EPA 4 – Remedies for breaches by enduring attorneys
This factsheet is part of a set of factsheets about enduring attorneys under the Powers of Attorney Act 1998 (Qld) (POA Act).
The factsheets in this series are:
EPA 4 – Remedies for breaches by enduring attorneys
These factsheets do not relate to general powers of attorney or to decision making for children and minors.
Meaning of terms
A dictionary in schedule 3 defines particular words used in the POA Act.
In simple terms:
- An Enduring Power of Attorney (EPA) is a formal document used by an adult (the principal) to authorise one or more persons (the attorneys) to make personal and/or financial decisions on the principal’s behalf if the principal lacks capacity to make those decisions.
- An attorney under an EPA means a person authorised to make decisions on behalf of another person.
- A principal under an EPA means a person who appoints an attorney to make decisions on that person’s behalf.
- Power for a matter means power to make all decisions about that matter.
- A person’s capacity for a matter means the person is capable of:
- understanding the nature and effect of decisions about the matter; and
- freely and voluntarily making decisions about the matter; and
- communicating the decisions in some way.
- A person’s impaired capacity for a matter means the person does not have capacity to make decisions about the matter.
Personal liability of enduring attornerys
When an enduring attorney exercises a power authorised by a principal, the attorney must exercise that power in a way that complies with relevant general principles and discharges the attorney’s duties (section 76 POA Act), (see EPA 2 – Power of enduring attorneys and EPA 3 – duties of enduring attorneys).
Generally, enduring attorneys are not personally liable for losses and liabilities incurred by a principal.
However, an attorney can be held personally liable if a loss incurred by a principal was caused by the attorney’s failure to discharge his or her duties when exercising a power conferred by the principal.
Statutory remedies under the POA Act
Right to compensation
If a principal incurs a loss because of the attorney’s breach of the POA Act, the principal or the principal’s estate (if the principal has died) has a right to seek compensation from the attorney for that loss (sections 106 and 107 POA Act).
- An application for a compensation order against an attorney under sections 106 or 107 POA Act is made to the Supreme Court. QCAT does not have jurisdiction to decide such application (Public Trustee of Queensland v BN and Ors (2011) QCAT 666).
- If the principal or attorney has died, the application for compensation must be made within 6 months after the death. That time limitation can be extended by the court in exceptional circumstances (section 106 POA Act).
- The court may relieve an attorney from all or part of the attorney’s personal liability for a loss if the court finds that:
- the attorney acted honestly; and
- the attorney acted reasonably; and
- it would be fair to excuse the attorney's breach (section 105 POA Act).
- An attorney who is acting honestly would generally be found to be acting in good faith and in the principal’s interests. However, the attorney’s knowledge of a wrongdoing is not a necessary pre-requisite for a finding that an attorney acted dishonestly (Ede v Ede (2006) QSC 378).
Edward was the sole attorney for all matters for his mother, Rita. Rita owned a property and was diagnosed with dementia. When Rita’s health deteriorated, Edward moved her into a nursing home. Edward then sold Rita’s property without telling his sister, Grace. Edward used the proceeds of the sale to renovate his house. Rita died without leaving a will.
Grace may apply to the Supreme Court for a compensation order against Edward because her interest in Rita’s estate was lost as a result of Edward’s improper use of the proceeds of the sale.
Right to apply to QCAT or the Supreme Court to protect a principal's interests
A principal, a member of the principal’s family, an attorney, the Public Guardian, the Public Trustee, or another person who has a sufficient and continuing interest in the principal, can apply to QCAT or the Supreme Court for orders about something related to the POA Act (section 110 POA Act).
Direction, advice or recommendation
A principal or an interested person can apply for a direction, advice or recommendation about a matter related to the POA Act, including (section 118 POA Act):
- how the terms of an EPA should be interpreted;
- how an attorney's power for a matter should be exercised; or
- to authorise an attorney to undertake a transaction that the attorney may not be authorised to undertake.
A principal or an interested person can apply for a declaration about matters relating to an EPA, including about:
- a person's capacity for a matter (section 111 POA Act);
- the validity or invalidity of an EPA (sections 113 POA Act); and
- whether an attorney's power under an EPA has begun (section 115 POA Act).
A principal or an interested person can apply for an order about something related to the POA Act, including:
- an order to remove a power from an attorney and give that power to another attorney or a new attorney;
- an order to change the terms of an EPA; or
- an order to revoke all or part of an EPA (section 116 POA Act).
This may happen, for example, if a court or the tribunal finds that the circumstances of a principal or other circumstances have changed and one or more terms of the EPA are no longer appropriate to protect the principal's interests (section 117 POA Act).
Mary is Peter’s sole attorney for all matters. Peter was diagnosed with Alzheimer’s disease. Peter owns two properties and told Mary and his family to sell his properties to finance his care at home because he never wants to live in a care facility. Mary is a beneficiary under Peter’s will and will inherit Peter’s properties after his death. Peter’s health has deteriorated but Mary refuses to sell Peter’s properties to finance his care at home. Mary moves Peter into a care facility against his will.
A member of Peter’s family can apply to QCAT or the Supreme Court for a direction about where Peter should live and about selling one of Peter’s properties to finance his care at home. If appropriate, an order can be made removing Mary as Peter’s attorney.
Right to records and audit
If a principal or an interested party has genuine concerns about how an attorney for a financial matter is managing a principal’s finances, an application can be made to QCAT or the Supreme Court for:
- an order that the attorney provides a summary of receipts and expenditures for a specified period;
- an order that the attorney provides detailed accounts of dealings and transactions undertaken by the principal for a specified period;
- an order that the accounts provided be audited; or
- an order that the attorney present financial management plan for approval (section 122 POA Act).
Complaints to the Public Guardian
The Office of the Public Guardian (OPG) is an independent statutory body created under the Public Guardian Act 2014 (Qld) (PG Act) to protect the rights and interests of vulnerable Queenslanders, including adults with impaired capacity.
The OPG can investigate a complaint or allegations that an adult with impaired capacity is or has been being neglected, exploited or abused, or that decision-making arrangements are inappropriate or inadequate (section 19 PG Act).
- Those investigative powers include:
- the power to require an attorney for a financial matter or an administrator to produce records and accounts (section 21 PG Act);
- the power to gain access to all information necessary to investigate a complaint (section 22 PG Act); and
- the power to summon a person to answer questions or produce documents or things (section 25 PG Act).
- Once an investigation is completed, the OPG issues a written report that can be used as evidence in legal proceedings or police investigations.
- The OPG may require that the costs of an investigation be paid by:
- the attorney or administrator if he or she has not acted as required by law; or
- the person making the complaint if the complaint is frivolous, vexatious or without good cause (section 29 PG Act).
The OPG also has power to protect an adult with impaired capacity, including by:
- suspending the operation of an EPA for up to 3 months if an attorney is not competent (section 34 PG Act);
- applying for interim orders to protect a principal’s rights and interests;
- applying for an entry and removal warrant if a principal is at immediate risk of harm (section 36 PG Act); and
- bringing a claim for damages or to recover possession of a property or payment of money wrongfully dealt with (section 33 PG Act).
In addition to the statutory remedies set out in the POA Act, in some cases an equitable remedy may be available to protect the interests of a principal. A claim for an equitable remedy may be made together with a claim for a statutory remedy.
Equity is a complex area of law. The courts consider many factors when determining if an equitable remedy should be granted to a person, including a lengthy delay in seeking a remedy and the conduct and circumstances of the parties involved when they entered into a transaction.
Below are examples of common equitable claims made in the context of EPAs. This is not an exhaustive list of equitable claims that may be available to protect a person’s interests.
Breach of fiduciary duty
- The relationship between a principal and an attorney gives rise to fiduciary duties owed by the attorney to the principal. These duties are inherent in the relationship of trust between an attorney and principal, which is also called a fiduciary relationship.
- If an attorney breaches a fiduciary duty, for example, by making a profit at the principal’s expense, an application can be made for an order holding the attorney accountable for the profit made in breach of a fiduciary duty.
For an example of equitable compensation awarded for a breach of fiduciary duty by an enduring attorney, see Smith v. Glegg (2004) QSC 443 (9 December 2004).
- A court may set aside a transaction if one party to that transaction is at a special disadvantage when compared to the other party, and the stronger party knew or ought to have known about it and takes an unfair advantage of that vulnerability to gain a benefit for himself or herself (Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447).
- The special disadvantage of a principal in comparison to an attorney may arise, for example, because of a principal’s age, impaired capacity, illness or lack of assistance or explanation if assistance or explanation would be necessary for the principal to make an informed decision about his or her interests.
- When considering a claim of unconscionable dealings, a court looks to the conduct of the stronger party trying to enforce a dealing or gain a benefit when dealing with a person with a special vulnerability.
A court may set aside a transaction procured by undue influence, which can arise as a matter of fact or where there is a presumption of undue influence between the parties that is not rebutted by evidence. For example, there is a presumption that in a conflict transaction between a principal and attorney (or between a principal and a relative, business associate, or close friend of the attorney), the attorney induced the principal to enter into that transaction by undue influence (section 87 POA Act). If that presumption is not rebutted by the principal, a court may set aside that conflict transaction.
- When considering a claim of undue influence, a court looks to the quality of the consent for a transaction given by a vulnerable party.
For an example of an order setting aside a transfer of a house as a result of undue influence and unconscionable dealing by an enduring attorney, see Gillespie v Gillespie & Ors (2012) QDC 212).
- A trust is a legal relationship under which a person holds a legal interest in a property for the benefit of one or more beneficiaries and subject to certain duties.
Under exceptional circumstances, a court may make a declaration that a person’s legal interest in a property is held on trust for the benefit of another person. That could happen, for example, if it would be unconscionable to allow an enduring attorney to take an unfair advantage of a vulnerable principal who loaned the attorney money to buy a house on a promise that the principal could live in the home with the attorney.
John is 80 years old. John used his superannuation funds to buy a house where he intended to live with his daughter, Sarah, and her family. In exchange, Sarah promised to care for John for the rest of his life. John intended to leave the house to Sarah on his death, and registered the house on his own name. Sarah convinced John to transfer the house to her name and then asked John to move out once their relationship broke down. John asked Sarah to return the money he used to buy the house, but Sarah refused it claiming that the money was an advancement of her inheritance.
John may apply to the court for a declaration that he has an equitable interest in the house. The remedy given by the court will depend on the evidence presented by the parties. If John is successful in his claim, the court may, for example, make a declaration that Sarah holds her interest in the property on trust for John and order Sarah to repay John the money he contributed plus interest.
For examples of cases where the court declared that the legal owner of a property held an interest on trust for another person, see Swettenham v Wild (2005) QCA 264 and Field v Loh & Anor (2007) QSC 350.
Unmeritorious complaints about enduring attorneys
- Before commencing legal proceedings, it is recommended that a person considers if alternative dispute resolution (ADR) would be an appropriate way to try to resolve a conflict or legal problem. In ADR, an impartial person assists those in disagreement to solve the issues between them (see Alternative Dispute Resolution).
- It is strongly recommended that a person obtains legal advice before making an application to QCAT or the Supreme Court.
- An application that is found to be frivolous, trivial, vexatious, misconceived or lacking in substance can be dismissed and an order for costs can be made against the applicant.
- An order can also be made prohibiting a person to make a new application about a matter without first obtaining authorisation from the court or tribunal (s 123 POA Act).
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