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What Can I Do if an Attorney Breaches Their Duty?

By 25 October 2019 Wills & Estates

Enduring Power of Attorney

Like an executor, someone appointed as a Power of Attorney has significant legal responsibilities, including making decisions on property and financial matters for the person who appointed them (the principal).

An Enduring Power of Attorney continues to operate in the event that the principal loses mental capacity, allowing the attorney to make decisions such as buying and selling real estate, operating bank accounts, paying bills and dealing with government agencies. In certain States, including Queensland, an attorney can also make important lifestyle and health decisions for the principal.

An attorney must at all times act in the best interests of the person who appointed them. Where there is a conflict between the interests of the two, the attorney must give priority to the interests of the principal and not gain any personal benefit from the role.

Problems may arise when an attorney engages in a ‘conflict transaction’, as outlined in section 73(2) of the Powers of Attorney Act 1998 (Qld). Examples of these transactions include where an attorney:

  • Purchases an asset belonging to the principal for themselves;
  • uses the principal’s money to make loans to themselves, family members, friends, etc; and
  • uses the principal’s money to purchase a house for the attorney to live in.

As demonstrated above, an attorney must be extremely cautious when dealing with the principal’s money or other assets. The principal can authorise an attorney to enter into a conflict transaction but this must be expressed within the Power of Attorney document. The attorney should maintain reasonable accounts and records of the principal’s money and property. An attorney can use the principal’s assets to maintain the principal’s dependants, as long as it is ‘reasonable’ in the circumstances.

An attorney who fails to observe their fiduciary duty to the principal can be required to compensate the principal or the principal’s estate (if the principal has passed away) for any loss that they caused.

Undue influence: It should be noted that if a transaction similar to those outlined above occurs, there is an automatic presumption in the principal’s favour that the principal was induced to enter into the transaction by the attorney’s undue influence. This presumption holds even where there is no issue about the principal’s mental capacity to enter into the transaction.

In this circumstance it is up to the attorney to rebut the presumption by showing that the principal entered into the transaction of their own free will and/or that it was authorised and appropriate. This can be done if the attorney can show the principal had the benefit of independent advice; knew or understood the extent to which the transaction was advantageous or disadvantageous; and was motivated to enter into the transaction by factors other than the influence claimed.

Undue influence can be a particular problem when the attorney is the child or other close relation of the principal. Despite their responsibilities, an attorney who is also a close relative can easily ‘muddy the water’ when it comes to the question of influence, creating problems with other siblings, for example. For this reason an Enduring Power of Attorney should be a person in whom the Principal has absolute trust.

A legal professional with expertise in this area can also advise on the best way to structure a Power of Attorney document to avoid or lessen the likelihood of some of the problems we’ve described in this article.

How to make a complaint

In Queensland someone who believes that an attorney is acting in breach of their fiduciary duty to a principal can make an application to the Queensland Civil and Administrative Tribunal to investigate the principal’s affairs.

In any event, if you have concerns about the conduct of either the executor of a deceased person’s estate or someone with Enduring Power of Attorney, contact Delaney & Delaney today on (07) 3236 2604 or by email admin@delaneyanddelaney.com.au. Wills and estates, and benefit nominations, are specialty areas of ours developed over 100 years of practice during which we’ve gained a reputation for excellence and integrity.