GMAL v The Public Guardian[2018] QCATA 107

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL

REASONS FOR DECISION

1. [1]
   The applicants in this matter are GMAL and MHH.  They are the daughter and son-in-law of TCAR (the adult).  The latter is an 89 year old widow who resides with the applicants in a town in North Queensland.
2. [2]
   The adult appointed one of the applicants, GMAL, as her attorney under an enduring power of attorney dated 10 April 2014.
3. [3]
   On 4 November 2015, the adult executed a transfer of her real property and former principal place of residence (the property) to herself and to the applicants as joint tenants (the transaction), with the consideration expressed to be the natural love and affection borne by the transferor to the transferees.  This transfer is now registered on the title to the property.
4. [4]
   The Public Guardian brought applications to the Tribunal seeking a declaration about the adult's capacity to enter into the transaction, and directions.  Another daughter of the adult, HDL, brought an application for the appointment of an administrator for her. 
5. [5]
   In the result, the Tribunal made orders dismissing the application for the appointment of an administrator, and directing the attorney to effectively reverse the transaction by transferring title to the property to the sole name of the adult.
6. [6]
   The applicant appeals against this decision or seeks leave to appeal.
7. [7]
   This matter was heard by the Appeal Tribunal on 12 February 2018, with the decision reserved.  

Grounds of Appeal

8. [8]
   The applicants claim that the identified grounds of appeal include both questions of law alone and mixed questions of law and fact, and are discussed as follows.^[1]
9. [9]
   Ground 1 asserts that the member erred in law by not clearly applying the presumption of capacity.
10. [10]
    It is correct to say that the member did not specifically hold that the adult was entitled to the presumption that she had capacity to enter into the transaction.  In fact, the only reference thereto was in the member's reasons for decision where he seems to be referring to the Public Guardian’s submissions^[2] about the transaction.  
11. [11]
    In MP v Public Trustee of Queensland,^[3] the Appeal Tribunal noted in allowing an appeal:

… the Tribunal member made no specific reference to the presumption of capacity during the conduct of the hearing, or in the oral reasons for decision provided on the day of the hearing.

It is not clear that the presumption of capacity was applied when the Member determined that MP's application be dismissed.  We are satisfied that the Tribunal Member erred in not clearly applying the presumption during her deliberations.

12. [12]
    On the basis that the member's reasons do not clearly apply the presumption during his deliberations, the member fell into error, and the appeal on this ground is allowed. 
13. [13]
    Grounds 2, 3, 6, and 7 assert that the member erred by not considering the circumstances surrounding the transaction (both before and after) when determining whether or not the adult had capacity; did not place enough weight on the fact that the adult had testamentary capacity; and in stating that testamentary capacity had nothing to do with property.
14. [14]
    The essence of these grounds is the proposition that the adult's decision to enter into the transaction arose out of her desire to ensure the intended gift of the property to the applicant GMAL upon her passing was taken out of the reach of potential challenges by other family members.  This was done on the basis of legal advice the adult received when providing instructions for her will.
15. [15]
    The effect of the transaction was to take the property out of the adult's estate, and therefore not subject to challenge by way of a family provisions application, for example.  Because the transaction arose out of legal advice in relation to the adult's will, the applicants’ assert that the transaction simply pre-empted the adult's testamentary wishes.
16. [16]
    Thus, if the adult possessed testamentary capacity, the applicants maintain that she also had capacity for the transaction, because the two were interrelated.
17. [17]
    The concept of capacity is decision-specific.  That is to say, it depends upon the transaction in question.  As stated in Gibbons v Wright: ^[4]

The law does not prescribe any fixed standard of sanity as requisite for the validity of all transactions. It requires, in relation to each particular matter or piece of business transacted, that each party shall have such soundness of mind as to be capable of understanding the general nature of what he is doing by his participation.

… the mental capacity required by the law in respect of any instrument is relative to the particular transaction which is being effected by means of the instrument, and may be described as the capacity to understand the nature of that transaction when it is explained.

18. [18]
    While there was evidence of health professionals which may have inclined the member to conclude that adult had testamentary capacity at the time of the transaction, the Appeal Tribunal holds that the two types of transactions are essentially different in character, and thus the elements of capacity for each type of transaction are accordingly different.  It does not follow therefore that an adult who has testamentary capacity has by that fact alone the capacity to enter into a different transaction – even if it was a transaction designed to ensure the adult's testamentary wishes were beyond challenge.
19. [19]
    The member's comment that testamentary capacity has nothing to do with property, is in essence, taken to be a somewhat inelegant expression in making the point that the transactions are different in nature.
20. [20]
    These grounds of appeal must fail.
21. [21]
    Grounds 4 and 5 assert that the member erred in not placing enough weight on the solicitor's evidence, and failed to correctly apply the principles under s 5 of the Guardianship and Administration Act 2000 (Qld).
22. [22]
    In this context, the adult consulted a solicitor about changing the terms of her will.  When expressing her wish that the applicants were to receive her property, she was advised that this gift may be subject to challenge. Acting on the advice of her solicitor, the adult then proceeded to transfer the property to the joint names of herself and the applicants.  The solicitor was the adviser concerning the adult's will and in relation to the transaction, was the person best in a position to assess capacity at the precise time of the transaction.  Thus, the evidence of the solicitor ought to have been pivotal in assisting the Tribunal to assess the adult's capacity to enter into the transaction.
23. [23]
    However, there were perceived deficiencies in the solicitor's evidence in this regard.  Clearly, the transaction was undertaken on the solicitor's advice.  In fact, the adult initially intended to transfer the whole of her property to the applicants, but the solicitor recommended transfer of a one-half interest only.  While the solicitor opined that the adult understood the transaction, it is the ‘effect’ thereof which gave the member cause for concern.  That is because there is no evidence from the solicitor to indicate what advice or discussions to place about the potential repercussions which may follow from making such a gift.  For example, the possible effect on the adult's pension, her future needs, and the potential need to raise money for an accommodation bond may have been relevant considerations.  But there is no evidence to suggest that the adult had turned her mind to her potential future financial needs.  The separate representative for the adult indicated at the hearing that these were issues which should have been addressed.
24. [24]
    While the evidence of the solicitor in relation to testamentary capacity, and the existence of undue influence, may have been of assistance, her failure to address the financial issues which may have arisen out of the transaction, is unfortunate.  It denied the Tribunal the opportunity to consider whether the adult was aware of and had weighed all the potential issues arising out of the transaction.
25. [25]
    For these reasons, the Appeal Tribunal, finds that the member was entitled to find that the evidence of the solicitor was of limited weight, and the appeal on this ground fails.
26. [26]
    Ground 8 asserts the member erred in considering the adult's future financial needs when assessing her capacity.
27. [27]
    This ground is raised in the context of the member's finding that for the adult to understand the effect of the transaction, she would need to have considered and understood the consequences of the transaction on her financial circumstances.  The applicants submit that even if such issues had been raised, the existence of that advice or otherwise would not be an indicia of capacity.  Further, the solicitor's failure to raise these issues does not tend to rebut the presumption of capacity.
28. [28]
    It is true to say that the existence of relevant advice is not an indicia of capacity – but the adult's response to that advice may have demonstrated she was aware of the relevant consequences of the transaction. That awareness may be relevant to the issue of capacity, particularly in circumstances where the evidence of health professionals tended to the view that the adult was not capable of complex financial transactions.
29. [29]
    The Appeal Tribunal accepts the proposition that failure to raise the issues does not tend to rebut the presumption.  However, it does tend to call into question the objective grounds upon which the solicitor relied in opining on the capacity issue.
30. [30]
    In essence, the adult was entitled to the presumption that she had capacity to enter into the transaction.  That presumption extends to the nature and effect thereof, including potential consequence arising out of the transaction.
31. [31]
    This ground is connected with Ground 1, and for similar reasons the Appeal Tribunal finds that the member fell into error in not specifically referring to this legal presumption.
32. [32]
    Grounds 9, 10, and 11 assert the member erred in confusing the sequence and authors of medical reports; the sequence of the adult's wills, and in relying on inaccurate material provided by the Office of the Public Guardian.
33. [33]
    There may be some inaccurate dates mentioned in the member's reasons for decision.  However, it was not established how the correction of any such inaccuracies would have affected the member's decision.
34. [34]
    The Public Guardian refers to the adult transferring a one-half share of her property to her attorney.  This is indeed inaccurate in that the property was transferred to three joint tenants.
35. [35]
    However, there is no evidence to suggest these issues were material to the member's decision, or if corrected, would likely have resulted in a different decision, accordingly, the appeal on these grounds fails.
36. [36]
    Ground 12 refers to the fact that the Tribunal's order does not compel MHH to re-transfer his interest in the property, and therefore the order cannot be carried out.
37. [37]
    This assertion is correct.  However, it is not in issue that the adult intended to follow the advice of the solicitor and transfer a one-half interest in the property.  The resultant ownership of the property by three joint tenants does not accord with the adult's intention.  It is not appropriate for the title to the property to remain in its current state, and further orders ought to be considered which will effectively remedy this circumstance.
38. [38]
    It is not clear if this ground of appeal intended to bring about this finding, but in any event, the Appeal Tribunal holds that a further remedial order may be appropriate in the circumstances.     
39. [39]
    Mr John Eylander, separate representative for the adult, provided grounds for appeal.^[5]  To the extent that they differ from those raised by the applicants, they are discussed below.
40. [40]
    Ground 1:  The Tribunal misdirected itself when stating there is no evidence the adult turned her mind to her future financial needs.^[6]  The adult's appointment of the attorney was the adult's decision on this point. The tribunal conflated the attorney's powers and duties with the belief that the adult had the capacity to make these decisions.  The evidence was that the adult did not have capacity to make complex financial decisions.  Mr Eylander's submissions included the statement:  ‘It is not in dispute that the adult lacked capacity to make decisions about complex financial matters after the death of her husband’ (22 June 2015).
41. [41]
    The decision about the transaction was in fact the decision to appoint an attorney.
42. [42]
    This submission is confusing.  It is a matter of fact that the attorney did not make the decision about the transaction.  It arose from instructions of the adult and she executed all relevant documentation.  It was the decision of the adult – and whether she had the capacity to do so is the central issue.
43. [43]
    This ground was not clarified at the appeal hearing.  The appeal on this ground fails.
44. [44]
    Ground 2: The Tribunal erred in finding that the acquisition by the attorney of a joint interest is a conflict transaction.^[7] Section 73(3) of the Act provides that a transaction is not a conflict transaction merely because by the transaction the attorney in the attorney's own right and on behalf of the adult – acquires a joint interest in property. Mr Eylander also submits that if the attorney had received a gift of a share as a tenant in common, then this would be a conflict transaction.
45. [45]
    It is noted that the reference to joint interest in s 73(3) includes an interest as tenant in common.  The distinction on the ground of the nature of the interest transferred is elusive at best.  The submission involves a misreading of the relevant legislation.  In any event the discussion is academic.  That is because the attorney did not enter into the subject transaction – as prohibited in s 73(1).
46. [46]
    The Appeal Tribunal holds that on the basis of the reasoning in paragraph [45] only, to the extent the member based his decision on the fact that the transaction was an unauthorised conflict transaction within the meaning of s 73 Powers of Attorney Act 1998 (Qld) (‘the Act’), the member fell into error. 
47. [47]
    Ground 3:  The Tribunal erred in classifying the transaction as a gift, for the same reason in Ground 2, namely that the adult retained a joint interest in the property, and thus the transaction was not a gift.  It is inaccurate to say that she, in effect, transferred a two-thirds interest to others, and the member's comments to this effect are challenged.^[8]
48. [48]
    Again, the distinction between a joint holding as opposed to tenants in common is elusive, and with respect, defies common sense.  The issue was raised at the appeal hearing, but was not clarified beyond Mr Eylander's written submissions.
49. [49]
    It cannot reasonably be argued that the adult has not given away part of her property – irrespective of whether the property is subsequently held jointly or as tenants in common.  The adult was previously the sole owner of the property, and now there are three owners, each with rights as co-owners.  If the property is sold, it is not clear on what basis the adult could claim an interest greater than one-third of the sale proceeds.  Mr Eylander asserts that a court order will require the assessment of interest in the property, with an equitable adjustment.
50. [50]
    In any event, the prohibition of gifts under s 88 of the Act does not apply because the attorney did not enter into the transaction.
51. [51]
    The Appeal Tribunal holds that on the basis of the reasoning in paragraph [50] only, to the extent the member based his decision on the fact that the transaction was a gift transaction in breach of s 88 the Act, the member fell into error.   
52. [52]
    Ground 3: While not raised as a specific ground of appeal, Mr Eylander submits that the adult was not unduly influenced by the attorney in the creation of her wills or in the decision to transfer an interest in her property. 
53. [53]
    The essence of the submission is to the effect that there is no evidence to suggest there was undue influence.  However, to simply point to an absence of evidence may be insufficient.  That is because the legislation contains a presumption of undue influence,^[9] and the onus thus lies on the attorney to produce evidence to show its absence.
54. [54]
    It is not clear if the presumption in s 87 of the Act was relevant to the member's decision.  However, on the issue of the legal presumption in s 87, the following events are noteworthy.
55. [55]
    The adult visited a solicitor for the purpose of changing her will. No presumption of undue influence applies to this process (so far as the tribunal's jurisdiction is concerned).  Thereafter, it seems to be clear that the adult's decision to enter into the transaction was motivated solely on the basis of the solicitor's advice about the effectiveness of the adult's testamentary wishes, given the right of a family member to challenge the terms of her proposed will.  In these circumstances, it is difficult to envisage how the presumption of undue influence could stand.
56. [56]
    The Appeal Tribunal holds that on the basis of the reasoning in paragraph [55], to the extent the member based his decision on the fact that the principal/adult was induced to enter the transaction by the attorney's undue influence, the member fell into error. 
57. [57]
    Mr Eylander also submits that the declaration by the tribunal to effect a setting aside of the transaction, results in the applicants being excluded as beneficiaries under the second will.  This is clearly not the adult's intention.  There is nothing inequitable in the status quo remaining as the attorney is providing the adult with a dignified existence, care, support, love and affection.
58. [58]
    The prejudice to the attorney may be an outcome, depending on findings about the adult's capacity to enter into the transaction.  However, this circumstance does not empower the Tribunal to set aside the legal principles which may arise from its finding of the facts.
59. [59]
    To the extent this submission is intended to be a ground of appeal, it must fail.
60. [60]
    HDL provided submissions to the Appeal Tribunal essentially supporting the member's decision, and outlining her concerns about the alleged ulterior motives of the attorney or of the applicants.^[10]
61. [61]
    TEG, the adult's son, also provided submissions which again consisted of support for the member's decision.^[11]  He also submits that insofar as the grounds of appeal relate essentially to the member not clearly applying the presumption of capacity, and by not applying the test for testamentary capacity to capacity for the transaction, they are questions of law only.  Therefore, there should be no order for a re-hearing. 
62. [62]
    The relevant principles to be applied in determining whether to grant leave are:

    1. (a)
       Is there a reasonably arguable case of error in the primary decision?^[12] 
    2. (b)
       Is there a reasonable prospect that the applicant will obtain substantive relief?^[13]
    3. (c)
       Is leave necessary to correct a substantial injustice to the applicant caused by some error?^[14] 
    4. (d)
       Is there a question of general importance, upon which further argument, and a decision of the appellate court or tribunal, would be to the public advantage?^[15]
63. [63]
    The Appeal Tribunal concludes:

    1. (a)
       Arguable case of error:  The member found, in essence, that the adult was not capable entering into complex financial transactions, and that the transaction fell into this category.  This was a finding which appeared to be open to the member on the evidence before him.
    2. (b)
       However, the Appeal Tribunal has found that the member fell into error on a number of issues.  Those errors are essentially questions of law, and may have contributed to the member's decision to some degree. 
    3. (c)
       However, the significance of these errors and the extent to which the member relied upon them in arriving at his decision, is not clear, and cannot be determined from the hearing transcripts or his reasons for decision.  Accordingly, it is appropriate for the matter to be returned to the member for reconsideration of the applicable legal tests and for reconsideration of his order made in relation to the property.
64. [64]
    Given the issues are legal in nature, it may usually be the case to not require additional evidence.  However, the applicants request the Tribunal to consider further affidavits at a rehearing, and the Tribunal may consider it appropriate to discuss with the applicants’ the terms of any remedial orders in relation to the property.  For these reasons, no order is made about the hearing of additional evidence.
65. [65]
    Orders made accordingly.