VCAT power to order compensation

It may be surprising to many that VCAT was only given power to order compensation, against a defaulting attorney under a power of attorney, in 2015.

On 1 September 2015 the new legislation concerning powers of attorney, the Powers of Attorney Act 2014, came into effect.

Section 77 provides that the Supreme Court or VCAT can order an attorney under an enduring power of attorney to compensate the principal (the donor of the power) for a loss caused by contravention of that legislation.

This was one of the main innovations of this new legislation, and it seems a very sensible innovation given that VCAT has such a significant role in dealing with powers of attorney.

However, because of a jurisdictional glitch VCAT can only order compensation for alleged breaches of duties of an attorney which occurred after 1 September 2015. It cannot make an order for compensation for any breaches before that date.

This is important, first, because breaches may have occurred both before and after 1 September 2015, and, second, because VCAT is generally considered the preferred jurisdiction to resolve these disputes.  VCAT is considered to be quicker, simpler and cheaper.

For breaches before September 2015 the claim would have to be made elsewhere, probably the Supreme Court of Victoria. Similarly, so that everything is dealt with at the same time, the Supreme Court would also probably be the correct forum for cases where breaches have occurred both before and after this date.

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