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Ethics: When an attorney acts beyond their power

Ethics: When an attorney acts beyond their power

By Carly Erwin

Ethics Practice & Procedure 

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A solicitor may face an ethical dilemma where they suspect an attorney is seeking to abuse their power to the detriment of the principal.

Snapshot
  • A solicitor has an ethical obligation to act in the best interests of their client, the principal. 
  • It is prudent for a solicitor to warn an attorney in circumstances where the attorney may be breaching their duties to the principal. 
  • A solicitor may decline to act where it becomes apparent that an attorney intends to pursue actions that would detriment the principal.

You are approached by the daughter of a long-standing client who is the sole appointed enduring power of attorney. The daughter has requested you transfer the title to the family home which is owned by the mother into the daughter’s name. She notes that her mother has said that she wants her to have this for taking care of her. You pay a visit to the mother and she confirms what the daughter has said, but it does not seem she has capacity to make this decision. You are aware the daughter has experienced financial difficulty from a failed business venture and are of the view that she may be attempting to abuse her position. What should you do?

It is not uncommon for a solicitor to express concern regarding the actions of an attorney. As the principal is in a vulnerable position, a solicitor must remain vigilant that the attorney is adhering to their duties. The Powers of Attorney Act 2014 (Vic) explicitly prescribes the duties of an attorney as follows:

Duties of attorney

An attorney under an enduring power of attorney:

  • must act honestly, diligently and in good faith and
  • must exercise reasonable skill and care and 
  • must not use the position for profit, unless permitted under section 70 and
  • must avoid acting where there is or may be a conflict of interest unless the attorney is authorised by the power, the principal or VCAT and
  • must not disclose confidential information gained as the attorney under the power unless authorised by the power or by law and
  • must keep accurate records and accounts as required by section 66.

In circumstances where it is apparent, or there is cause for concern that an attorney may be in breach of their duties, it is imperative that a solicitor should consider their ethical obligations to the principal who is their client. Importantly, a solicitor has a fundamental duty in accordance with Rule 4 of the Australian Solicitors’ Conduct Rules 2015 to act in the best interests of the client. A failure to properly protect the interests of their client may result in a breach of ethical duties. 

When a principal’s solicitor is alerted to the fact that an attorney may be purporting to act improperly, what can they do? A solicitor has a duty to make further inquiries so they can ascertain whether the attorney’s proposed actions would be detrimental to the interests of the principal. The transfer of the title to the house for no profit may adversely affect the finances of the elderly client. In the circumstances outlined above, the solicitor has already begun the process of making inquiries by paying a personal visit to the client and confirming instructions. However, as the solicitor has doubt as to the capacity of the client to make this decision, it would be wise to investigate further by formally assessing the principal’s capacity.1 It is relevant to bear in mind the comments made by Chief Justice Young: “. . . red lights should flash when certain factors exhibit themselves . . . a prudent solicitor when he or she sees the red light, makes inquiries”.2

In the event that further inquiries confirm the solicitor’s suspicions that the attorney is attempting to act beyond their power, it would be good practice to warn the attorney against taking the proposed actions. A solicitor may have a duty to warn the attorney of any issues or risks with the proposed course of action.3 It is possible that an attorney may be unaware of the duties imposed on them by the Act, and may cease their proposed actions after being given appropriate warning. 

Should the attorney attempt to instruct the solicitor to persist, regardless of the warning provided, it would be prudent for the solicitor to decline to continue to act.4 Remember, a solicitor has a fundamental ethical duty to act in the best interests of their client. Continuing to act would be to the client’s detriment and may result in a breach of ethical obligations. 

The LIV Ethics, Wellbeing & Practitioner Support department is currently producing an ethics guideline on Powers of Attorney (Attorney abuse of power). For guidance relating to potential abuses of power by an attorney, contact the LIV Ethics Hotline on ph 9607 9336. ■


Carly Erwin is a paralegal in the LIV Ethics, Wellbeing & Practitioner Support department. 

  1. The LIV Capacity Guidelines and Toolkit 2018 is available to assist in assessing capacity.
  2. Yaktine v Perpetual Trustees Victoria Ltd [2004] NSWSC 1078 at [65].
  3. See Reilly v Reilly [2017] NSWSC 1419 at [405]. 
  4. Note 3 above; see also LIV Ethics Committee Ruling R4282, September 2005.

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