Last updated 15 July 2022
As well as complying with the terms of the general or enduring powers of attorney (and in the case of enduring powers of attorney, the general and health care principles), the attorney has the following duties to:
- act honestly and with reasonable diligence
- act according to the terms of the document
- support the principal to exercise their human rights
- keep money and property of the principal separate from that of the attorney
- preserve the confidentiality of the principal’s affairs
- support the principal to make and communicate their own decisions where possible
- exercise the power in a way tat safeguards the principal’s rights, interests and opportunities
- support the principal’s cultural and linguistic environment and values.
If more than one attorney is appointed, an attorney should exercise their power in consultation with any other attorneys or decision makers or in any way the document directs (e.g. jointly, severally or by majority) to ensure the interests of the principal are not prejudiced by a breakdown in communication.
Conflict transactions are also a significant concern when an attorney exercises a power of attorney, particularly under an enduring power of attorney. A conflict of interest arises where the best interests of the principal are at odds with the interests of the attorney. This might be the case, for example, where a person who has lost capacity has appointed their spouse under an enduring power of attorney.
A conflict transaction is defined as one that may conflict or result in a conflict between the duty of an attorney towards the principal and the interests of the attorney or a relation, business associate or close friend of the attorney, or another duty of the attorney (s 73(6) Powers of Attorney Act)
An attorney may only enter into a conflict transaction if:
- the principal has authorised specific conflict transaction in the power document or
- a court or tribunal authorised the conflict transaction.
Resignation of attorney
The Powers of Attorney Act provides that an attorney may resign by giving signed notice to the principal (s 72). However, under an enduring power of attorney, if the principal has no capacity at the time of the attorney’s resignation, the attorney’s resignation is not effective unless the approval of the court or tribunal is obtained (s 82 Powers of Attorney Act).
Breach of obligations
Attorneys can be required to compensate the principal or the principal’s estate for any loss caused by the attorney’s failure to comply with their obligations under the power of attorney or under the provisions of the Powers of Attorney Act.
It is important to bear in mind that if the principal or the attorney has died, any application for compensation must be made to a court within six months of the death of either, whichever first occurs.
Consistent with this right to compensation, the Powers of Attorney Act also permits a person, whose benefit under a principal’s estate may have been lost because of the actions of an attorney, to apply to a court for compensation out of the principal’s estate (ss 106–107).
Signing documents under a power of attorney
The document must be signed in such a way to show that the person does so as the attorney for the principal. The easiest way to do this is for the document to be signed ‘X (the principal) by their attorney Y’.
When a person is acting as an attorney on behalf of a principal, the attorney should always disclose this before a transaction is entered into. Otherwise, the attorney could be held personally liable for any contract made on the principal’s behalf.