Review of the Role and Operation of Powers of Attorney Announced in SA

Recently the "YourSAy engagements" website posted a new proposal for discussion and feedback on the role and operation of powers of attorney in South Australia with a particular focus on the Powers of Attorney and Agency Act 1984 (SA) (the POA Act). The broad description of the investigation is that it is looking at "whether the current laws that apply to Enduring Powers of Attorney (POAs) are effective and are working to protect vulnerable South Australians".  

How Powers of Attorney Currently Work

Under current legislation in SA a POA:

• allows individuals (known as principals) to plan for their future by identifying clear legal arrangements for their financial affairs which will take affect when they lose their decision-making capacity;
• enables principals to choose to appoint a trusted person (attorney) in anticipation of losing decision-making capacity; and
• provides a mechanism by which individuals can control their future. 

POA's have been described as "an important expression of autonomy" and currently the details of these laws have been codified in the POA Act with the aim of ensuring that those who find themselves in a vulnerable position are protected under the law. 

The Aims of the Engagement

According to the YourSAy website the engagement has the following aims, to:

• identify the problems or concerns with the current POA Act and associated laws;
• gather the views of the SA community on how the law can be improved; and
• consider alternative options already implemented in other Australian jurisdictions.

The engagement is intended for the participation of the whole SA community as well as legal experts and medical and allied health professionals.

Some Areas in Need of Attention

One of the key areas where feedback is being sought is relation to the abuse of POAs as the factsheet on the topic indicates that, while abuse is known to happen, the level at which abuse happens is difficult to work out:

Currently there are relatively few legal remedies available for an abuse of a POA in South Australia. The available remedies may be derived from the POA Act, in equity or through the criminal law. There are however a range of reasons why they may be seen to be inadequate, and these inadequacies are discussed in detail in the factsheet.

Further, the POA Act consists mainly of provisions which are quite general in nature. for example, the POA Act does not prescribe the attorney’s role or the scope of their powers. It only states that the attorney is to perform his or her duties "with reasonable diligence to protect the interests of the principal". This generality is a problem because  the fact that each POA can have a unique set of conditions that can be attached to it by individual principals, it creates uncertainty for both principals and attorneys as to their legal obligations. This is said in the factsheet on this topic to contrast with interstate laws governing POAs which are often more comprehensive than the law in SA, detailing specific obligations, restrictions and administrative requirements for POAs, including registration.

An example of the generality problem are the witnessing requirements for POAs which the factsheet says are more relaxed in SA than in most other states and territories. The creation of a POA in SA, requires the principal’s signature need only be witnessed by one witness who must be a person authorised by law to take affidavits. The purpose of witnessing is to provide evidence that the document was signed voluntarily, and that the nature of the agreement was understood.  

Another area in need of attention has been identified as that of "legal capacity", namely, whether the individual is capable of making financial decisions – such as the sale of property or management of a share portfolios and daily transactions like shopping. Legal capacity is relevant when making a POA as an individual must have legal capacity to create a POA. It is also relevant in determining when a POA takes effect, that is, whether an individual has lost legal capacity is not always clear. In some cases, such as an accident or a suddenly occurring medical condition, the loss of legal capacity is easy to establish while in others it is not, for example, when an individual has a particular condition such as dementia and their capacity "comes and goes", determining capacity becomes a delicate process. Additionally, onset of conditions is often gradual, and the individual may have difficulty accepting their incapacity.

The diagnosis of a mental illness, cognitive impairment or a neurodegenerative disorder does not of itself render an individual legally incapacitated.

In South Australia, when creating POAs, often it is the solicitor who is responsible for determining the legal capacity of the individual seeking the POA. The activation of a POA, is the province of the attorney or health professional who often make an assessment of the principal’s legal capacity. It is not expressly required that an assessment of mental capacity be done by a health professional. However, neither a solicitor or attorney have been trained in this type of assessment and, when dealing with the more complex situations described above, it is questionable whether either has the ability to make this type of assessment. For these reasons it has been recommended that capacity assessments should be undertaken by professionals, such as psychologists or neuropsychologists, enabling the better identification of these cases and allowing for a clinical assessment of capacity at the time of the decision.

Some of the Areas Suggested for Feedback

Following are some of the feedback points suggested (more detailed lists can be found in the factsheets]:

General Matters 

1. How widely are POAs used?
2. What are the barriers to making POAs?
3. How does the SA POA Act compare to other Powers of Attorneys laws in Australia? What are its benefits/disadvantages?
4. Should guiding principles be introduced in the POA Act?
5. How can the POA Act be simplified?

Legal Capacity

1. How should capacity be defined?
2. Who should be making the capacity assessment for the creation and activation of a POA?
3. How can the principal’s rights be protected when assessing capacity?
4. Should there be principles to guide capacity assessment?
5. What evidence should be required to create or activate an enduring power of attorney?

Abuse of Power

1. What is the level of abuse of POAs?
2. How are POAs abused?
3. How can abuses of POAs be better detected, reported and investigated?
4. What measures should be implemented to prevent abuses?
5. Are the current legal remedies adequate?

The submissions arising from the engagement are to be considered and a report provided by the end of 2020 with recommendations for the SA Government about how the law can be improved.

The closing date for submissions is 4 September 2020 at 5 pm.

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Role and Operation of Powers of Attorney - YouSAy review of Existing laws: Closing date: 5pm, Friday 4 September 2020

South Australian Law Reform Institute: Powers of Attorney [Fact Sheet 2] – Use of Powers of Attorney in South Australia and Guiding Law

South Australian Law Reform Institute: Powers of Attorney [Fact Sheet 3] – The Principal’s Legal Capacity

South Australian Law Reform Institute: Powers of Attorney Fact [Sheet 5] – Abuse of Powers of Attorney: Current Legal and Practical Remedies