New legislative changes for Attorneys and Administrators

While no person expects, nor wishes, to experience a lack of capacity, the very real fact of life is that they may.  Incapacity can be long term or short term and can impact everyone quite differently.

The question of someone’s capacity to understand the nature and the effect of something is fraught with difficulty mainly because capacity is something that is very specific to the person and the type of decision they must make.

With all this in mind, it is not doubt unsurprising that the impact of legal capacity is an area of increasing difficulty and, sadly, ripe for dispute.

This past week, Queensland Parliament passed the Guardianship and Administration and Other Legislation Amendment Bill (‘the Bill’) which included amendments to various Acts, including our Powers of Attorney Act 1998 (Qld) and the Guardianship and Administration Act 2000 (Qld). The Bill has provided a number of valuable changes, some of which are addressed below.  While the Bill has been passed, the commencement date of these changes has yet to be released.

You can read the whole Bill here.

Some of the key changes I have found of interest are highlighted below.

Conflict Transactions

In relation to decision making by Attorneys, the Bill also includes amendments to section 73 of the Powers of Attorney Act 1998 (Qld), which deals with conflict transactions by providing similar provisions as above. In section 68(2) of the Bill, further clarity is offered in a new section 73(1A) referring to when an attorney may be authorised to enter into a conflict transaction, the Bill further provides for a principal to retrospectively authorise the transaction:

(1A)Despite subsection (1), if an attorney enters into a conflict transaction without obtaining an authorisation mentioned in subsection (1) for the transaction, a conflict transaction of that type or conflict transactions generally, the principal may retrospectively authorise the transaction if the principal has capacity to do so.

(1B)A conflict transaction authorised under subsection (2) is taken to be, and to have always been, as valid as if it had been entered into under an authorisation given by the principal before the attorney entered into the transaction.

Note—

See also section 118(3) in relation to the retrospective authorisation of particular transactions by the court.

(1C)Subsection (5) applies if an attorney enters into a conflict transaction without obtaining an authorisation mentioned in subsection (1).

(1D)To remove any doubt, it is declared that, until the conflict transaction is authorised under subsection (2) or section 118(3), the attorney has acted contrary to subsection (1).

In section 68(4) of the Bill, examples of conflict transactions are included as:

2A conflict transaction happens if an attorney for a financial matter lends the principal’s money to a close friend of the attorney.

3A conflict transaction happens if an attorney for a financial matter rents the principal’s residential property to the attorney or a relative of the attorney.

4A conflict transaction happens if an attorney for a financial matter uses the principal’s money to pay the personal expenses of the attorney, including, for example, the attorney’s personal travel expenses.

5A conflict transaction happens if an attorney for a financial matter buys the principal’s house.

And further states when a transaction is not a conflict in section 68(5) of the Bill:

(3)However, a transaction is not a conflict transaction merely because—

(a)the attorney is related to the principal; or

(b)the attorney may be a beneficiary of the principal’s estate on the principal’s death; or

(c)by the transaction the attorney, in the attorney’s own right and on behalf of the principal—

(i)deals with an interest in property jointly held; or

(ii)acquires a joint interest in property; or

(iii)obtains a loan or gives a guarantee or indemnity in relation to a transaction mentioned in subparagraph (i) or (ii).

(3A)Also, to remove any doubt, it is declared that the making of a gift or donation under section 88 is not a conflict transaction.

(3B)A conflict transaction between an attorney and a person who does not know, or have reason to believe, the transaction is a conflict transaction is, in favour of the person, as valid as if the transaction were not a conflict transaction.

There are like adjustments to the Guardianship and Administration Act 2000 (Qld) in respect of the role of an Administrator.

Development of Principles

The Bill also sees the introduction of a new section 6C and 6D Chapter 1A Principles for the Powers of Attorney Act 1998 (Qld) setting out a more comprehensive set of General Principles and Health Care Principles to be applied when performing the function and exercising powers under the Act or an enduring document. These are set out in section 56 of the Bill as follows:

Chapter 1A Principles

6C General principles

The principles (the general principles) set out below must be applied by a person or other entity that performs a function or exercises a power under this Act or an enduring document—

General principles

1 Presumption of capacity
An adult is presumed to have capacity for a matter.

2 Same human rights and fundamental freedoms

(1)An adult’s inherent dignity and worth, and equal and inalienable rights, must be recognised and taken into account.

(2)The rights of all adults to the same human rights and fundamental freedoms, regardless of a particular adult’s capacity, must be recognised and taken into account.

(3)The principles on which an adult’s human rights and fundamental freedoms are based, and that should inform the way those rights and freedoms are taken into account, include—

(a)respect for inherent dignity and worth, individual autonomy (including the freedom to make one’s own choices) and independence of persons; and

(b)non-discrimination; and

(c)full and effective participation and inclusion in society, including performing roles valued by society; and

(d)respect for difference and acceptance of persons with impaired capacity as part of human diversity and humanity; and

(e)equality of opportunity; and

(f)accessibility; and

(g)equality between all persons regardless of gender.

3 Empowering adult to exercise human rights and fundamental freedoms
The importance of the following matters must be taken into account—

(a)empowering an adult to exercise the adult’s human rights and fundamental freedoms;

(b)encouraging and supporting an adult—

(i)to perform social roles valued in society; and

(ii)to live a life in the general community and to take part in activities enjoyed by the community; and

(iii)to achieve maximum physical, social, emotional and intellectual potential and to become as self-reliant as practicable;

(c)an adult’s right to participate to the greatest extent practicable in the development of policies, programs and services for people with impaired capacity for a matter.

4 Maintenance of adult’s existing supportive relationships

(1)The importance of maintaining an adult’s existing supportive relationships must be taken into account.

(2)Maintaining an adult’s existing supportive relationships may, for example, involve consultation with—

(a)the adult, to find out who are the members of the adult’s support network; and

(b)any persons who have an existing supportive relationship with the adult; and

(c)any members of the adult’s support network who are making decisions for the adult on an informal basis.

(3)The role of families, carers and other significant persons in an adult’s life to support the adult to make decisions should be acknowledged and respected.

5 Maintenance of adult’s cultural and linguistic environment and values

(1)The importance of maintaining an adult’s cultural and linguistic environment and set of values, including religious beliefs, must be taken into account.

(2)Without limiting subsection (1), for an adult who is an Aboriginal person or a Torres Strait Islander, the importance of maintaining the adult’s Aboriginal or Torres Strait Islander cultural and linguistic environment and set of values, including Aboriginal tradition or Island custom, must be taken into account.

6 Respect for privacy

(1)An adult’s privacy must be taken into account and respected.

(2)An adult’s personal information, including health information, must be protected on the same basis as other people’s personal information is protected.

7 Liberty and security

(1)An adult’s right to liberty and security on an equal basis with others must be taken into account.

(2)An adult should not be deprived of the adult’s liberty except in accordance with the law.

8 Maximising an adult’s participation in decision-making

(1)An adult’s right to participate, to the greatest extent practicable, in decisions affecting the adult’s life must be recognised and taken into account.

(2)An adult must be given the support and access to information necessary to enable the adult to make or participate in decisions affecting the adult’s life.

(3)An adult must be given the support necessary to enable the adult to communicate the adult’s decisions.

(4)To the greatest extent practicable, a person or other entity, in exercising power for a matter for an adult, must seek the adult’s views, wishes and preferences.

(5)An adult’s views, wishes and preferences may be expressed orally, in writing or in another way, including, for example, by conduct.

(6)An adult is not to be treated as unable to make a decision about a matter unless all practicable steps have been taken to provide the adult with the support and access to information necessary to make and communicate a decision.

9 Performance of functions and exercise of powers
A person or other entity in performing a function or exercising a power under this Act in relation to an adult, or under an enduring document for an adult, must do so—

(a)in a way that promotes and safeguards the adult’s rights, interests and opportunities; and

(b)in the way that is least restrictive of the adult’s rights, interests and opportunities.

10 Structured decision-making

(1)In applying general principle 9, a person or other entity in performing a function or exercising a power under this Act in relation to an adult, or under an enduring document for an adult, must adopt the approach set out in subsections (2) to (5).

(2)First, the person or other entity must—

(a)recognise and preserve, to the greatest extent practicable, the adult’s right to make the adult’s own decision; and

(b)if possible, support the adult to make a decision.

(3)Second, the person or other entity must recognise and take into account any views, wishes and preferences expressed or demonstrated by the adult.

(4)Third, if the adult’s views, wishes and preferences can not be determined, the person or other entity must use the principle of substituted judgement so that if, from the adult’s views, wishes and preferences, expressed or demonstrated when the adult had capacity, it is reasonably practicable to work out what the adult’s views, wishes and preferences would be, the person or other entity must recognise and take into account what the person or other entity considers the adult’s views, wishes and preferences would be.

(5)Fourth, once the person or other entity has recognised and taken into account the matters mentioned in subsections (2) to (4), the person or other entity may perform the function or exercise the power.

6D Health care principles

The principles (the health care principles) set out below must be applied by a person or other entity that performs a function or exercises a power under this Act or an enduring document for a health matter—

Health care principles

1 Application of general principles
A person or other entity that performs a function or exercises a power under this Act, or an enduring document, for a health matter in relation to an adult, must also apply the general principles.

2 Same human rights and fundamental freedoms
In applying general principle 2 to a health matter—

(a)the principle of non-discrimination requires that all adults be offered appropriate health care, including preventative care, without regard to a particular adult’s capacity; and

(b)any consent to, or refusal of, health care for an adult must take into account the principles of respect for inherent dignity and worth, individual autonomy (including the freedom to make one’s own choices) and independence of persons.

3 Performance of functions and exercise of powers
In applying general principles 9 and 10 to a health matter, a person or other entity, in performing a function or exercising a power under this Act in relation to an adult, or under an enduring document for an adult, must take into account—

(a)information given by the adult’s health provider; and

(b)if the adult has a medical condition—

(i)the nature of the adult’s medical condition; and

(ii)the adult’s prognosis; and

(c)if particular health care is proposed, any alternative health care that is available; and

(d)the nature and degree of any significant risks associated with the proposed health care or any alternative health care; and

(e)whether the proposed health care can be postponed because a better health care option may become available within a reasonable time or the adult is likely to become capable of making the adult’s own decision about the health care; and

(f)the consequences for the adult if the proposed health care is not carried out; and

(g)a consideration of the benefits versus the burdens of the proposed health care; and

(h)the effect of the proposed health care on the adult’s dignity and autonomy.

4 Substituted judgement For applying general principle 10(4) to a health matter, the views and wishes of an adult expressed when the adult had capacity may also be expressed—

(a)in an advance health directive; or

(b)by a consent to, or refusal of, health care given at a time when the adult had capacity to make decisions about the health care.

Presumption of Capacity by Court or Tribunal

Section 75 of the Bill introduces a new section 111A providing that the Court or Tribunal is to presume that the adult has capacity until proven otherwise:

111A Application of presumption of capacity

(1)If, in performing a function or exercising a power under this Act, the court or tribunal is required to make a decision about an adult’s capacity for a matter, the court or tribunal is to presume the adult has capacity for the matter until the contrary is proven.

(2)If a declaration by the court or tribunal that an adult has impaired capacity for a matter is in force, a person or other entity that performs a function or exercises a power under this Act is entitled to rely on the declaration to presume that the adult does not have capacity for the matter.

Interests of Beneficiary under Principal’s Will

Section 66 of the Bill introduces new sections that deal with beneficiary’s interests in the Will of a Principal where the beneficiary’s interest in the Will may be impacted by the conduct of the attorney in making decisions to sell or otherwise convert property owned by the Principal in the course of their duties as attorney.

The new sections provide for some certainty for the interests of the beneficiary to remain in tact (as best as can be achieved) and to avoid frustrating a gift intended by the principal to benefit that particular beneficiary.  A common issue that arises in this context is where a beneficiary may be gifted a property in the Principal’s Will and the attorney lawfully sells that same property which is the subject of the gift to fund the Principal’s move into retirement or aged care. Currently, a beneficiary (or the legal personal representative) may apply to the Court for compensation for the loss of a benefit in an estate under section 107 of the Powers of Attorney Act 1998 (Qld).  With the inclusion of this new section, it is anticipated that there will be less need for an application to be made to the Court under s107 to achieve the success of the gift intended in the Principal’s Will.

The new sections 61A to 61D are as follows:

61A Application of ss 61B–61D

Sections 61B to 61D apply only in relation to an enduring power of attorney.

61B Effect on beneficiary’s interest if property dealt with by attorney

(1)This section applies to a person who is a beneficiary (the beneficiary) under a deceased principal’s will.

(2)The beneficiary has the same interest in any surplus money or other property (the proceeds) arising from a sale, mortgage, charge, disposition of, or other dealing with, property under the powers given to an attorney under an enduring power of attorney as the beneficiary would have had in the property sold, mortgaged, charged, disposed of or otherwise dealt with, if the sale, mortgage, charge, disposition or other dealing had not happened.

(3)The beneficiary is also entitled to—

(a)any money or other property that is able to be traced as income generated by the proceeds; and

(b)any capital gain that is generated from the proceeds.

(4)This section applies even if the beneficiary is the attorney who sold, mortgaged, charged, disposed of or otherwise dealt with the property.

(5)This section applies subject to any order made by the court under section 61D(1).

61C Attorney not required to keep proceeds and property separate

Section 61B does not require an attorney for a principal who has sold, mortgaged, charged, disposed of, or otherwise dealt with, the principal’s property under the powers given to the attorney, to keep any surplus money or other property arising from the sale, mortgage, charge, disposition or other dealing separate from other property of the principal.

61D Application to court to confirm or vary operation of s 61B

(1)An application may be made to the court for—

(a)an order, including an order to direct a conveyance, deed or other thing to be executed or done, to give effect to section 61B; or

(b)an order to ensure a beneficiary under the principal’s will does not gain an unjust and disproportionate advantage or suffer an unjust and disproportionate disadvantage of a kind not contemplated by the will because of the operation of section 61B.

(2)An application may be made by—

(a)a beneficiary under the principal’s will; or

(b)the personal representative of a deceased beneficiary under the principal’s will; or

(c)the personal representative of the principal.

(3)An order made under subsection (1)(b)—

(a)has effect as if it had been made as a codicil to the principal’s will executed immediately before the principal’s death; and

(b)applies despite any contrary operation of section 61B.

(4)An application under this section must be made to the court within 6 months after the principal’s death.

(5)The court may extend the application time.

(6)The Succession Act 1981, section 44(1) to (4) applies to an application and an order made on it as if the application were an application under part 4 of that Act by a person entitled to make an application.

(7)Despite section 109A, a reference in this section to the court does not include a reference to the tribunal.

Some of these changes will provide some much needed clarity around common areas of dispute and I am hopeful that they achieve the desired certainty that brought about the changes in the first place.  These changes are significant for many, particularly those of the lawyers who practice in this area and are advising clients as to the impact of conflict and the unintended consequences of dealing with property gifted in Wills.  These changes also highlight the need for any person either advising on or being advised on enduring documents that the law will constantly evolve and change and these important documents cannot be set and forgotten about.

Those of the changes listed above, of course, not an exhaustive list of the changes. I highly recommend the read.  You can access the full copy of the Bill here.

 

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2 Comments Add yours

  1. Nice Blog and very useful information.Thanks for sharing ,also if you are in Auckland New Zealand and you need any help of legal services in Auckland.

    Like

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