SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
COURT OF APPEAL
Case Title: / Alcazar-Stevens v StevensCitation: / [2017] ACTCA 12
Hearing Date: / 13 February 2017
Decision Date: / 7 April 2017
Before: / Murrell CJ, Elkaim and Rangiah JJ
Decision: / Leave to appeal granted. Appeal dismissed with costs.
Catchwords: / APPEAL – POWERS OF ATTORNEY – STATUTORY INTERPRETATION – Appeal against extension of time to make an application for compensation under s 50(1) – Whether extension should have been refused because respondent had no reasonable prospects of establishing standing – Whether primary judge erred by misconstruing s 50(1) – Whether primary judge erred by failing to find that the respondent lacked any reasonable prospects of establishing standing
Legislation Cited: / Administration and Probate Act 1929 (ACT) ss 32, 38A, 39, 88
Family Provision Act 1969 (ACT) s 8
Guardianship and Management of Property Act 1991 (ACT) s 8
Powers of Attorney Act 1956 (ACT) s 15
Powers of Attorney Act 2006 (ACT) ss 3, 8, 10, 13, 27, 34, 38, 40, 41, 42, 47, 48, 50, 60, 74, 80, 81, 84
Cases Cited: / Alexander v Perpetual Trustees WA Ltd [2004] HCA 7; 216 CLR 109
Byers v Overton Investments Pty Ltd [2001] FCA 760; 109 FCR 554
Despot v Registrar General (NSW) [2013] NSWCA 313
Hunter Valley Developments v Cohen [1984] FCA 176; 3 FCR 344
Millington v Wilkie [2005] NSWCA 45; 62 NSWLR 322
Onus v Alcoa of Australia Ltd [1981] HCA 50; 149 CLR 27
Ramage v Waclaw (1988) 12 NSWLR 84
Seiler v Minister for Immigration, Local Government and Ethnic Affairs [1994] FCA 12; 48 FCR 83
Parties: / Catherine Alcazar-Stevens (Appellant)
Alexander Stevens (Respondent)
Representation: / Counsel
Mr M Orlov (Appellant)
Mr W Sharwood (Respondent)
Solicitors
Elringtons Lawyers (Appellant)
Snedden Hall & Gallop Lawyers (Respondent)
File Number(s): / ACTCA 26 of 2016
Decision under appeal: / Court/Tribunal: Supreme Court of the Australian Capital Territory
Before: Mossop AsJ
Date of Decision: 11 July 2016
Case Title: Stevens v Alcazar-Stevens
Citation: [2016] ACTSC 170
THE COURT:
1. On 11 July 2016, the primary judge granted the respondent an extension of time to make an application for an order under s 50(1) of the Powers of Attorney Act 2006 (ACT) (POA Act). This is an application for leave to appeal against that interlocutory judgment.
2. Section 50 of the POA Act provides, relevantly:
50 Compensation for failure to comply with Act
(1) An attorney under a power of attorney may be ordered by the Supreme Court to compensate the principal (or, if the principal has died, the principal’s estate) for a loss caused by the attorney’s failure to comply with this Act in the exercise of a power.
…
(3) If the principal or attorney has died, the application for compensation must be made to a court within 6 months after the day of the death.
…
(5) The Supreme Court may extend the application time under subsection (3)
...
3. The issue before this Court is whether the extension of time should have been refused on the basis that the respondent has no reasonable prospects of proving that he has standing to bring an application for compensation under s 50(1) of the POA Act.
4. Given that the Court concludes that the application for leave to appeal should be allowed but the appeal should be dismissed, it is convenient to refer to the matter as an appeal.
Background
5. Luisa Aida Maldonado (the deceased) died on 25 November 2015, leaving two daughters and three sons. Under the deceased’s will, her daughters are the beneficiaries of her estate. Her sons are not beneficiaries.
6. One of the deceased’s daughters, Constance Stevens, was named as executor under the will, but she has not applied for probate. The appellant is the deceased’s other daughter. The appellant was the deceased’s attorney under an enduring power of attorney dated 3 March 2011. The enduring power of attorney was revoked upon the deceased’s death by the operation of s 60 of the POA Act.
7. The respondent is one of the deceased’s sons. He alleges that while the deceased was still alive, the appellant used her power of attorney to sell land owned by the deceased for the sum of $497,000. The respondent alleges that the appellant then paid $150,010 of the proceeds to herself and used another $90,000 to retire a loan she and her husband had taken out. The appellant also paid $150,010 to her sister, the executor. The appellant admits the transactions, but says that they were carried out in accordance with her mother’s wishes.
8. The respondent claims that the appellant’s conduct involved “conflict transactions” which were made in contravention of s42(3) of the POA Act. He alleges that by reason of those transactions, the deceased’s estate has suffered a loss of $390,020. He wishes to seek an order under s50(1) of the POA Act, that the appellant pay compensation to the estate of the deceased. As no such application had been made within the 6 month period prescribed under s 50(3), the respondent sought an extension of time pursuant to s 50(5) of the POA Act.
The proceeding before the primary judge
9. The only issue in dispute before the primary judge concerned the respondent’s standing to bring an application under s50(1) of the POA Act. The respondent claimed to have a sufficient interest in the estate to apply, as he proposed to bring an application for a family provision order under the Family Provision Act 1969 (ACT), and a proceeding challenging the validity of the deceased’s will.
10. The appellant submitted that only the executor or administrator of a deceased estate, or the Public Trustee and Guardian, has standing to bring an application under s50(1) of the POA Act and, accordingly, the respondent should be refused the extension of time.
11. The primary judge rejected the appellant’s argument. His Honour noted that s50 of the POA Act is silent as to who may make an application. In contrast, ss27, 80, 81 and 84 of the POA Act expressly identify who may make an application under those provisions. His Honour considered that if the intention of the legislature had been to confine the persons at whose instigation an application under s50 could be made, it would have been similarly easy to do so. His Honour said that the starting point was that under s50, a statutory power is given to the Court in terms which do not confine the class of persons who may invoke it.
12. The primary judge noted that any order made under s50 of the POA Act must involve payment to the principal or the principal’s estate and nobody else. His Honour also noted that there is a statutory regime under the Administration and Probate Act 1929 (ACT) (Administration and Probate Act) for representation of the estate and for replacement of the representative. His Honour stated that while an application under s50 of the POA Act would usually be made by either the principal or the representative of the estate, the regime under the Administration and Probate Act did not necessarily imply that those persons were exclusively entitled to make such an application.
13. The primary judge noted that the predecessor to the POA Act, the Powers of Attorney Act 1956 (ACT) (the 1956 Act) contained a provision (s15) permitting applications to the Court to remedy a breach of duty by an attorney under an enduring power of attorney. That section specified that the application could be made by the public trustee, a trustee company or, with the leave of the court, “some other person”. His Honour said that there was nothing in the POA Act or any relevant extrinsic material to indicate an intention to reduce the range of persons able to seek a remedy for a breach of duty by an attorney.
14. His Honour concluded that given the protective purposes behind the POA Act generally, and s50 in particular, the section should not be interpreted as being confined to applications made by the principal, a representative of the principal or the principal’s estate. His Honour decided that although the respondent had not commenced proceedings to challenge the validity of the will or for family provision, he had a sufficient interest to make an application under s50(1) of the POA Act. His Honour granted the extension of time.
The parties’ submissions on appeal
15. The appellant’s written submissions summarise her argument as follows:
11. The only issue is whether the respondent has standing to bring an application for a compensation order in favour of the estate under s 50 of the POA Act.
12. The appellant submits that the respondent lacks standing because, on the proper construction of the POA Act, where the principal has died, only a person who is entitled at law to represent the estate may bring an application for a compensation order under s 50 of the Act, and the respondent is not such a person.
13. Alternatively, the appellant submits that neither the fact that the respondent is an “eligible person” for the purpose of seeking a family provision order under the Family Provision Act 1969 (ACT), nor that the respondent would be entitled to share in his mother’s estate upon intestacy if he succeeded in challenging the validity of the will, is a sufficient basis to give him standing to invoke the court’s jurisdiction in the absence of any evidence to show that he has a prima facie case for a family provision order to be made in his favour or that there is any real and substantial basis for any challenge to the validity of his mother’s will.
16. The appellant’s primary submission is that on the proper construction of the POA Act, only a person who is entitled to represent the estate may bring an application for compensation under s50(1). The appellant submits that the statutory right of action created by s50(1) is a chose in action belonging to the principal, which forms part of the principal’s estate when the principal dies. The appellant notes that under s38A of the Administration and Probate Act, the real and personal property of a deceased person vests in the Public Trustee and Guardian until representation of the estate is granted to an executor or administrator, at which point the real and personal estate passes to and becomes vested in the executor or administrator pursuant to s39. The appellant argues that the legislature enacted s 50 of the POA Act with the Administration and Probate Act in mind, and it was not the legislative intention to enlarge the class of persons entitled to act in a representative capacity on behalf of the principal’s estate. The appellant submits that only an executor or administrator, or, in the absence of such a person, the Public Trustee and Guardian (pursuant to an order made under s88 of the Administration and Probate Act), may bring an application for relief under s50(1) of the POA Act.
17. The appellant submits that the primary judge erred in failing to rule that the respondent lacked standing to bring an application under s50(1) of the POA Act.
18. The appellant’s alternative argument was not developed in her written submissions, nor was that argument mentioned in her oral submissions.
19. The respondent submits that the appeal should be dismissed, essentially for the reasons given by the primary judge.
The legislation
20. Section 13(1) of the POA Act provides that an adult (called the “principal”) may, by a power of attorney, appoint one or more people to do anything for the principal that the principal can lawfully do by an attorney. Section 3 defines “power of attorney” as a general power of attorney or an enduring power of attorney, but does not provide a substantive definition of the expression. In Despot v Registrar-General (NSW) [2013] NSWCA 313 at [48], a power of attorney was described as “a formal instrument by which authority or power to represent the donor is conferred on the donee.”
21. Section 8 of the POA Act states that an enduring power of attorney is a power of attorney that is not revoked by the principal becoming a person with impaired decision-making capacity. Section 13(2) provides that by an enduring power of attorney, an adult may appoint one or more people to do anything in relation to certain matters, including property matters. A “property matter” is defined broadly in s10 to mean a matter relating to the principal’s property.
22. Part 4.3 of Ch4 of the POA Act has the heading, “Things attorneys can and cannot do”. Section 34 provides that a power of attorney does not authorise the attorney to do anything that would result in a benefit being given to the attorney, unless that is expressly authorised under the power of attorney. Section 38 provides that an enduring power of attorney does not authorise an attorney to make a gift of all or any of the principal’s property to anyone else unless the power of attorney expressly authorises the making of the gift. Section 40 applies if an enduring power of attorney expressly authorises the payment of reasonable living expenses for a named person, and operates to limit the payments to reasonable costs of five categories of living expenses. Section 41 allows an attorney under an enduring power of attorney to provide from the principal's estate for the needs of a dependant of the principal, but, unless there is a contrary intention expressed, such provision is limited to what is reasonable.
23. Part 4.4 of Ch4 has the heading “Obligations of attorneys and others”. Section 42(3) provides that an attorney may enter into a conflict transaction only if the principal authorises the transaction, conflict transactions of that kind, or conflict transactions generally, in a power of attorney. The expression “conflict transaction” is defined in s42(1) as a transaction that results, or may result, in conflict between the duty of an attorney towards the principal and either the interests of the attorney (or a relative, business associate or close friend of the attorney) or another duty of the attorney.