The following summaries of cases decided by courts and tribunals in Victoria and other States has a twofold purpose. First, to give real examples of elder financial abuse and how the courts have dealt with it in those cases, and, second, to assist people who may be involved in some form of financial abuse to recognise that something similar may be happening to them.
We will add cases from time to time as they arise.
We will strive to draw out the principles arising from these cases so as to be understandable to the layman.
|ODY (Guardianship) (2016) VCAT 804
|Claiming compensation in VCAT for breaches of obligations as attorney
The case draws further attention to three important principles that flow from the change in legislation relating to creation of powers of attorney before and after 1 September 2015.
We will refer to powers of attorney dated before this date as “old” powers of attorney, and following this date “new” powers of attorney. (Note that old powers of attorney still continue to be valid following September, 2015.)
First, for old powers of attorney, compensation actions can only be commenced in VCAT in relation to breaches of attorney obligations that occurred after September, 2015.
Second, for old powers of attorney, compensation can only be claimed in VCAT if there was a breach of a provision of the new legislation (the Powers of Attorney Act 2014). That is, the legislation that came into effect on 1 September, 2015.
Third, if there is no available remedy in VCAT because of the above jurisdictional restrictions, it may be possible to make the claim somewhere else – for instance in the Supreme Court.
The Tribunal said in this case – “This is not to say that there is no possible remedy for the alleged actions of (the attorney). It may be open to the applicant to make some other claim under some other law, before a court, but VCAT does not have the power to deal with this claim.”
Why is this important?
It is important because conducting a claim in VCAT is considered, for many claims, to be quicker, simpler and cheaper. However, if compensation is sought from an attorney under an old power, for alleged breaches before September, 2015, the claim cannot be commenced in VCAT, it must be commenced elsewhere, where it may take longer and may be a more difficult process.
Moreover, if there are breaches of an old power that occurred both before and after September, 2015 only the breaches after can be claimed in VCAT (and see above), so it may be better to commence the claim in a court, for instance, so as to be able to deal with all breaches.
It would seem that this dilemma can only be rectified the State government amending the VCAT legislation.
|HHF (Guardianship) (2019) VCAT 54
|Legal standing of beneficiaries to institute a claim for compensation against defaulting attorney in VCAT
This VCAT case was concerned with a number of matters but so far as it is relevant to compensation actions against attorneys under powers of attorney, it considered whether beneficiaries under a Will had standing (legal capacity to institute a claim) in VCAT to make such a compensation claim.
This was a case where the beneficiaries sought to institute a compensation claim against an attorney after the death of the person who appointed that attorney under a power of attorney. It was alleged that the attorney did not carry out his duties satisfactorily and caused loss to the estate, and consequently to the beneficiaries.
Beneficiaries are not specifically mentioned in the Powers of Attorney Act (section 78) as persons who can institute a claim for compensation, but they applied under one of the subsections which provides – “…any other person whom VCAT is satisfied has a special interest in the affairs of the principal.”
No definitive answer was provided by VCAT in this case. The Tribunal stated – “It is appropriate that the Tribunal consider, on a case by case basis, whether the interests of beneficiaries under an estate are such that they should be considered to have a “special interest” in the affairs of the principal.”
In this case the Tribunal did consider that the beneficiaries had a sufficient special interest – “I find that the applicants have a special interest in the affairs of (the deceased) and that they have standing to make an application for compensation.”
It is noted that section 78 does specifically provide that an executor of an estate can make a claim for compensation against the defaulting attorney. It is suggested that beneficiaries may well have standing to make a claim if the executor of the estate was also, during the life of the deceased, the attorney under a power of attorney.
It is also noted that if the relevant power of attorney was created under the former legislation, that is before 1 September, 2015, the beneficiaries in this case could only have claimed for breaches by the attorney after this date (but there may be other avenues of redress for breaches before that date) – see the case note immediately below of DLM.
|DLM (Guardianship) (2018) VCAT 1638
|Ability of administrator of deceased estate to recover for breaches under a power of attorney
In this important case, decided by Vice President Judge Harbison, at VCAT, the applicant, the administrator of a deceased estate, sought a declaration that compensation could be claimed (in VCAT) against an attorney under a power of attorney for alleged breaches both before and after the introduction of the new powers of attorney legislation (which came into force on 1 September 2015).
The deceased’s son held a power of attorney and the administrator of the estate wanted to claim compensation from the son for alleged breaches of his duties as attorney. The alleged breaches occurred both before and after September 2015.
There is no specific power under the old legislation to claim compensation, this power was only introduced in the new legislation.
The case involved a power of attorney created under the old legislation, accordingly before 1 September 2015. The question before the Tribunal was to what extent compensation could be claimed (in VCAT) – could it not be claimed at all, only for breaches before September 2015, only after September 2015 or in relation to both before and after.
The Tribunal found via some quite difficult reasoning that compensation could only be claimed for the period after September 2015.
Remember that the case was about a power of attorney created under the old legislation. It should be noted that the legislation is quite clear that powers of attorney created under the new legislation, that is after 1 September 2015, are subject to compensation claims for breaches of an attorney’s duties.
Although there are no statistics in existence, it is probably reasonable say that the majority of powers of attorney currently in existence were created prior to September 2015.
Accordingly, the practical implications of this judgment are that for powers created prior to 1 September 2015, probably the majority now in existence, the donor of the power (or the administrator/executor of an estate if the donor has died) will be able to claim compensation for breaches only after September 2015.
Judge Harbison made it very clear in her judgment that the finding related only to claims for compensation made in VCAT itself. Her Honour was at pains to indicate that there may be other remedies available in other courts under different legal principles (for instance, fraud, unconscionable conduct, et cetera). According, it is still possible to claim compensation for breaches of a power of attorney created prior to September 2015, but those claims would have to be made in other jurisdictions which may well not have the convenience of running the claim in VCAT. Proceedings in VCAT are likely to be cheaper and quicker, and very probably more straightforward legally, than in other courts.
|Polacsek v Patek (2018) VCC 24
|Loan agreement, failure to repay, effect of document purportedly forgiving loan
This is a Victorian County Court case. It involved a written loan agreement in relation to a loan by an elderly lady to a step son.
The loan was to be repaid by a specified time with simple interest. It was not repaid and the step-son asserted that it was forgiven by a written document.
The plaintiff was 89 at the time of the trial and had dementia. She was represented by a “litigation guardian”. The case concerned whether the written document purportedly forgiving the loan was valid. The court found that it was not, that it was a forgery, or at least the elderly lady’s signature on that document was a forgery.
Interestingly, the court went on to say that even if the document forgiving the loan was not a forgery, it would still not have been effective because it did not have the proper characteristics of an enforceable contract, and it it was not in the form of a deed which would have overcome that problem.
The important lesson that arises out of this case is that parties to loan agreements, or especially here the document seeking to forgive the loan, should have legal advice so that good valid agreements are brought into existence.
Neither party had legal advice in this case. It was nevertheless, a good result for the elderly lady – had the step-son had legal advice (and no forgery was involved) the document forgiving the loan would very probably have been valid and enforceable.