The Powers of Attorney Act 2014 (Act) comes into effect in Victoria on 1 September 2015.
The new Act aims to increase protection against the misuse and abuse of Enduring Powers of Attorney (EPAs). The Act seeks to do this in several ways, including by introducing criminal and civil consequences for Attorneys who act dishonestly or cause loss.
A person will commit a criminal offence if he or she dishonestly obtains or uses an EPA, or obtains the revocation of an EPA:
- for his or her financial advantage or for the financial advantage of another person; and/or
- to cause loss to the Principal or to another person.
The punishment for a person committing one of these offences is up to 5 years imprisonment and/or a fine of up to $91,000.
The punishment for a company committing one of these offences is a fine up to $364,000.
The Act extends the criminal offences to officers of companies (which could include directors and managers of trustee companies, law firms, accounting firms and financial services providers) if the company commits an offence and the officers failed to take reasonable steps to prevent the occurrence of the offence.
If an Attorney breaches the duties and obligations imposed by the Act, the Attorney may be required to compensate a Principal for any loss suffered (regardless of whether the Attorney acted dishonestly).
The compensation provisions apply:
- to EPAs made under the old legislation;
- even if the EPA is invalid or has been revoked;
- even if the Attorney is convicted of a criminal offence in relation to the breach;
- even if the Principal has died (in which case compensation will be payable to the Principal’s estate).
The Act does not limit the amount of compensation that an Attorney may be required to pay.
Protection for Attorneys
If an Attorney is concerned or uncertain about a transaction or decision that he or she needs or wishes to make for a Principal, the Attorney can apply to VCAT or the Supreme Court for direction as to whether the transaction or decision ought to proceed.
If the proposed transaction or decision is approved, and provided the Attorney has acted honestly, the Attorney will not have contravened the Act.
The role of an Attorney is very important and comes with a great deal of responsibility. The new Act imposes considerable and complex duties and responsibilities on Attorneys, with serious consequences for contravention.