Lec 12: Powers of Attorney
Note: pre 16/2/2004 POAS – see COL
Leg:
§ Pre POA Act – governed by Conveyancing Act (form of POA in Sch of CA)
§ Pt 6 Conveyancing Act 2003 – apply to POA created between 1/3/1985-15/2/2004
o Now incorporated as Sch 1 of POA Act
§ Powers of Attorney Act 2003 – any POA created after 15/2/2004
§ Common law + equity applies, subject to POA Act: s7
Terminology:
§ Form for prescribed POA: Sch 2 (s8) – covers POA and EPOA
§ Person giving power (Principal) to person receiving power (Attorney): s3
Powers of Attorney
· Definition: instrument where Principal gives A authority to act in place of P in making and carrying out financial/property decisions.
o May be general and unlimited: ends when mental incapacity
o May be specific: limited to 1 trans, time or particular function (eg executing docs)
o May be enduring: continues even if loss of mental capacity
· POA may be needed when person is unable to look after own affairs, eg:
o When out of the country
o When temporarily disabled eg in hospital
o In failing mental or physical health
· If comp, may POA to execute docs on its behalf:
o in times between meetings of BOD
o where lots of docs requiring execution eg. Bank has lots of Mg etc docs
Principal
Capacity
· Principal must have mental capacity to understand:
o Nature/effect of appointment
o Sorts of trans/operations the A will do
· For EPOA must understand:
o A can assume complete auth over P’s affairs
o A can do anything with P which P could’ve done
o EPOA continue even if mentally incapable
o If mentally incapable – irrevocable without Ct order.
· If unwell/elderly –
o obtain medical certificate OR
o If doing own assessment, keep statement with POA
· If subject to protection order – POA is suspended whilst estate subject to management: s76(4)-(5) Protected Estates Act 1983 (NSW)
· Capable of being P:
o Minors: s46 Minors (Property and Contracts) Act 1970 (NSW), but A has no greater than minor to transact
o Several Ps: can appoint 1 A
o Intoxication: if affects mental capacity – voidable but not void: Howard v Currie [1879]
o Partners: jointly appoint A re PA matters
o Corps: Dirs may appoint: s198D Corp Act 2001
· Incapable of being P:
o If NO mental capacity – POA is void.
o Alien enemies – cannot appoint Aus A
o Insolvent persons: P has no control over their prop. Exceptions:
§ Re things which Cred have no right to
§ Re administration of insolvent estate
§ At direction of Trustee in bankruptcy
o Trustees: Cannot give POA to execute function as Tee: s10
o Attorney: cannot appoint sub-A unless their POA specifically provides: s45
· Don’t automatically lose capacity: eccentricity, depression, fears, hallucinations, delusions, deaf, mute, blind, epilepsy, Alzheimers
Rights
o To terminate the POA at any time for any reason UNLESS irrevocable
o To repudiate actions in breach of POA – P is bound to obligations to 3rd parties (if unaware), so much work quickly to repudiate any actions
o To ratify actions in breach of POA – eg. if P fails to repudiate, will be implied ratification
Responsibilities:
o To indemnify A (only if A acts properly within their auth)
o To resolve disputes between joint/several As
o Notify A of revoking POA.
Attorney
Capacity
· Can be:
o Minors: s46(3) Minors (Property and Contracts) Act 1970 (NSW), but personal liability to P or 3rd parties are limited.
o Insolvents
o Partners: if appoint PA – members at time jointly
o Public Trustee: s12(1)(iv) Public Trustee Act 1913 (NSW)
o Trustee companies: s13 Trustee Companies Act 1964 (NSW)
o Joint attorneys: - if “A and B” (must act together, auth ceases on death of 1 A: s46(1)), but if “A or B” à several (can act together or alone, and auth doesn’t cease on death: s46(2)).
o Corporations: better to appoint particular person within comp
· Can NOT be:
o Persons lacking mental capacity – POA valid but not exercisable
o Alien enemies
Rights:
o To be indemnified
o To choose not to act unless there is contractual obligation (has power, but not obliged to do things)
o To follow ambiguous instructions to best of their ability
o To be protected when unaware of revocation of power
o Rely on POA against P and 3rd part: s47
o Rely on POA if unaware of suspended power due to protection order: s76(6) Protected Estates Act 1983
o Trustee unaware: s58 Trustee Act 1925
o To remuneration (for professional As)
Responsibilities:
o To read, understand and act within POA – otherwise liable to P and 3rd parties
o To obey instructions (even if contrary to POA)
o To act personally and not delegate unless auth
o Tortious duty of care to P (if negligent)
o Duty to take care of P’s property (eg. accurate records of money, keep money separate from own)
o Duty to avoid conflicts (COI, profiting)
o To prove authority (has onus to prove authority, if dispute with P)
o To consider interests of all Ps (if 1+)
Restrictions:
o Must stay within scope of power
Multiple As
o If multiple and “severally” – joint attorneys (POA doesn’t cease on death/legal incapacity of 1 A)
o If multiple but NOT “severally” – POA ceases on death/legal incapacity of 1A: s46
o Can also appoint ALTERNATE As.
Scope of Power
§ Cl 1 of Sch 2 form: “to do on my behalf anything I may lawfully authorise an A to do” – widest authority: s9.
§ Construction of POAS – strictly construed
§ Cl 8 of Sch 2 form sets out limitations
§ General law limitations:
o Actions illegal
o Actions have illegal purpose
o Actions require personal skill/discretion of principal e.g. making will, swearing Aff, voting, marrying, act as comp director/sec
§ POA does NOT give authority to exercise any function as a Tee that is Principal has: s10
§ POA does NOT give authority for sub-A unless expressly stated: s45.
§ IF A exceeds scope of POA:
o Minor/insubstantial – P still bound
o More substantial – trans is valid to point of POA but void where in excess (if severable). If not severable, wholly void.
o P can repudiate actions in breach of POA – P is bound to obligations to 3rd parties (if unaware), so much work quickly to repudiate any actions
o P can ratify actions in breach of POA – eg. if P fails to repudiate, will be implied ratification
3rd Parties:
§ Has ONUS to check that A has not exceeded authority!
Rights:
· To rely on POA
· To protection against revocation (if unaware): s48 (see below Termination)
· To remedies against A (if A act without authority and 3rd party has no action against P)
· To rely on instrument granting POA – unaware of subsequent instructions
Responsibilities:
· Duty to inquire:
o Should carefully examine POA instrument, ensure valid/current, ensure action within scope of POA.
o If notice, 3rd party has no remedy – and cannot avoid knowledge
o May have constructive notice (suspicion)
· Several As: 3rd party should refuse to act on auth of 1A if aware that other As may object
· Joint As: 3rd party should ensure they are dealing with all JAs
General Power under POA Act
· Prescribed POA gives A authority to do for Principal anything which Principal might lawfully authorise A to do, subject to POA instrument: s9(1)
· Effective even if A doesn’t sign
· May be witnessed by any adult.
· Must specifically authorise A if:
o A to give gifts: s11
o Give A benefits: s12
o Give benefits to 3rd parties: s13
Siahos v JP Morgan trust Australia Limited [2009] NSWCA 20:
· FACT: Greek parents appoint son as A whilst on holiday. Parents and A are TIC in property. Whilst away, son took out Mg on property without parent’s knowing.
· Parents (P) challenge against Mgee (3rd party) – should’ve checked etc.
· HELD: A not authorised – cannot confer benefit on self.
Irrevocable POA
· POA may be “irrevocable” IF expressed as so+ given for valuable consideration: s15
o Remains irrevocable unless terminated by Sup Ct or as provided in POA: s16
o This doesn’t take away P’s capacity to do same acts: James v Nesbitt [1955]
o A can ignore P’s instructions: Barclays Bank v Bird [1954]
· If not express as “irrevocable” – common law applies:
o Must be given for sufficient consideration or created by deed; AND
o Must be given for purpose of some benefit to A
· Examples of use:
o Mgee as A of Mgor in standard Mg
o Lor as A of Lee in licensed prem
· Sup Ct may terminate: s28
o Objects of POA done
o Objects of POA cannot be done
o Power exhausted
Powers by Deed
· If not in statutory form – prepared as Deed and signed as required for Deeds
· Gen, cannot execute Deed on behalf of another unless auth by Deed
Enduring Power of Attorney
· EPOA continue to be effective for acts within their scope EVEN though Principal has lost mental capacity, IF: s19
o POA instrument includes statement that POA is intended to continue, even if Principal loses capacity after execution
o POA execution is attested by prescribed person, NOT A (eg. Bar, sol, registrar of local Ct, bar/sol of Ct of any state/territory, licensed conveyance: s19(2)).
o Wit endorsed/annexed to POA is s19(1)(c) certificate, which states:
§ Person explained effect of POA before signing
§ Principal appeared to understand effect of POA
§ Person is prescribed witness
§ Person is not A under POA; AND
§ Person witnessed signing of POA by Principal
· EPOA NOT effective until A accepts by signing POA: s20
o A may accept at any time POA is executed or afterwards: (3)
Form:
o Include cl 2 of Sch 2 form, unless:
o EPOA only for particular action or limited time
o If so – can be wit by any person.
o Otherwise, “prescribed witness” must sign certificate in form.
o s19(2) defines: local Ct registrar, Aus bar/sol, licensed conveyancer, Public Trustee employee or Trustee comp (finished course of study).
o Must be signed by A (not nec at same time as P) to be effective.
Formalities:
o Must be signed by P
o Can direct someone to sign if physically unable or blind: s38(1A) Conveyancing Act 1919
o Must be witnessed by prescribed Wit: s19(2)
o Can be any adult unless EPOA
o If not Deed, then no need for Wit.
o NO stamp duty.
Registration @ General Registry of Deeds LPMA
· Rego required if dealings affecting RP land
o Conveyance executed under POA is ineffective unless POA instrument registered! S52 POA
§ Must rego before lodging dealing: s36(2) RPA
§ Except L of term of 3 yrs or less
o Any instrument creating POA may be regod: s51 POA Act
Multiple POAs:
o POA does not revoke previous POAS – can appoint several As through 1 doc (as Jas) or separate docs
Copy of POA:
o Certified copy is evidence of POA: s44(1)
o Must be signed on each page of copy: s44(1)(b)
Foreign POAs to use in Aus:
o Should be attested by notary or authenticated by Australian Consular officials.
Aus POAs to use overseas:
o Should be legalised according to law of that country
o Should be executed before a notary and taken to consulate of that country for stamping/legalisation
Checking a Doc executed under POA
· On doc (eg. Transfer), check:
o Correct execution clause used by A – usually “signed by JS as attorney for WB”
o A signature witnessed
o Sight orig/certified copy of POA
· Check POA against execution clause:
o Principal’s name
o A’s name (if 1+, several or joint? If joint, all must sign. If several, only 1 need sign)
o Scope of power – should clearly auth trans, check time limit on power etc
o Execution by Principal
o IF enduring POA must also be signed by A as acceptance of power + s19 certificate
· Consequences:
o Onus in on 3rd party to check that A has not exceeded their authority
o No remedy – unless P ratifies transaction or you have remedy against A
Commencement:
o Cl 3 Sch 2 Form – can specify when POA is effective
o If no specification, then:
o Effective immediately
o If EPOA – effective when A signs doc.
o May specify – effective when reg medical practitioner certifies P is no longer capable
Termination
· Where POA given for specific period/purpose – POA comes to end
· Otherwise POA may be terminated by:
o Revocation by Principal
o Renunciation by A or Principal (acts inconsistent with POA continuing)
o Death (either Principal or A)
o Bankruptcy (or mental incapacity, with some exceptions) of Principal or A
· Revocation:
o Should be to A and 3rd parties
o May be oral or implied – no prescribed form
o Best to revoke by formal Deed
o Can be registered in General Registry of Deeds
· A and 3rd parties are entitled to rely on POA if unaware of termination: s47-48 POA Act – so long as within scope of POA
o Max penalty for A doing something KNOWING terminated is 5 yrs prison: s49
· POA may be suspended by protection order: s76 Protected Estates Act 1983
Judicial Review:
· Sup Ct and Guardianship Trib have concurrent power re disputes rePOAs: Pt 5
· BUT only Sup Ct can make these orders:
o That irrevocable POA terminate: s28
o That POA made when P mentally incapacitated be confirmed: s29-32
o Review of POA given by P who is incommunicate for time being: s33(3)
§ “incommunicate” – unconscious, stroke, unable to understand communications or express intentions: s4