Legal update: New VCAT decision on attorney misconduct

2 Jun 2016

VCAT finds new compensation provisions under the POA Act only apply to contraventions occurring after 1 September, 2015.

On 12 May 2016 the Victorian Civil and Administrative Tribunal (VCAT) dismissed an application for compensation under section 77 of the Powers of Attorney Act 2014 (the POA Act). The application for compensation was made in regards to alleged misuse of an enduring power of attorney (financial) appointed by YDM.

YDM, the principal, appointed her nieces – SZY as her primary attorney and the applicant as the alternate attorney – under an enduring power of attorney (financial) on 14 May 2013. Both nieces, who are sisters, signed the statements of acceptance on 18 May 2013.

The applicant claimed SZY, through her role as financial attorney, obtained a personal financial benefit, transferring $95,000 of YDM’s money into her personal bank account, which was never accounted for. YDM died on 13 November 2013. The applicant first made her application on 3 February 2015.

The POA Act came into effect on 1 September 2015, expanding VCAT’s power to order an attorney to compensate the principal for loss caused by the attorney contravening a provision of the POA Act. Compensation can still be ordered even though the principal has died, in which case compensation is payable to the estate, provided an application is made within 6 months of the death of the principal or the attorney.

They key issues raised were:

  • can a claim for compensation be made with respect to attorney misconduct and financial loss occurring before the commencement of the POA Act?
  • if so, can such a claim be made 2 years after the principal’s death?

VCAT found, although it is possible to apply for compensation relating to powers of attorney made before 1 September 2015, the alleged misconduct of an attorney and the associated financial loss must have occurred after this date. The attorney could not have “contravened” the POA Act when it did not exist.

VCAT dismissed the application, to the extent that it related to the orders for compensation, as it did not have jurisdiction to proceed.