5.6 Powers of attorney have been used for centuries. The power of attorney gives legal power to one person, the attorney, to deal with financial and property matters on behalf of the person making the power, the principal (or donor). The relationship created by the power of attorney is one of agency, with the attorney having power as agent for the principal. Agency is a fiduciary relationship in equity. Under the common law, a power of attorney terminates automatically when a principal loses legal capacity. This is because the principal-agent relationship is a personal one and the agent has no authority to do anything the principal could not lawfully do for themselves. As the principal has lost capacity and is unable to make legal decisions, those same decisions cannot be made any longer by the attorney.
5.7 This created concern for many people who wished to make a power of attorney specifically to allow an appropriate person to manage their affairs for them if they lost capacity in their later years. In response, the states and territories enacted legislation in the 1970s and 1980s to establish ‘enduring’ powers of attorney—powers of attorney that continue (or endure) notwithstanding that a principal has lost decision-making ability.
5.8 An enduring power of attorney allows a person to appoint a trusted person (or persons) to act on their behalf should they lose capacity, upholding important principles of choice and control. Having an enduring attorney can avoid the need for a tribunal appointed substitute decision maker. An enduring attorney may also protect against abuse in circumstances where an older person with diminished decision-making ability is unable to protect themselves against fraud and abuse.
5.9 In relation to non-financial matters, the common law did not provide an equivalent to the power of attorney or enduring power of attorney. For example, it was not possible at common law for a person with capacity to appoint another person to make personal or lifestyle decisions for them—such as consenting to medical treatment or deciding that they should live in a secure environment—when they have lost the ability to make such decisions for themselves. To address this, the concept of ‘enduring guardianship’ was first introduced in Australia by the Guardianship and Administration Act 1993 (SA). Similar arrangements were subsequently enacted in all other states and territories.
5.10 The legislation for enduring documents in each state and territory is now broadly consistent and in each state and territory there is a process for mutual recognition of interstate enduring documents. Nevertheless, there are significant differences in the form of documentation. Queensland and Victoria provide for a combined financial and personal enduring document. NSW has separate documents for enduring powers of attorney and enduring guardianship. South Australia has adopted advance care directives legislation which allows a person to appoint a substitute decision maker (equivalent to an enduring guardian), while maintaining a separate process of enduring powers of attorney for financial matters.
5.11 Beyond questions of form, there are important differences in the legal test of capacity or decision-making ability and differences concerning who has the authority to assess and certify capacity or decision-making ability. Historically, the obligations on the attorney, and the standard by which they were to act, were not set out in legislation. Instead the obligations were defined by common law and equitable fiduciary duties—particularly duties of loyalty and duties of due care and diligence. Guardians are typically required to act in the ‘best interests’ of the principal. More recently, states such as Queensland and Victoria have passed legislation that set out principles to guide decision making by attorneys. Those principles seek to uphold the fundamental rights of the principal. This approach is not applied consistently across the states and territories.
5.12 The ALRC’s report, Equality, Capacity and Disability, recommended a shift from the ‘best interests’ standard to one based on the ‘will preferences and rights’ of the person, reflecting the paradigm shift toward supported decision making in the Convention on the Rights of Persons with Disabilities (CRPD). The implementation of this approach in state and territory guardianship laws will lead to a change in the way in which individuals with diminished decision-making ability are supported to make decisions.
Current law – registration of enduring documents
5.13 Currently, Tasmania is the only jurisdiction in which it is compulsory to register enduring documents—both powers of attorney and enduring guardianship. When conducting transactions in land there is a requirement in all states, except for Victoria, to register an enduring power of attorney document with the respective state and territory body responsible for land titles. In certain jurisdictions there is also an option to register an enduring power of attorney. Accordingly, outside of Tasmania, there is no general requirement for registration of enduring documents.
Dyson Heydon and Mark Leeming, Cases and Materials on Equity and Trusts (LexisNexis Butterworths, 8th ed, 2011) ch 11.
Peter Devonshire, ‘Account of Profits for Breach of Fiduciary Duty’ (2010) 32 Sydney Law Review 389, 390.
Dyson Heydon and Mark Leeming, above n 3, ch 24.
Nick O’Neill and Carmelle Peisah, Capacity and the Law (Sydney University Press Law Books) ch 10.
Legal Aid ACT, Submission 58.
O’Neill and Peisah, above n 6, ch 9.
House of Representatives Standing Committee on Legal and Constitutional Affairs, Parliament of Australia, Older People and the Law (2007) ch 3.
Powers of Attorney Act 1998 (Qld); Powers of Attorney Act 2014 (Vic).
Guardianship Act 1987 (NSW); Powers of Attorney Act 2003 (NSW).
Advance Care Directives Act 2013 (SA).
Powers of Attorney and Agency Act 1984 (SA).
O’Neill and Peisah, above n 6.
Justine O’Neill, ‘Decision-Making in Guardianship Contexts: From Substitution to Support’ (2015) 24 Human Rights Defender 31.
Powers of Attorney Act 1998 (Qld) Schedule 1; Powers of Attorney Act 2014 (Vic) s 21. See also Advance Care Directives Act 2013 (SA) ss 9-10.
Law Reform Committee, Parliament of Victoria, Inquiry into Powers of Attorney: Final Report (August 2010) xliv.
Australian Law Reform Commission, Equality, Capacity and Disability in Commonwealth Laws, Report No 124 (2014).
Powers of Attorney Act 2000 (Tas) ss 4, 11; Guardian and Administration Act 1995 (Tas) s 32.
See, eg, Conveyancing Act 1919 (NSW) pt 23 div 1; Real Property Act 1900 (NSW) s 36; Land Title Act 2000 (NT) s 148; Powers of Attorney Act 1980 (NT) s 8; Real Property Act 1886 (SA) s 155. The legislation in WA refers to registration in the permissive but appears to be required by the relevant land titles office see Transfer of Land Act 1893 (WA) s 143.
Land Titles Act 1925 (ACT) s 130; Powers of Attorney Act 1980 (NT) s 7; Land Title Act 1994 (Qld) s 133.