Opinion
Elder abuse, conflict and change
1st Oct 2020
It’s no secret that Australia has an ageing population and that many intelligent minds around the country are attempting to find ways to effectively combat the growing prevalence of elder abuse.
Unsurprisingly, the Australian Law Reform Commission’s elder abuse report published in 2017 made a number of recommendations to assist in combatting elder abuse, of which a very important aspect was the laws regarding alternative decision-makers, particularly powers of attorney.
Below I will highlight issues relating to conflicts when it comes to attorneys, and provide an overview of the new legislative changes soon to commence in Queensland.
In 2019, legislative amendments to the Powers of Attorney Act 1998 (Qld) (Powers of Attorney Act) and Guardianship and Administration Act 2000 (Qld) (Guardianship and Administration Act) were passed. These amendments relate to conflicts, what happens when a gift in a will is thwarted by the actions of an attorney, and the general and healthcare principles relating to decision-making and care.
Conflict transactions
Conflict transactions are complex and a source of constant confusion among practitioners. Section 73 of the Powers of Attorney Act provides that an attorney may enter into a conflict transaction only if the principal authorises that transaction.
The question of whether a transaction is a ‘conflict transaction’ requires some thought. The main aspects of the concept are whether the transaction is one in which there may be a conflict, or which results in a conflict between a duty of the attorney toward the principal and either the interests of the attorney, or a business associate or close friend, or another duty of the attorney.[1]
Recent amendments
The recent amendments to the legislation provide further examples of what conflict transactions look like. These include:
- Attorney lends the principal’s money to a close friend or relative;
- Attorney rents the principal’s property to themselves or a relative of the attorney;
- Attorney uses principal’s money for personal expenses of the attorney, for example the attorney’s personal travel expenses; and
- Attorney buys the principal’s home.
To some, these examples may seem fairly understandable. However, one ought to consider how easily and commonly they arise within the family dynamic. For example, consider a circumstance where a parent appoints their adult child as their attorney and the adult child wishes to buy the family home after their parent moves to a care facility, so as to keep the home in the family. Further, their parent no longer has the capacity to appreciate such a decision to sell.
Enter: a conflict transaction.
While one would hope that these issues would be considered proactively and legal advice would be obtained before taking seemingly innocent steps, that is not always the case. Many people are not aware that the mere existence of a power of attorney creates a presumption of undue influence between principal and attorney in respect of a transaction between them.[2] The very nature of this presumption shifts the onus of proof, and gives what can colloquially be called the ‘free kick’ for the siblings of the attorney to attempt to undo the transaction between the attorney and mum/dad unless a court is convinced that the transaction was one that the principal consented to freely and voluntarily.
The amendments also introduce new provisions that allow for a principal to authorise a conflict transaction retrospectively,[3] and allow for some certainty for otherwise disappointed beneficiaries when an attorney sells/converts property or interests while discharging their duties as attorney.[4] Previously, a disappointed beneficiary would make an application under s107 of the Powers of Attorney Act for compensation for their loss. It is understood that the introduction of this new provision may alleviate some of the burden on courts (for such s107 compensation applications) and permit the ‘tracing’ of those converted interests.
These changes to the Powers of Attorney Act are similarly reflected in the corresponding sections of the Guardian and Administration Act.
These revisions have also introduced the first update in over 16 years to the standard forms in power of attorney and advance health directives. The full ambit of changes, including the new forms, will come into effect on 30 November 2020.
Rapidly changing area of law
There is no question that this area of decision-making is complex. The added complexity of family dynamics, blended families and the erroneous perception of simplicity regarding these appointments creates challenges for practitioners on many levels. The recent decision of McFee v Reilly [2018] NSWCA 322 made it clear that practitioners must ensure that they are receiving instructions from the correct people, with the correct authority, and be very mindful of how an attorney must discharge their duties and avoid conflict transactions.
This area of law is rapidly changing and will continue to do so as society attempts to contain the beast that is elder abuse. With the introduction of the first laws criminalising elder abuse in the ACT last month, it’s safe to say that many aspects of elder abuse will continue to adjust the way in which legal services are provided to older persons in our communities.
For a more comprehensive account of these changes, you can read the author’s blog article on the changes here.
Michele Davis is a former lawyer turned researcher and writer. She is a self-confessed succession nerd and has devoted her career to the world of succession and elder law. After 9 years in private practice, she is currently undertaking her PhD at QUT. To read more of her writing on succession and elder law, visit her website, and for her writing on law and wellbeing, visit Mad About Law.
The views and opinions expressed in these articles are the authors' and do not necessarily represent the views and opinions of the Australian Lawyers Alliance (ALA).
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