VICTORIAN CIVIL AND ADMINISTRATIVE TRIBUNAL
human rights DIVISION
GUARDIANSHIP LIST	
vcat reference No. G88262	
CATCHWORDS	
Enduring power of attorney – compensation for breach of duties as an attorney, invalidation of transactions – attorney systematically attempted to acquire principal’s assets for his own immediate or eventual benefit – breach of statutory and common law duties – Powers of Attorney Act 2014 (Vic) ss 63, 116	

Represented person/principal	EIB	
WHERE HELD	Melbourne via teleconference 	
BEFORE	Member A. Smith	
HEARING TYPE	Final hearing	
DATE OF HEARING	21 April 2022	
DATE OF ORDER AND WRITTEN REASONS	3 June 2022	
citation	EIB (Guardianship) [2022] VCAT 609	

Order
About the application
On 23 March 2018 the principal, [EIB], made an enduring power of attorney for financial matters. [EEX] and [YKO] were appointed attorneys. That power has been revoked by VCAT and State Trustees Limited has been appointed as [EIB's] administrator.  
State Trustees Limited applied to VCAT for orders about the validity of two transactions by the attorney, [EEX].
VCAT orders that:
The attorney, [EEX] in:
Being nominated as a beneficiary under [EIB's] HostPlus superannuation policy failed to comply with Part 6 of the Powers of Attorney Act 2014 (Vic). 
Twice preparing, facilitating [EIB's] signature and signing an alleged agreement for his own benefit dated 10 July 2019 and 12 August 2019 failed to comply with Part 6 of the Powers of Attorney Act 2014 (Vic). 
Therefore, under section 116(1)(d) of the Powers of Attorney Act 2014 (Vic), VCAT declares that both transactions above are invalid. 
[EEX] is not excused for the contravention under section 74 of the Powers of Attorney Act 2014 (Vic).

A. Smith
Member			

APPEARANCES:		
EEX, brother of EIB
Mr A. Schlicht of Counsel for EEX
Mr M. Mantello, solicitor for EEX
Ms H. Trimble, State Trustees Limited, applicant
YKO, sister of EIB
NME, sister of EIB
EDP, brother of EIB 

Reasons
The Victorian Civil and Administrative Tribunal (VCAT) is providing these reasons on a confidential basis. Clause 51AJ of Schedule 1 of the Victorian Civil and Administrative Tribunal Act 1998 provides that unless VCAT orders otherwise, a person must not publish or broadcast any report of a proceeding under the Powers of Attorney Act 2014 that identifies or could lead to the identification of a party to the proceeding.

1	EIB is a 60-year-old single woman who lives in an aged care facility. She is the eldest of six children in her family and both of her parents have died. State Trustees Limited (STL) has brought proceedings against one of her siblings, EEX, a former attorney under an enduring power of attorney (EPOA), alleging that he acted in breach of his duties as attorney and certain actions that he took as attorney should be invalidated. 
History of proceedings
2	Through her solicitors, EIB’s sister, YKO, applied in 2019 for orders about an EPOA, compensation and appointment of a guardian and an administrator. This resulted in the revocation of an EPOA and the appointment of STL as administrator on 27 November 2019.  
3	At the time of the 2019 application, there were also concerns that EEX had:
a	transferred funds from EIB’s $115,000 term deposit to a joint account in his and his wife’s names;
b	taken control of the deposit paid for the sale of EIB’s house – approximately $45,000; and 
c	taken control of monies paid under a Total and Permanent Disability claim made from EIB’s superannuation fund – approximately $32,000. 
4	STL has recovered these funds from EEX and these transactions did not form part of the compensation application. 
5	The compensation application has been varied since 2019, noting the resolution of the allegations set out in paragraph 3 above. In February 2020, STL notified the Victorian Civil and Administrative Tribunal (VCAT) that it would assume the role of applicant for compensation from EEX (instead of YKO) for the following outstanding matters: 
a	As attorney, EEX had a practice of paying expenses for EIB and reimbursing himself. STL initially alleged that of roughly $56,000 payments made in that fashion, roughly $28,000 was unaccounted for. [Prior to hearing, EEX furnished further accounts to STL, which they progressively accepted as reducing the sum alleged to be owing. By the hearing, the contested value had diminished to around $1,900 which EEX alleged may be due to an accounting error. For reasons of efficacy, STL withdrew that part of its application at the hearing.]  
b	STL proceeded with an amended claim, such amendment being approved by me at the hearing. The residual claim related to two events where EEX was allegedly in breach of his duties as an attorney. The first event concerns an alleged agreement in which EIB purportedly signed a document conveying an unconditional gift of $269,000 to EEX when such funds become available (the alleged agreement). The second event concerns the circumstances under which EEX became the nominated beneficiary for EIB’s superannuation fund (the beneficiary nomination). 
Relevant legislative provisions
6	STL has asked VCAT to exercise powers under section 116(1)(d) of the Powers of Attorney Act 2014 (Vic) (POAA), which provides:
(1)	On application under Division 3, … VCAT may make an order about any one or more of the following matters in relation to an enduring power of attorney—
…
(d)	 the validity of a transaction by an attorney under the enduring power of attorney if VCAT is satisfied there has been a failure to comply with Part 6 or for any other reason
Note: Under the VCAT Act VCAT has powers to give directions and make declarations.
7	STL alleged that the relevant failure to comply relates to section 63 of the POAA, which sets out the duties of an attorney:
(1)	An attorney under an enduring power of attorney—
(a)	must act honestly, diligently and in good faith; and
(b)	must exercise reasonable skill and care; and
(c)	must not use the position for profit, unless permitted under section 70; and
(d)	must avoid acting where there is or may be a conflict of interest unless the attorney is authorised by the power, the principal or VCAT; and
(e)	must not disclose confidential information gained as the attorney under the power unless authorised by the power or by law; and
(f)	must keep accurate records and accounts as required by section 66.
(2)	Nothing in this section is to be taken to affect any duty an attorney has at common law. 

8	Subsection 63(2) would presumably preserve the general common law fiduciary duties that an attorney would have to the principal. That is, that an attorney must put the principal’s interests ahead of his own and must act consistently with a relationship of trust and confidence. 
9	In making orders under section 116, VCAT needs to give consideration to whether the attorney is entitled to relief under section 74 of the POAA, which states:
If the Supreme Court or VCAT considers that—
(a)	an attorney under an enduring power of attorney is or may be personally liable for a contravention of the provisions of this Act relating to enduring powers of attorney; and
(b)	the attorney has acted honestly and reasonably and ought fairly to be excused for the contravention—
the Supreme Court or VCAT may relieve the attorney from all or part of the attorney's personal liability for the contravention.
About EIB
10	From childhood, EIB lived with her parents. When they divorced, she continued living with her mother and she and her mother became owners of their home as tenants in common in 1987.  
11	EIB worked in a family business until she was 40 years of age (2001) but retired after a bullying incident. She then drew the Disability Support Pension due to depression, anxiety and panic attacks.  
12	EIB and her mother made similar wills together on 4 August 2008. Her mother died in 2009 and left her interest in the home to EIB. Probate for her mother’s estate was granted at the start of 2010. In their wills, both women demonstrated a particular interest in supporting EIB’s nephew with a disability. Apart from naming her siblings as executors and trustees, EIB’s will does not mention her siblings. 
13	Evidence from her siblings suggests that EIB was always somewhat reliant on family, and they reported to Clinical Neuropsychologist, Simone Manglesdorf (whose report is discussed below), that she may have had a learning difficulty or autism spectrum disorder, even before the onset of her now known disabilities. As reported to Ms Manglesdorf and other professionals, EIB experienced a progressive and serious decline in functioning which was noticed by her siblings from 2015.  
14	In April 2018, Ms Mangelsdorf, recorded that EIB presented with severe and largely global cognitive impairment consistent with a moderate-to-severe neurocognitive disorder. She stated:
From a legal perspective, I am of the opinion that given the severity of her cognitive impairment that her very recently made EPOA appointments are invalid. On the basis of her severe cognitive impairment as well as her inability to appreciate her current situation or needs, [EIB] lacks the capacity to make lifestyle or financial decisions. If [EIB] does not have a current will, I am of the opinion that given her lack of knowledge about her financial situation and assets that she lacks testamentary capacity to do so.
15	In May 2018, EIB was admitted to North-Western Mental Health and was assessed by Dr Killian Ashe, Neuropsychiatry Registrar, and Dr Sarah Farrand, Consultant Neuropsychiatrist, who wrote a joint report. That report notes that EIB’s General Practitioner and her family had indicated memory problems and a possible mental illness from 2015. The conclusions in this report are consistent with Ms Manglesdorf’s opinion. 
16	EIB’s home was sold by the attorneys in October 2018 to support her admission to aged care. EIB has approximately $120,000 held by STL, a Refundable Accommodation Deposit (RAD) of $450,000 and has $174,000 in her superannuation fund. Her fortnightly budget is in deficit by about $340, but this is deemed sustainable by the administrator. 
17	I accepted the view put forward by all parties that EIB would be unable to attend the hearing or express a will and preference about the issues under consideration. 
The enduring power of attorney
18	On 23 March 2018, EIB appointed YKO and EEX as her joint and several attorneys. The instrument was prepared by solicitors, Accessible Family Law, and was executed and accepted by the attorneys. It is a standard appointment with no special conditions. This is the instrument relevant to the compensation application. It is also the EPOA referred to by Ms Manglesdorf above. 
19	An affidavit of Dr Akinsola Akinbiyi dated 16 March 2018 states his opinion that EIB understands the information relevant to the decision and the effect of appointing a power of attorney (Dr Akinbiyi’s first opinion). This opinion was relied upon in the making of the EPOA. This is directly contrary to the opinion of Ms Manglesdorf one month later. 
20	Over a year later, on 10 July 2019, EIB signed a different instrument, prepared by Best Hooper Lawyers, which purported to appoint EEX, YKO and YFY as joint attorneys. Unlike the 2018 instrument, this draft instrument contained the following non-standard conditions:
a	that the attorneys shall not be liable to reimburse EIB if they act in circumstances where they have a conflict of interests;
b	that the attorneys can make gifts to other persons, whether charitable or not; and
c	“If I have given a nomination of beneficiaries (either binding or non-binding), in respect of any superannuation entitlements I may have, my attorney, at the discretion of the attorney, may, if the attorney thinks fit, renew, but not change, any nomination, whenever necessary, even though my attorney may be, may be married to or related to, any nominee.”
21	EEX accepted nomination under this instrument. However, YKO and YFY refused to accept nomination under this instrument and because it was a joint, not a joint-and-several appointment, it never became operative. I consider that it is, however, relevant to these proceedings.
22	Another affidavit of Dr Akinbiyi dated 1 July 2019 purports to restate his opinion that EIB understands the information relevant to the decision and the effect of appointing a power of attorney (Dr Akinbiyi’s second opinion). Financial records show that there were payments on 16 March 2018 of $330 and 13 February 2010 of $460 to Dr Akinbiyi, so one presumes he was consulted shortly before the times that the documents refer to. However, Dr Akinbiyi’s second opinion arouses suspicion, as the handwriting and signature are distinctly different to the 2018 handwriting and signature.  
23	As Dr Akinbiyi does not state the basis of his belief for either his first or second opinions, I prefer the opinions of Ms Manglesdorf, Dr Ashe and Dr Farrand which set out the test results and bases for their opinions and are more persuasive opinions. 
The alleged agreement
24	Also dated 10 July 2019, is a draft agreement which has been signed by EIB and by “[EEX] (PoA)”. Signature blocks were included for “[YFY] (PoA)” and “[YKO] (PoA)” but were not signed. The draft agreement says (grammatical errors have not been corrected):
I, [EIB], [address]. Is making a gift of $279,000.00 to [EEX] [address]. Which is half of the processed from the sale of my home [address] as he was entitled to half of the house. This money is an unconditional gift and is not repayable at Anytime he is entitled to the funds. If and or when the following funds become available and doesn’t impact [EIB].
25	Exactly the same wording was later repeated in a Statutory Declaration dated 12 August 2019 signed by EIB. Curiously, there is a stamp and a signature from the Werribee Police Station in the body of the document, but there is also a signature of a Justice of the Peace in Exhibition Street, Melbourne in the signature block for the authorised witness. EEX’s evidence was that it was signed at the Werribee Police Station. 
26	Because roughly 80% of the proceeds of sale from the house were used to pay the RAD, the funds have never been gifted to EEX under the alleged agreement. I infer that STL’s concern about the document is that, despite its contradictory phrasing and unlikely enforceability, it might be seen as creating an entitlement for EEX at some future point. 

27	EEX’s evidence about how this document came about is as follows: In 2008, EEX regularly took his mother to her dialysis appointments and generally supported her and EIB in the home with maintenance and various chores. He says his mother recognised that she owed him a debt for his help and that she wanted him to have her half interest in the home. EEX says that he would deflect these conversations saying: “we’ll work it out later”. He said he deflected because he didn’t need the money and EIB needed a roof over her head. After his mother died, EEX says he confirmed with EIB her recollections of these discussions and her agreement that he was entitled to half of the value of the house. EEX says that EIB had often brought up the matter of his entitlement, but he always deferred it until he more recently discovered that his siblings had taken $29,500 from EIB’s account. 
28	EEX says he was angry and disappointed that his siblings would take advantage of EIB to the extent that they did. He states that the alleged stealing prompted him to take the measures that he contends were to protect EIB. Because most of the proceeds of sale of the house was required to be paid into EIB’s aged care deposit, EEX’s purpose in creating the agreement was securing his perceived share of the sale proceeds for the future date when the deposit is released from the aged care facility (presumably, when EIB leaves the facility or dies).
29	EEX’s evidence was that one day, while EIB was at his house, EIB said: “I want to write it [her acknowledgement of his entitlement] down” and she proceeded to write it down. Conversely, he also says he went to the computer and typed it out, she read it and signed it on 10 July 2019. When his siblings refused to also sign the alleged agreement, he obtained the statutory declaration form online and created the second version of the document and that he drove EIB and himself to the Werribee Police Station on 12 August 2019 where it was signed a second time.   
30	There was no evidence from EEX that EEX gave EIB the opportunity to seek financial or legal advice before making such a significant gift as would be expected, for instance, if an attorney made an application under section 121 POAA for approval of such a gift. 
31	STL, YKO and other siblings disputed the idea that EIB’s mother ever had an intention to give half of the value of the house to EEX, noting that such an idea is completely contrary to the terms of her will made in 2008, at the same time EEX says she was contemplating a gift to him. They also dispute that EIB ever expressed an informed or a genuine will and preference to gift any funds to EEX, noting EIB’s testamentary preference to favour her nephew with a disability.

The beneficiary nomination
32	EIB had superannuation with HostPlus. EEX says that he was viewing EIB’s superannuation statements found in EIB’s home but wanted an updated statement. He found that he would have to wait some time for the company to send the next statement out or could register online. Registering online would be a quicker way to obtain the statements, so EIB asked to do so. EEX’s evidence was that EIB was operating the computer. The venue for this interaction is unclear, as I infer from the evidence that EIB did not have a computer in her home.
33	YKO rejected the evidence that EIB would be operating a computer. NME said EIB would never have operated a computer in her life. 
34	NME’s evidence is consistent with Dr Manglesdorf’s report which says:
… she is now at a point where [family] visit her daily to supervise with medications, assist with meals and prompt her to attend to personal care needs. The family have taken over her financial management as she was unable to manage bill payments or access money from the ATM. 
… [EIB] was unable to independently prepare a hot drink and toast. She had no recollection of the task that she was meant to perform and did not respond to cues in the environment (e.g. toaster popping; smell of toast). The opinion of the OT was that she was unsafe to be at home alone.
…On formal neurological assessment, [EIB] presented with severe and largely global cognitive impairment. Most severely affected was her memory and executive function. Language skills, especially semantic knowledge, were also reduced. … Overall this was judged to be consistent with a moderate-to-severe neurocognitive disorder. 
35	There was no evidence from EEX that EEX gave EIB the opportunity to seek financial or legal advice before making the nomination as would be expected, for instance, if an attorney made an application under section 121 POAA for approval of such a nomination. 
36	EEX admits to involvement with his nomination as beneficiary on EIB’s HostPlus policy. STL has since invested her funds in a different superannuation policy and, contrary to its current contention that EEX ought not to be named as beneficiary, on creating the new policy they inadvertently transferred over the old nomination which is now something they need to remedy with the new superannuation company.
STL’s position
37	STL contends that these (and other) actions by EEX were in breach of his duties as an attorney. They seek that VCAT orders the invalidation of the alleged gift and the nomination of a superannuation beneficiary.
38	STL’s position is supported by EIB’s siblings except EEX.
EEX’s position
39	Counsel for EEX, Mr Schlict, argued that EEX was not acting as an attorney at the times that he engaged in the nomination or signing the agreement. Mr Schlict did not agree with my suggestion at the hearing that one cannot change one’s fiduciary duties like changing a hat and that while ever one holds appointment as an attorney, one owes a fiduciary duty. He maintained that EEX was only acting as a brother, not as an attorney, even after I pointed out to him that in the 10 July 2021 alleged agreement the abbreviation “(PoA)” (meaning “Power of Attorney”) appears after his name on a form that he typed out and signed. 
40	Mr Schlict also argued that as no benefit has yet accrued to EEX, he cannot yet be said to have benefited or therefore be in breach of his duties. Mr Schlict relied on the reports by Dr Akinbiyi to suggest that each time EEX undertook one of these actions he was supported by medical opinion as to EIB’s decision-making capacity.  
41	Mr Schlict did not argue that the two impugned events were not ‘transactions’ for the purpose of section 116(1)(d). In any event, I consider that such an argument would have been contrary to the natural meaning of the word. 
My findings on factual matters and credibility
42	While I accept that Dr Akinbiyi’s first opinion may have been based on his observations and reflected his position at that time, I do not accept that his opinion is based in any rigorous examination or testing. As I said above, I prefer the opinions and reports of Ms Manglesdorf, Dr Ashe and Dr Farrand.
43	I do not accept Dr Akinbiyi’s second opinion is a genuine document reflective of its contents. In any event, the opinion it purports to offer is inconceivable against the weight of other medical evidence available. 
44	While EEX was a confident witness and was bold in his answers to my questions, much of what he said was self-serving and illogical. For instance, his mother’s will – prepared at or around the same time as he states his mother expressed a wish to reward his assistance with chores around the house by giving him her share of the house – does not recognise any special entitlement for EEX. His evidence is variable about who wrote/typed the alleged agreement and where the online investigations about superannuation took place.
45	Others of EEX’s statements are not credible. Given the severity of her disability and a longstanding lack of financial skills, I cannot accept that EIB was able to go online to look at her superannuation benefits or express an informed view that EEX should be her beneficiary under her superannuation policy. Because she was unable to operate an ATM, I cannot accept that she wrote out the alleged gift and prefer EEX’s other explanation, that he typed it.  
46	Because EEX orchestrated the attempt to create a new EPOA in 2019 with special conditions that (if successful) would have excused and protected his actions in the making of the alleged gift and the nomination as beneficiary, I do not accept that EEX had a genuine misunderstanding of his role as an attorney or was unaware of his duties as an attorney at the time of those actions and at the time of preparing the draft 2019 EPOA. I consider it is even possible that he had received legal advice to that effect and that is why the draft 2019 EPOA was created. From his demeanour at the hearing, my view is that he had a general sense of entitlement to EIB’s assets and took a number of systematic and dubious steps to ensure that he would, immediately or eventually, assume ownership of most of EIB’s assets to the exclusion of other family members.  
47	I do not make any findings about whether YKO had stolen $29,500 from EIB at some point. I do however find that EEX’s reported response to the discovery of that alleged misuse to be utterly disproportionate and misconceived. EEX’s evidence suggested that he has been selfless and altruistic in his assistance over the years to his mother and sister. I find, however, that EEX had and has an over-developed sense of entitlement to his mother’s and sister’s assets which is not justified by any contributions he may have made to their household.  
My findings on legal issues
48	I find that EEX, as an attorney who twice drafted and arranged for EIB to sign the alleged agreement, breached his duties as an attorney under section 63(1) of the POAA because the action was:
a	Not done diligently and in good faith – in that it served his interests only. Had it been EIB’s genuine wish, one of the other attorneys may have made the arrangements or – even more appropriately – he might have made an application for VCAT’s approval under section 121 of the POAA. But for his initial attempt to have his two other siblings sign the first agreement, I would have thought it to be dishonest also. However, as he made no attempt to disguise his intentions, I do not draw that conclusion. 
b	Did not demonstrate reasonable skill and care – an attorney acting with reasonable skill and care would have made an application for VCAT’s approval under section 121 of the POAA. Also, an attorney acting in accordance with a fiduciary duty and with reasonable care and skill would give EIB an opportunity to seek legal and financial advice before committing to such a gift, which EEX failed to do. 
c	Used the position for profit – if the agreement was valid, he would have created a debt in the estate to a value of $279,000 to be paid to him once the aged care facility released her bond. If paid, that would be a very significant profit if it originated as recompense for running some errands and performing physical work at EIB’s and her mother’s home. 
d	Failed to avoid acting – and indeed acted – in circumstances that created a conflict of EIB’s interests with his own, in that he created a future benefit for himself by creating the alleged agreement.  
49	I find that EEX, as an attorney who accepted and facilitated nomination as a beneficiary under the principal’s superannuation policy, breached his duties as an attorney under section 63(1) of the POAA because the action was:
a	Not done diligently in good faith – in that it served his interests only. Had it been EIB’s genuine wish, one of the other attorneys may have made the arrangements or – even more appropriately – he might have made an application for VCAT’s approval under section 121 of the POAA. 
b	Did not demonstrate reasonable skill and care – an attorney acting with reasonable skill and care would have made an application for VCAT’s approval under section 121 of the POAA. Again, there was no opportunity provided for EIB to seek independent legal or financial advice as might be expected of an attorney acting under a fiduciary duty or exercising reasonable care. 
c	Used the position for profit – if the nomination was valid, he would inherit from EIB $174,000 (or whatever balance is in her account at the date of death) from EIB’s estate, whereas it is clear from EIB’s will that she wants her disabled nephew to be her main beneficiary. 
d	Failed to avoid acting – and indeed acted – in circumstances that created a conflict of EIB’s interests with his own, in that he created a future benefit for himself by creating the nomination. 
50	These transactions are particularly wicked because they involved taking advantage of a sister who he knew to have a significant disability and to have a particular reliance on him and his siblings. The ultimate loser, had his attempts been successful, would have been his nephew with a disability who is the primary beneficiary of EIB’s will.  
51	Accordingly, I find that EEX was in breach of Part 6 of the POAA and these transactions are not valid. 
52	Under section 74 of the POAA, I need to turn my mind to whether EEX acted honestly and reasonably and ought fairly to be excused for the contravention. His actions certainly were not reasonable. I have some doubts about whether they were honest and am concerned about how Dr Akinbiyi’s second opinion was created. I cannot conclude that, on the basis of honesty, it is appropriate to excuse EEX for the contraventions. It would be contrary to the interests of justice for such a concerted series of attempts to secure the assets of a vulnerable person to his own use and control to be excused under these circumstances.  
53	In its 11 August 2021 Statement of Claim, STL applied for VCAT to make an “order declaring any will signed after 23 March 2018 to be invalid”. I declined to do so on the basis that only the Supreme Court would have such jurisdiction. However, I note that any actions by an attorney to have an incapacitated principal sign a will that favours that attorney would be infected by the same breaches of statutory and common law duty as I have explored in the preceding paragraphs and would likely lead to a similar finding of invalidity by a Court of competent jurisdiction.  

A. Smith
Member