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Clarifying and consolidating the powers

Feature Articles

Cite as: September 2015 89 (9) LIJ, p.50

The new Powers of Attorney Act will clarify and consolidate Victoria's laws for general and enduring powers of attorney (POA) for financial matters and enduring powers of guardianship.

By Kerry Harrison

Snapshot
  • The Powers of Attorney Act 2014 commences on 1 September.
  • The Act will clarify and consolidate Victoria’s laws for general and enduring POAs for financial mat ters and enduring powers of guardianship.
  • The Act aims to encourage more Victorians to use, understand and recognise POAs.
  • The Powers of Attorney Act 2014 (Vic) (the Act) clarifies and consolidates aspects of the law for general and enduring POAs for financial matters under the Instruments Act 1958 and enduring powers of guardianship (EPOGs) under the Guardianship and Administration Act 1986. The Act provides a new consolidated enduring POA (EPOA) for financial and personal matters, creates the new role of supportive attorney, provides guidance on assessing a person’s decision-making capacity and improves protections against abuse.

    The Act implements many of the recommendations made by the Victorian Parliamentary Law Reform Committee (VPLRC) in its Inquiry into Powers of Attorney report tabled in Parliament in August 2010.1 The VPLRC heard evidence that only about 11 per cent of the population have an EPOA.2 However, even if a person has a POA, there is no guarantee that a service provider will accept it.3 Abuse of POAs is also not uncommon, yet is rarely detected or reported.4

    The Act reflects recommendations from the Victorian Law Reform Commission in its Guardianship: Final Report tabled in Parliament in April 2012.5

    It does not consolidate enduring POAs (medical treatment) which will continue to be regulated under the Medical Treatment Act 1988.

    Key changes
    General POAs

    The Act includes only minor amendments to the law regulating general POAs (referred to as “general non-enduring powers of attorney” under Part 2 of the Act), as these powers were not considered in need of major reform.6

    Terminology

    Under the Act, a person giving the powers is called the principal, and the person appointed is called the attorney for enduring POAs or supportive attorney for supportive attorney appointments (s3).

    Decision-making capacity

    Section 4 of the Act provides that a person has decision-making capacity as to a matter (except under Part 2) if they can:

  • understand the information relevant to the decision and the effect of the decision;
  • retain the information to the extent necessary to make the decision;
  • use or weigh up that information as part of the process of making the decision; and
  • communicate the decision and the person’s views and needs as to the decision in some way, including by speech, gestures or other means.
  • A person is presumed to have decision-making capacity unless there is evidence to the contrary.

    The Act provides guidance on factors to be considered in determining whether a person has decision-making capacity for a matter:

  • a person may have capacity for some matters and not for others;
  • where a person does not have capacity for a matter, it may be temporary;
  • a person has capacity for a matter if they can make a decision with practical and appropriate support;
  • it should not be assumed that a person does not have capacity for a matter:
  • on the basis of their appearance; or merely because they make a decision that is, in the opinion of others, unwise. However, if the decision has a high risk of being seriously injurious to their health or wellbeing, it may be evidence that they do not have capacity.

    The Act also introduces principles for decision makers under EPOAs for a principal who does not have capacity, which focus on being as least restrictive of the principal’s freedom of decision and action, and supporting them to participate in decisions, as much as possible (s21).

    EPOAs for financial and personal matters

    Part 3 of the Act allows an adult with decision-making capacity to appoint an enduring attorney(s) under a consolidated EPOA for financial and/or personal matters.

    A financial matter is defined as any matter (including any legal matter) relating to the principal’s financial or property affairs, such as making an investment (s3).

    A personal matter means any matter (including any legal matter) relating to the principal’s personal or lifestyle affairs, such as where a person lives (s3).

    Appointment

    The Act includes clear eligibility criteria to be appointed as an enduring attorney (s28).

    An individual must be an adult, not insolvent under administration, nor be a care worker, health or accommodation provider for the principal and can be the occupant of a position, rather than be personally named (s29).

    To be appointed for financial matters an individual must also not have been convicted or found guilty of an offence involving dishonesty or if so, have disclosed this to the principal and recorded it in the EPOA and a trustee company must not have a proceeding for winding up commenced against it.

    The Public Advocate is eligible to be appointed as an enduring attorney for personal matters.

    The principal can appoint multiple enduring attorneys to act jointly, severally, jointly and severally, or as a majority (s30), an alternative enduring attorney for each enduring attorney (s31) and specify the matters for which each attorney is to act.

    Part 5 of the Act also sets out clear revocation and resignation requirements in relation to EPOAs.

    Witnessing

    The Act narrows the list of qualified witnesses for making and revoking EPOAs by requiring one of the two witnesses to be a medical practitioner or authorised to witness affidavits (s35).

    Commencement

    The Act includes new common commencement criteria for EPOAs (s39). A principal can specify a time, circumstance or occasion on which the power for all matters or for a specified matter under an EPOA is exercisable, and if not, the power commences when the EPOA is made. If the principal loses capacity, the power commences immediately.

    Before an enduring attorney commences exercising power for a matter for the first time because the principal does not have capacity, they must take reasonable steps to give notice to any person as required under the EPOA (s40).

    Duties

    The Act clearly specifies the duties of enduring attorneys (in addition to their duties at common law) to:

  • act honestly, diligently and in good faith (s63);
  • exercise reasonable skill and care (s63);
  • not use the position for profit unless permitted (ss63, 70);
  • avoid acting where there is or may be a conflict of interest unless authorised by the EPOA (s63);
  • not disclose confidential information gained as the attorney unless authorised by the power or by law (s63) and
  • keep accurate records and accounts as required by s66 (s63).
  • An enduring attorney with financial powers:

  • is not able to enter into a conflict transaction unless authorised or ratified by the principal or the Victorian Civil and Administrative Tribunal (VCAT) (ss64 and 65);
  • must keep the attorney’s property separate from the principal’s property, except if they jointly own, or jointly acquire property thereafter (s69);
  • may provide from the principal’s property for the needs of a dependant of the principal if specified in the EPOA (s68); and
  • can make a gift of a principal’s property in specified circumstances and must keep a record of specified gifts made of $100 or more (s67).
  • An enduring attorney is not entitled to remuneration unless authorised by the EPOA or by law (s70).

    VCAT

    The Act clarifies VCAT’s existing powers in relation to EPOAs and introduces new protective powers including to: authorise and retrospectively validate conflict transactions (ss116, 120); declare the making or revocation of an EPOA to be valid (ss116, 117); determine that an EPOA is invalid (ss116, 118); and order compensation for any loss caused by an enduring attorney contravening the Act, in addition to the Supreme Court’s power (s77).

    Offences

    The Act creates new indictable offences punishable by up to five years imprisonment or 600 penalty units or both for individuals, and 2400 penalty units for incorporated bodies (s135). The Act provides that a person must not dishonestly obtain an EPOA or the revocation of an EPOA and an enduring attorney must not dishonestly use the EPOA, to obtain financial advantage for themselves or another person, or cause loss to the principal or another person.

    Existing enduring powers

    The new Act does not affect the validity of POAs existing before the Act started. However, transitional and consequential provisions apply to existing enduring POAs for financial matters (s142) and EPOGs (s143), eg, the new capacity definition and VCAT powers.

    Supportive attorney appointments

    In a legal first for Australia, the Act allows a principal with decision-making capacity to appoint a supportive attorney (s86). The supportive attorney’s role is to support the principal to make or give effect to some or all of their own decisions (s85).

    The principal can specify decisions for which they want support, which are not limited to personal or financial matters (s85).

    The principal may authorise a supportive attorney to exercise powers for decisions, including to:

  • access, collect or obtain information (for example, accessing income and banking information to support the principal to make a financial decision) (s87);
  • communicate information to make or give effect to supported decisions, or communicate, or assist the principal to communicate, supported decisions (for example, communicating the principal’s health treatment decision to their doctor) (s88); and
  • do anything that is reasonably necessary to give effect to supported decisions, other than decisions about significant financial transactions (s89).
  • Appointment

    The eligibility requirements to be appointed as a supportive attorney under the Act are the same as for an enduring attorney who is an individual (s91).

    The Act enables a principal to appoint more than one supportive attorney to act separately (s92) and an alternative attorney for each attorney (s93).

    The revocation (ss103, 109) and resignation (s111) requirements for supportive attorney appointments include that a principal with capacity to make the appointment can revoke it at any time (s86).

    Witnessing

    The witnessing requirements for a supportive attorney appointment are similar to EPOAs, except that one adult witness must be authorised to witness statutory declarations (s97). Only one eligible witness is required for the revocation of the appointment (s107).

    Commencement

    Supportive attorney appointments have similar commencement criteria to EPOAs (s101), except the appointment has no effect when a principal loses capacity for a matter for which the supportive attorney has been appointed (s102).

    Duties

    The Act specifies the duties of supportive attorneys (s90) to:

  • act honestly, diligently and in good faith;
  • exercise reasonable skill and care;
  • not use the position for profit;
  • avoid acting where there is or may be a conflict of interest and if so, ensure the principal’s interests are the primary consideration; and
  • discuss anything about a supported decision with the principal in a way they can understand and that will assist them to make the decision.
  • VCAT

    VCAT powers under Part 8 include powers to revoke, vary or suspend supportive attorney appointments or make any other order (s120) in relation to: a principal’s capacity for matters to which the appointment applies; the effect on an appointment of any failure to comply with the Act; a supportive attorney failing to comply with terms of the appointment or exercising undue influence over the principal; or any other matter in relation to the appointment (s116).

    Offences

    The offences under the Act (s136) in relation to supportive attorney appointments are the same as for EPOAs, except they only apply to individuals.

    Further information

    Further information is available from the Office of the Public Advocate: www.publicadvocate.vic.gov.au.

    The new Act aims to clarify and consolidate laws to encourage more Victorians to use, understand and recognise POAs and provide better protection against abuse. A greater uptake of POAs will benefit principals, their families and the general community by providing principals with a low cost way of planning for their future, more certainty for third parties, as well as reducing the burden on the public system.7

    Kerry Harrison is a legal policy officer in the Civil Law Policy Branch of the Department of Justice and Regulation (Vic) and was the research officer for the VPLRC’s Inquiry into Powers of Attorney. 1. www.parliament.vic.gov.au/images/stories/committees/lawrefrom/powers_of_attorney/Report_24-08-2010.pdf 2. House of Representatives Standing Committee on Legal and Constitutional Affairs, Older People and the Law, The Parliament of the Commonwealth of Australia (2007), 71 citing Office of the Public Advocate, Queensland Government, submission 76, 7 in note 1 above, at 20-21. 3. Note 1 above, at xli, 283. 4. Note 1 above, at xli, 27. 5. www.lawreform.vic.gov.au/projects/guardianship-final-report. 6. Victorian Parliamentary Debates, Legislative Assembly, Book No. 9, 26 June 2014, at 2392. 7. Note 1 above, at 22-23.

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