for the gifts to be made to AJB’s two sons, such being consistent with what CJB was intending to do, and accordingly it is appropriate for this Tribunal to authorise them as conflict transactions.

Relevant Facts and Circumstances

5. [5]
   On 18 February 2012, CJB gave her enduring power of attorney to her husband ASB, her son AJB, and her daughter SRB, under the Powers of Attorney Act 2003 (NSW), to be operated jointly and severally. Under that power of attorney document, the power to give reasonable gifts as provided for under s 11(2) of that Act was expressly excluded.^[2]
6. [6]
   Since then ASB has also been diagnosed with dementia and no longer has capacity enabling him to act as CJB’s attorney. Thus, it has fallen upon her remaining attorneys to conduct, as is relevant in this proceeding, her financial affairs.
7. [7]
   On 1 December 2022, those attorneys applied to this Tribunal for approval of two conflict transactions, namely the payment of $250,000 to each of AJB’s sons, being in turn SRB’s nephews. The premise of that application was expressed in the application document in the following terms:^[3]

The Adult made gifts of the proceeds of the sale of the property in the United Kingdom in the sum £300,972.90 to her other grandchildren [Named persons] in 2017. The Adult has 4 grandchildren and it was her wish for them all to receive a similar gift from her during her lifetime which was expressed to us, (sic) the Applicants as well as directly to [RB] and [AB] on multiple occasions. The Adult’s health condition deteriorated quickly in 2019, meaning she was not able to make the intended gift to [RB] and [AB]. The Adult has since lost capacity to make decisions in July 2021.

… The Adult has sufficient assets to comfortably support herself and her husband, (sic) [ASB] into the future even after the making of the gifts. We note that the Adult’s assets are largely held jointly with [ASB].

8. [8]
   On 27 April 2023, this Tribunal gave directions in furtherance of that application requiring inter-alia AJB to provide to the Tribunal a statement of CJB’s income and expenditure on a weekly, fortnightly, or monthly basis, and if CJB’s income includes any means-tested pension or other benefit to explain any impact of the proposed gifts on that pension or benefit.^[4]
9. [9]
   On 22 August 2023, this proceeding came before me on for an oral hearing. Whilst AJB had previously provided at various times information purportedly in response to those directions,^[5] in my opinion that information was not satisfactory to enable me to fully understand the impact, if any, the gift would have on CJB’s financial circumstances and needs for the remainder of her life. It was insufficient to ensure that the relevant legislative ‘General Principles’ would be met. During the conduct of that hearing it became apparent to me that:

   1. as noted in the application, CJB’s finances were tied in with her husband’s finances, the majority of their funds being jointly held;
   2. AJB also held his father’s enduring power of attorney and was simultaneously managing his father’s finances alongside the management of his mother’s finances; and
   3. Whilst it was said to be a gift being made only by their mother, it was entirely unclear as to whether the intended gift was to come from only his mother’s funds or from funds held jointly with ASB, the latter appearing to be most likely.
10. [10]
    That being said, in my opinion it opened the door to questions about the effect, if any, the gifted amount, if paid, could have on ASB’s finances and accordingly whether the General Principles were being met by AJB as his father’s attorney.
11. [11]
    Accordingly I adjourned the hearing part heard and gave Directions for the provision by both AJB and SRB of the following:

    1. Evidence from the [Named Bank] as to the separation of joint accounts held by CJB with her husband ASB identifying funds separately held in the name of CJB from which the proposed payment of $500,000 (the conflict transaction in issue) was intended to be made; and
    2. A report from an independent chartered practicing accountant, or a licenced financial advisor, as to the effect the proposed payment of $500,000 will have on the financial circumstances of CJB in terms of her financial needs for the remainder of her natural life.
12. [12]
    Ultimately, after two extensions of time for the provision of that information, AJB filed the requisite information.^[6]
13. [13]
    It is against this list of facts and circumstances that I reached the conclusion I did in this proceeding.

The Issues

14. [14]
    There was nothing before me, either documentary or oral, to suggest to me that the enduring power of attorney given by CJB appointing AJB and SRB was in any way invalid such that the attorneys were not empowered to manage their mother’s financial affairs. Nor was there anything before me to suggest that there was any doubt CJB was, at the time of the hearing, of impaired capacity to the extent of, at the very least, financial matters.^[7] Not only did the oral evidence of both AJB and SRB satisfy me that this was so, but it was also supported by a health professional’s report.^[8]
15. [15]
    Thus, the issue before me was a singular one, such being whether the two conflict transactions should be approved.

Should the conflict transaction be approved ?

Relevant Law

16. [16]
    This issue called for the exercise of this Tribunal’s protective jurisdiction, such being to ensure care is taken of those without capacity to care for themselves by way of this Tribunal exercising a form of substituted judgment in considering inter-alia what CJB would likely do if having capacity.^[9]
17. [17]
    Notwithstanding that CJB had given her power of attorney under the relevant legislation in New South Wales, for the purposes of this proceeding the issue fell to be determined under the POA Act.^[10]
18. [18]
    There are three primary relevant provisions of that Act which are engaged in this proceeding.^[11] For ease of reference I extract them here:

73  Avoid conflict transaction

1.  An attorney for a financial matter may enter into a conflict transaction only if the principal, or the court under section 118(2), has authorised the transaction, conflict transactions of that type or conflict transactions generally.

…

6.  A conflict transaction is a transaction in which there may be conflict, or which results in conflict, between—

1.  the duty of an attorney towards the principal; and

2.  either—

1.  the interests of the attorney, or a relation, business associate or close friend of the attorney; or

2.  …

88  Gifts and donations

1.  Unless otherwise authorised under this Act, an attorney for a principal may give away or donate the principal’s property only if—

1.  the gift or donation is—

1.  of the nature the principal made when the principal had capacity; or

2.  of the nature the principal might reasonably be expected to make; and

2.  the value of the gift or donation is not more than what is reasonable having regard to all the circumstances and, in particular, the principal’s financial circumstances.

2.  …

118 Advice, directions and recommendations etc.

1.  On an application about a matter, the court may give directions or advice or make a recommendation, order or declaration about the matter or another matter related to this Act, including about—

1.  the interpretation of the terms of, or another issue involving, a power of attorney, enduring power of attorney or advance health directive; or

2.  the exercise of an attorney’s power or another issue involving an attorney’s power.

2.  Without limiting subsection (1), the court may, by order and subject to the terms the court considers appropriate, authorise an attorney, either generally or in a specific case, to undertake a transaction that the attorney is not otherwise authorised to undertake or may not otherwise be authorised to undertake, if the court is satisfied the transaction would be in accordance with the general principles.

19. [19]
    Subject only to one restriction, this Tribunal has unfettered discretion to determine whether to authorise a conflict transaction. That restriction is, as this is a power that the Tribunal is exercising under the POA Act the General Principles are to be applied, such being the reference to the ‘General Principles’ in that last provision extracted as they are laid out in s 6C of the POA Act.^[12]
20. [20]
    In doing so there must be a balance. That is, while there must be encouragement of self-reliance and substituted judgement, the Tribunal must act consistent with the adult’s proper care and protection, such including protection of financial interests.^[13] The Tribunal must also consider the nature of the transaction, and what the adult’s views and wishes are, or at the very least were when the adult had capacity, in deciding whether the conflict transaction should be approved.^[14]
21. [21]
    Finally, evidence must also be led to demonstrate the benefit to the adult or the necessity to protect the adult’s interests, and what the adult’s views and wishes are, or once again at the very least were when the adult had capacity, in relation to the transaction.^[15]

Evidence

22. [22]
    The material before me was relatively brief and succinct in its content. Whilst not in any way minimising the weight that could be attributed to any of it, for the purposes of these reasons in my opinion it suffices to record the relevant parts of it merely by way of summary:

    1. Whilst being one of the appointed attorneys, SRB gave evidence of her mother having previously gifted funds to SRB’s daughters, her understanding of what her mother’s present view would be in the absence of a similar gift being made to AJB’s sons, and in turn SRB gave her support for the gifts to her nephews;^[16]
    2. Both AB and RB gave affidavits in this proceeding to which they each exhibited an e-mail to them both said to be from CJB dated 25 November 2015 entitled ‘A plan for you both’ in which the gift of $250,000 to each of them was raised with the following comment being made therein;^[17] and

… We would like to help you both get a step onto the real estate ladder as we think you are sensible lads. We would like to take your time looking at units, townhouses etc. either separate ones of together and then when you find a good one we would finance you to the limit of $250,000 each or $500,000 if you share. …

3. RB also exhibited later e-mails from CJB up to May 2019 of similar content.^[18]

23. [23]
    As I noted it earlier herein, AJB had also filed material said to show his mother’s financial circumstances and that the gift of $500,000 would not create any adverse result for her on-going needs. However, as I also noted it earlier, such did not satisfy me that this was so particularly given that at least in part it was evidence of jointly held funds with ASB, and not funds solely held by CJB. What then followed as a result of the directions I gave was more detailed and precise evidence from AJB as to his mother’s financial circumstances which showed with clarity:^[19]

    1. CJB’s personal assets totalling $1,850,000, of which $600,000 was held in an annuity account providing the source of CJB’s income, and $860,000 was held on deposit solely in CJB’s name with the Commonwealth Bank; and
    2. A statement by a Chartered Accountant that, after review of relevant financial documentation as referenced therein, his opinion was the payment of the $500,000 “will not have a detrimental impact on maintaining the financial needs of [CJB] for the remainder of her natural life.”

Consideration of the Issue

24. [24]
    Noting the comment extracted from the e-mail CJB sent to AB and RB as I have referenced it earlier herein, my first thought was that the gift was to have come from both CJB and ASB. However, in discussion with both AJB and SRB during the hearing I was satisfied on the basis of what they both said that, whilst the e-mail suggests a joint gift, it was always their mother’s wish that the gift be made whether it came from her funds alone or from funds held jointly with her husband.
25. [25]
    Given the evidence is that CJB had made similar gifts to her other grandchildren in years past, and the evidence is that the gifts which are the conflict transactions for which approval is sought is of the same nature, one might think that they fall within the authority of s 88 of the POA Act and thus approval is not required. However, in my opinion, it is the provisions of s 88(b) that is relevant and so giving rise to, or at the very least the potential need for, the approval.
26. [26]
    Moreover, it must not be overlooked that, when giving the enduring power of attorney to AJB and SRB, CJB expressly excluded the power to give reasonable gifts, thus invoking the operation of s 73(1) of the POA Act given the express absence of authority from CJB to make a gift. But even if the gifts proposed to be made fell within the ambit of s 88, in my opinion they would still in my opinion fall within the ambit of a conflict transaction under s 73 of the Act because the gifts are proposed to be given to the sons of one of the attorneys, the nephews of the other.
27. [27]
    There is also the issue arising in terms of the value of the gift relative to CJB’s present circumstances, in particular her financial circumstances, such which may readily be considered to be different now as a result of her dementia, loss of cognitive abilities, and the fact she is now a permanent resident of an aged care facility which of itself carries a substantial financial burden. This falls squarely into the ambit of s 73. For that reason alone it is appropriate and proper that the attorneys have sought approval for the transactions.
28. [28]
    All that being said, as noted earlier herein, s 118(2), which as relevant in this proceeding must be read in conjunction with s 73(1) and (6), s 88, and s 109A of the POA Act, empowers this Tribunal with a discretion to authorise an attorney to undertake a conflict transaction if satisfied the transaction would be in accordance with the General Principles. Accordingly, it follows that I must answer two questions in the positive before authorising the transactions, namely:^[20]

    1. Am I satisfied that the transactions accord with the General Principles?; and
    2. Should I exercise my discretion to authorise the attorneys to enter into those transactions?
29. [29]
    In addressing those two questions, in my opinion there are four of the General Principles found in s 6C of the POA Act that are directly engaged in this proceeding, each of which must be shown to have been positively engaged before the discretion should be exercised in favour of authorising the transactions. I discuss each of them in turn.

General Principle 1 – Presumption of capacity

30. [30]
    I have already addressed this issue earlier herein and need not repeat here what I have already said. Whilst the general principle is a presumption of capacity, that presumption has been rebutted on the material that is before me. Accordingly I can be satisfied that my decision to authorise the transaction is not inconsistent with this principle.

General Principle 8 – Maximizing an adult’s participation in decision-making

31. [31]
    I accepted as a fact that CJB’s dementia had deteriorated to a point where it was no longer possible for her to realistically be expected to participate in the process of deciding, at the time of the hearing, to authorise the payment of $500,000 in total to her two grandsons. For that reason, notwithstanding the provisions of GP 8(6) that provides for CJB “not to be treated as unable to make a decision about a matter unless all reasonable steps have been taken to provide her with the support and access to information to make a communicate a decision”, in my opinion this Principle is not engaged to its full extent.^[21]
32. [32]
    But that is not to say that her participation should be ignored. In my opinion her participation can be engaged by identifying what her views, wishes, and preferences would be in that regard.
33. [33]
    That was done by way of the oral submissions from AJB and SRB as to the discussions they had had with their mother in earlier years, but moreover from the e-mailed communications from CJB to both AB and RB in earlier years before the decline of her cognitive abilities. It seems to me that this is sufficient, and I find it to be so, as evidence of this  General Principle being satisfied.

General Principle 9 – Performance of functions and exercise of powers

34. [34]
    The focus of this principle is not in terms of any dealings with CJB in identifying the decision she might have made, but rather it is on the content and nature of the decision to be reached.^[22]
35. [35]
    Under this Principle, it is necessary for this Tribunal to reach the conclusion required of it in a way that, inter-alia, safeguards CJB’s rights, interests, and opportunities. It is for that reason I sought the further documentation from AJB in terms of the financial information. In the absence of that further documentation the material that was before this Tribunal was simply devoid of adequate substance to enable a point of satisfaction of this Principle to have been reached.
36. [36]
    The provision of that information shows me, and I can thus readily find it as a fact, that CJB’s rights, interests, and opportunities, as they may readily be expected to arise  in her remaining years as a person sadly afflicted by the declining condition and effect of dementia as a permanent resident of an aged care facility, are still safeguarded notwithstanding the gifting of $500,000. It could not be said to not be in her interests. Accordingly General Principle 9 has been met in the affirmative.

General Principle 10 – Structured decision-making

37. [37]
    This Principle is applied in conjunction with the application of General Principle 9, and when that earlier Principle has been satisfied it is primarily under subsections (3) to (5) of General Principle 10 that this proceeding falls to be determined. For ease of reference I extract here in full this Principle as it is expressed in s 6C of the POA Act:

10  Structured decision-making

1.  In applying general principle 9, a person or other entity in performing a function or exercising a power under this Act in relation to an adult, or under an enduring document for an adult, must adopt the approach set out in subsections (2) to (5).

2.  First, the person or other entity must—

1.  recognise and preserve, to the greatest extent practicable, the adult’s right to make the adult’s own decision; and

2.  if possible, support the adult to make a decision.

3.  Second, the person or other entity must recognise and take into account any views, wishes and preferences expressed or demonstrated by the adult.

4.  Third, if the adult’s views, wishes and preferences can not be determined, the person or other entity must use the principle of substituted judgement so that if, from the adult’s views, wishes and preferences, expressed or demonstrated when the adult had capacity, it is reasonably practicable to work out what the adult’s views, wishes and preferences would be, the person or other entity must recognise and take into account what the person or other entity considers the adult’s views, wishes and preferences would be.

5.  Fourth, once the person or other entity has recognised and taken into account the matters mentioned in subsections (2) to (4), the person or other entity may perform the function or exercise the power.

38. [38]
    In my opinion it is readily possible and correct to step past subsection (2) once it is established that General Principles 1 to 8 have been met,^[23] and moreover on the basis as I have already noted herein that CJB’s cognitive decline is such that she is not practically now able to participate in the decision making process in any meaningful way.
39. [39]
    That being so, the focus then falls on a recognition and acceptance of CJB’s views, wishes, and preferences as required under subsections (3) and (4), such having been identified in a consideration of General Principle 8. It is not however the question of a determination as to what CJB’s views, wishes, and preferences would be in terms of the decision I am being asked to make, that being the authorisation of a conflict transaction, but rather it is in terms of her views, wishes, and preferences as to the nature of the matter upon which the decision is to be made.^[24]
40. [40]
    In that regard I could readily accept on the evidence that was before me it was abundantly clear that CJB wished to gift a substantial fund to each of her grandchildren. She had done so to two of them earlier but was still to do so to AB and RB, and undoubtedly would have done so but for the on-set of her dementia and her cognitive decline. The decision that I am being asked to make is consistent with the matter upon which the effect of that decision gives rise to.
41. [41]
    I can thus readily accept and I so find that General Principle 10 has also been satisfied.

Conclusion

42. [42]
    On the basis of the satisfaction of those General Principles, particularly given the stated views, wishes and preferences of CJB to which I have referred, I see no reason not to exercise the discretion afforded me as constituting this Tribunal and authorise the transactions proposed. In my opinion there is a solid basis for the transactions proposed, and certainty that the transactions does not adversely affect the financial circumstances of CJB such that she would be left without the requisite safeguards in place.
43. [43]
    Accordingly, the proper outcome is that AJB’s and SRB’s application for approval of a conflict transaction should be allowed and the relevant transactions authorised. There will be an order to that effect.