Facts of the Case
In the case of Reilly v Reilly, the Reilly family operated farming properties. The husband granted an enduring Power of Attorney to his wife. The husband then lost capacity through Alzheimer’s. Prior to the husband’s death, the wife transferred one of the farming properties to the daughters for a nominal amount. The NSWSC found that this was contrary to the wishes of the husband as expressed in his will.
From the aforesaid case, it is observed that the will was the main evidence being submitted to the court in establishing the fact that the transfer of property by the wife was contrary to the wishes of the husband prior to his death. To that effect, the will has acted as the last shielding of the husband’s wishes prior to his death from any improper or fraudulent transaction by the attorney.
It was held by the court that the transfer had been made for the purpose of giving effect to the wife’s own personal views of what was fair as between siblings and not for the purposes of advancing the interests or benefits of the husband.
Limitations of Attorney’s Power as per Reilly v Reilly
Justice Lindsay in Reilly v Reilly made several statements of general principle at Common Law concerning the Power of Attorney:
- The relationship between the principal and attorney is a fiduciary one where the attorney is obliged not to place herself in a position of conflict nor to obtain a profit or benefit from her fiduciary position without first obtaining fully informed consent from the principal.
- The primary objective of a power of attorney is to enable the attorney to act in the management of his or her principal’s affairs. In the absence of clear power to do so, the attorney cannot transfer the principal’s property to himself or herself or to others.
- It is a breach of duty by the attorney to confer a benefit on himself or herself or upon some other person to the detriment of the principal.
- The attorney is obliged to exercise the power genuinely and not for any improper or foreign purpose.
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