SIBLINGS FIGHT OVER THE BENEFICIAL OWNERSHIP OF PROPERTIES ACQUIRED BY THE BROTHER USING A POWER OF ATTORNEY GRANTED BY THE SISTER TO HIM
Guirguis v Girgis [2020] NSWSC 1468 (23 October 2020)
This is a dispute between a brother and a sister as to the beneficial ownership over a property acquired by the brother in the name of the sister using a power of attorney granted by the sister to the brother.
Facts:
The plaintiff brother contends that everything done by him in the name of his sister (ostensibly as her agent) was done on the basis that she had agreed to hold property in her name on trust for him. On his case, he acquired and disposed of property, and received income, in the name of his sister but, in equity, on his own behalf.
The rationale for this arrangement is said to be the plaintiff’s desire to protect his assets from the claims of creditors. That desire is, in turn, said to have arisen from his unhappy experience of family law litigation and bankruptcy. He advised his trustee in bankruptcy, in a Statement of Affairs, that he separated from his first wife (not a party to these proceedings) in February 1992. On the matrimonial front, his “asset protection purpose” is said to have originated in a desire to protect his assets against any claim from a spouse should he (as he did) re-partner following the dissolution of his first marriage. Nevertheless, he continued to conduct business in the name of his sister even after the time when (on the evidence of his second wife, the second cross defendant), in or about March 1998, he “confessed” to her that he was the beneficial owner of property purchased in his sister’s name.
The defendant sister’s case is that her brother agreed that he would, as her attorney, acquire and manage property in Australia for her benefit so as to enable her to establish a financial presence in Australia which might assist her, and her family, if and when (as she anticipated) they applied to the Australian Government for permission to migrate to Australia from Egypt.
Issue: Does the plaintiff has right, title or interest over the properties?
Legal basis:
- Taheri v Vitek [2014] NSWCA 209; (2014) 87 NSWLR 403
- Ward v Ward (No. 2) [2011] NSWSC 1292
Analysis:
The court does not accept that the parties ever agreed that the defendant would (via the plaintiff acting as her attorney) buy and hold property “on trust” for the plaintiff. That is not the type of language either party used. The fact that the plaintiff may have told the defendant that he trusted her does not, of itself, justify a finding that she agreed to act as a trustee. It is consistent with an informal family arrangement in which neither party expected to be governed by legal formality.
As observed in Taheri v Vitek “The primary object of a power of attorney is to enable the attorney to act in the management of his principal’s affairs. An attorney cannot, in the absence of a clear power so to do, make presents to himself or others of his principal’s property: Tobin v Broadbent”
Although the power of attorney under which the plaintiff transacted business in the name of the defendant was expressed to authorise him “to execute an assurance or other document, or do any other act, whereby a benefit is conferred on him”, that is a matter of power or authority; it does not exonerate him from the fiduciary obligations by which an attorney under power is bound: Ward v Ward (No. 2) [2011] NSWSC 1292. He remains accountable to the defendant for the value of the property he transferred to his wife for no consideration, subject, prima facie, to an allowance being made in his favour for the agreement on the part of the defendant that he and his wife could reside in the property indefinitely as their matrimonial home. The precise terms of that agreement, and its implications for any accounting exercise on the part of the plaintiff, remain to be clarified.
In these circumstances, and in the absence of any coherent explanation for the plaintiff’s dealings with property in the name of the defendant pursuant to the power of attorney she granted to him, orders should, prima facie, be made for him to account for his dealings.
Conclusion: The court declares that the plaintiff has no right, title or interest over the properties.
