A person who accepts appointment[1] as attorney of the donor under an irrevocable power which the donor has granted by instrument is authorised to represent the donor.[2] Therefore the donee is usually presumed to be authorised to do what the donor can do.[3] The mere fact that a statute grants a right to the donor does not rebut that presumption.[4] The grant of an irrevocable power of attorney imposes an implied obligation on the donor to do what is necessary to enable the donee validly to exercise the power so granted.[5]
The grant of an irrevocable power is said not to deprive the donor of capacity to do acts that the donee is authorised to do[6] and that the donor has contracted not to do, whether expressly or by an implied term prohibiting the donor from depriving the donee of the secured benefit in interference with the grant,[7] although a donor’s attempt to terminate a retainer entered into by the donee and a solicitor is apparently pointless.[8] The court may, on the donee’s application, injunct the donor not to act inconsistently with the grant.[9]
The donee must act honestly in all matters concerning the donor’s affairs.[10] However, subject to contrary terms, the donee of an irrevocable power does not owe any fiduciary obligation to the donor,[11] and may act independently of, and ignore any direction or wish expressed by, the donor.[12] Ultimately however the existence and shape of any such duty depends on the terms creating the power and the purpose for which the power was granted.[13] Exercise of an irrevocable power for a purpose other than one for which the power was granted is susceptible to relief on the ground of fraud on the power.[14]
The common law assumes that a power of attorney is revokable.[15] At common law, an irrevocable power of attorney must be sustained by valuable consideration and coupled with a security or other interest intended to be for benefit, not of the donor, but of the donee so as to achieve or advance the purposes of the arrangement.[16] The fact that a power is expressed to be irrevocable is not conclusive at common law.[17] The donee has a sufficient interest against the donor in strengthening a security over goodwill and chattel.[18] The donee also has a sufficient interest in performance of obligations under a contract, at least where a proprietary interest is involved.[19] The donee may have a sufficient interest where the power secures an interest of the donor in whose success the donee has an interest.[20] The donee’s interest may secure a benefit not capable of immediate enjoyment by the donee.[21]
Section 15 of the Powers of Attorney Act 2003 (NSW) provides that an instrument creates an irrevocable power of attorney for the purposes of the Act if the instrument is expressed to be irrevocable and is, or is expressed to be, given for valuable consideration.[22] Section 15 departs the common law. It does not require the power to be coupled with an interest.[23] And it does not require that each power be sustained by consideration.[24] Rather the ‘instrument’ must be given for actual or stated consideration.
If the instrument creating the power fails to be expressed as irrevocable then it is not irrevocable for section 15 purposes.[25] It seems that the seal of a deed cannot replace actual or stated consideration.[26] By actual consideration is meant to be included a consideration that in fact moved from the donee but that is ‘not stated on the face of the document’.[27] If the instrument creating the power is expressed to be a deed but is executed as a simple contract then, because section 15 does not require the instrument to be a deed, the instrument validly creates the power.[28]
The Court of Appeal has held that section 15 does not exhaust the subject matter with which it deals but merely provides ‘one way in which an irrevocable power of attorney may be created’.[29] Brereton J however has doubted that construction.[30]
Satisfaction of section 15 engages section 16.[31] Subject to contrary terms, section 16 preserves the irrevocable power in certain events which might have otherwise ended the power.[32]
Section 52 provides that certain documents affecting land under a power of attorney have no effect unless the instrument creating the power has been registered.[33]
Section 28 grants to the Supreme Court a discretion to terminate an irrevocable power of attorney where it is satisfied that the objects or the power have been carried out or become incapable of being carried out, or that the power is otherwise exhausted. That discretion is not enlivened where current obligations remain unperformed or future obligations exist.[34] It qualifies the seeming position at common law that an irrevocable power of attorney ceases when the donee has reaped the contemplated benefit.[35]
Prescribed power of attorney
A prescribed power of attorney for the purposes of the Act is a power of attorney created by a duly executed instrument (whether or not under seal) that is in or to the effect of the prescribed (pro forma[[36]) form.[37] Subject to the Act[38] and the instrument terms (which may be specific to the particular appointment[39]),[40] a prescribed power of attorney grants authority to the attorney to do on behalf of the donor anything that the donor may lawfully authorise an attorney to do.[41]
A grant of power with an unlimited scope does not satisfy the need for an attorney to have ‘express’ authority to give himself a benefit.[42]
A failed power of attorney
Purported exercise of a void power of attorney does not itself create a valid transaction between the purported principal and the third person,[43] although such exercise sometimes entitles the purported agent to enforce the transaction as the real principal.[44]
[1] See, eg, Quest Rose Hill Pty Ltd v White [2010] NSWSC 939 [111] (Ward J); Re Beechworth Land Estates Pty Ltd [2018] NSWSC 1630 [38] (Brereton J).
[2] See, eg, Despot v Registrar-General of NSW [2013] NSWCA 313 [48] (Meagher JA, Ward JA agreeing at [115], Bergin CJ in Eq agreeing at [116]).
[3] See, eg, Cordiant Communications (Australia) Pty Ltd v Communications Group Holdings Pty Ltd [2005] NSWSC 1005 [31]-[33] (Palmer J). But see Fast Funds Pty Ltd v Coppola [2010] NSWSC 470 [168]-[171] (Slattery J).
[4] See, eg, Quest Rose Hill Pty Ltd v White [2010] NSWSC 939 [107] (Ward J).
[5] See, eg, Quest Rose Hill Pty Ltd v White [2010] NSWSC 939 [111] (Ward J).
[6] See, eg, Powers of Attorney Act 2003 (NSW) s 43(1); Cordiant Communications (Australia) Pty Ltd v Communications Group Holdings Pty Ltd [2005] NSWSC 1005 [65]-[69] (Palmer J); Quest Rose Hill Pty Ltd v White [2010] NSWSC 939 [100], [107] (Ward J).
[7] See, eg, Cordiant Communications (Australia) Pty Ltd v Communications Group Holdings Pty Ltd [2005] NSWSC 1005 [119]-[122] (Palmer J); Re Beechworth Land Estates Pty Ltd [2018] NSWSC 1630 [42]-[46] (Brereton J).
[8] See, eg, Re Beechworth Land Estates Pty Ltd [2018] NSWSC 1630 [43] (Brereton J).
[9] See, eg, Cordiant Communications (Australia) Pty Ltd v Communications Group Holdings Pty Ltd [2005] NSWSC 1005 [164]-[167] (Palmer J).
[10] See, eg, Overdean Developments Pty Ltd v Garslev Holdings Pty Ltd (No 3) [2021] NSWSC 1482 [90], [578] (Williams J).
[11] See, eg, Cordiant Communications (Australia) Pty Ltd v Communications Group Holdings Pty Ltd [2005] NSWSC 1005 [152] (Palmer J); Quest Rose Hill Pty Ltd v White [2010] NSWSC 939 68], [70], [73], [84], [91] (Ward J).
[12] See, eg, Cordiant Communications (Australia) Pty Ltd v Communications Group Holdings Pty Ltd [2005] NSWSC 1005 [153]-[158] (Palmer J); Quest Rose Hill Pty Ltd v White [2010] NSWSC 939 [68]-[69], [73], [84] (Ward J).
[13] See, eg, Despot v Registrar-General of NSW [2013] NSWCA 313 [48] (Meagher JA, Ward JA agreeing at [115], Bergin CJ in Eq agreeing at [116]); Overdean Developments Pty Ltd v Garslev Holdings Pty Ltd (No 3) [2021] NSWSC 1482 [593], [596]-[598], [600] (Williams J).
[14] See, eg, Overdean Developments Pty Ltd v Garslev Holdings Pty Ltd (No 3) [2021] NSWSC 1482 [707]-[709], [831] (Williams J).
[15] See, eg, Despot v Registrar-General of NSW [2013] NSWCA 313 [49] (Meagher JA, Ward JA agreeing at [115], Bergin CJ in Eq agreeing at [116]).
[16] See, eg, Cordiant Communications (Australia) Pty Ltd v Communications Group Holdings Pty Ltd [2005] NSWSC 1005 [152] (Palmer J); Quest Rose Hill Pty Ltd v White [2010] NSWSC 939 [81]-[82] (Ward J); Despot v Registrar-General of NSW [2013] NSWCA 313 [49]-[50] (Meagher JA, Ward JA agreeing at [115], Bergin CJ in Eq agreeing at [116]); Re Beechworth Land Estates Pty Ltd [2018] NSWSC 1630 [25] (Brereton J). See also Bailey v Angove’s Pty Ltd [2016] UKSC 47 [6]-[10] (Lord Sumpton, Lords Neuberger, Clarke, Carnwath and Hodge agreeing).
[17] See, eg, Quest Rose Hill Pty Ltd v White [2010] NSWSC 939 [81] (Ward J).
[18] See, eg, Quest Rose Hill Pty Ltd v White [2010] NSWSC 939 [85] (Ward J).
[19] See, eg, Quest Rose Hill Pty Ltd v White [2010] NSWSC 939 [68] (Ward J).
[20] See, eg, Re Beechworth Land Estates Pty Ltd [2018] NSWSC 1630 [32] (Brereton J).
[21] See, eg, Quest Rose Hill Pty Ltd v White [2010] NSWSC 939 [89] (Ward J).
[22] See also Powers of Attorney Act 2003 (NSW) s 3(1) (definition of ‘valuable consideration’); BT Securities Ltd v Lobel [2011] NSWSC 335 [14] (Harrison J); Re Beechworth Land Estates Pty Ltd [2018] NSWSC 1630 [30] (Brereton J); Overdean Developments Pty Ltd v Garslev Holdings Pty Ltd (No 3) [2021] NSWSC 1482 [597] (Williams J).
[23] See, eg, Quest Rose Hill Pty Ltd v White [2010] NSWSC 939 [72] (Ward J); Re Beechworth Land Estates Pty Ltd [2018] NSWSC 1630 [32] (Brereton J).
[24] See, eg, Quest Rose Hill Pty Ltd v White [2010] NSWSC 939 [89] (Ward J).
[25] See, eg, Despot v Registrar-General of NSW [2013] NSWCA 313 [55] (Meagher JA, Ward JA agreeing at [115], Bergin CJ in Eq agreeing at [116]).
[26] See, eg, Quest Rose Hill Pty Ltd v White [2010] NSWSC 939 [89] (Ward J).
[27] See, eg, Re Beechworth Land Estates Pty Ltd [2018] NSWSC 1630 [29] (Brereton J).
[28] See, eg, BT Securities Ltd v Lobel [2011] NSWSC 335 [10] (Harrison J).
[29] Despot v Registrar-General of NSW [2013] NSWCA 313 [52]-[64] (Meagher JA, Ward JA agreeing at [115], Bergin CJ in Eq agreeing at [116]), citing Powers of Attorney Act 2003 (NSW) s 7(1). See also Overdean Developments Pty Ltd v Garslev Holdings Pty Ltd (No 3) [2021] NSWSC 1482 [593] (Williams J).
[30] See, eg, Re Beechworth Land Estates Pty Ltd [2018] NSWSC 1630 [27]-[28] (Brereton J). See also Overdean Developments Pty Ltd v Garslev Holdings Pty Ltd (No 3) [2021] NSWSC 1482 [209]-[210], [590], [596]-[597] (Williams J).
[31] See, eg, Despot v Registrar-General of NSW [2013] NSWCA 313 [52] (Meagher JA, Ward JA agreeing at [115], Bergin CJ in Eq agreeing at [116]); Re Beechworth Land Estates Pty Ltd [2018] NSWSC 1630 [28] (Brereton J).
[32] See also Quest Rose Hill Pty Ltd v White [2010] NSWSC 939 [71] (Ward J); Despot v Registrar-General of NSW [2013] NSWCA 313 [52] (Meagher JA, Ward JA agreeing at [115], Bergin CJ in Eq agreeing at [116]).
[33] See also Powers of Attorney Act 2003 (NSW) s 51(1); MIS Funding No 1 Pty Ltd v Truskett [2017] NSWSC 1002 [45], [49], [76] (Black J).
[34] See, eg, MIS Funding No 1 Pty Ltd v Truskett [2017] NSWSC 1002 [59] (Black J).
[35] See, eg, Despot v Registrar-General of NSW [2013] NSWCA 313 [50]-[51] (Meagher JA, Ward JA agreeing at [115], Bergin CJ in Eq agreeing at [116]). See also Bailey v Angove’s Pty Ltd [2016] UKSC 47 [7] (Lord Sumpton, Lords Neuberger, Clarke, Carnwath and Hodge agreeing).
[36] See, eg, Broadway Plaza Investments Pty Ltd v Broadway Plaza Pty Ltd [2020] NSWSC 1778 [2329] (Ward CJ in Eq).
[37] Powers of Attorney Act 2003 (NSW) s 8; Powers of Attorney Regulation 2016 (NSW) cl 5, sch 2 (‘Form 1 General Power of Attorney’). See also Overdean Developments Pty Ltd v Garslev Holdings Pty Ltd (No 3) [2021] NSWSC 1482 [571] (Williams J).
[38] See, eg, Powers of Attorney Act 2003 (NSW) ss 10-3. See also Great Investments Ltd v Warner [2016] FCAFC 85 [85]-[90] (Jagot, Edelman and Moshinsky JJ); Broadway Plaza Investments Pty Ltd v Broadway Plaza Pty Ltd [2020] NSWSC 1778 [2251] (Ward CJ in Eq).
[39] See, eg, Overdean Developments Pty Ltd v Garslev Holdings Pty Ltd (No 3) [2021] NSWSC 1482 [573] (Williams J).
[40] Powers of Attorney Act 2003 (NSW) s 9(2).
[41] Powers of Attorney Act 2003 (NSW) s 9(1).
[42] See, eg, Overdean Developments Pty Ltd v Garslev Holdings Pty Ltd (No 3) [2021] NSWSC 1482 [580]-[586] (Williams J).
[43] See, eg, Lundie v Rowena Nominees Pty Ltd (receiver & manager appointed) (in liq) [2006] WASCA 106 [52]-[53] (Steytler P).
[44] See, eg, Lundie v Rowena Nominees Pty Ltd (receiver & manager appointed) (in liq) [2006] WASCA 106 [60]-[70] (Steytler P).