ByLawyers News and Updates

Powers – NSW

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Among By Lawyers most frequently used precedents in New South Wales are powers of attorney, appointments of enduring guardian, and the related personal documents associated with lifestyle, health, and estate planning. With an ageing population it is not surprising that lawyers are increasingly called upon to advise their clients on these documents and to prepare one or more of them, often at the same time a client gives instructions for preparation of their will.

As a result of feedback from our subscribers, a number of formatting amendments have been made to the following precedents, with a view to maximising the benefits of document automation, ensuring consistency, and enhancing usability:

  • General powers of attorney;
  • Enduring powers of attorney;
  • Appointments of enduring guardian;
  • Advance care directive;
  • Revocations.

We encourage and value all feedback from subscribers using these and our other precedents; it is one of the ways that we consistently enhance and update our content.

These precedents are found in the Powers of Attorney, Appointment of Enduring Guardian, and Advance Care Planning (NSW) publication.

Until 2003, powers of attorney in NSW were made under the Conveyancing Act 1919 and were used to cover all decisions relating to both the donor’s financial affairs and any health or lifestyle decisions to be made on their behalf. With the introduction of the Powers of Attorney Act 2003 and related amendments to the Guardianship Act 1987 passed at the same time, the parliament created the current regime under which decisions about a donor’s financial affairs are covered by a general power of attorney or, if the donor has lost capacity, an enduring power of attorney, and decisions relating to a donor’s health and lifestyle are covered by their appointment of an enduring guardian. Powers of attorney previously prepared under the Conveyancing Act 1919 remain effective under the Powers of Attorney 2003.

Electronic Transactions – NSW

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Schedule 1 to the Electronic Transactions Regulation 2017 (NSW) came into operation on 22 April 2020 . It allows for witnessing of documents by audio visual link in New South Wales.

This is a practical step by NSW parliament. It allows wills, powers of attorney, deeds and agreements, enduring guardianship appointments, affidavits and statutory declarations to be witnessed through audio visual means. Formats such as Zoom, Skype or Microsoft Teams, which integrates with LEAP, can be used.

Practitioners can send a document to a client by email, if the client has printing facilities, or by post. A meeting can then be arranged via any audio visual format to witness the client signing the document.

Under the regulation the practitioner witness must:

  • Observe the client sign the document in real time – this may involve ensuring that the practitioner can view the document on screen as the signature is made;
  • Sign the document or a copy of the document themselves;
  • Be reasonably satisfied that the document that they sign is the same document, or a copy of the document, signed by the client; and
  • Endorse the document, or copy, with a statement specifying the method used to witness the signature and that the document was witnessed in accordance with the regulation.

The following wording is suggested for the endorsement:

This document was signed in counterpart and witnessed over audio visual link in accordance with clause 2 of Schedule 1 to the Electronic Transactions Regulation 2017.

The regulation allows a witness to sign a counterpart of the document, or have the client scan and email the signed document back to the practitioner, who may then print and witness the copy. Of course, the client may also post the original back to the practitioner, who may then sign the original document on receipt.

The regulation also allows for swearing or affirming the contents of an affidavit by audio visual link.

This is a temporary, COVID-19 related measure. Schedule 1 expires 6 months from the date of commencement, being 22 October 2020.

Remote signing – All states

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Practical issues relating to the remote signing of documents such as agreements, deeds, wills and powers of attorney by companies and individuals

Remote signing of documents has become an important issue for solicitors and their clients due to the coronavirus pandemic. Face to face meetings are now largely excluded meaning clients are unable to attend at their lawyer’s office to sign documents.

Documents which must be signed need to be mailed or emailed to clients and then signed remotely.

Signatures

Signatures establish the identity of the person signing and their intention to create legal relations.  It is this intention indicated by placing their mark on a document that gives it its legal character or functionality, not the mark itself. There is no real distinction made at law between handwritten signatures, marks or electronic signatures. Signing a document electronically might be done by typing one’s name, pasting an image of one’s usual signature, using a stylus or finger on a touchscreen or using e-signing software.

Agreements

An agreement can be in electronic form and executed electronically, if witnessing is not required.

Most contracts, such as the contract for the sale of land, do not require a witness.

If witnessing is required, it can be done electronically provided the witness is present when the deed is signed. If witnessing is not possible this way due to virus related isolation, then the counterparty will need to agree to another method.

Electronic conveyancing requirements

A Client Authorisation Form may be electronically signed, subject to specific jurisdictional requirements. Whilst the Verification of Identity Standard requires a face-to-face in person interview, compliance with the standard is not mandatory and taking ‘reasonable steps’ to verify the identity of the client, such as by video meeting, is sufficient.

The By Lawyers Contract for Sale of Land in NSW and in VIC allows for electronic exchange and electronic settlement in compliance with electronic transactions legislation and the Verification of Identity Standard rules.

Deeds

Deeds usually require signatures to be witnessed and to be in writing.

An electronically-signed deed that is immediately printed out on paper may satisfy the common law requirement for paper with the first printed version being the original deed rather than a copy. However, parties to a transaction are better served to agree in advance to the acceptability of a particular form of deed and its electronic signature. Similarly, checking before execution  the requirements of organisations such as registries with whom the deeds must be registered will ensure their acceptability.

As mentioned above, witnessing can be electronic provided the witness is present when the deed is signed. If this is not possible then the counterparty will need to agree to another method.

An acceptable method might be by video attendance of the party’s lawyer who on return of the signed deed certifies it to be identical to the one submitted for signing and that the signing was witnessed by video.

Wills

The issue with executing wills remotely given social distancing, is the availability of two witnesses who are not themselves beneficiaries.

Where the required two disinterested witnesses are not available, the will may be executed informally, by the testator, who after signing it, returns it to their solicitor with a statement that they intend it to be their last will and testament. Accompanied by an affidavit explaining the signing in the prevailing circumstances, perhaps with video witnessing, a grant of probate of the informal will is likely to be made if required. Once the pandemic ends the will can be properly signed.

Powers of attorney

A general power of attorney does not need a witness and can be signed remotely.

However, an enduring power of attorney must be witnessed by a prescribed witness – usually the principal’s solicitor – who must also certify that they explained the effect of the document to the principal and that they appeared to understand it. On that basis remote signing is technically impossible.

Where a face to face meeting – even one at an outdoor location with appropriate distancing – is not possible, the document could be sent to the client by post or email for their written or electronic signature. Their lawyer could hold a video conference with the client and explain the document and see it signed by their client. When returned the lawyer can certify that they gave the explanation and were satisfied as to the principal’s understanding, but whilst unable to personally witness the document being signed, they witnessed the signing in video conference.

In this practical way the power is likely to be acceptable in most cases where there is no issue raised.

Where this approach is taken, the risks that the document may not be effective need to be explained to the client and appropriate file notes made.

Appointments of enduring guardian and Advance medical directives

The same witnessing and certification procedures apply to these instruments as for enduring powers of attorney. Similar practical, emergency measures might be undertaken.

Company execution

It is arguable whether a company can execute a document electronically under s 127 of the Corporations Act 2001.

However, in this busy world of commerce it is common for documents to be signed by duly authorised officers, or one director, or by a duly appointed attorney.

Generally

The ongoing response to Coronavirus means that emergency measures are rapidly being introduced to modify the usual signing and witnessing requirements. For example, some courts will currently accept unsigned affidavits on the basis that they will later be formally executed if necessary. The website of each court should be referred to as required.

 

Keep up-to-date with our latest COVID-19 News & Updates

Power of attorney

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By Russell Cocks, Solicitor

First published in the Law Institute Journal

Property lawyers often come across a Power of Attorney in practice and understanding the obligations of an Attorney is important.

The ability of a person (the donor) to delegate power to another (the attorney) has been recognised by the law for centuries. A common law form of Power of Attorney would be in the form of a deed and would recite the appointment by the donor of the attorney and confer power on the attorney. Traditionally such documents would run for many pages and would enumerate extensive powers that the attorney was authorised to exercise on behalf of the donor. Alternatively, the document could be limited in scope, authorising the attorney to exercise specific powers for a specific purpose.

The significance of the power conferred on the attorney was recognised as a reason for government supervision and a system of registration of powers was established. But the cost of this supervisory role was deemed excessive and the registration of powers ceased in the late 20th. century, although a limited registration process is available at the Land Titles Office for ‘heavy users’. The wheel turns in such matters and there are presently calls for law reform to again invoke a registration process.

The form of a power of attorney was governed by the Instruments Act 1958 until the Powers of Attorney Act 2014. This Act sets out in detail the requirements relating to the creation, use and revocation of powers of attorney and recognises various types of powers, the most important of which is the Enduring Power of Attorney. This is so as the common law took the view that the attorney loses power if the donor loses legal capacity and, given the importance of powers for the management of the affairs of the elderly who are susceptible to losing capacity, such a restriction undermines the effectiveness of the power. The Act therefore perpetuates the Enduring power beyond loss of capacity of the donor.

FIDUCIARY DUTY

Perhaps the most important aspect of a power of attorney is the fiduciary duty owed by the attorney to the donor. This is a common law concept and is not mentioned in the Act, although the Act does have a prohibition on the attorney entering into any transaction that may create a conflict between the interests of the donor and the interests of the attorney (s 64) and specifically prohibits the attorney from using the position to make a profit (s 63). These are the two fundamental elements of the common law fiduciary duty and to that extent the Act confirms that duty.

A recent case that considered a breach of the common law duty is Ash v Ash [2017] VSC 577. The donor appointed his daughter (who was a solicitor) as attorney in 2012. By 2014 the donor had lost capacity and the attorney made a number of transfers of the donor’s assets, including superannuation, that resulted in the donor’s assets being substantially diminished. These transfers were to entities associated with the attorney and the attorney directly benefited from these transactions.

The attorney sought to explain the transactions as flowing from previous instructions given by the donor and as a result of the attorney using her ‘signing authority’ at the donor’s bank but the court dismissed these suggestions as a ‘fiction’ and to accept that argument would be to ‘undermine the protective role inherent in the appointment of an attorney’.

The court did not suggest that an attorney can never enter into a transaction creating conflict between the interests of the donor and the attorney and recognised that ‘fully informed consent’ of the donor would justify an attorney entering into such a ‘conflict’ transaction, however the attorney failed to discharge the onus of proving that such consent had been given by the donor.

The donor was represented by a VCAT appointed administrator who successfully sought judgment against the attorney for all losses suffered as a result of the attorney’s breach of fiduciary duty and also judgment against entities associated with the attorney who had been ‘knowing assistants’ in this breach.

Had these actions taken place after 2015 the attorney may well have also been charged under s 135(3) Power of Attorney Act with committing an offence of using a power of attorney to gain financial advantage for the attorney or another person, with a possible penalty of 5 years imprisonment.

Tip Box

•Powers of Attorney create fiduciary obligations that the attorney must honour

•These obligations include a duty to avoid conflicts of interest

•Criminal penalties may apply to breach of these obligations

•Whilst written for Victoria this article has interest and relevance for practitioners in all states

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