When Family Members Cross the Line: What Bird v Bird Teaches About Powers of Attorney and Executor Duties in NSW

The NSW Court of Appeal decision in Bird v Bird [2013] NSWCA 262 serves as a powerful reminder of the responsibilities and legal limitations faced by family members acting as attorneys or executors of a deceased estate. The case, involving the misuse of powers of attorney and the failure of executors to properly call in estate assets, is a cautionary tale for families dealing with ageing parents’ financial affairs.

This blog explores the factual background, key legal issues, and the Court's findings in Bird v Bird, and outlines critical lessons for anyone acting under a Power of Attorney or managing an estate in New South Wales.

Factual Background

Percy Bird, a retired businessman, made a will in 1991 and later a codicil in 1994. He appointed his wife Mona and sons Warrick and Rodney as attorneys under a Power of Attorney. That document specifically removed the authority usually provided under s 163B of the Conveyancing Act 1919, which would have allowed attorneys to confer a benefit upon themselves.

During the 1990s, Percy became seriously ill and was admitted to hospital and nursing care. In that period, Mona - acting under the Power of Attorney - sold four of Percy’s properties and paid the proceeds, not into an estate or joint account, but into her own personal bank account.

Upon Percy's death in 1996, Warrick, Rodney, and solicitor Mr Cannington were appointed executors. Despite the suspicious sale and transfer of assets, no action was taken to recover the misappropriated funds. It wasn’t until 2005 that Percy’s daughter, Deborah Bird, commenced proceedings seeking to hold her brothers and the solicitor accountable.

What the Court Had to Decide

The Court of Appeal had to determine:

1. Whether the sons (Warrick and Rodney) could be held liable for knowing receipt under the principles in Barnes v Addy;

2. Whether the executors had committed a devastavit - a failure to properly collect and preserve estate assets;

3. Whether the claim was statute-barred due to the passage of time;

4. Whether Deborah, as a residuary beneficiary, had suffered a loss that could be compensated.

Legal Principles Considered

1. Misuse of Powers of Attorney

The Court found that Mona, acting as attorney, had exceeded her authority by transferring the proceeds of Percy’s property sales into her own account. This was a breach of fiduciary duty. The Power of Attorney did not authorise the attorney to confer a benefit upon herself or others.

Importantly, this breach occurred while Percy was still alive - yet it was never discovered or addressed by the executors after his death.

2. Knowing Receipt – The Barnes v Addy Claim

Deborah argued that her brothers received some of the misappropriated funds from Mona and should be personally liable as recipients of trust property with actual knowledge of the breach.

However, the Court upheld the trial judge's decision that there was insufficient evidence to prove the brothers had the necessary actual knowledge that the funds they received were misappropriated. The Court noted:

“Whilst I am prepared to find that they did read the powers of attorney, I am not convinced that on reading the powers of attorney, they must have appreciated that the powers of attorney were limited.” – Rein J at first instance

Accordingly, Deborah’s Barnes v Addy claim failed.

3. Devastavit – Executor Duties Breached

The real turning point came in relation to the devastavit claim. The Court found that the executors failed in their core duty to call in and preserve the estate assets.

They should have investigated what happened to the proceeds of sale from Percy’s properties. Had they done so, they would have uncovered the misappropriation and taken action to recover the funds. Their failure to do so resulted in a substantial loss to the estate.

“Executors are under a positive duty to call in and collect the assets of the deceased and are liable to the estate for any loss caused by breach of this duty.” – Macfarlan JA at [104]

4. Was the Claim Statute-Barred?

The executors argued that too much time had passed, and Deborah’s claim was out of time under the Limitation Act 1969. The primary judge agreed.

However, on appeal, the Court overturned this, noting that time only began to run when the executors' opportunity to sue Mona was itself statute-barred—namely in 1999, not in 1996. As the proceedings were filed in 2005, they were within time.

The Court’s Final Decision

The Court of Appeal:

• Dismissed Deborah’s Barnes v Addy claim;

• Allowed the appeal in respect of her devastavit claim;

• Ordered the executors (Warrick, Rodney, and Mr Cannington) to pay Deborah $188,920.25 plus interest;

• Required further proceedings in the Equity Division to resolve contribution claims among the executors;

• Awarded costs in favour of Deborah, with partial costs against her brothers and full appeal costs against the solicitor.

Key Lessons for Families and Legal Professionals

1. Powers of Attorney Do Not Authorise Everything

Even when acting under a valid Power of Attorney, attorneys must strictly comply with its limitations. Importantly:

• Attorneys cannot benefit themselves unless expressly authorised to do so;

• Transferring a principal’s funds into a personal account, even with “good intentions”, is a breach of duty;

• Family members must avoid informal or undocumented financial arrangements.

Attorneys are fiduciaries—they must act in the principal’s best interest, not their own.

2. Executors Must Investigate and Act

Executors are not passive custodians of a will. They must:

• Investigate all financial dealings, including transactions made under a Power of Attorney;

• Call in all estate assets;

• Take action to recover misappropriated property or funds.

Failure to do so can result in personal liability for the loss.

3. Beneficiaries Have Standing

Where the executors are also beneficiaries, a conflict of interest may arise. As in this case, other beneficiaries—such as Deborah—may be required to step in to enforce the estate’s rights.

Beneficiaries can bring action on behalf of the estate where executors fail to do so.

4. Claims Can Still Be Made Years Later

This case highlights how limitation periods are not always straightforward. Beneficiaries who believe executors failed in their duties should seek legal advice, even years after the deceased’s passing.

Conclusion

Bird v Bird offers critical insight into the legal boundaries of fiduciary roles within families. Whether you’re acting under a Power of Attorney or appointed as an executor of a loved one’s estate, the responsibilities are serious—and failure to act properly can have lasting legal consequences.

If you're unsure of your rights or obligations in an estate matter, it’s essential to seek legal advice early. A proactive approach can prevent costly disputes later.