Basis of liability of an attorney or agent...Basis of liability of an attorney or agent The issues...
46
Transcript of Basis of liability of an attorney or agent...Basis of liability of an attorney or agent The issues...
2
Basis of liability of an attorney or agent
The issues with the liability of an attorney include:1. Acting with authority – Taheri –v- Vitek [2014] NSWCA 209; Hartley –v-
Wood [2017] NSWSC 14202. Acting in a manner which is consistent with fiduciary dutiesSmith –v- Smith [2017] NSW 408Reilly –v- Reilly [2017] NSW 1419Lindsay –v- Arnison [2017] NSWSC 41
4
Does the Attorney have authority
1. Validity2. Operation
3. Scope
5
Warning signs1.Changing solicitors (advisers?) especially from the victim’s long standing
solicitor.2.Using the exploiter’s solicitor rather than an independent solicitor.3.Family tensions.4.Legal transactions being undertaken at the instigation of another, especially
the fiduciary or beneficiary.5.The transaction disposing of almost all the victim’s assets.6.Disposal of the victim’s assets for nominal or no consideration.7.Regular changes of wills or powers of attorney.
6
7
Issues with preparation of power of attorney
• Attributes of the attorney• Powers given to attorney, eg benefits• Conditions and limitations on use of powers• Requirements for operation
Elder Abuse Scenario Darryl Browne 8
Accredited Aged Care ProfessionalTM program
SELF-LEARNING MODULES
Aged Care Essentials
Five modules covering the essentials of aged care.
1. Aged care industry
2. Aged accommodation choices
3. ACAT and home care
4. Centrelink and Veterans’ Affairs
5. Residential care fees
DAY 1 WORKSHOP
Aged Care Advice Steps
Shows you how to provide advice and build strategy solutions for clients. This includes:
1. A deeper understanding of fees and what is happening in practice within the care industry
2. The 9-step process for creating advice solutions
3. Case studies to analyse the available strategies
4. Tips and traps for clients
DAY 2 WORKSHOP
Advanced Aged Care
Builds on the Day 1 skills by working through more complex case studies to further develop advice skills. Guidance to help you get your business ready through:
1. Client value proposition
2. Pricing
3. Marketing strategies
AGED CARE STEPS WORKSHOPBECOME AN ACCREDITED AGED CARE PROFESSIONALTM ACCREDITED
AGED CARE PROFESSIONALTM
Aged Care Steps provides a suite of tools and practical materials to support the advice process for aged carewww.agedcaresteps.com.au
WHAT’S INVOLVED?The accreditation program runs over two days (can be done consecutively or on separate days) with Essentials modules to be completed before attending the workshop.
The full program has been approved for CPD points from the Financial Planning Association (FPA).
Assessments apply to various components of the accreditation program.
DO YOU NEED TO BUILD YOUR KNOWLEDGE AND SKILLS AND LEARN HOW TO DEVELOP AGED CARE ADVICE SOLUTIONS FOR CLIENTS?
Our Accredited Aged Care ProfessionalTM program can give you the confidence to provide aged care advice and help you to gain recognition for your expertise.
PROMOTE YOUR EXPERTISE
Display the accreditation certificate in your office and use the accreditation logo on your website and in marketing materials.
‘FIND AN ADVISER’ ON THE AGED CARE STEPS WEBSITE
Gain an opportunity to attract new clients with a listing in the ‘Find an Adviser’ section of the Aged Care Steps (ACS) website (available to accredited advisers who subscribe to ACS services).
KICKSTART YOUR BUSINESS
Share in our experience with insights on how to build aged care advice into your business to maximise your opportunities. Tips include how to gain control of the first meeting, develop a client value proposition, design your service packages and set your pricing.
WHAT DO PREVIOUS ATTENDEES SAY?
WANT TO KNOW MORE?
Find more information or register for an upcoming workshop at www.agedcaresteps.com.au and www.superannuation.asn.au/learning/courses
WHAT ADDITIONAL BENEFITS ARE AVAILABLE?
ACCREDITED AGED CARE
PROFESSIONALTM
Excellent two days and very valuable for my business. Glenn Setches, LSH Accounting
Very comprehensive course, delivered with amazing depth of knowledge and ability to break it down into easy to follow steps. Appreciated the opportunity to learn from the best. Linda Ginever, Bridges
If you truly want to highlight yourself as a professional person and to provide advice in aged care, the advanced course is a must. Well done, well presented. Jeff Glossop, PennyWise Investments
Perhaps the best training workshop I have attended. Demystified a complex area that will be increasingly in demand.Peter Gardner, Securitor, WA
Excellent session. Exceeded my expectations. Andrea Paynter, Bailiwick
AGED CARE STEPS WORKSHOPBECOME AN ACCREDITED AGED CARE PROFESSIONALTM
Aged Care Steps provides a suite of tools and practical materials to support the advice process for aged carewww.agedcaresteps.com.au
WANT TO KNOW MORE?
Find more information or register for an upcoming workshop at agedcaresteps.com.au
ACS Advice Generator TM
Efficiency in advice delivery
Model scenarios including …
Care scenarios
Home care versus residential care
Existing residents – including low or high care
Couple scenarios with just one or both into care
Couple scenarios with one person into care and one accessing home care
Former home strategies
Rent or sell former home or leave vacant
Rent former home and sell in 2 years
Leave former home vacant and rent or sell in 2 years
Sell home and downsize for spouse to a cheaper home or retirement village
Include all ongoing and sale/home preparation costs
Impact if protected person staying in home
Impact in 2 years if no spouse in home
Strategies to pay the RAD/DAP
Compare different RAD amounts
Children contribute money to pay the RAD/RAC
DAP from RAD strategy (or DAC from RAC) as well as additional service fees from RAD
Select which investments to liquidate to pay fees including super, investment properties, trusts/companies, ABPs (deeming & deductible rules)
Using reverse mortgage drawdowns to pay DAP
Adding additional value
Using funeral bonds, impact of debts and gifting
Options for pre-2014 residents
Impact of annual and lifetime MTF caps
CarePlus, super downsizer and trust/bond strategies
Recalculate DAC after implement strategies (if low-means)
The leading aged care advice software since 2014
agedcaresteps.com.au
1300 226 816
Important information: The information in this publication is general and does not take into account your particular circumstances. We recommend specific tax or legal advice be sought before any action is taken and refer to the relevant Product Disclosure Statement before investing in any product. ABN 42 156 656 843. Aged Care Steps Pty Ltd operates under AFSL 486723.
Key features include …
Unique 2 stage advice process – to replicate impacts of time needed to sell or rent home
Calculate full cashflow, expenses (including fees), Centrelink/DVA, tax and end of year asset position
Select 5 or 10 year forward projections – with cash flow and asset value graphs
Ability to include all costs for strategy options, including impact of capital gains tax
Single data entry to populate advice document template for quick advice development
Client explanation fact sheets
Tax, Centrelink and DAP from RAD schedules
Additional quick stand-alone calculators
Rates charts – aged care, Centrelink & Veterans’ Affairs
Singles and couples
Existing and new care recipients
Centrelink pensioners (including blind)
DVA service and disability pensioners, war widows and ex-POWs (including qualifying service impacts)
Self-funded clients and means-non disclosed
Non-residents and visa holders who are not eligible for Medicare
Low-means and full-RAD paying residents
Home care recipients
Homeowners and non-homeowners (including granny flats, retirement villages and land lease communities)
Suits all clients including …
Quick and easy to use – modelling and populated template text
Model and compare up to 5 strategies in one table
Secure web-based software hosted in Australia. External penetration testing to verify data security
Help functions including step lists and training videos
Access to our team for support with using the software
Automatic checks to minimise potential data entry errors
AGED CARE ACTION PLAN: YOU CAN MAKE A DIFFERENCE THIS NEW YEAR
© Aged Care Steps Pty Ltd, November 2012 | Aged Care Steps ABN 42 156 656 843 is an authorised representative of Strategy Steps Pty Ltd | AFSL 333649 | www.agedcarestepscom.au
THE VALUE OF YOUR ADVICEForward planning Timely planning enables elderly parents to
transition to aged care with ease and dignity.
Simplicity amidst confusion
You provide a central point for accurate and relevant information on aged care.
An impartial voice You act as an independent voice during sensitive family discussions and a conduit to achieve agreement.
Creation of a pathway
Clients are able to understand the decisions and actions needed to secure the appropriate level of care.
Removal of emotion
Objective recommendations removes emotion from the decision making process.
The big picture Advice is based on a complete understanding of the clients’ situation and unwanted consequences are avoided.
Confidence and peace of mind
Professional advice enables clients to make informed decisions with confidence.
Family cohesion Minimise the potential for family disputes with a check of estate planning issues.
THE VALUE FOR YOUOffering aged care services to your clients:> Consolidates and enhances your client relationships> Provides added value to your client > Earns consulting fees for your specialist advice> Builds relationships with the extended family, potentially
generating new business
YOUR MESSAGE TO CLIENTS
> Be observant. Parents are good at covering up – look for any signs that suggest they aren’t managing.
> Talk to other family members about any problems that are identified.
> Talk to parents about their future and discover their concerns and living arrangement preferences.
> Consider the level of assistance that might be needed. Will extra help in the home suffice or is residential aged care needed?
> If residential care is needed, identify potential aged care homes and investigate their facilities.
> Check that parents have current wills and enduring powers of attorney/guardianship in place.
> Learn where parents keep their important documents, including their wills, bank account details, and insurance policies.
> Arrange an appointment with you to discuss financial considerations and strategies for accessing care for parents.
During the holiday season suggest your clients take the following actions:
CONTACT YOUR CLIENTS WITH ELDERLY PARENTS:> In your Christmas newsletter> In your ‘holiday hours’ notification to clients> In an alert on your website> During your December client reviews
YOUR OFFER TO CLIENTSYou can help clients and their families:> Explore priorities and preferences and help family
members arrive at a common view> Understand how aged care works and the range
of care options available > Identify the steps required to access the right level of
care> Understand the costs to enter care and the ongoing fees> Consider the role of the family home in funding the
entry fee> Review the parents’ ongoing cashflow requirements> Develop strategies to optimise the parents’ financial
position including minimising fees, maximising entitlements and investing the remaining assets
> Ensure the estate plan continues to reflect the parents’ wishes and the family’s decisions.
YOU CAN MAKE A DIFFERENCE The New Year is traditionally a time to take stock and plan ahead. Clients with elderly parents may find that the holiday season presents an opportunity to identify and raise issues with parents about their future well-being.
Many people enter aged care under emergency conditions because of an accident or illness, leaving little time for thoughtful decision making. Make sure your clients don’t face this situation. Encourage them to address the looming issue of aged care for their parents now.
AGED CARE ACTION PLAN: YOU CAN MAKE A DIFFERENCE THIS NEW YEAR
© Aged Care Steps Pty Ltd, November 2012 | Aged Care Steps ABN 42 156 656 843 is an authorised representative of Strategy Steps Pty Ltd | AFSL 333649 | www.agedcarestepscom.au
THE VALUE OF YOUR ADVICEForward planning Timely planning enables elderly parents to
transition to aged care with ease and dignity.
Simplicity amidst confusion
You provide a central point for accurate and relevant information on aged care.
An impartial voice You act as an independent voice during sensitive family discussions and a conduit to achieve agreement.
Creation of a pathway
Clients are able to understand the decisions and actions needed to secure the appropriate level of care.
Removal of emotion
Objective recommendations removes emotion from the decision making process.
The big picture Advice is based on a complete understanding of the clients’ situation and unwanted consequences are avoided.
Confidence and peace of mind
Professional advice enables clients to make informed decisions with confidence.
Family cohesion Minimise the potential for family disputes with a check of estate planning issues.
THE VALUE FOR YOUOffering aged care services to your clients:> Consolidates and enhances your client relationships> Provides added value to your client > Earns consulting fees for your specialist advice> Builds relationships with the extended family, potentially
generating new business
YOUR MESSAGE TO CLIENTS
> Be observant. Parents are good at covering up – look for any signs that suggest they aren’t managing.
> Talk to other family members about any problems that are identified.
> Talk to parents about their future and discover their concerns and living arrangement preferences.
> Consider the level of assistance that might be needed. Will extra help in the home suffice or is residential aged care needed?
> If residential care is needed, identify potential aged care homes and investigate their facilities.
> Check that parents have current wills and enduring powers of attorney/guardianship in place.
> Learn where parents keep their important documents, including their wills, bank account details, and insurance policies.
> Arrange an appointment with you to discuss financial considerations and strategies for accessing care for parents.
During the holiday season suggest your clients take the following actions:
CONTACT YOUR CLIENTS WITH ELDERLY PARENTS:> In your Christmas newsletter> In your ‘holiday hours’ notification to clients> In an alert on your website> During your December client reviews
YOUR OFFER TO CLIENTSYou can help clients and their families:> Explore priorities and preferences and help family
members arrive at a common view> Understand how aged care works and the range
of care options available > Identify the steps required to access the right level of
care> Understand the costs to enter care and the ongoing fees> Consider the role of the family home in funding the
entry fee> Review the parents’ ongoing cashflow requirements> Develop strategies to optimise the parents’ financial
position including minimising fees, maximising entitlements and investing the remaining assets
> Ensure the estate plan continues to reflect the parents’ wishes and the family’s decisions.
YOU CAN MAKE A DIFFERENCE The New Year is traditionally a time to take stock and plan ahead. Clients with elderly parents may find that the holiday season presents an opportunity to identify and raise issues with parents about their future well-being.
Many people enter aged care under emergency conditions because of an accident or illness, leaving little time for thoughtful decision making. Make sure your clients don’t face this situation. Encourage them to address the looming issue of aged care for their parents now.
© Aged Care Steps Pty Ltd, 2018 | ABN 42 156 656 843 is an authorised representative of Aged Care Steps Pty Ltd | AFSL 486723 | www.agedcaresteps.com.au
INC
OM
E P
A
AGE
INC
OM
E P
A
AGE
PHASE 1Care free years (no disability)
PHASE 2Quiet years
(some disability)
PHASE 3Frailty years
(severe disability)
The three phases of retirement
Traditional approach
The spending pattern in retirement will vary based on client ability and it looks more like a
smile than a straight line.
Advisers are rethinking the approach to retirement planning to address the three phases of retirement.
Rethinking retirement planning
Supporting advice professionals with confidence and competence to provide aged care advice
Retirement planning assumed a constant indexed income which did not allow for higher
care needs in later life.IN
CO
ME
PA
AGE
INC
OM
E P
A
AGE
PHASE 1Care free years (no disability)
PHASE 2Quiet years
(some disability)
PHASE 3Frailty years
(severe disability)
The reality
Contact Aged Care Stepswww.agedcaresteps.com.au1300 226 816
Frailty risk
The three phases The forgotten pillar
Change your conversations. Ask clients...
Frailty risk can leave older clients vulnerable and without adequate means to fund care.
The frailty years can represent 20-25% of retirement years. Funding the increasing costs of care allows greater
independence and control.
Clients are increasingly likely to reach the frailty years – changing their expenditure patterns.
Focus retirement planning on three risk pillars: longevity, sequencing and the often
ignored frailty risk.
8,000,000
7,000,000
6,000,000
5,000,000
4,000,000
3,000,000
2,000,000
1,000,000
1974/75
65-84 85 + Proportion aged 85 +
PROPORTION OF THE POPULATION AGED 65 AND OVER
THE GROWTH IN THE NUMBER OF AUSTRALIAN CENTURIANS
Proportion aged 65-85
Without disability With some disability With severe disability
2014/15 2054/55
20%
15%
10%
5%
40,000
30,000
20,000
10,000
1974/75 2054/55
65 70 75 80 84.6
9.2 yrs 7 yrs 3.4 yrs
10 yrs 6.7 yrs 5.6 yrs
87.3
122
40,000
8.1
13.0
17.7
0.6 2.04.9
87.3
84.6
FEMALE LIFE EXPECTANCY(CURRENTLY AGED 65)
MALE LIFE EXPECTANCY(CURRENTLY AGED 65)
HOME CARE RESIDENTIALCARE
HOMEADAPTATION
FRA
ILT
Y R
ISK
3.
LON
GE
VIT
Y R
ISK
1.SE
QU
EN
CIN
G R
ISK
2.
How they expect to fund aged care costs
What role their home can play
The impact of relying on family and friends for support
Are they willing to ignore frailty risk
Source: Australian Institute of Health and Welfare – selected health expectations by age 65, by sex, 2015.
THE OPPORTUNITYGROW YOUR BUSINESS OR ADD VALUE TO EXISTING CLIENTS WITH AGED CARE ADVICE SOLUTIONS
Australia’s population is ageing and approximately a quarter of our retirement years could be care years. So the demand for help and the need to be prepared are critical. Advisers who have created business solutions for aged care advice have been able to:
DO YOU HAVE AGEING CLIENTS OR CLIENTS WITH OLDER PARENTS? Chances are that many of your clients are struggling with decisions around aged care or may encounter this need in the near future. Once the need arises who will they talk to? Will it be you? Or will it be another adviser promoting skills in aged care? Don’t risk losing your clients just because you didn’t have an aged care solution for your business. You could choose to become an expert or you may prefer to create links with referral partners and guide your clients through finding the answers they need. Whatever business model you choose, Aged Care Steps has support solutions, giving you the confidence.
AGED CARE STEPSGROWING YOUR BUSINESS WITH AGED CARE
Advice GeneratorTM Paraplanning Business ToolkitTM Accreditation program and workshops
Attract new clients with marketing activities
Expand support to existing clients and add greater value
Build relationships with the next generation to maintain
and grow business
Create more effective relationships with
professional referrers
1. 2. 3. 4.
SUPPORTING YOU EVERY STEP OF THE WAYAged Care Steps provides a suite of practical tools designed to support each stage of your advice process, helping you to maximise opportunities. Aged Care Steps can work with you to help define your business service model and client value proposition so you can select the services you need to deliver your advice.
Get started by building your aged care knowledge and be business ready – Accreditation program and Business starter kit.
Start conversations with existing clients and attract new clients – marketing materials and tips in Business Toolkit.
Develop advice with advice process guides, strategy papers, technical library – Business Toolkit.
Advice delivery using the Advice Generator to model strategies and access document templates or paraplanning support.
THE AGED CARE ADVICE JOURNEY
AGED CARE STEPSGROWING YOUR BUSINESS WITH AGED CARE
Aged Care Steps provides a suite of tools and support materials to support the full advice process for aged care www.agedcaresteps.com.au
AGED
STEPSCARE
PARAPLANNING
Use our aged care fact find and professional paraplanning services if you:• Need help to develop the aged care strategies, do the modelling
and prepare the advice documents (you can add your AFSL details, disclaimers and fees).
• Are still on a learning curve with aged care advice.• Need to fill a gap in your resources for a quick turn-around to
help clients with urgent needs.
ADVICE GENERATORTM
Our own unique modelling software enables you to take control of the advice strategy development. With a simple data input section and template wording it is intuitive and easy to use and allows you to model up to five strategies. Help functions are available to help you when needed. The Generator is specifically designed for modelling aged care options and significantly reduces the time needed to prepare documents as well as minimise the risk of making errors.
BUSINESS TOOLKITTM
The Business ToolkitTM provides practical tools to help you attract business and give advice. The range of tools includes the following and much, much more:
Client brochures & strategy papers
Client seminar kits
Marketing flyers & posters – for clients
and referrers
Quick calculators Technical library to build knowledge
Client conversation guides
The Aged Care Advice Generator is a fantastic tool that enables me to put together a comprehensive strategy paper for a client in an hour. It makes delivering aged care advice very efficient. It used to take days to put together the aged care advice document for clients.Rod Chase, RI Advice Morisset
I recently had a demo of your Aged Care Steps - Aged Care Advice Generator. Having worked in software for 9 years I have to say I’d definitely recommend it. Current software solutions don’t cater for Aged Care as well as they should, if at all. The generator is quick and easy to use and provides invaluable output comparing different scenarios for the end client ensuring that they are provided with meaningful output so that advisors can make the right decisions with their clients. Jason Lien, Centuria
If you want to be successful in providing aged care advice, then accessing both the Aged Care Business Toolkit and Advice Generator is essential. Mike Curley, Morgans Financial
Excellent practical course with good content. The calculator software & strategy paper template is brilliant!!Malcolm Phillips, Dragonfly Financial Services
WHAT OUR CLIENTS SAY
WANT TO KNOW MORE?Find more information at agedcaresteps.com.au
13/11/2018
1
© Aged Care Steps, 2018
Aged Care: blessing or burden?
Louise BitiDirector
13/11/2018
2
© Aged Care Steps, 2018 Source: Client survey yourlifechoices.com.au
© Aged Care Steps, 2018
Probability of residential care
Source: ACFA Annual report
13/11/2018
3
© Aged Care Steps, 2018
Why planning is important
People over age 85 with dementia
• Dementia would be 18th largest economy (if a country)
• One person every 3 seconds in the world
• Over half of people in aged care
• 2nd leading cause of death in Australia
Source: www.dementia.org.au/statistics
© Aged Care Steps, 2018
Why planning ahead is key
» Achieve life goals
» Provide living standards
» Plan for the expected and provide a contingency for the unexpected
» Being prepared for “aged care” at all ages to provide choices, and minimise the family strain
» Independence is not just self-reliance but also the ability to have a say in where and how you live
13/11/2018
4
© Aged Care Steps, 2018
Frailty risk - the forgotten pillar
© Aged Care Steps, 2018
The aged care landscape
13/11/2018
5
© Aged Care Steps, 2018
Are the choices substitutes?
Accommcosts
Key issue • Is this enough care?• Cashflow
• Suitability?• Value for money &
reserves
• Care & accomm bundled• Structure finances?
Care & living costs
• Care fees: $3,807-$14,700 pa
• Personal living expenses
• Private accommodation (sell at market value)
• Uncertain ongoing costs
• Buy licence/lease to occupy (common for 20-30% loss upon exit)
• Known ongoing costs
• Personal living expenses• May buy extra services
• Deposit for right to occupy – avg RAD $300-800K (full refund)
• Care fees: $18,491-$45,723 pa
• Additional fees & personal expenses
Home care package Retirement village Residential care
Note: this is a generalised summary to identify issues & not full range of choices or implications.
© Aged Care Steps, 2018
Not another Royal Commission !!
13/11/2018
6
© Aged Care Steps, 2018
Advice at all ages
Age 40-60
• Adequacy of savings• Estate readiness• Supporting parents
& dealing with 3 G’s of aged careTM
Age 65-80
• Cashflow• Maximising home
care services• Equity release for
home care• Estate planning
Age 80+
• Family guidance• Funding
mechanisms• Cashflow
management• Estate
implementation
© Aged Care Steps, 2018
Advice Project Wheel TM
Client &
familySource support services
Information sources
Own networks
You
Support partners
Client
13/11/2018
7
© Aged Care Steps, 2018
Important information
• The information contained in this presentation is current as at 1 Nov 2018.
• It is based on our understanding of the present laws and Government announcements and the assumption that they will continue.
• These are general statements and should be relied upon as a guide only, as an individual’s circumstances can be quite different. You should seek advice about how the relevant laws impact on your particular circumstances.
• The rates of return and inflation used in the projections are estimates only and are intended to be only a guide to future performance. No guarantee of investment performance is given or implied through the use of these projections and actual returns will differ from those indicated. Past performance should not be taken as a guide to future performance.
• We recommend that you refer to the relevant Product Disclosure Statement where reference is made to a particular product before taking any action.
• Aged Care Steps Pty Ltd ABN 42 156 656 843, AFSL 486723
TIME,EXPENSE & ACTIVITY LEVELS
1
2
3
4
5
You first need to understand how aged care works and what options clients have, so you can be confident to start client conversations.Over time you can build on this knowledge and develop your skills for dealing with families facing difficult and emotional times.Get started by enrolling in the Accredited Aged Care ProfessionalTM program.
Take some time to think about how involved you want to become. Whether you outsource the advice to an expert, use paraplanning support or become an expert, you always want to be at the hub of the process so your clients have a central reference point – you.
ACCESS ADVICE SUPPORT SERVICES
PROACTIVE EXPERT
OUTSOURCE ADVICE
It is important to decide what services you will provide to clients and the limitations on your advice.Develop clear service packages to outline what is in-scope and what is out-of-scope. And set up referral arrangements for areas of expertise that are outside your advice scope.The Business ToolkitTM and training programs we offer can help you with this step.
Clients will pay for advice if they see value. So part of the pricing method is to clearly define your client value proposition.We see many advice models and can provide guidance on determining pricing of aged care advice.
Clients may not know to ask you about aged care unless you start the conversation. Start marketing your service through your website, newsletters, client seminars, flyers and in every client meeting.The good news is that our Business ToolkitTM has a wide range of tools to help you with efficient and effective marketing – including our 10 week kickstart programTM.And once you start giving advice, our Paraplanning and Advice GeneratorTM can help you to develop strategies and produce advice documents in a fraction of the time.
SUPPORT ACROSS EVERY STEP OF THE ADVICE PROCESS
GET THE SKILLS AND KNOWLEDGE
CHOOSE YOUR BUSINESS MODEL
DEFINE YOUR SERVICE OFFER
SET YOUR PRICING
START THE CLIENT CONVERSATION
Best Practice to prevent elder financial abuse © Darryl Browne 2018
1
Best practice to prevent elder financial abuse
Darryl Browne1 Principal Browne Linkenbagh Legal Services
The Australian Law Reform Commission’s proposed that
The Law Council of Australia, together with state and territory law societies, should develop national best practice guidelines for legal practitioners in relation to the preparation and execution of wills and other advance planning documents to ensure they provide thorough coverage of matters such as: (a) elder abuse in probate matters; (b) common risk factors associated with undue influence; (c) the importance of taking detailed instructions from the person alone; (d) the need to keep detailed file notes and make inquiries regarding previous wills and advance planning documents; and (e) the importance of ensuring that the person has ‘testamentary capacity’—understanding the nature of the document and knowing and approving of its contents, particularly in circumstances where an unrelated person benefits.
2
Drawing on various3, court decisions and commentary4, but focusing on protection against financial abuse of the elderly through the use of enduring appointments and
1 1 Darryl Browne is the principal of BROWNE. Linkenbagh Legal Services. He is an Accredited
Specialist in Wills and Estates. He is the Chair of the Law Society’s Elder Law Capacity and Succession Committee. He is a Councillor of the Law Society, a member of the Specialist Accreditation Board and he facilitates the Law Society’s Working Group on Elder Abuse. He is a member of the Law Council of Australia’s Elder Law and Succession Committee. He is a member of the Legal Aid Commission Board and the University of Sydney’s Law Extension Committee. He writes monthly Case Notes on wills and estates for LSJ and occasional other articles for that and other journals. He facilitates the Law Society’s online Wills and Probate Procedures for Solicitors. He designed and presents the Masterclass on Powers of Attorney. He is a member of STEP and SMSF Association. The opinions expressed in this paper are his own. 2 Proposal 8.1.
3 These include the Victorian Law Reform Commission report on Succession Laws (which is available at
http://lawreform.vic.gov.au/projects/succession-laws/succession-laws-report-pdf), the report of the General Purpose Standing Committee No. 2 of New South Wales Parliament’s Legislative Council titled Elder abuse in New South Wales (which is available at https://www.parliament.nsw.gov.au/committees/DBAssets/InquiryReport/ReportAcrobat/6063/Report%2044%20-%20Elder%20abuse%20in%20New%20South%20Wales.pdf), and the Australian Law Reform Commission report titled Elder Abuse – A National Response (which is available at
https://www.alrc.gov.au/publications/elder-abuse-report). 4 This includes the Law Society of NSW’s publication, When a client’s mental capacity is in doubt: A
Practical Guide for Solicitors (which is available at https://www.lawsociety.com.au/resources/areasoflaw/ElderLaw/index.htm), the Law Society of England and Wales’ publications, Wills and Inheritance Protocol (which can be accessed at file:///C:/Users/user/Downloads/Law%20Society%20Wills%20and%20Inheritance%20Protocol.pdf) and a Practice Note on Financial Abuse (which can be accessed at http://www.lawsociety.org.uk/support-services/advice/practice-notes/financial-abuse/), the ABA’s publication, Effective Counseling of Older Clients: The Attorney-Client Relationship (1995) (which can be found at
Best Practice to prevent elder financial abuse © Darryl Browne 2018
2
the preparation and execution of wills and other advance planning documents, I’ve prepared the following suggestions for appropriate measures of protection that can be offered by legal practitioners. 1 Meeting set-up 1.1 Identify the client If an attorney instructs a solicitor to sell the principal’s home, the client is the principal. Instructions can only be taken from the attorney if the attorney has authority; and the power of attorney should be checked by the solicitor to ensure that sufficient authority exists. If an attorney consults a solicitor to ascertain whether the attorney has authority to act for the principal, the client will be the attorney. Failure to properly identify the client can expose third parties to liability for which the solicitor may be liable. At least that is an outcome of Reilly –v- Reilly [2017] NSWSC 14195. 1.2 Take instructions directly from the client Instructions should be taken from the client and not the client’s (supposed or real) ‘delegate’6. In Legal Profession Conduct Commissioner –v- Brook [2015] SASCFC 128 the practitioner took instructions to prepare a will for ZG. The instructions were taken from a daughter of ZG, BJ, who asserted that she was acting with the authority of ZG. At that time, ZG was 86 years of age and resident in a nursing home. At no time did the practitioner meet with, or speak to, ZG to satisfy himself that he was preparing a will in accordance with her wishes and that she had testamentary capacity7. Gray ACJ8 stated that “In my view, it was a wholly inadequate way in which to take instructions”. Referring to The Estate of Tucker, Deceased, [1962] SASR 999 the Court noted that “instructions should be taken from the testatrix herself, not from third persons, and that full information should be obtained about the status and personal position of the intending testatrix. The practitioner should directly address the question as to whether the testatrix is capable in law of making a will”10. The Full Court of the Supreme Court of South Australia in Brook determined that, to protect the public and uphold public confidence in the legal profession, the practitioner’s name be removed from the Roll of Practitioners11.
http://www.americanbar.org/content/dam/aba/administrative/law_aging/2012_aging_bookD15289_effectivecounselingolderclients.authcheckdam.pdf), the Queensland Law Society Ethics Centre’s Guidance Statement to witnessing enduring powers of attorney (which can be found at http://www.qls.com.au/Knowledge_centre/Ethics/Guidance_Statements/Guidance_Statement_No_5_–_Witnessing_Enduring_Powers_of_Attorney) and the British Columbia Law Institute’s guide for legal practitioners faced with the possibility of undue influence (which is available athttp://www.bcli.org/sites/default/files/undue%20influence_guide_final_cip.pdf). 5 [2017] NSWSC 1419, [176], [375] – [388], [404].The solicitor acted for all parties in an
intergenerational transfer from the father (through the actions of his attorney) to his daughters when the father had lost mental capacity. The transaction was voided and the solicitor found to be negligent in his actions. 6 See Anastasia Pates v Diane Craig and The Public Trustee Estate of The Late Joyce Jean Cole [1995]
NSWSC 87, F [142], [147]. As to a difficulty caused by the existence of “too many intermediaries”, see Re Estate of Anne Margaret Kent (dec); ex parte Bonker [2017] WASC 239, [24]. Also note Sinnamon v Proe [1996] QSC 164 and Legal Services Commissioner –v- Ho [2017] QCAT 95, [64]. 7 [2015] SASCFC 128, [9].
8 Vanstone and Kelly JJ agreed.
9 This case concerned a solicitor taking instructions to make a will by post.
10 [2015] SASCFC 128, [12]; see also [44]. Other recent examples along similar lines are Petrovski v
Nasev; The Estate of Janakievska [2011] NSWSC 1275; Dellios –v- Dellios [2012] NSWSC 868, [46]; SNC (No2) [2014] NSWCATGD 21 and Estate El Chami; Habib v El Chami [2016] NSWSC 1208. 11
In Legal Services Commissioner –v- Ho [2017] QCAT 95 the solicitor was publicly reprimanded and fined for unsatisfactory professional conduct for preparing documents in advance on instructions from another person without reference to the client: [64].
Best Practice to prevent elder financial abuse © Darryl Browne 2018
3
1.3 Act for only one client There are risks ranging from disciplinary action for breach of professional conduct rules12 to awards of damages for negligence or breach of fiduciary duty13 to adverse judicial comment14 for a solicitor who acts for more than one client in a legal transaction15. The reason was explained as follows in Legal Services Commissioner –v- McNamara (Legal Practice) [2011] VCAT 1228:
In accepting retainer to act for a client, a legal practitioner owes a duty to act in the interests of his client and to make available to the client all of his expertise and knowledge. If the practitioner concurrently acts for another client who has interests adverse to the first client and a conflict arises the practitioner must necessarily sacrifice the interest of the one client to the other or vice versa or perhaps by failing to act at all on a particular issue might sacrifice the interests of both clients. Whichever way it goes the practitioner fails to perform to the full the duties which he owes to the two clients
16.
The Court of Appeal said this in Archer –v- Archer [2000] NSWCA 314:
“[The solicitor] purported to act for all parties on the transfer of [real estate]. Although his explanation of the documents was sufficient, he failed to properly consider his duty to [the parents]. He should have interviewed them privately, without [the son] present, to satisfy himself that both of them were perfectly happy with the transaction”
17
1.4 See the client alone The ideal arrangement is for the solicitor to see the client alone (or, at worst, with a support person who has no interest in the legal transaction)18. Any person who may benefit should not be within sight or hearing19. In Woodley-Page –v- Simmons (1987)
12
Legal Services Commissioner –v- McNamara (Legal Practice) [2011] VCAT 1228 – where the solicitor acted for both executor and beneficiary. 13
Reilly –v- Reilly [2017] NSWSC 1419 where the solicitor acted for both transferor and transferee of real estate from go to whoa. Similarly, Matouk –v- Matouk (No 2) [2015] NSWSC 748; Vertzayias –v- King [2011] NSWCA 215 where the solicitor acted for both borrower and guarantor. 14
In Anderson –v- Anderson [2017] NSWCA 131, [40] Leeming JA criticised a solicitor by name for acting for both the primary attorney, who didn’t act because it was inconvenient, and the substitute attorney who acted in excess of her authority; Basten JA and Sackville AJA agreeing. In Fouche v Superannuation Fund Board [1952] HCA 1; (1952) 88 CLR 609, 630, [8] referred to this conduct from a named solicitor and said that the “gross impropriety and illegality of this [action] is obvious”. See also Pinter –v- Pinter [2016] QSC 314, [126]. In Lucas v Lucas [2018] NSWSC 962 the court said of the named solicitor: “Mr Ewart made serious errors of judgment in giving advice to the Plaintiff in 2010 and 2016 in relation to the Plaintiff’s claim to an interest in the Property...he acted on behalf of the Defendant in connection with the purchase of the Property…he should have realised much earlier than he did that he could not properly advise the Plaintiff in relation to a dispute or possible dispute with the Defendant arising out of the very transaction in which Mr Ewart acted for the Defendant”: [76] – [77]. 15
A recent example of the practical problems that can arise if a solicitor attempts to act for more than one client is Waterwood Hotel Management Pty Ltd v KOP International Pty Ltd [2018] NSWSC 102. 16
[2011] VCAT 1228, [89]; [96]. See also Archer v Howell (No. 2) (1992) 10 WAR 33, 49. 17
[2000] NSWCA 314, [97]. 18
See Estate of Sharman [1999] NSWSC 709 – the testator’s daughter provided instructions to the solicitor; Donato –v- Mangravite; Estate of Donato [2005] NSWSC 488, [8], [10]; Petrovski v Nasev; The Estate of Janakievska [2011] NSWSC 1275, [193] – [194]; Dellios –v- Dellios [2012] NSWSC 868, [47]; Estate of Stanley William Church [2012] NSWSC 1489, [38] where instructions were taken by telephone; Smith –v- O’Neil [2015] NSWSC 1924, [41]; Ryan –v- Dalton; Estate of Ryan [2017] NSWSC 1007. 19
Church v Mason [2013] NSWCA 481; Barakett v Barakett [2016] NSWSC 1257, [27]. In McNamara –v- Nagel [2017] NSWSC 91, the sole beneficiary was present at the hospital when the testator gave instructions for the preparation of the will, its explanation and signing. The solicitor admitted that that situation was “less than desirable” [115]. The court found that that fact established “suspicious circumstances” concerning the testator’s knowledge and approval of the will: [233]. However the court found that the beneficiary’s presence was “not material” ([117]) in the circumstances, partly because the beneficiary’s “presence was passive”: [95]. In Gray v Taylor; The Estate of the late Stanislaw Zajac [2017] NSWSC 4 and Re Watson [2017] VSC 322 the courts excused the beneficiary’s presence both
Best Practice to prevent elder financial abuse © Darryl Browne 2018
4
217 ALR 25, Young J said that that was “the standard practice in making will” and added “The reason is obvious, because unless the testator is seen alone the solicitor is just not able to be sure that he is not being influenced by the friend to make the will in that way”20. Another reason is that close involvement in preparation of a will from one who benefits thereby can arouse suspicion as to the testator’s appreciation and approval of the contents of the will21. At least 6 of the 7 decisions in the last decade where testamentary undue influence has been found involved the ‘abuser’ involved in making the will22.
In Brown v Guss [2014] VSC 251 the judge said that it was “unfathomable” that the solicitor “was unable to see that his position as solicitor taking instructions for a new and elderly client was compromised by allowing [a beneficiary] to be present at the meeting” when instructions for the will were taken23. In The Public Trustee of Queensland –v- Tennila [2018] QSC 84 the court remarked: “It is unfortunate that [the will drafter] did not insist on taking the instructions from the deceased for his will in the absence of [the residual beneficiary]”24: 1.5 Devote sufficient time to the meeting There needs to be sufficient time to enable an assessment of the client’s understanding and volition. As to an instance of inadequate time see Dickman –v- Holley; in the estate of Simpson [2013] NSWSC 18 where the solicitor gave this evidence:
“I spoke with [the deceased] for approximately 10 minutes. Of these 10 minutes, we were alone for about 5 minutes. Only while we were alone did I discuss [the deceased’s] wishes with her. It is my practice with elderly people to have a general discussion about the time of year or who the current Prime Minister is or other events in order to gauge whether the person is sufficiently aware and capable of making a will. …As a result of our conversation I decided that [the testator] was capable of making a Will”
25.
During the five minutes the solicitor obtained instructions for both a will and power of attorney! The validity of the power of attorney was not an issue in the proceedings. However, the will was found to be invalid by reason of lack of testamentary capacity, lack of knowledge and approval and by reason of testamentary undue influence.
when instructions were obtained and the will executed as the client had, in each instance, requested the beneficiary’s presence. 20
(1987) 217 ALR 25, [34]. 21
Nock –v- Austin [1918] HCA 73, (1918) 25 CLR 519, 528; Barry v Butlin [1838] EngR 1056; 2 Moo PCC 480; Fulton v Andrew LR 7 HL 448; Low v Guthrie [1909] AC 278, 284. 22
Edwards –v- Edwards [2007] EWHC 1119; Nicholson v Knaggs [2009] VSC 64; Brown –v- Wade
[2010] WASC 367; Petrovski v Nasev; The Estate of Janakievska [2011] NSWSC 1275; Schrader –v- Schrader [2013] EWHC 466; Brown v Guss [2014] VSC 251. Another instance is Carey –v- Norton [1998] 1 NZLR 661, 668. 23
[2014] VSC 251, [357]. Other authority to this effect includes Johnson v Buttress [1936] HCA 41; (1936) 56 CLR 113; Archer –v- Archer [2000] NSWCA 314, [97]; Dellios –v- Dellios [2012] NSWSC 868, [47], [57]; Estate of Stanley William Church [2012] NSWSC 1489, [38]; Mace –v- Mace [2015] NSWSC 1659. This didn’t occur in Courtney v Powell [2012] NSWSC 460 but that was an unusual situation where the benefitted party was trying to use her influence to talk the party providing the benefit out of doing so. In Ikonomou –v- Panagopoulos [2017] NSWSC 1805 the court disagreed with the submission
that there was something untoward about a daughter attending the conference with her mother’s solicitor when she gave instructions for her will, the daughter was named as executor and the daughter’s suggestion for beneficiaries were adopted. 24
[2018] QSC 84, [20]. 25
[2013] NSWSC 18, [44], [165].
Best Practice to prevent elder financial abuse © Darryl Browne 2018
5
Unfortunately, this instance of failing to take sufficient time to undertake the task properly is not an isolated incident26. 1.6 Meet in an appropriate place The meeting needs to occur in a place where it is appropriate to give advice about legal transactions. Judging from the failed legal transactions in Badman –v- Drake [2008] NSWSC 1366, Maestrale v Aspite [2012] NSWSC 1420, [3]; Matouk –v- Matouk (No 2) [2015] NSWSC 748; Ryan –v- Dalton; Estate of Ryan [2017] NSWSC 1007, this is not a café. The meeting should take place at a time when it is appropriate to receive advice about a legal transaction. This isn’t a social occasion or a recreation event27. 1.7 Consider the atmospherics This may duplicate the requirement to ensure an appropriate meeting place, but it is important to ensure that the environment allows the client to take in what he or she is told. This may mean that the client should not have a baby or toddler at the meeting28. It is recommended that mobile phones be made inert. 2 Meeting procedures 2.1 Identify yourself It is important that the client knows that you are a solicitor29. If the person is not an existing client, and the arrangement for the meeting has been made by another person, you should ensure that the person has chosen you as his or her solicitor30, or, at least, understands that they may choose their own solicitor31. If the position is otherwise the solicitor may be considered conflicted and the client may be treated as not having received independent advice32.
2.2 Get the language right It is vital to communicate with the client in a language with which both you and the client are conversant33. If this isn’t possible, ensure that an independent interpreter translates the conversation34. Ensure that the translator has the requisite credentials35. In no conceivable circumstance should a person who has an interest in
26
In Application by Craig-Bridges; The Estate of Ella Minnie Lillian Bush; The Estate of Ella Minnie Lillian Bush v NSW Trustee & Guardian [2016] NSWSC 1611 the solicitor spent “not more than five minutes”: [124]. Ten minutes was considered inadequate in Irvine –v- Irvine [2008] NSWSC 592, [42]. Twenty minutes, which included the time to type the will, is also inadequate: see Robinson –v- Spratt [2002] NSWSC 426, [29.12] and Veall –v- Veall [2014] VSC 251. 27
In Wong –v- Wong [2008] NSWSC 330, an irrevocable power of attorney was signed at a golf club. 28
Evolution Lifestyles Pty Ltd v Clarke (No 3) [2016] NSWSC 1237, [152]. 29
Irvine –v- Irvine [2008] NSWSC 592. 30
Evolution Lifestyles Pty Ltd v Clarke (No 3) [2016] NSWSC 1237; Juzumas –v- Baron 2012 ONSC 7220, [80]. 31
Irvine –v- Irvine [2008] NSWSC 592. 32
See, for instance, Raoul (by his tutor Karamihas) –v- Hanna [2017] NSWSC 728. 33
Riz –v- Perpetual Trustee of Australia Ltd [2007] NSWSC 1153; Dellios –v- Dellios [2012] NSWSC 868, [48] – [49]; Matouk –v- Matouk (No 2) [2015] NSWSC 748; Barakett –v- Barakett [2016] NSWSC
1257. 34
A very good telephone service of this type is offered by Translating and Interpreting Service (T: 1300 304 604 F: 03 9235 3682 E: [email protected] W: www.tisnational.gov.au) at a very
reasonable cost. 35
Barakett –v- Barakett [2016] NSWSC 1257, [25], [34]. Someone like a local real estate agent or the spouse of the instructing solicitor should not be used, even though that person may speak the language, unless in the gravest emergency. The article in 43 LSJ April 2018, Interpreters and lawyers: why we must work together for better outcomes, Tran, pp 86 – 87, provides useful information about the role of
the interpreter as seen from the interpreter’s perspective.
Best Practice to prevent elder financial abuse © Darryl Browne 2018
6
the transaction be involved in the translation36. Also bear in mind the comments in Rocco Condello v Sung Soo Kim [2018] NSWSC 394:
being bilingual does not make someone qualified to interpret. Even where a solicitor speaks the witness’ language, an independent and qualified interpreter must be retained to translate any affidavit evidence given in a foreign language into the English language. An affidavit must then be obtained from the interpreter verifying the fact of translation and that the English version was translated back to the witness before his or her affidavit was sworn or affirmed.
37
2.3 Ascertain the client’s intentions It will often be important to allow the client to enunciate his or her reasons for seeing you. Ascertaining the outcome which the client wishes to achieve by the legal transaction38 will usually define the solicitor’s retainer39. 2.4 Check for conflicts In Dickman v Holley; Estate of Simpson [2013] NSWSC 18 the court explained the reason why acting where an existing client may benefit can cause legal issues:
Although [the solicitor] did not perceive that he had a conflict of interest (or more accurately, a conflict between duty and duty), I think he did have such a conflict. The Salvation Army Property Trust was an established client. He worked from its offices. The Salvation Army Property Trust would expect him to do what was proper to document what [the solicitor] was told was Mrs Simpson's intention to leave her estate to the Salvation Army. His duty to Mrs Simpson included making inquiries relevant to her testamentary capacity, including as to whether she appreciated who had claims on her bounty and was able to evaluate those claims. This would have included inquiring who was or were the beneficiary or beneficiaries of any existing will. Bringing Mrs Simpson's mind to bear on the question of who, other than the Salvation Army, might have claims on her estate was potentially not in the interests of his established client.
40
2.5 Explain the legal transaction There are a number of aspects to this. It will often involve:
drawing the client’s attention to the effect of the legal transaction41, both positive and negative42. It was said by Street J in Bester v Perpetual Trustee Co Ltd [1970] 3 NSWR 30 that it is not textual advice that is needed but advice upon the more general topic of whether the legal transaction should be entered into at all, and, if so, the general nature of the transaction.
36
Matouk –v- Matouk (No 2) [2015] NSWSC 748. However, in Ikonomou –v- Panagopoulos [2017]
NSWSC 1805 the court disagreed with the submission that it was in appropriate for the client’s daughter to act as interpreter for her mother at a conference with her mother’s solicitor when the mother gave instructions for her will, the daughter was named as executor and the daughter’s suggestion for beneficiaries were adopted. 37
[2018] NSWSC 394, [15]. See also Rogic –v-Samaan [2018] NSWSC 1464. For the problems that can arise where this is not done with a will, see Re Theodoulou [2018] VSC 601. 38
Winefield –v- Clarke [2008] NSWSC 882. 39
A solicitor’s duty of care is usually confined to performing the retainer and any additional assumed responsibility (ie the penumbral or peripheral duty). 40
[2013] NSWSC 18, [165]. The will was set aside as invalid because the testator lacked testamentary capacity, did not know and approve its contents and it was the outcome of testamentary undue influence. 41
This can reveal some problems with the transaction. For instance, in Smith v. Glegg [2004] QSC 443 the judge remarked that the “documents were so inconsistent with each other that no lawyer could have sensibly explained their combined effect”: [45]. 42
Janson v Janson [2007] NSWSC 1344; Irvine –v- Irvine [2008] NSWSC 592; Winefield –v- Clarke
[2008] NSWSC 882.
Best Practice to prevent elder financial abuse © Darryl Browne 2018
7
advising as to the propriety of the transaction43, and warning the client against improvident transaction44. This may mean that the solicitor should obtain information about the client’s financial circumstances45 or recommend that the client obtain advice about the financial or other relevant implications.
advising the alternatives available to the client46; and
advising the advantages and disadvantages47 of the alternatives48. 2.6 Check for mental capacity It is said that there is a presumption of mental capacity (or sanity) for all transactions except a will49. However, it seems that there is a move away from the use of presumptions, and a move towards a close examination of the circumstances of each situation, to determine issues of fact such as mental capacity50. It was therefore said in Ryan –v- Dalton; Estate of Ryan [2017] NSWSC 1007 that “A solicitor should always consider capacity and the possibility of undue influence, if only to dismiss it in most cases”51. That is no easy ask, as an assessment of mental capacity is time and task specific. A finding of mental incapacity in relation to one type of legal transaction does not mean that mental capacity is lacking in relation to another legal transaction52. Similarly, a finding of mental capacity or incapacity at one point of time doesn’t preclude a different and opposite finding at another point of time53.
43
Janson –v- Janson [2007] NSWSC 1344, [82] - [83]; Riz –v- Perpetual Trustee of Australia Ltd [2007] NSWSC 1153, [116]. The Court of Appeal stated in Aboody v Ryan [2012] NSWCA 395 that “[i]t was part of [the solicitor’s] duty to see that [the client] understood fully the legal and practical consequences of what he was doing”: [78]. 44
Riz –v- Perpetual Trustee of Australia Ltd [2007] NSWSC 1153, [115] et seq; Badman v Drake [2008]
NSWSC 1366, [86]. 45
Aboody v Ryan [2012] NSWCA 395, [29]. 46
Janson v Janson [2007] NSWSC 1344; Aboody v Ryan [2012] NSWCA 395, [70]. 47
In Riz –v- Perpetual Trustee of Australia Ltd [2007] NSWSC 1153, [128] Brereton J said that “a lawyer
giving independent advice is required to address the fairness or reasonableness of a proposed transaction, so that the client can appreciate its disadvantages; if this involves matters beyond the lawyer’s expertise, then the lawyer should seek specialist assistance”. 48
Janson v Janson [2007] NSWSC 1344; Stivactas v Michaletos (No 2) (1993) NSW ConvR 55-683. 49
In Szozda v Szozda [2010] NSWSC 804 Barrett J attributed the origins of the presumption to Attorney-General v Parnther [1792] Eng R 2455; (1792) 3 Bro CC 441; (1792) 29 ER 632. It has been described as both "long cherished": Masterman-Lister v Brutton &Co [2003] 3 All ER 162 at 169 and "longstanding": Owners Strata Plan No 23007 v Cross [2006] FCA 900 [66]. See also Murphy v Doman [2003] NSWCA 249 (2003) 58 NSWLR 51, [36]; Re Griffith; Easter v Griffith (1995) 217 ALR 284 , 295; L v Human Rights and Equal Opportunity Commission [2006] FCAFC 114; (2006) 233 ALR 432, 437-38 [20]; A v City of Swan [No 5] [2010] WASC 204, [66]; Owners of Strata Plan No 23007 v Cross [2006] FCA 900; (2006) 153 FCR 398, 414-15 [66]-[68] ; Slaveski v Victoria [2009] VSC 596, [25]-[26]; Goddard Elliott (a firm) v Fritsch [2012] VSC 87, [546]. 50
Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8; (2002) 209 CLR 95; Evans v Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2012] FCAFC 81; (2012) 289 ALR 237; Ashton v Pratt [2015] NSWCA 12; Veall –v- Veall [2015] VSCA 60, fn[71]. 51
[2017] NSWSC 1007, [107(2)]. 52
Gibbons v Wright [1954] HCA 17; (1954) 91 CLR 423, 437-438; In the Estate of Park (Dec’d); Park v Park [1954] P 89; Martin v Azzopardi (1973) 20 FLR 345, 358; PY v RJS [1982] 2 NSWLR 700, 702; Secretary, Department of Health and Community Services v JWB (Marion’s Case) [1992] HCA 15; (1992) 175 CLR 218, 237-238; Masterman-Lister v Brutton & Co [2003] 1 WLR 1511; Murphy v Doman
(as representative of the estate of the late Min Simpson ) & Anor [2003] NSWCA 249; (2003) 58 NSWLR 51 [35]; Sheffield City Council v E [2004] EWHC 2808 (Fam); Edwards v Edwards (2009) 25 VR 40, [56]; Farr v State of Queensland [2009] NSWSC 906 [15]; Guthrie & Anor v Spence [2009] NSWCA 369; PJB v Melbourne Health and State Trustees Limited [2011] VSC 327. Erdogan v Ekici [2012] VSC 256, [54]; Raoul (by his tutor Karamihas) –v- Hanna [2017] NSWSWC 728, [68]. 53
Guthrie v Spence [2009] NSWCA 369; (2009) 78 NSWLR 225, [174]- [175]; Banks v Goodfellow (1870) LR 5 QB 549; Timbury v Coffee [1941] HCA 22; (1941) 66 CLR 277; Brown v Wade [2010] WASC 367; Estate Cockell; Cole –v- Paisley [2016] NSWSC 349; Re Kensall [2016] VSC 724; Re WS
[2017] NSWSC 745, [25].
Best Practice to prevent elder financial abuse © Darryl Browne 2018
8
In Ryan –v- Dalton the court observed that in the case of anyone over 70, being cared for by someone, who resides in a nursing home or similar facility, or about whom for any other reason the solicitor might have concern about capacity, the solicitor should ask the client and their carer or a care manager in the home or facility whether there is any reason to be concerned about capacity including as a result of any diagnosis, behaviour, medication or the like. In legal transactions other than a will, the mental capacity required by the law is relative to the legal transaction which is being investigated. It is the capacity to understand the nature of that transaction when it is explained. Ordinarily the nature of the transaction means its broad operation54. This is the test that applies to transactions as diverse as a contract for sale, a power of attorney and court proceedings. In simple terms, for a will:
“It must be remembered that what needs to be established is, put simply, that [the testator] knew what the general nature and effect of making a will was, that she was able to remember what her property was, and its approximate value, that [the testator] knew who had claims upon her testamentary bounty, and that she had the mental capacity to reflect and reason so that she could judge, having regard to her assets, how far, if at all, she should give effect to the claims”
55.
There can be significant consequences for a solicitor who doesn’t do this. In Legal Services Commissioner v Ford [2008] LPT 12 a solicitor was removed from the roll for preparing a power of attorney for a person who lacked the mental capacity to do so. This is not an isolated instance56. 2.7 Check for volition It has long been said that legal transactions must be “the offspring of [the person’s] own volition”57. This issue is different from mental capacity. In Bridgewater –v- Leahy [1998] HCA 66; 194 CLR 457; 158 ALR 66; 72 ALJR 1525 the plurality said that “equitable principles may be invoked to set aside a gift where a donor is perfectly competent to understand and intend what he or she did”58. In Whereat v Duff [1972] 2 NSWLR 147 the NSW Court of Appeal explained that “even a person of full capacity may form the intention to make an improvident gift under the undue influence of another”59. So, “Why are you doing this?” (or similar) can be a useful enquiry. Significant change in contents of will60, especially if they result in inexplicable exclusion of beneficiaries61, or inexplicable inclusion of beneficiaries62, points to
54
Gibbons v Wright [1954] HCA 17; (1954) 91 CLR 423, [7] – [8]; Hobhouse v Macarthur-Onslow [2016] NSWSC 1831, [399]. 55
McNamara –v- Nagel [2017] NSWSC 91, [290]. 56
See also Legal Services Commissioner v Comino [2011] QCAT 387, Legal Services Commissioner v de Brenni [2011] QCAT 340; LSC –v- Penny [2015] QCAT 108; LSC –v- Given [2015] QCAT 225; Legal Profession Complaints Committee and Wells [2014] WASAT 112 and In NSW there is Council of the Law Society of NSW v Berger (No 1) [2017] NSWCATOD 137 and (No. 2) [2018] NSWCATOD 4 to the
same effect. 57
Hall –v- Hall (1868) LR 1 P & D 481, 482. 58
[1998] HCA 66, [118] per Gaudron, Gummow and Kirby JJ citing Huguenin v Baseley (1807) 14 Ves Jun 273 at 299-300 [33 ER 526 at 536]; Rhodes v Bate (1866) LR 1 Ch App 252 at 256 and Allcard v Skinner (1887) 36 Ch D 145 at 183 and referring to Union Fidelity Trustee Co of Australia Limited v Gibson [1971] VicRp 69; [1971] VR 573, 576 and, in Canada, Geffen v Goodman Estate [1991] 2 SCR 353, 376. 59
[1972] 2 NSWLR 147 at 169.However, sometimes legislation conflates these separate principles. An example is Guardianship and Administration Act 2000, Qld where capacity is defined to include “freely and voluntarily making decisions about” a matter: see s7 analysed in SZ [2010] QCAT 64, [11], [33] – [34] and [37]. 60
Brown –v- Wade [2010] WASC 367; Petrovski v Nasev; The Estate of Janakievska [2011] NSWSC 1275; Carey –v- Norton [1998] 1 NZLR 661, 671.
Best Practice to prevent elder financial abuse © Darryl Browne 2018
9
testamentary undue influence. A factor which may suggest abuse, pressure, exploitation, coercion and the like is the regular changes of wills or powers of attorney63 within a relatively short period of time. (It is well recognised that a person can change their will as often as they like64. The same is true with any legal transaction, especially one involving unilateral action such as a power of attorney or enduring guardian appointment form. Nevertheless, too regular changing of these documents may suggest a lack of mental capacity65 or want of volition66.) Other signs of a lack of volition include:
the client making a transaction disposing of almost all the victim’s assets67,
the client disposing of all his or her assets for nominal or no consideration68,
the failure for the client to be paid the stated consideration69 for a transfer of title.
2.8 Ensure that the client understands It will be crucial for the solicitor to discuss the legal issues in a manner which allows the solicitor to form an opinion about the client’s understanding of the legal transaction70. It is necessary to ensure that the client comprehends the contents, nature and effect of the relevant documentation71. In Lauvan Pty Limited –v- Bega [2018] NSWSC 154 the court said
It is uncontroversial that a solicitor must ensure that the client understands the documents he or she is to execute and the consequences of executing them, especially in relation to unusual provisions
72…depending on the circumstances known
61
Dickman v Holley; Estate of Simpson [2013] NSWSC 18; Schrader –v- Schrader [2013] EWHC 466; Carey –v- Norton [1998] 1 NZLR 661. 62
In Mahon –v- Mahon [2015] NZHC 2143 the court observed that “an otherwise unexpected outcome may be powerful evidence from which influence which is undue can be inferred in the absence of other explanation. In cases where a disposition is to a family member something more may be required”: [29]. In Edwards –v- Edwards [2007] EWHC 1119 the gift over provision was inexplicable. 63
Timbury v Coffee [1941] HCA 22; (1941) 66 CLR 277; Ranclaud –v- Cabban (1988) NSW Conv 55-385; Robinson –v- Spratt [2002] NSWSC 426; Szozda –v- Szozda [2010] NSWSC 804. 64
See, for instance, the comments of Young CJ in Eq in Barnes –v- Alderton [2008] NSWSC 107, [58]. 65
Robinson –v- Spratt [2002] NSWSC 426, [40]. Some clients make a hobby of making wills. For instance, in Re Perrin [2016] VSC 578 the testator made wills on 23 September 2015, 6 February 2015, 11 April 2014, 3 April 2014, 10 October 2012 and 30 June 2008. In Rockman –v- Fast [2016] VSCA 262, the deceased made wills in June 2005, April 2006, July 2008, October 2008, April 2009, June 2009 and April 2010, as well as an informal will in August 2010. In Application by Craig-Bridges; The Estate of Ella Minnie Lillian Bush; The Estate of Ella Minnie Lillian Bush v NSW Trustee & Guardian [2016] NSWSC
1611 the testator made wills on 8 June 2011, 22 November 2011, 12 November 2012 and 21 February 2013. There was no finding of testamentary incapacity for any of the wills in these last two cases. In Revie –v- Druitt [2005] NSWSC 902 the deceased died in October 2001 having made wills on 24 November 1999, 30 August 2000 and 4 October 2001. The last was made without testamentary capacity and no-one sought to propound the second last will. See also Ranclaud -v- Cabban (1988) NSW Conv R 55-385 regarding the frequent making of powers of attorney. 66
In Re Demediuk [2016] VSC 587, the deceased made will on 5 July 1956, 9 July 2010, 24 November 2010, 10 February 2012 and 27 October 2012: [22]. 67
Johnson –v Buttress [1936] HCA 41; (1936) 56 CLR 113; Smith v. Glegg [2004] QSC 443. 68
Turner v Windever [2005] NSWCA 73; Irvine –v- Irvine [2008] NSWSC 592; Sleboda –v- Sleboda [2008] NSWCA 122; Smith v. Glegg [2004] QSC 443; Ward –v- Ward [2011] NSWSC 107, [36]; Aboody –v- Ryan [2012] NSWCA 395; Cohen –v- Cohen [2016] NSWSC 336. Inadequate consideration has
long been a relevant factor which a court considers when exploring the legal propriety of a transaction, see, for instance, Dobson –v- Dobson (1879) 13 SALR 137; Carello –v- Jordan [1935] St R Qd 294; Richardson –v Otto [1938] QWN 15; Blomley –v- Ryan (1956) 99 CLR 362; Nichols –v- Jessup [1986] 1 NZLR 266; Nichols –v- Jessup (No2) [1986] 1 NZLR 237. 69
Winefield –v- Clarke [2008] NSWSC 882, [49]; Matouk –v- Matouk (No 2) [2015] NSWSC 748. 70
Winefield –v- Clarke [2008] NSWSC 882. 71
Archer –v- Archer [2000] NSWCA 314, [97]. 72
[2018] NSWSC 154, [422] citing Fox v Everingham [1944] ArgusLawRp 11; (1983) 50 ALR 337, 341-2; Henderson v Amadio (No 1) [1995] FCA 1300; (1995) 140 ALR 391, 518-9.
Best Practice to prevent elder financial abuse © Darryl Browne 2018
10
to the solicitor, the performance of the retainer may require more than an explanation of the legal effect of documents, but also the obvious practical implications of the client’s entry into the transaction the subject of advice
73.
Three comments can be made in this context:
To assess a client’s understanding, a solicitor should usually ask open questions. Open-ended questions allow for an evaluation of the client’s understanding. Further comments on open questions are made below.
In assessing a client’s understanding, the assessment should be approached from the mindset that a client’s age, appearance, disability, stated reasons or behaviour does not establish a lack of mental capacity. A reason is that mere irrationality, even extreme irrationality, is not delusional if it has some connection with reality74. A mistaken belief is not a delusion75. A paranoid schizophrenic can have testamentary capacity although his or her estate is managed76, not have testamentary capacity even though his/her estate is not managed77, or have his or her affairs managed and not have testamentary capacity78. However, these factors may be relevant to other issues concerning the validity of a will, such as knowledge and approval, undue influence and fraud. Accordingly, anything which is unusual about a person’s appearance, stated reasons or behaviour, in particular, should be carefully recorded. As Mann J said in Schrader –v- Schrader [2013] EWHC 466: “Testators do strange things and are entitled to be whimsical, capricious, vindictive, wrong in belief or their acts beyond explanation without that of itself proving lack of capacity”79.
Specific additional procedures may be appropriate for some legal transactions. So, with a will, the testator should read the will80. Where there is any doubt about the client’s cognition, the solicitor should read the will out loud to the testator with pauses to explain the terms during the reading to ascertain that those terms are understood by the testator and carry out his or her intentions81. The solicitor should explain to the testator the effect of the
73
Ibid at [424] citing Provident Capital Ltd v Papa (2013) 84 NSWLR 231; [2013] NSWCA 36, [75], [80]. 74
Schultz v Bailey [2007] NSWCA 110; Petrovski v Nasev; The Estate of Janakievska [2011] NSWSC 1275, [77]. 75
Du Maurier v Wechsler [2001] NSWSC 4, [40]. 76
Briton v Kipriditis [2015] 1499; Estate Cockell; Cole –v- Paisley [2016] NSWSC 349. 77
Haim –v- NSW Trustee & Guardian; Estate of Feurring [2013] NSWSC 1406; Estate El Chami; Habib v El Chami [2016] NSWSC 1208. 78
Re Oliver (dec’d) [2016] QSC 264. 79
[2013] EWHC 466, [82]. In Estate of Budniak; NSW Trustee & Guardian –v- Budniak [2015] NSWSC 934, [460] the court noted that “capricious, frivolous, mean, or even bad, motives” don’t affect testamentary validity, “irrational, unjust, unfair, vindictive or even perverse, will” must be upheld if the testator had the capacity to make the will. 80
This will allow the testator to correct any inadvertent errors, such as the spelling of the testator’s name: Petrovski v Nasev; The Estate of Janakievska [2011] NSWSC 1275, [144] – [145]. It is especially
important if the testator is elderly, has impaired cognition or is suffering a deteriorating medical condition: The Estate of Stanislaw Budniak; NSW Trustee & Guardian v Budniak [2015] NSWSC 934, [466]. It is the “customary (and perhaps the best) means of ensuring that a testator knows and approves of the content of the will”: Estate Stojic, Deceased [2017] NSWSC 168, [95]; Tobin v Ezekiel [2012] NSWCA 285; Barry v Butlin [1838] EngR 1056; (1838) 2 Moo PC 480; 12 ER 1089, 484; 1091; Gregson v Taylor [1917] P 256, 261; Re Fenwick [1972] VicRp 75; [1972] VR 646, 652”: [47]. See also Re Hodges; Shorter v. Hodges (1988) 14 NSWLR 698, 705,Guardhouse v. Blackburn (1866) LR 1 P and D 109; Fulton v. Andrew (1875) LR 7 HL 448; Anastasia Pates v Diane Craig and The Public Trustee Estate of The Late Joyce Jean Cole [1995] NSWSC 87, [8]. See also Public Trustee v Permanent Trustee Company Limited; Estate of Rintoul [1999] NSWSC 722, [41] – [42]. 81
Robinson –v- Spratt [2002] NSWSC 426, [31]. This will also allow any obvious errors to be identified, which errors, if unidentified, may cast doubt on a testator’s testamentary capacity: Estate El Chami; Habib v El Chami [2016] NSWSC 1208, [35]. Another example is Application by Craig-Bridges; The
Best Practice to prevent elder financial abuse © Darryl Browne 2018
11
changes to the will so far as different amounts were left to various beneficiaries82.
2.9 Allow time for cogitation Some clients will want or need an opportunity to reflect on the advice given. Accordingly, unless there is a need for urgency, it will often be important to allow the client the opportunity to consider any documents and issues at his/her leisure83. In Thorne –v- Kennedy [2017] HCA 49, one factor used to assess undue influence was whether there was time to reflect on the solicitor’s advice84. 3 Engage in open dialogue To assess a client’s understanding a solicitor should usually ask open questions85. Open-ended questions allow for an evaluation of the client’s understanding86. This illustration from Doulaveras v Daher [2009] NSWCA 58 explains the benefits:
A solicitor who gives a detailed and careful explanation to someone sitting on the other side of the desk might form the view that that person understood the transaction if the person remained silent during the explanation, looked at the solicitor during it, periodically nodded, and when asked at the end whether all that had been understood, also nodded. Alternatively, a solicitor might form that view on the basis that the person on the other side of the desk periodically asked questions that related to the subject matter. In the first of those situations, if the person on the other side of the desk had, unbeknown to the solicitor, a serious deficiency in brain functioning, the solicitor’s conclusion might not be a reliable one, however honestly it may have been arrived at.
87
3.1 Examples of open questions Open questions will often start with the words like
“why” (as in ‘Why are you seeing me today?’, ‘Why are you leaving X out of your will?’),
Estate of Ella Minnie Lillian Bush; The Estate of Ella Minnie Lillian Bush v NSW Trustee & Guardian [2016] NSWSC 1611 where the judge remarked: “it seems unlikely that Mr Palmer read out all of the November 2011 will to Mrs Bush before she signed it. That is because one of the powers the will gave Mrs Bush’s executor was to apply capital “for the maintenance, education or benefit of any minor beneficiary”; a plainly unnecessary power in a will for the benefit of two charities. Had Mr Palmer read out this clause to Mrs Bush, he would surely have noticed the problem”: [85]. See also Coates –v- Wattson; Estate of Sullivan [2013] NSWSC 604, [18] – [19]. 82
Ibid at [30]. 83
Irvine –v- Irvine [2008] NSWSC 592; Evolution Lifestyles Pty Ltd v Clarke (No 3) [2016] NSWSC 1237, [151]; Hobhouse v Macarthur-Onslow [2016] NSWSC 1831. 84
[2017] HCA 49, [60]. 85
It is not suggested that there should be open questions used in every circumstance or even in every circumstance where mental capacity is doubted. There will be circumstances where closed circumstances will be appropriate. These are comparatively rare. The default position of open questions is therefore recommended unless it is realised that these will not produce sufficient information to enable a sound assessment of mental capacity. See in this context the comments in Effective Counseling of Older Clients: The Attorney-Client Relationship (1995), p18. This can be found at
http://www.americanbar.org/content/dam/aba/administrative/law_aging/2012_aging_bookD15289_effectivecounselingolderclients.authcheckdam.pdf (accessed 27 November 2016). 86
Cf Estate of Stanley William Church [2012] NSWSC 1489, [39] – [40], [43] – [44]. In Burns –v- Burns [2016] EWCA Civ 37 the purpose was stated to be to test the testator’s faculty: [24]. In Gray v Taylor; The Estate of the late Stanislaw Zajac [2017] NSWSC 4 the court explained that “testamentary capacity is in doubt, at the very least, a solicitor should ask the testator questions to ascertain the testator’s basic understanding, to gain reasonable assurance regarding testamentary capacity”: [126]. See also Robinson –v- Spratt [2002] NSWSC 426; Nicholson v Knaggs [2009] VSC 64; Petrovski v Nasev; The Estate of Janakievska [2011] NSWSC 1275. 87
[2009] NSWCA 58, [65] per Campbell JA with whom Giles and MacFarlan JJA agreed. To the same effect see Robinson –v- Spratt [2002] NSWSC 426, [31]; Petrovski v Nasev; The Estate of Janakievska [2011] NSWSC 1275, [183], [298], [306] and Ryan v Dalton; Estate of Ryan [2017] NSWSC 1007, [98]. In Nicholson v Knaggs [2009] VSC 64 a doctor colourfully called this the “Noddy Syndrome”.
Best Practice to prevent elder financial abuse © Darryl Browne 2018
12
“what” (as in ‘What is the reason you are appointing Y as your attorney?”, ‘What do you know about Z’s financial circumstances?’),
“who” (as in ‘Who is the person best able to make these decisions for you?’ and ‘Who do you want to benefit from your estate after your death?’),
‘when’ (as in “When do you want your attorney to be able to act for you?”) and
‘how” (as in ‘How is that legal action in the person’s best interests?’). These are the type of questions asked by an investigative journalist. A good example of this type of questioning is found in Read –v- Carmody [1998] NSWCA 182. They are almost essential to properly performing the lawyer’s function of testing a client understands88. 3.2 Examples of closed questions Open question wouldn’t start with the words like
“do/does/did” (as in ‘Do you agree?’ – a better approach may be “What do you think about that?”),
“is/are” (as in ‘Is that what you want?’ - ditto),
“can/could” (as in “Can you still look after yourself?” - a better approach may be “Who is involved in helping you with your activities?”),
“will/would” (as in ‘Would X be a good person to have as your attorney?’ a better approach may be “What are the attributes you need in an attorney?” followed by “Who has those attributes?”) or
“has/have” (as in “Have you understood that?” - a better approach may be “What does that mean?”),
as these words allow for a ‘yes’ or ‘no’ answer which does not aid an assessment of a person’s understanding. These are the type of questions asked by a cross-examiner. A terrible example of this type of questioning occurred in Estate of Stanley William Church [2012] NSWSC 1489.89 3.3 Consider a mix When ascertaining that a person understands, a question like “What do you understand by that?” is preferable to “Is that what you want?”. However, when obtaining instructions, an appropriate initial question may be a closed question, like “Have you done this before (such as make a will, power of attorney, or the like)?”. If the answer is positive, the following question could be open question: “Why are you making changes to that document?”90. Accordingly, I disagree with the comment made in Ryan –v- Dalton; Estate of Ryan [2017] NSWSC 100791 that:
88
Doulaveras –v- Dahler [2009] NSWCA 58; Lederberger v Mediterranean Olives Financial Pty Ltd [2012] VSCA 262, [100] – [101]; Badenach v Calvert [2016] HCA 18; Pates –v- Craig; The estate of Cole [1995] NSWSC 87; Archer –v- Archer [2000] NSWCA 314, [97] – [98]; Petrovski v Nasev; The Estate of Janakievska [2011] NSWSC 1275, [89]; A –v- N [2012] NSWSC 354; Dellios –v- Dellios [2012] NSWSC 868, [44]; Estate of Budniak; NSW Trustee & Guardian –v- Budniak [2015] NSWSC 934; Hobhouse v Macarthur-Onslow [2016] NSWSC 1831; Raoul (by his tutor Karamihas) –v- Hanna [2017] NSWSWC 728, [94]. 89
See [2012] NSWSC 1489, [40]. See also In Re Beaney [1978] 1 WLR 770. 90
The reason this enquiry is suggested is explained in McNamara v Nagel [2017] NSWSC 91, as follows: “One issue that is relevant to the determination of whether a testator had testamentary capacity is the extent of any disparity between the testamentary effect of the will in question and an earlier will made at a time when the testator clearly had testamentary capacity. If the new will involves a substantial change in testamentary intention, and the dispositions made by it are not objectively justifiable on the basis of the relationships between the testator and the potential beneficiaries, and the calls that various potential beneficiaries have on the bounty of the testator, those circumstances may support a finding that the testator did not have the capacity adequately to weigh the claims of those who may have claims on the property at that testator’s disposal”: [49]. In that matter there was a substantial departure from the earlier will but this was satisfactorily explained by the intervening death of the testator’s husband which made the earlier will “substantially redundant”: [88]. 91 [2017] NSWSC 1007, [106] – [107].
Best Practice to prevent elder financial abuse © Darryl Browne 2018
13
“In all cases instructions should be sought by non-leading questions such as: Who are your family members? What are your assets? To whom do you want to leave your assets? Why have you chosen to do it that way?”
As the following questions, specific to a power of attorney and suggested by the Queensland Law Society Ethics Centre in its Guidance Statement to witnessing enduring powers of attorney92, indicate, a blend of open and closed question, leaning heavily in favour of open questions, can be useful:
What is an Enduring Power of Attorney? Why do you want an Enduring Power of Attorney? What sort of decisions will your attorney be making for you? Can you limit the attorney’s powers if you want to? Are you able to give specific instructions to your attorney about decisions
to be made? What is the extent of the assets over which the attorney will have
control? How many attorneys can you have? Why have you selected this person to be your attorney? If you have more than one attorney, who will make decisions concerning
you or your finances? When will the attorney’s power for financial matters begin? When will the attorney’s power for personal matters begin?93 How long does the attorney’s power last? Can you change or revoke the Enduring Power of Attorney? Is there anything else that will end the attorney’s power? What would you do if you didn’t agree with the attorney’s decision?
I have marked the closed questions in italics. Four of the 15 questions are closed questions. About 75% are open questions. It is worth considering the comment made in the American Bar Association’s publication, Effective Counseling of Older Clients: The Attorney-Client Relationship (1995)94 that open-ended questions have advantages and disadvantages.
“Useful in painting the total picture of your client’s case, [open-ended] questions often pick up details that might be overlooked when responding to narrower enquiries. They do not interfere with a person’s memory flow and, therefore, enhance recollection. On the other hand, much irrelevant data will be recounted during the client’s initial open narrative, and important detail is often ignored. Open-ended questions do not generally stimulate memory as do narrower ones.”
95
4 Proof Sound procedures can assist with proof of matters that may become contentious. In that regard, practitioners should: 4.1 Take detailed notes
92
http://www.qls.com.au/Knowledge_centre/Ethics/Guidance_Statements/Guidance_Statement_No_5_–_Witnessing_Enduring_Powers_of_Attorney 93
This question is not relevant to a power of attorney made pursuant to Powers of Attorney Act, NSW. 94
This can be found at http://www.americanbar.org/content/dam/aba/administrative/law_aging/2012_aging_bookD15289_effectivecounselingolderclients.authcheckdam.pdf 95
Ibid at p18.
Best Practice to prevent elder financial abuse © Darryl Browne 2018
14
A solicitor should take detailed notes of questions asked, answers given and general observations made96. Take care to ensure it is accurate97. The following comment appears in the Law Society of NSW’s publication, When a client’s mental capacity is in doubt: A Practical Guide for Solicitors98 concerning the need to carefully record conversations and observations in doubtful situations:
It is fundamental that solicitors take thorough, comprehensive and contemporaneous file notes of any consultation with clients where mental capacity is in issue or where the solicitor is exploring this issue through questioning and by observing the client. These notes will be invaluable if the issue of mental capacity is subsequently raised in legal proceedings where the question of the client’s mental capacity is challenged. These challenges may not be made for some years after a solicitor has taken instructions, as is often the case when wills are disputed many years after they have been made. A solicitor’s notes may also be of assistance to any professional clinician who is engaged to undertake a professional assessment of the client’s mental capacity.
This is particularly important where there are circumstances which may cast doubt on the client’s mental capacity99, such as a long-standing diagnosis of dementia100, hospitalisation101, brain injury102 or other medical condition103. In Catherine Margaret Thorn, as Executrix of the Estate of the Late Betty McAuley v Ian Geoffrey Boyd [2014] NSWSC 1159 the court suggested that such a circumstance arises on learning that a person’s attorney pursuant to a power of attorney has exercised authority104. 4.2 Obtain appropriate expert opinion If time, circumstance – such as where the solicitor has a doubt about the client’s mental capacity or volition - and the client’s instructions105 allow, a solicitor should
96
This is because the “evidence of an experienced and impartial solicitor, who knew the deceased, would normally carry great weight”: Petrovski v Nasev; The Estate of Janakievska [2011] NSWSC 1275, [207]. At the very least, this may assist in obtaining a costs order even where the will is not maintained: Estate El Chami; Habib v El Chami [2016] NSWSC 1208, [52]. In Campbell, Some aspects of the practical operation relating to deceased estates, it was said the solicitor should make “an extremely detailed file note”. A good illustration of this practice is d'Apice v Gutkovich - Estate of Abraham (No. 2) [2010] NSWSC 1333, [64] – [65]. A bad example occurred in Nicholson –v- Knaggs [2009] VSC 64. The solicitor had 2 meetings with the client. The note from the first meeting contained 66 words; the notes from the second contained 53 words. The court said that the notes “barely meet the description of a record”: [628]. 97
Gray v Hart [2012] NSWSC 1435, [206]. 98
This is available at https://www.lawsociety.com.au/resources/areasoflaw/ElderLaw/index.htm. 99
See Ryan –v- Dalton; Estate of Ryan [2017] NSWSC 1007, [107(4)]. 100
dÄpice –v- Gutkovitch; Estate of Abraham (No2) [2010] NSWSC 1333, [4]; Hobhouse v Macarthur-Onslow [2016] NSWSC 1831. 101
McNamara –v- Nagel [2017] NSWSC 91, [277]. 102
Freeman –v- Brown [2001] NSWSC 1028; Glenda Phillips v James Phillips; John Matthew Phillips by his Tutor NSW Trustee & Guardian v James Phillips [2017] NSWSC 280. 103
McNamara –v- Nagel [2017] NSWSC 91, [277]. See also Mace –v- Mace [2015] NSWSC 1659. This, or any other action, alone will not protect the transaction from successful challenge: see Aboody –v- Ryan [2012] NSWCA 395, [40]. 104
[2014] NSWSC 1159, [42]. 105
There is circularity in obtaining instructions to obtain an opinion on mental capacity which may disclose that the client did not have the mental capacity to give the instructions. However, there is no obvious and easily available approach which avoids this potential circularity. In most circumstances the solicitor could rely on the presumption of sanity.
Best Practice to prevent elder financial abuse © Darryl Browne 2018
15
obtain a medical opinion about the client’s mental capacity, capacity to withstand pressure or other appropriate issue106. However, it is important to recognise that the ‘tests’ for mental capacity are legal tests, not medical tests107. Moreover, no medical skill is needed is making the assessment. Historically, where the issue needed to be resolved by a court, the assessment was left to a jury108. It is said that solicitors cannot delegate or abrogate the responsibility of assessing the client’s mental capacity109. This doesn’t mean that a medical opinion is not useful in assessing a person’s mental capacity to undertake a legal transaction; it often will be, especially one obtained contemporaneously110 from a longstanding treating doctor111 based on the existence or absence of episodic and/or autobiographical memory rather than, say, semantic memory112. If it is appropriate to obtain a medical opinion, I suggest that: 4.2.1 Initial approach to the doctor After ascertaining the appropriate medical practitioner and obtaining an authority from the client for the doctor to provide a report, I suggest that the solicitor ring the
106
In some major decisions no medical evidence has been relied on. An example is Timbury –v- Coffee [1941] HCA 22; (1941) 66 CLR 277. Whether a practitioner recommends that a medical opinion be obtained will always depend on assessment made after considering all the circumstances: Legal Services Commissioner –v- Ho [2017] QCAT 95, [27]. 107
Craig-Bridges v NSW Trustee and Guardian [2017] NSWCA 197, [133] citing Zorbas v Sidiropoulous (No 2) [2009] NSWCA 197, [65]; Guthrie v Spence (2009) 78 NSWLR 225; [2009] NSWCA 369, [196]; Simon v Byford [2014] EWCA Civ 280; [2014] WTLR 1097, [17]. See also Romascu v Manolache [2011] NSWSC 1362, [200]; Key v Key [2010] EWHC 408, [98].Re Matiasz (deceased) [2017] VSC 677, [29]. 108
In Boughton –v- Knight (1873) LR 3 P and D 64, 67 it was aid: "This is eminently a practical question, one in which the good sense of men in the world is called into action, . . It does not depend solely on scientific or legal definition". 109
Romascu v Manolache [2011] NSWSC 1362, [200] citing Key v Key [2010] EWHC 408; [2010] All ER 155, [98]. 110
Cf Manning v Hughes - Estate of Ludewig [2010] NSWSC 226, [60], [67]. In Kerr –v- Badran [2004] NSWSC 735 and Revie –v- Druitt [2005] NSWSC 902, [34], Windeyer J observed the limitation on
usefulness of expert evidence from people who had never seen the testator. Justice Campbell agreed in Campbell, Some aspects of the practical operation relating to deceased estates. The reason a contemporaneous report is suggested is explained by Leeming JA in Nominal Defendant v Smith [2015] NSWCA 339, as follows:
“Although to some it may seem counterintuitive, I see no real difference between Ms Callister wrongly but genuinely believing that she could not have missed the black vehicle, and Mr Smith wrongly but genuinely believing that he did see the black vehicle. That is the nature of human memory. Writing extra judicially (P McClellan, “Who Is Telling the Truth? Psychology, Common Sense and the Law” (2006) 80 ALJ 655) Justice McClellan has observed (at 664 and 665) that
memories are unstable and malleable and vulnerable to suggestion. I do not regard that as controversial. Nor do I read his Honour as regarding it as controversial. It is supported not merely by one’s ordinary experience but also by a body of psychological evidence: see for example Goodrich Aerospace Pty Limited v Arsic [2006] NSWCA 187; 66 NSWLR 186 at [18] - [20] and R v Gittany (No 4) [2013] NSWSC 1737 at [334] - [341].”: [82].
As to the preference for a contemporaneous opinion, in Re White; Montgomery v Taylor [2018] VSC 16 the court discounted a medical opinion of testamentary capacity because it was formed 3 weeks before the will was made. 111
Robinson –v- Spratt [2002] NSWSC 426, [41]; Nicholson –v- Knaggs [2009] VSC 64, [39]; Dickman v Holley; Estate of Simpson [2013] NSWSC 18, [152]. The advantage of a treating doctor was illustrated in McNamara –v- Nagel [2017] NSWSC 91. The evidence of both qualified geriatricians was discounted as “neither had the opportunity to interview” the testator: [303]. The evidence of the treating specialist was preferred because he met with her and assessed her as having mental capacity to make an advance care directive two days before she made the will: [319]. In Roche –v- Roche [2017] SASC 8 the court discounted the medical evidence because they had not evaluated the lay evidence about the testator’s level of functioning: [9]. See also Bailey v Bailey [1924] HCA 21; (1924) 34 CLR 558 per Knox
CJ and Starke J. However, there has been criticism in medical circles in relying on an assessment obtained in the course of a 15-minute consultation by a medical practitioner without formal training in detecting, assessing or evaluating cognitive impairment: Lonie, Assessment of Testamentary Capacity from a medical perspective, 2017. 112
Lonie, Assessment of Testamentary Capacity from a medical perspective, 2017.
Best Practice to prevent elder financial abuse © Darryl Browne 2018
16
doctor outlining the information that will be requested. Where relevant the likely time frame and cost can be ascertained. This approach should be useful in identifying any obstacles, such as the doctor’s reluctance to provide a report, or likely delay in providing the report. 4.2.2 Give the doctor the relevant information As well as informing the doctor of the legal standards against which the assessment is made, comprehensive background material should be provided. This includes:
the medical history known to the solicitor
the personal history, including, if relevant, a family tree
evidence of the client’s previous intentions, such as earlier wills and other documents
the circumstances of dependency
relevant information about the relationship with relatives or acquaintances113
the solicitor’s observations about the aged person, and
the reason the legal transaction is being undertaken by the client.
4.2.3 Identify the information that is sought Commonly, information about the patient’s medical history, details of treatment and details of medication is requested. It may be appropriate to seek the doctor’s opinion as to whether the medical condition, treatment or the medication is likely to impair the client’s ability to remember, reflect and reason, and do so in a rational way114. If that opinion is yes, the doctor should be asked to state whether the impairment is likely to be permanent or temporary – and if temporary it’s likely duration, whether it has or is likely to become worse or better, and, if so, over what period of time. Whether the response is positive or negative, the doctor should be asked for an explanation as to how the doctor has come to that conclusion, eg by reference to literature, tests, observations, experience, and so forth. As a general rule, the doctor should be asked for a copy of his or her records. Lastly, it may be useful to enquire whether there is anything else that the doctor feels that the solicitor should know. 4.2.4 Tell the doctor the legal tests If the doctor is being asked to state an opinion about the client’s mental capacity – and this will often not be appropriate - the medical practitioner will often need to be directed to the relevant legal ‘test’ for mental capacity115. Thinking that a medical practitioner can assess testamentary capacity would be like a doctor expecting a solicitor to assess frontotemporal dementia. Apart from the futility involved, there may be costs consequences for a will-drafter who fails to adequately engage the
113
The British Columbia Law Institute publish a guide which contains these suggestions. It can be found at http://www.bcli.org/sites/default/files/undue%20influence_guide_final_cip.pdf, accessed 7 January 2017, at 41. 114
Estate Stojic, Deceased [2017] NSWSC 168 citing King v Hudson [2009] NSWSC 1013, [50] - [51]; Dickman v Holley; Estate of Simpson [2013] NSWSC 18, [159]; Estate of George Aeneas McDonald [2015] NSWSC 1610, [53] - [70]. This description originated with Myers J (writing extra-judicially in the Australian Bar Gazette 1967 Vol 2 p 3): Petrovski v Nasev; The Estate of Janakievska [2011] NSWSC 1275, [253]. 115
An example where a medical report may not be useful where this does not occur is Estate El Chami; Habib v El Chami [2016] NSWSC 1208, [31] – [32]. Lindsay J referred to the medical report stating: “It is my view that [the deceased] is physically unable but mentally able to make any informed life decisions” and observed that the doctor’s “mind was not specifically focused upon whether, at a particular time, the deceased had the requisite mental capacity to give instructions for the making of a will, or to execute, a will”. See also Barakett –v- Barakett [2016] NSWSC 1257, [20] and Re Kensall [2016] VSC 724, [92]. In Re White; Montgomery v Taylor [2018] VSC 16 the court discounted a medical opinion of testamentary capacity because the medical practitioner did not appreciate the elements of testamentary capacity: [62].
Best Practice to prevent elder financial abuse © Darryl Browne 2018
17
medical practitioner116. Also, because “cognitive failure does not of itself mean that there is no capacity to make a will”117, general observations about mental capacity may not assist. In this context it should be observed that it is not surprising that a medical practitioner needs to be directed to the relevant legal ‘test’ for mental capacity as medical practitioners are trained to diagnose and treat118 medical conditions, not make an assessment of mental capacity according to legal tests119. This means that tests about medical capacity which are routinely performed by medical practitioners for the purpose of diagnosis, such as orientation to time and place, or the Mini-Mental test120, are generally not helpful in assessing mental capacity in the legal context. After all, a person may not know who the Prime Minister is121 or be unable to draw a clock face but understand the broad operation of a power of attorney when it is explained122. The opposite is also true123.
116
In Re Oliver (dec’d) [2016] QSC 264 the Public Trustee of Queensland did not obtain its costs for “propounding a will which it could not prove because of its own default in documenting, by its solicitor and by the doctor it contracted at the time of making the will”: [9]. 117
Loupos v Demirgelis [2008] NSWSC 1207, [55]. 118
It was observed in Patel v The Queen [2012] HCA 29 that “[t]reatment is "[m]anagement in the application of remedies; medical or surgical application or service." It is "[t]he course of action adopted to deal with illness, and the control of the patient." It is "management in the application of medicines, surgery, etc." It is "medical care for an illness or injury." The process involved in "management", a "course of action" or "medical care" is a process which includes typical steps like taking a history, assessing symptoms, conducting a physical examination and procuring tests. Then, often later, the process can involve diagnosing the relevant condition, and giving advice as to how to deal with it, as well as carrying out any surgical or medical procedures, or supplying any drugs or medicines, conforming to that advice”: [136] (citations omitted). 119
It has been said in the High Court that, in general terms, "(a) doctor offers a patient diagnosis, advice and treatment", the objectives of which are "the prolongation of life, the restoration of the patient to full physical and mental health and the alleviation of pain" Sidaway v Governors of Bethlem Royal Hospital [1985] UKHL 1; (1985) AC 871 at 903; Rogers v Whitaker [1992] HCA 58; (1992) 175 CLR 479 at 483; Breen v Williams ("Medical Records Access case") [1996] HCA 57; (1996) 186 CLR 71, [9] per Gaudron and McHugh JJ. 120
In Dementia and the cognitive requirements of Banks v Goodfellow: a review of the literature, Jane
Lonie and Kelly Purser state that “MMSE (Folstein, Folstein, & McHugh, 1975) provides an indication of whether or not a testator’s overall level of functioning is less good than it should be, on average, for his/her age. It does not allow for the reliable determination of a testator’s capabilities in different areas of cognitive function (as set out within the neurocognitive disorders section of the DSM-V). This is the case even for a number of alternative more comprehensive cognitive screening measures such as the Addenbrooke’s Cognitive Examination-III (ACE-III; Hsieh et al., 2013) and the Montreal Cognitive Assessment (MOCA; Smith et al., 2007), which comprise subscale scores for specific areas of cognitive functioning…As noted by Shulman et al (2007), ‘Someone who scores 27/30 on the MMSE may lack capacity because of impaired judgment and reasoning due to frontal lobe impairment, which is not tested by the MMSE’. In light of the well-documented insensitivity of the MMSE to executive impairment and its widespread use in capacity evaluation, it is concerning to note that executive functions are widely held (Shulman et al., 2009; Sousa et al., 2014) to represent the most crucial area of cognitive function in testamentary capacity”. In Legal Incapacity and expert opinion evidence, Coyne and Miller state that:
“The MMSE is the most commonly used test of general cognitive capacity. It is a particularly blunt instrument and lacks the specificity required to ascertain capacity in particular areas of decision-making”. 121
In Gray v Taylor; The Estate of the late Stanislaw Zajac [2017] NSWSC 4 the court riley observed
that “This question has become harder to answer in recent years”: [179]. 122
In Manning v Hughes - Estate of Ludewig [2010] NSWSC 226 White J found that the testator suffered short term memory loss, was regularly disoriented as to time and had poor insight by retained testamentary capacity: [12] – [14]. 123
In Legal Incapacity and expert opinion evidence, Coyne and Miller state that: “Just because an individual performs poorly on, say, neuropsychological tests for Executive Functioning does not mean that they cannot make a reasoned decision about a specific issue, such as making a Will. Equally, just because they performed well on such tests it does not follow that they have the capacity to make a reasoned decision about a specific legal issue”.
Best Practice to prevent elder financial abuse © Darryl Browne 2018
18
If a solicitor is directing a doctor’s attention to the relevant ‘tests’, it is highly recommended that reference be made to the legal tests explained by the High Court and the Court of Appeal124. There is also merit in drawing the medical practitioner’s attention to the recommended procedures referred to at items 1 to 3 of this paper, as these hold true for a doctor as much as a solicitor. 4.2.5 Understand the doctor’s role Even if a medical practitioner is asked for an opinion about the client’s mental capacity, doctors should not explain the legal transaction. Accordingly, a doctor probably can’t directly comment on whether the client understood the legal transaction. If the relevant issue is mental capacity, the doctor should report on the client’s ability to have the requisite understanding after explanation. The solicitor must provide the explanation. However, the following summary gives an example of the comments which a medical practitioner has the qualifications to make which will then enable the solicitor to better form the necessary opinion about the client’s mental capacity:
the main thrust of [the doctor’s] opinion [was] that the evidence of [the testator’s] forgetfulness, lack of insight, inability to hold a complex conversation, and a certain degree of paranoia, indicate that she suffered both from a loss of memory and frontal lobe disease that impaired her cognitive functions… Dr Rosenfeld said that the frontal lobe is a critical aspect of being able to think and understand the recollection of things. He said that it was the seat of executive function and to be able to do the job it is meant to do, it has to be able to take in information, interpret it and hold that information in the brain whilst taking in other bits of information and comparing them. He said that one of the earliest features in frontal lobe dysfunction is the inability to hold different disparate bits of information and hold them there in a useful manner to be able to compare them.
125
In Roche –v- Roche [2017] SASC 8 the expert consultant’s evidence was that the deceased’s frontotemporal dementia affected his executive planning capacity, power to concentrate and left him uninhibited126. The court noted that the test for testamentary capacity was concerned with whether the testator comprehends the extent of their estate, the competing claims on that estate and the practical legal effect of the disposition. The court found that the testator had testamentary capacity at the time of his last will. On the other hand, a medical report which does not provide
124
For a will this is the test explained in Banks v Goodfellow (1870) LR 5 QB 549; Timbury v Coffee [1941] HCA 22; (1941) 66 CLR 277 and, in more modern language, Read v Carmody [1998] NSWCA 182. For every other legal action, it is the test contained in Gibbons v Wright [1954] HCA 17; (1954) 91 CLR 423, [7] – [8]. 125
Manning v Hughes - Estate of Ludewig [2010] NSWSC 226, [66]. The court then drew the conclusion
that it could not be satisfied that the testator had testamentary capacity. An explanation of the relevance of this report appears from the comments in Dementia and the cognitive requirements of Banks v Goodfellow: a review of the literature where Jane Lonie and Kelly Purser explain that “Executive functioning is said to comprise the cognitive functions of planning and decision making, working memory (or the ability to hold information in mind whilst mentally manipulating it), responding to feedback/error correction (the ability to adapt or alter a usual pattern of behavior in accordance with a changed environment), overriding habits/inhibition (the ability to hold back or override a primed response), mental flexibility (the ability to think in different ways about something or to change one’s line of thinking) and initiation (the ability to generate thoughts or action) (DSM-V, 2013). In clinical practice, the ability to reason about things in abstract or hypothetical terms, is another commonly assessed executive function. In dementia, when the capacity for abstract thought is lost, thinking becomes increasingly stimulus bound, concrete and literal”. 126
[2017] SASC 8, [474] – [480].
Best Practice to prevent elder financial abuse © Darryl Browne 2018
19
material which is useful medical evidence but merely information which any astute questioner, including the client’s solicitor, could elucidate, is not helpful127. It is said that the medical practitioner must have appropriate knowledge and skill to provide an evidence-based assessment and a reasoning base for their opinion128. As well as reporting on matter going to a person’s mental capacity, medical reports may be useful in assessing a client’s vulnerability to undue influence129. 4.2.6 Understand the opinion provided It is important to not be mislead by medical terms which are inconclusive about medical capacity. For instance, a statement that a client has dementia may not be useful in assessing mental capacity for a particular transaction at a particular time. This is because “[d]ementia is a term that describes a number of different diseases characterised by ‘impairment of brain functions, including language, memory, perception, personality and cognitive skills’”130. There are many different forms of dementia, ranging from Alzheimer’s disease, dementia with Lewy Bodies, fronto-temporal lobe dementia, vascular dementia, Parkinson’s disease, sundowner’s syndrome and many others. A diagnosis of dementia says nothing about the specific impairment (or otherwise) which is relevant to the particular transaction. Also, mild neurocognitive disorder (or MCI) is a slight predictor of dementia (which could be described as major neurocognitive disorder) – the conversion rate is between 30 and 40% - but no more. So, in Roche –v- Roche [2017] SASC 8, the testator had frontotemporal dementia but possessed testamentary capacity at the time he made his last will. Similarly, inconclusive comments are that a patient is ‘alert’ – meaning awake and not drowsy (such as may be the result of medication) – or oriented – meaning that the person knows the date and location131. These types of comments don’t directly assist the critical assessment of mental capacity for a particular task at a particular time. In this context the following comments have been made by medical practitioners, McSwiggan, Meares and Porter, in Decision-making capacity evaluation in adult guardianship: a systematic review132:
Decision-making capacity is generally conceptualized as the ability to understand the scope of the decision, appreciate that the decision relates to your circumstances, and the ability to reason through the possible choices and to communicate those choices
133.
127
An example is found in In the matter of an application pursuant to Part 2 (sections 21 to 28) of the Succession Act 1981 (Qld) for the authorisation of the making of a Will on behalf of MPL [2016] QSC 61, [21]. 128
Lonie, Assessment of Testamentary Capacity from a medical perspective, 2017. 129
See Nicholson v Knaggs [2009] VSC 64, [364]; Petrovski v Nasev; The Estate of Janakievska [2011] NSWSC 1275, [295]; Tobin v Ezekiel; Estate of Lily Ezekiel [2011] NSWSC 81, [34]; but compare Hobhouse v Macarthur-Onslow [2016] NSWSC 1831, [329] and the VLRC’s report on Succession Law,
[2.24]. 130
This appears in Elder Abuse – A National Response [2.18] quoting Australian Institute of Health and Welfare, Dementia in Australia (2012) 2. 131
This is a feature of immediate memory which, unlike working memory, is not a strong indicator of mental capacity: Lonie, Assessment of Testamentary Capacity from a medical perspective, 2017. 132
The article is available at https://www.cambridge.org/core/journals/international-psychogeriatrics/article/decision-making-capacity-evaluation-in-adult-guardianship-a-systematic-review/60179F547B339A60905FB33CFA506F64 (accessed 31 December 2017) 133
file:///C:/Users/user/AppData/Local/Packages/Microsoft.MicrosoftEdge_8wekyb3d8bbwe/TempState/Downloads/dmcreviewarticle[661].pdf (accessed 31 December 2017) p10 citing Moberg, P. J. and Kniele, K. (2006). Evaluation of competency: ethical considerations for neuropsychologists. Applied Neuropsychology, 13, 101–114.; Lai, J. and Karlawish, J. (2007). Assessing the capacity to make
Best Practice to prevent elder financial abuse © Darryl Browne 2018
20
…decision-making capacity is not a global, “all or nothing” status but rather a situation-specific functional definition
134…medical diagnoses alone do not predict
impaired decision-making capacity 135
…no single neuropsychological test, cognitive domain or psychiatric presentation consistently predicts a lack of capacity
136.
Documenting the person’s ability to understand, appreciate, reason and communicate the decisions under review, taking note of their values and preferences, has been found to be a more reliable method of assessing decision-making capacity than providing medical information alone
137.
An assessment of the following factors relevant to the third (and fourth limbs) of the Banks –v- Goodfellow test will be useful for testamentary capacity, but probably less so for mental capacity for other legal transactions:
abstract reasoning ability
problem solving ability
theory of mind
autobiographical recall
ability for multiple evaluation
inhibition
insight
complex receptive language skills
recent memory
future thinking
Self-monitoring and reality testing138.
4.2.7 Summary including suggestion to check the reply The Law Society has developed draft letters to be sent to a doctor seeking information relevant to the solicitor’s assessment of mental capacity. However, the following should be born in mind in relation to the use of those letters: 1. the solicitor should obtain instructions to write to the client’s doctor, and, if those
instructions are forthcoming, obtain a signed authority for the doctor to provide the information sought by the solicitor; 2. the letters should not be relied upon as adequate in ALL circumstances. The
letters should not be used by a practitioner without considering the particular circumstances relating to the particular client; 3. the solicitor should factor in the potential for delay while waiting for a response from the doctor, and act accordingly if there is the need for prompt action;
everyday decisions: a guide for clinicians and an agenda for future research. Americal Journal of Geriatric Psychiatry, 15, 101–111. 134
Ibid at p2 citing Anderer, S. (1990). A model for determining competency in guardianship proceedings. Mental & Physical Disability Law Reporter, 14, 107–114; Sabatino, C. and Basinger, S. (2000). Competency: reforming our legal fictions. Journal of Mental Health and Aging, 6, 119–143.; Peisah, C., Forlenza, O. and Chiu, E. (2009). Ethics, capacity, and decision-making in the practice of old age psychiatry: an emerging dialogue. Current Opinion in Psychiatry, 22, 519–521. 135
Ibid at p2 citing Okai, D., Owen, G., McGuire, H., Singh, S., Churchill, R. and Hotopf, M. (2007). Mental capacity in psychiatric patients. British Journal of Psychiatry, 191, 291–297; Moye, J., Gurrera, R., Karel, M., Edelstein, B., and O’Connell, C. (2006). Empirical advances in the assessment of the capacity to consent to medical treatment: clinical implications and research needs. Clinical Psychology Review, 26, 1054–1077; van Staden, W. (2009). Acceptance and insight: incapacity to give informed consent. Current Opinion in Psychiatry, 22, 554–558. 136
Ibid at p2 citing Okai et al., 2007; Palmer, B. and Savla, G. (2007). The association of specific neuropsychological deficits with capacity to consent to research or treatment. Journal of the International Neuropsychological Society, 13, 1047–1059; Moberg, P. J. and Rick, J. (2008). Decision-making capacity and competency in the elderly: a clinical and neuropsychological perspective. Neurorehabilitation, 23, 403–413. 137
Ibid at p10. 138
Lonie, Assessment of Testamentary Capacity from a medical perspective, 2017.
Best Practice to prevent elder financial abuse © Darryl Browne 2018
21
4. the solicitor should not rely on the doctor’s opinion alone – the solicitor should
assess mental capacity, but the doctor’s opinion may assist the solicitor reach a conclusion in that regard; 5. if the client is very elderly or ill or about to travel overseas or if there is any other reason to anticipate that they may die or lose mental capacity, the solicitor should not delay the making of the will; 6. the solicitor should generally proceed to make a will if the client’s instructions are
sufficiently clear and consistent (or promptly decline to accept instructions if they aren’t, especially if the client declines to provide an authority to obtain relevant information from the client’s doctor); 7. the solicitor should not proceed to make a power of attorney if he/she has doubts
about mental capacity; an application for a financial management order should be considered in that situation, and made if there is an immediate need for such an appointment; and 8. when a reply is received from the doctor, the solicitor should carefully consider
the doctor’s report to ensure that it has addressed the issues most useful to the solicitor’s assessment of the client’s mental capacity139. If it doesn’t, the solicitor may need to contact the doctor to clarify the situation. 4.3 Keep the records A solicitor should retain file notes and any medical report indefinitely. This is because the necessity for proof can arise many years after the legal work is performed. An example is Hookway v Hookway [2017] TASFC 4. In June 2006 and July 2006 Peter Hookway made wills. He died in July 2006 survived by a son and daughter. In September 2006 probate was granted. The second will, but not the first, contained a gift of valuable real estate to a discretionary trust for the testator’s grandchildren. The children were the trustees of the trust and had an informal arrangement that the trust property was to be held as to 50 per cent for the benefit of the son’s two children, and 50 per cent for the benefit of the daughter’s child. In 2012 there was a falling out between the siblings. As a result of the falling out, the son no longer agreed to maintain the informal arrangement. In 2015, some nine years after her father’s death and the grant of probate, the daughter brought proceedings for the revocation of the grant of probate of the second will, and a grant for the first will which did not contain a discretionary trust. The Court concluded that the testator lacked testamentary capacity to make the second will. As probate is a public act, and the ultimate purpose of the court is to ensure the due and proper administration of the estate and the interests of the parties beneficially entitled to it, the delay of nine years and the daughter’s conduct in the interim140 did not present an obstacle to revocation of the grant. Apart from meeting the relatively unusual facts of Hookway, the suggestion to retain file notes indefinitely is made because the need for evidence of mental capacity can arise many years after the legal work is performed. An example is Commonwealth v Cornwell [2007] HCA 16; (2007) 234 ALR 148; 81 ALJR 933. In 1999 Cornwell commenced proceedings asserting that the Commonwealth was vicariously liable for the advice given to him by an employee in 1965 which, by relying upon the advice, had meant that he had ‘lost the opportunity of joining the Commonwealth
139
See Glenda Phillips v James Phillips; John Matthew Phillips by his Tutor NSW Trustee & Guardian v James Phillips [2017] NSWSC 280 140
The daughter’s actions as a co-executor included distributing bequests to beneficiaries, defending proceedings, selling real estate, settling insurance claims, making payments of liabilities, spending money on repairs, pursuing a claim for compensation, purchasing a property for the testator’s partner, entering into leases and filing taxation returns. It was considered that these actions didn’t amount to acquiescence, an estoppel, abuse of process, laches or the like. [10].
Best Practice to prevent elder financial abuse © Darryl Browne 2018
22
Superannuation Fund on and from… 1965 and in consequence upon his retirement on 31 December 1994 received a lesser benefit than that which he would have received had he been admitted to the Fund on and from… 1965’. The High Court determined that the claim was not statute barred. A similar issue could have arisen if Cornwell had made a will in 1965 and died in 1994. In Estate of Beryl Lee Hordern (Deceased); Homersham v Carr [2017] NSWSC 753, even though most of the file was destroyed ‘in the ordinary course after seven years’, some parts of the file were retained ‘because of their importance to the question of the deceased’s testamentary capacity’. If it is not feasible to retain the whole file – which is the better situation, there is much to be commended about this alternative. The End Darryl Browne
