ALAN appoints his three children, Jim, Robert and Mary as his attorneys under a validly executed enduring power of attorney.
Alan’s children are appointed “jointly and severally”, so that either one of them can use their power as Alan’s attorney without the consent of the others.
Several years later, at 90 years of age, Alan is admitted into a nursing home.
Mary’s relationship with her long-term husband breaks down and needing funds to purchase her husband’s share of the matrimonial home, she sells two large parcels of shares in Alan’s portfolio and withdraws $700,000 to fund the property settlement.
Mary makes small weekly cash payments into Alan’s bank account in partial repayment of the funds.
When Alan passes away, his executors, Jim and Robert, allege that Mary misused her role under the power of attorney.
Mary ultimately repays the whole of the funds, including interest, calculated three percent per annum. The repayment is primarily made by offsetting her entitlement in Alan’s estate.
The executors claim damages of over $400,000, including the loss of dividends and the loss of the capital increase in the value of the shares.
In her defence, Mary states that Alan consented to the transactions, that the executors were aware of the transactions and otherwise disputes the quantum of damages claimed.
The matter proceeds to the Supreme Court and evidence demonstrates that at the time of the transactions, Alan was suffering from cognitive decline.
However, evidence also indicates that Jim and Robert agreed to the “loan” and specifically the three percent interest rate.
The Court ultimately rules that Alan, whilst suffering from some degree of cognitive decline, did in fact have capacity to consent to the loan, and did so.
Furthermore, because Jim and Robert were aware of the transaction, they were “estopped” from now making a claim against Mary and given the nature of the loan, Mary did not breach her obligations to Alan.
The claim is dismissed and Jim and Robert are ordered to pay Mary’s Court costs.
This fictional column is not legal advice.
By Manny WOOD, Solicitor
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