Rodney received from Mona part of the sale proceeds with knowledge that they were obtained by her without Percy’s authority and that they were liable under the first limb of the principles in Barnes v Addy (1874) LR 9 Ch App 244, to indemnify the estate in respect of Percy’s loss of that part of the proceeds. Deborah claimed that the executors breached their duties by not attempting to recoup the sale proceeds from Mona (that is, they allowed the estate to ‘waste’) and seeking orders that they committed a devastavit11 and that they indemnify Percy’s estate for the loss it suffered. At first instance Rein J rejected the Barnes v Addy claim on the basis that Warwick and Rodney were not proved to have known that their receipts were of funds Mona obtained by acting without Percy’s authority and the devastavit claim was rejected on grounds that Deborah had suffered no loss and the claim was in any event statute barred.
Court of Appeal Findings: 1. Deborah’s appeal in relation to her Barnes v Addy claim was rejected. 2. Deborah succeeded in relation to her devastavit claim. The Court of Appeal held that the executors’ cause of action against Mona only became statute barred in 1999 after the expiration of six years from Mona’s first misappropriation. Deborah’s proceedings were commenced within time because they were commenced within six years of the relevant date in 1999. 3. In the course of implementing its decision the Court of Appeal reduced by 50 per cent Deborah’s entitlement against Warwick and Rodney to her costs of the appeal to reflect her lack of success on her severable, Barnes v Addy claim against them. She was given the whole of her appeal costs from Mr Cannington as she was successful on her only claim against him. The respondents were ordered to pay the whole of Deborah’s costs at first instance as failure at first instance on one of multiple claims does not ordinarily result in a plaintiff being deprived of his or her costs. ( c ) Breach of power of attorney Grant v Grant12 is a case where there was a misuse of a power of attorney and the attorney acted outside the authority conferred by the power of attorney. Nerez held a power of attorney from her father, Dr Grant and depleted
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his estate of over $4 million between 2011 and 2017. In 2017 Nerez caused the transfer of Dr Grant’s last remaining property to her daughter for nominal consideration. The estate contends that this transfer was for $900,000 and that Nerez and her daughter never intended to pay that amount. The property has been leased to Nerez for life. In October 2017 Nerez transferred $160,000 from Dr Grant’s accounts using the power of attorney and applied the funds for her and her daughter’s benefit. In accordance with the orders of Kunc J the granddaughter repaid $60,000. As a result, $100,000 remains unaccounted for and outstanding. The estate contends that the power of attorney did not confer on Nerez power to make gifts to herself or other family members and that Nerez’s actions were a breach of the power of attorney. The estate seeks to have the transfer of property set aside and to recover the funds transferred from Dr Grant’s accounts.
NSW Supreme Court Findings: 1. Slattery J ordered that the second defendant transfer the property to the plaintiff for no consideration. The Court concluded that Nerez did not take the trouble to read the Power of Attorney at the time or to seek advice about it before going ahead with the transfer of the Killcare property to Kashaya. Because of the substantial nature of this transaction, relative to Dr Grant’s assets at the time and because she was gaining a substantial benefit as a result, an honest person in her position would have checked the powers conferred on her under the Power of Attorney and obtained advice as to whether she was authorised to use the Power of Attorney in these circumstances. The Court found that the transfer of the property was not in accordance with Dr Grant’s wishes and instructions as contended by the defendants and that a letter tendered by the defendants as evidence of Dr Grant’s wishes and instructions was fabricated. 2. Slattery J ordered that the first defendant pay compensation to Dr Grant’s estate for the money transfers of $100,000 and $34,700 that she authorised. The defendants contended that the cash withdrawals made from Dr Grant’s bank accounts were consistent with his wishes. The Court found that the large number of withdrawals made over the period
were well beyond anything that could possibly be related to Dr Grant’s care and is so great that it depleted his estate to the point of placing him in penury. The Court found that the total nursing home fees paid by Dr Grant during this period were only $119,823.47, being less than 3% of the $4 million withdrawn from the accounts and Dr Grant was left with a total of $20,769 in his two accounts. He was unable to pay his ongoing nursing home fees from his remaining resources and had no prospect of paying a deposit at the nursing home. The Court found that the power of attorney did not empower Nerez to make gifts to herself or to others by use of the instrument. The estate is entitled to interest on these sums to be assessed in accordance with the principles applicable to dishonest breaches of fiduciary duty: Hagen v Waterhouse (No. 2) (1992) 34 NSWLR 400.
7. Forms of Relief ( a ) Devastavit A devastavit is an old tort remedy available where loss is suffered by an estate. Definition13: He (or she) has wasted. The personal representative of a deceased estate is under a duty to properly preserve, protect and administer estate assets. Breach of the duty renders the personal representative personally liable for any loss to the estate: Re Tankard; Tankard v Midland Bank Executor and Trustee Co Ltd [1942] Ch 69; 72; [1941] 3 All ER 458; Dalrymple v Melville (1932) 32 SR (NSW) 596; 49 WN (NSW) 206; Re Diplock; Diplock v Wintle [1948] Ch 465; [1948] 2 All ER 318. A devastavit occurs where loss is suffered by an estate due to a breach of duty by the personal representative of a deceased estate to properly preserve, protect and administer estate assets. The personal representative is liable for losses to the estate arising from the breach. ( b ) Advantages and Disadvantages (or when not to use) ( iii ) Advantages: The advantages of bringing a devastavit claim is that it can be brought alongside other administrative actions against a personal representative of a deceased estate. For example, bringing a devastavit claim together with a claim under the first limb of Barnes v Addy14 similar to the
