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Attorney acting against the principal’s wishes

10 May 2019

Attorney’s responsibilities and actions are a heightened concern for lawyers today. As society has recently put a spotlight on elder-abuse issues, the decisions and proposals of an appointed attorney are carefully reviewed by law firms, courts and tribunals alike.

To avoid confusion, a power of attorney is a legal document whereby the principal assigns a trusted person with the power to deal with their assets, finances and allows the attorney to sign documents on their behalf. The document can operate immediately or only once the principal has lost mental capacity. If it is an enduring power of attorney it continues to have effect if the principal has lost mental capacity.

In the 2017 case of Reilly v Reilly [2017] NSWSC 1419, Frank Reilly appointed his wife Peg and his son Joseph to be his attorneys in 2003 severally, meaning they could act independently. Frank lost mental capacity in 2008 and resided in a nursing home. In July 2009 Peg transferred a farm known as “Boronga” to their four daughters as joint tenants for $1. Peg’s main reason was that Frank’s Will was not fair and equal to their children.

Frank then passed away in 2012. Under Frank’s Will, the farm was left to Joseph. Quite upset about the situation, Joseph brought an action against all parties involved in the transaction, including the solicitor.

Justice Lindsay stated:

the relationship between… principal and attorney is a fiduciary one, a consequence of which is that the attorney is obliged not to place herself in a position of conflict, not to obtain a profit or benefit from her fiduciary position.

The Court found that Peg had committed “a fraud on the power” as the action was inconsistent with Frank’s wishes. Justice Lindsay further commented:

in my assessment, more probably than not [Peg] effected the 2009 transfer primarily because of her strong, personal, subjective opinion that that is what ‘fairness’ between her children required she do.”

The case emphasises the need for attorneys to carefully examine any idea or proposal that involves the principal’s finances, assets or legal affairs.

This article is general information only and should not be relied on without obtaining further specific information.

Constance Scott Lawyer

Constance joined JMA Legal in our Sydney office in 2016 and graduated with a Bachelor of Criminology and Laws in the same year. Constance works cl.. Learn more about Constance Scott

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