Naomi de Costa, Special Counsel
24 July 2014
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We are all getting older
 Almost 280,000 Australians currently live with
dementia
 Each week, there are 1,600 new cases of
dementia in Australia. That is expected to
grow to 7,400 new diagnoses each week by
2050
 Dementia is only one reason why a person
may have impaired capacity
From Alzheimers Australia
http://www.fightdementia.org.au/understandingdementia/statistics.aspx
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The advice is always the same
 Going to see the solicitor about estate
planning has the same attraction as going
to the dentist
 However, all prudent financial planners,
accountants and other professional
advisors agree that everyone should have
an up to date will and power of attorney
(at least)
 Consequences of not having an EPOA are
bad: RT (unreported)15 July 2014, Supreme
Court of Queensland at Cairns
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But – what about the attorney?
 In most instances, the attorney is not asked about whether
they would be appointed until they are presented with the
completed document, and asked to sign to accept the role.
 Sometimes, they are not even asked to sign, and may not be
aware of the appointment. This is still a valid appointment on
acceptance: Whitney v National Australia Bank Ltd [2007] QSC
397
 The standard Queensland government short form EPOA is 14
pages long. The long form EPOA is 20 pages long.
 I am not convinced attorneys (or principals) read any or all of
the material included. However, I have never had an attorney
refuse to sign the EPOA document.
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What are you getting yourself in
for?
 Powers of Attorney Act 1998 is designed to benefit the principal
 Imposes very high standards of conduct on the attorney
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(including lay attorneys), which may commence from the time the
EPOA is signed by the principal
Includes a series of evidentiary burdens for the attorney to
overcome
Attorneys are personally liable for decisions made and not usually
entitled to an indemnity
Attorneys can only be paid for their work in limited circumstances
No time limit under the Act, other than six months from the date of
death of the Principal
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Conflict transactions
Section 73, Powers of Attorney Act 1998
 An attorney for a financial matter may enter into a conflict
transaction only if the principal authorises the transaction,
conflict transactions of that type, or conflict transactions
generally
 A conflict transaction is a transaction in which there may be
conflict, or which results in conflict, between:
a) the duty of the attorney toward the principal; and
b) either:
 the interests of the attorney, or a relation, business
associate or close friend of the attorney; or
 another duty of the attorney
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Presumption of undue influence
Section 87, Powers of Attorney Act 1998
The fact that a transaction is between a principal and
1 or more of the following –
a) an attorney under an EPOA or AHD;
b) a relation, business associate or close friend of the
attorney;
gives rise to a presumption in the principal’s favour
that the principal was induced to enter the
transaction by the attorney’s undue influence.
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Smith v Glegg [2004] QSC 443
 Conflict transaction does not need to be a transaction
which is entered in to by the attorney: principal signed
the contract herself
 Presumption of undue influence:
 applies even where there is no concern regarding the
principal’s capacity to enter in to transactions and;
 possibly (arguably) even before the attorney is able to
exercise power under the document e.g. EPOA
conditional on a future date/condition being reached
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Summary so far…
 The attorney can be appointed
without being advised in advance
 Conflict transactions, and the
presumption of undue influence
may apply from that time
 Reversal of the onus – up to the
attorney to prove any transaction is
authorised, appropriate etc.
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Some problematic examples
 Accountant is appointed as an attorney – every
invoice issued is a conflict transaction
 Family business – where principal is primary
shareholder and attorney is employee/director:
wages paid, cars bought from company are
also conflict transactions (even if the principal
signed for those transactions)
 Husbands and wives: transfers between
separately held and joint property
 Fish and chips with no receipt?
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Nobody seems to know…
By these steps, Ted and Bill did
what they could both to carry out
Ted’s wish to disinherit his children
and to protect his estate against
any claim they may make after
Ted’s death. Surprisingly, given the
involvement of lawyers, no one
appears to have taken account
of the effect of s 87 of the Powers
of Attorney Act 1998 (Qld).
Jackson J at [73], Baker & Ors v Affoo & Ors
[2014] QSC 46
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Some solutions – at the time of
drafting
 Conflict authority clauses – especially for spouses,
accountants, business partners – but ensure these
are properly understood
 Think through the types of decisions an attorney
may need to make – in the short or long term
 Never include a several appointment, and avoid
majority appointments – even if you aren’t acting,
you are still supposed to be exercising the power for
the benefit of the principal and supervising your coattorneys
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The solutions once the EPOA is in effect
(and principal still has capacity)
 Where any significant transaction is contemplated,
the principal and the attorney should receive
independent legal advice: cases indicate this is
possibly the only way to ensure the transaction is not
set aside
 Ensure accurate records are kept at the time of the
transaction, and until 6 months after the date of
death – currently I am trying to find the records of a
transfer that took place in 2004 and it’s really, really
difficult…
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Baker v Affoo [2014] QSC 046
 Elderly gentleman transfers the farm inter vivos to his
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neighbours (instead of his children)
Clear evidence over many years of his intention to
exclude children from will
Saw a solicitor (but it was the neighbours’ solicitor)
Saw a doctor who clearly certified capacity and
confirmed the gentleman’s wish to disinherit his children
Transfers held to be conflict transactions – could not
rebut presumption, and the transfers were set aside
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If principal has lost capacity to make
decisions: QCAT authority/release
 What about if the principal has lost capacity to
make decisions?
 If a conflict transaction is contemplated, the
attorney must seek approval from Queensland
Civil and Administrative Tribunal (QCAT)
 Must show the transactions is in the best interests
of the principal
 Can be retrospective, but must be before death
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Role of professional advisors
Most professional advisors have fiduciary duties to the
principal, but limited duties to the attorney – general
obligation to always act in their best interest.
The distinguishing obligation of a fiduciary is the
obligation of loyalty. The principal is entitled to the
single-minded loyalty of his fiduciary.
Millett LJ held in Bristol and West Building Society v Mothew
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Role of professional advisors
 If you are instructed to act on the direction of an attorney, and
the transaction may be a conflict transaction, or otherwise be
in breach of the Powers of Attorney Act the attorney should be
directed to seek legal advice, and as professional advisor, you
should seek your own advice
 Under the Land Titles Practice Manual [1-2040], the Titles Office
is entitled to refuse a transfer of land that amounts to a breach
of the Powers of Attorney Act – if there is such a right, then
professional advisors should be doing the same, especially
where the original retainer derives from the principal
 Identify – who is our client? Who do we owe duties to? Usually
will be the principal.
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Thank you!
Naomi de Costa
Special Counsel
Queensland Law Society Accredited
Specialist, Succession Law
Member, Society of Trust & Estate
Practitioners
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