Wilkinson Kate: Protection of Personal and Property Rights  Amendment Bill — First Reading 
Wilkinson Kate: Protection of Personal and Property Rights  Amendment Bill — First Reading 
[Volume:636;Page:7037] 
KATE WILKINSON (National) 
: 
 In speaking to this Protection of Personal and Property Rights Amendment Bill which in the industry is referred to colloquially as the Triple PR Act I think it is interesting to backtrack as to why the principal Act was originally enacted in 1998. 
The Protection of Personal and Property Rights Act basically provides for enduring powers of attorney to be given in relation both to property and to personal care and welfare. Before that Act powers of attorney could be granted but not enduring ones. In other words a general power of attorney would be limited to the extent that the attorney could do only what the donor could do. The general law of agency is that an agent may not have powers greater than those of the agent’s principal. The difficulty with this was that if the donor lost the mental ability and therefore ceased to have the capacity to perform the delegated acts—sign documents etc.—then the attorney’s powers also came to an end. This would mean for example that the power of attorney given by an elderly person may effectively cease in the very situation in which it is needed. 
The Protection of Personal and Property Rights Act was born enabling the power of attorney to continue notwithstanding the donor’s capacity. Enduring powers of attorney as we have stated can now be granted in two situations—for personal care and welfare in which case only one attorney is appointed and for property for which one or more attorneys can be appointed. Of course any enduring power of attorney can be revoked by the donor but obviously only as long as the donor has the mental capacity to do so. 
If no power of attorney is granted and a person becomes unable to manage his or her own affairs then an application to the court for a manager or a welfare guardian to be appointed is required obviously at additional cost and delay. So prudently enduring powers of attorney would be granted at minimal cost. This does not relate just to vulnerable elderly persons. Any one of us could have a car accident or lose capacity even temporarily and an enduring power of attorney enables the affairs of that person to be continued throughout such incapacity. So enduring powers of attorney are not tools just for the elderly. 
It is also important to appreciate that under a power of attorney the attorney can do anything the donor can or could do. So he or she can mortgage property sell the family home make decisions as to personal care borrow money and spend money. The powers are wide ranging and the choice of attorney no matter what protections have been put in place under this bill is still vital. The attorney must be someone who is trusted. Most can be trusted but unfortunately some cannot. 
The Minister the Hon Ruth Dyson has referred to the Law Commission report of 2001 entitled  
Misuse of Enduring Powers of Attorney 
. That paper referred to an absence of effective safeguards. Some of the problems that have been addressed in this bill and which were included in that report include that there is no monitoring of whether on signing the power of attorney the donor has the capacity to understand the effect of what was signed. There is no requirement for independent legal advice. There is no machinery to ensure that the donor is informed of the donor’s right of revocation. There is no requirement to file accounts and no independent monitoring of the acts of the attorney. There is no monitoring of the classification of a donor as mentally incapable which triggers the personal care and welfare powers and also can trigger the powers to act under a properly enduring power of attorney if so worded. The problems also include the powers of the Family Court to intervene and the understandable reluctance by donors to take court proceedings against children or other family members who have misused their powers. 
There is no doubt that some abuse of enduring powers of attorney has occurred especially with vulnerable elderly persons. They can be taken advantage of—sometimes by their own family—but we must remember that this bill is to protect any vulnerable person not just the elderly. It is important that any vulnerable person young or old who does not have mental capacity has the confidence that he or she is being protected and looked after by the law as much as is reasonably and practicably possible. 
As the commission reports a deed granting an enduring power of attorney is valid only if the donor understands what he or she is signing. Accordingly the bill prescribes how an enduring power of attorney should be created. It must now not only be in the prescribed form but be certified by a witness who must be independent of the donor and be a lawyer or an officer or employee of a trustee corporation. Previously anyone could be a witness. 
The signature of the attorney must be witnessed by a person other than the donor’s witness so we have two witnesses now as opposed to previously having one. The onus on the witness is harder because the witness must certify that he or she has no reason to suspect that the donor was mentally incapable at the time the enduring power of attorney was executed and signed. This will or may add to the cost of an enduring power of attorney but it certainly is a prudent step to ensure that the enduring power of attorney was properly and validly created in the first place. 
The bill makes some changes and additions to the interpretation of when a donor is mentally incapable by stating in new section 94(1) in clause 7 that “the donor of an enduring power of attorney is mentally incapable in relation to property if the donor is not wholly competent to manage his or her own affairs in relation to his or her own property.” In relation to personal care and welfare new section 94(2) states that a person “is mentally incapable … if the donor … (a) lacks the capacity—(i) to make a decision about a matter relating to his or her personal care and welfare; or (ii) to understand the nature of decisions about matters relating to his or her personal care and welfare; or (iii) to foresee the consequences of decisions about matters relating to his or her personal care and welfare …; or (b) wholly lacks the capacity to communicate decisions about matters relating to his or her personal care and welfare.” 
Enduring powers of attorney in relation to property can be expressed to take effect only in the event of mental incapacity or they can take effect from the date of signing. Enduring powers of attorney in relation to personal care and welfare however do not have that option and take effect for obvious reasons only in the event of mental incapacity. 
It is important that there is some objective test of mental capacity and the requirement in the bill for a relevant health practitioner to certify such lack of mental capacity before an attorney may act for a donor is a sensible protection for both the donor and also the attorney. There is a common-sense exception to this as has been mentioned by the Minister relating to personal care and welfare matters that are not significant. 
There is one other issue I would like to highlight and that is in relation to the power of attorney to be able to make gifts. Clause 16 basically enables the court to “authorise the attorney to make any loan or advance of the donor’s property subject to any conditions that the Court considers appropriate:”. The issue I have which I hope will be discussed at select committee is whether the attorney can continue regular gifting in accordance with normal estate planning asset protection gifting programmes. 
We all know that it is common practice for a variety of reasons for say a family home to be transferred to a family trust. It is effectively sold to that trust at its market value and the purchase price is lent to the trust to be reduced year by year at the rate of $27000 per 12 months that being the maximum amount allowable before gift duty is payable. There is uncertainty as to whether that gifting can be continued by an attorney and whether it should be able to be continued without the necessity of a court order if it is part of the regular gifting programme. This is an issue that I would like submitters and the select committee to consider from a practical pragmatic point of view. 
Many issues relating to enduring powers of attorney arise after a donor’s mental capacity has gone and the family is often left to decide what is in the best interests of that donor and what he or she would have wanted. In many circumstances the families themselves cannot agree—they disagree—and although applications to the court to try to resolve such disagreements are an option it is an expensive one. 
A common problem as highlighted by the Law Commission’s report is that of disputes between a child appointed as attorney and siblings of that child who are not appointed as attorney. As the report states: “Enduring powers of attorney (like wills) do not always bring out the best in people.” How we avoid that is difficult and not specifically addressed in the bill. 
Another problem highlighted is the high-handedness or bossiness in a failure by an attorney to ascertain the wishes of the donor—for example by selling the home of an institutionalised donor against the wishes and sometimes without even the knowledge of the donor. Although limiting the powers of attorney in such cases may be seen as an option it would be at the expense of often needed flexibility. At the end of the day an attorney who is appointed by anyone must be someone whom the donor absolutely trusts. The choice of attorney is vital. 
This bill follows many of the Law Commission’s recommendations. It addresses some of the concerns in relation to the misuse or abuse of enduring powers of attorney. National supports the bill.