Quest Rose Hill v White [2010] NSWSC 939

This case questioned the validity of an irrevocable power of attorney, attacking it on the grounds: that in its exercise the donee owed a duty of good faith; that it was void for being against public policy (as it amounted to a surrender of rights under the Strata Title Act; and that it was unjust under the Contracts Review Act. The court held there was no duty of good faith noting:

The distinction at common law between a revocable power of attorney and an irrevocable power of attorney, is that the holder of the latter owes no fiduciary duty to the donor and may act independently of and contrary to the directions and wishes of the donor. The attorney under such a power is not like an ordinary agent. As between him and a donor he is, so long as he does not exceed his authority, absolutely independent of the principal.

As to being void for surrendering rights under the Strata Title Act, the court rejected this noting that granting the right to vote to the donee was no different to granting the right to vote to a proxy and that in any event there were limitations within the Power of Attorney not inconsistent with the purposes of the legislation. As to being unjust under the Contracts Review Act the court found that Powers of Attorney have the potential for abuse but that having such potential is a necessary part of their efficacy and that the inclusion of such clauses does not make a contract unjust at its inception.

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