Power of Attorney Remains Valid After One Donor Dies

The Court ruled that a power of attorney granted by two donors remained valid for the surviving donor after the death of one donor. The decision was based on the interpretation of the power of attorney document and the subsequent conduct of the parties.

Reported Decision : [2000] 50 NSWLR 76

New South Wales Supreme Court

CITATION : [NAME] v [COMPANY] [2000] NSWSC 763 CURRENT JURISDICTION: Equity Division FILE NUMBER(S) : SC 3361/2000 HEARING DATE(S) : 27/07/2000 JUDGMENT DATE : 27 July 2000

PARTIES : [NAME] (P) [COMPANY] (D) JUDGMENT OF : [NAME]

COUNSEL : [redacted] [NAME] (S)(D) SOLICITORS : [redacted] John H [NAME] (D) CATCHWORDS : CONTRACTS [120]- Construction- Use of subsequent conduct to show whether power of attorney joint or several. CONTRACTS [166]- Power of attorney- Whether power of attorney by A and B to C terminates on A's death- [ADDRESS] empowered to appoint attorney when principal on the high seas unable to be contacted. WORDS & PHRASES- "Incommunicate". Administrator of the Territory of Papua and New Guinea v [NAME] (1973) 130 CLR 353 [NAME] v [NAME] 1 NW (2d) 662 (1942) (Iowa SC) Gee v Lane (1812) 15 East 592; 104 ER 967 Pacific Film Pty Ltd v Film Bars Pty Ltd (1980) 1 BPR 9147 Raw v Alderson (1817) 7 Taunt 453; 129 ER 182 CASES CITED : Schuler AG v Wickman Machine Tool Sales Ltd [1974] AC 235 Spunwill Pty Ltd v Bab Pty Ltd (1994) 36 NSWLR 290 Wallworth v Hall (1841) 4 My & Cr 619; 41 ER 238 [NAME] v Attorney-General of East Africa Protectorate [1919] AC 533 [NAME] v [NAME] 225 NW 245 (1929) (Iowa SC) [NAME] v [NAME] 44 NE 406 (1896) (Illinois SC)

DECISION : See para 22

THE SUPREME COURT OF NEW SOUTH WALES [NAME] 27 JULY 2000

3361/2000 - [NAME] & [NAME] v [COMPANY]

JUDGMENT

1 HIS HONOUR: I give leave to the applicants to amend the summons by adding as a defendant [COMPANY] which is the relevant mortgagor. I note that [NAME], solicitor, will be filing an appearance on behalf of that party but does not otherwise seek to be heard. 2 On 15 May 1995 a power of attorney, which was subsequently registered as Book 4097 No 32, was granted by [NAME] and [NAME] to the plaintiff, [NAME]. The power of attorney commences by saying, "1. I appoint" which is crossed out with six "Xs" and "We appoint ..." inserted instead. However two lines further down it says, "To be my attorney ... to do on my behalf anything I may lawfully authorise an attorney to do". 3 [NAME] died in September 1997. 4 The evidence suggests that virtually all the property that Mr and [NAME] held was joint property and that no administration of his estate was taken out when [NAME] died. All of his estate, with a few exceptions, passed to [NAME] by survivorship. 5 It had been the custom of both Mr and [NAME] before the former's death and of [NAME] afterwards, to invest some money on contributory mortgage through the law firm [NAME]. Those mortgages were taken out in the name of the client rather than the name of the solicitor. One such mortgage was mortgage 5883586J, the mortgagor being the defendant. To put it simply, that mortgage is now about to be refinanced and it is necessary for [NAME] to sign the discharge of mortgage. 6 [NAME] is somewhere near Madagascar, having sailed her yacht from Malaysia, but just exactly where she is no-one knows. Her yacht has not recently been sighted by the Zulu Land Yacht Club in Natal, which would be the body that keeps watch over the relevant stretch of coast. 7 The attorney, [NAME], has signed a discharge of mortgage. There have been objections to that discharge based on a passage which appears in Collier & Lindsay, Powers of Attorney in Australia and New Zealand (Federation Press, 1992) at page 210. After citing some cases concerning attorneys taking over administration of an estate and partnership cases the learned authors say: "It is submitted that it is in accordance with basic principles that a power of attorney given by several donors in relation to their joint affairs should terminate upon the death of one of the donors." 8 [NAME] thus brings these proceedings to ensure that her authority to sign the discharge on behalf of [NAME] will be recognised. 9 There is actually stronger authority for the above proposition than the learned authors cite. In Gee v Lane (1812) 15 East 592; 104 ER 967, the [ADDRESS] of the King's Bench held that a joint warrant signed by two debtors authorising their attorney to enter judgment against them terminated on the death of one of them. This was followed by the [ADDRESS] of Common Pleas in Raw v Alderson (1817) 7 Taunt 453; 129 ER 182. Those two cases are the basis of the proposition in [NAME] on Powers of Attorney and Proxies ([NAME], London, 1913) at page 141. It is to be noted that [NAME] states the principle thus: "Where there are two or more joint principals the death of one of them will generally revoke the power as to the other or others."

The underlining is mine. 10 The modern law is well stated in the Corpus Juris Secundum, Volume 2A paragraph 138 on page 739, which, omitting irrelevant details, is as follows: "Where the authority of an agent is derived from joint principals who are jointly interested in its execution, the death of one of the principals generally terminates the agency … except where the agency is coupled with an interest; but an agent who has been authorized by two principals, one of whom dies, continues to be authorized to act for the survivor if the authorization of the survivor so indicates. "A power of attorney which, although conferred by two principals, is clearly issued severally by them, is not revoked by the death of one of the principals ... ." 11 One thus needs to construe this power of attorney to see whether it is a power given by the jointure of the husband and wife or by each of them severally. There are indications both ways. The "we" in the typed part, particularly in view of what has been omitted, suggests that it is a joint power. On the other hand, although the word "we" has been inserted twice, the donors have left the word "my" wherever it appears. 12 Generally speaking, one cannot construe a document with reference to subsequent conduct of the parties; see eg Schuler AG v Wickman Machine Tool Sales Ltd [1974] AC 235. Santow J thought that rule might not still exist; see Spunwill Pty Ltd v Bab Pty Ltd (1994) 36 NSWLR 290. However, his views have not been met with universal acclamation. Whatever the extent of the rule in [NAME] v [NAME], it is clear that there are some exceptions. One exception is where it is necessary to construe an ancient land grant; see eg [NAME] v Attorney-General of East Africa Protectorate [1919] AC 533 and Administrator of the Territory of Papua and New Guinea v [NAME] (1973) 130 CLR 353. A second is where the Court needs to consider whether a contract has been made at all; see eg Pacific Film Pty Ltd v Film Bars Pty Ltd (1980) 1 BPR 9147. A third is where one needs to work out what are the terms of the contract. The most stark illustration is [NAME] v [NAME] 44 NE 406 (1896) (Illinois Supreme Court) where on the issue as to whether the defendant contracted to purchase from the plaintiff 10,000 pictures with frames or merely 5,000, evidence was given that shortly afterwards the defendant made a contract for 10,000 frames to be delivered. 13 Within this third exception appears to be the case where it is unclear whether an instrument was to operate jointly, severally or jointly and severally. The passage from the Corpus Juris Secundum supports this, as do the authorities behind it, namely, [NAME] v [NAME] 225 NW 245 (1929) (Iowa SC) and even more significantly, [NAME] v [NAME] 1 NW (2d) 662 (1942) (Iowa SC). 14 There are other exceptions, not relevant to the instant case such as conduct showing the true consideration for the contract and whether there was a condition precedent to its operation; see Chitty on Contracts (Sweet & Maxwell, London, 1999) 28th ed 12-106 et seq. 15 In the instant case there is evidence that the property was jointly owned, so that one could reasonably expect the power of attorney to be a power of attorney which would operate jointly whilst both survived and then for the survivor. There is also the use of the word "my" in the power of attorney and the additional evidence by conduct that since the death of [NAME] has on at least 10 occasions been involved in discharging mortgages through her attorney, [NAME]. [NAME] has met with [NAME]. Both the solicitors and [NAME] have reported to [NAME] what they are doing and [NAME] has always indicated complete satisfaction. 16 On all these matters it is clear that the power of attorney was intended to operate and does operate as a grant of authorisation by Mr and [NAME] jointly and severally. This being so, the death of [NAME] does not terminate [NAME]'s authority to act for [NAME]. 17 I will make the appropriate declaration. 18 Two other matters should be mentioned. In his interesting submissions, [NAME] of counsel for the applicants, put that if I did not come to that conclusion then it was a case where [NAME] was "incommunicate" within the meaning of sections 163D and 163G of the Conveyancing Act 1919. I do not consider that the definition of that term covers the case where a person is somewhere on the high seas, and can't communicate. It appears to me that it is only where a person is physically unable because of some handicap of body or mind that the section can be utilised. However, had I been of the view that [NAME] was incommunicate, then it would seem to me there would be no trouble with section 163G(2) and that the Court may, amongst other things, appoint a person to fill a vacancy in the office of attorney. 19 There is an apparent problem with the words "on the application by the principal". However, this is partly cured by section 163H of the Conveyancing Act. Further, one assumes that when a solicitor informs the Court that he acts for the plaintiff, that he does so. [NAME] could well have been made a co-plaintiff and the solicitor properly could have informed the Court he represented her. In any event this is a mere matter of procedure and Lord Cottenham's golden rule in Wallworth v Hall (1841) 4 My & Cr 619, 635; 41 ER 238, 244, that the Court never allows rules of general procedure to get in the way of doing equity, would have applied. 20 Even if I had not come to the view that the power of attorney was valid, a simple method of dealing with the matter would have been to order [NAME] to execute the instrument herself within a short period of time, and then, when she did not comply, order that the instrument be executed by [NAME] under section 100 of the Supreme Court Act 1970. 21 There are, of course, also remedies by way of appointing a receiver or by invoking the provisions of section 98 of the Conveyancing Act, but these involve additional administration and expense. 22 Accordingly, I declare that the power of attorney registered Book 4097 No 32 continues in force as a power of attorney from [NAME] to [NAME], notwithstanding the death of [NAME].

oOo

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