VICTORIAN CIVIL AND ADMINISTRATIVE TRIBUNAL
human rights DIVISION
GUARDIANSHIP LIST	
vcat reference NoS. G93618 & G93619
	
CATCHWORDS	
Guardianship List – application for compensation – whether the attorney contravened a provision of the Act when acting under the power – whether any contravention caused a loss to the principals’ estates – conflict transactions – whether the principal had capacity to have authorised the conflict transactions – decision-making capacity presumed unless there is evidence to the contrary – Powers of Attorney Act 2014 (Vic) – sections 77, 63, 65, 4.	

Represented persons	The estates of FJN and MNG	
WHERE HELD	Melbourne in person	
BEFORE	Acting Deputy President B. Hoysted	
HEARING TYPE	Hearing	
DATE OF HEARING	18 December 2023	
DATE OF ORDER	28 March 2024	
date of written reasons	5 April 2024	
citation	FJN (Guardianship) [2024] VCAT 310	

OrderS
G93618 [FJN]
About the application
On 05 January 2015 the principal, Estate of FJN, made an enduring power of attorney for financial matters. WQS was appointed as attorney.
YVS applied to VCAT for an order that the attorney WQS compensate the principal for a loss.
VCAT extended the time for making this application to the date of the application, as allowed under section 126 of the Victorian Civil and Administrative Tribunal Act 1998.
VCAT orders that:
The Attorney WQS must now pay Principal’s estate the sum of $90,755.76 being half the total amount ordered – $181,511.52 – to be paid by WQS to the joint estate of FJN and MNG.
VCAT makes this order because it is satisfied that:
-	The attorney WQS contravened (did not comply with) section 63(1)(a), (b), (c) and (d) of the Power of Attorney Act 2014 when acting as an attorney under the above power.
-	The Principal has suffered loss of $90,755.76 which was caused by this contravention
G93619 [MNG]
About the application
On 05 January 2015 the principal, Estate of MNG, made an enduring power of attorney for financial matters. WQS was appointed as attorney.
YVS applied to VCAT for an order that the attorney WQS compensate the principal for a loss.
VCAT extended the time for making this application to the date of the application, as allowed under section 126 of the Victorian Civil and Administrative Tribunal Act 1998.
VCAT orders that:
The Attorney WQS must now pay Principal’s estate the sum of $90,755.76 being half the total amount ordered – $181,511.52 – to be paid by WQS to the joint estate of MNG and FJN.
VCAT makes this order because it is satisfied that:
-	The attorney WQS contravened (did not comply with) section 63(1)(a), (b), (c) and (d) of the Power of Attorney Act 2014 when acting as an attorney under the above power.
-	The Principal has suffered loss of $90,755.76 which was caused by this contravention

B. Hoysted
Acting Deputy President			
APPEARANCES:		
For the Applicant:	Ms D Foy of Counsel	
For YVS: 	In Person	
For the Respondents:	Mr A Klotz of Counsel	
For WQS: 	In person	
For TYS: 	In person	
For EQX:	In person	

Reasons
The Victorian Civil and Administrative Tribunal (VCAT) is providing these reasons on a confidential basis. Clause 51AJ of Schedule 1 of the Victorian Civil and Administrative Tribunal Act 1998 provides that unless VCAT orders otherwise, a person must not publish or broadcast any report of a proceeding under the Powers of Attorney Act 2014 Vic) that identifies or could lead to the identification of a party to the proceeding.
1.	This proceeding related to the estates of a husband and wife who had both executed identical Powers of Attorney. They both died in 2019. In these written reasons for decision, the husband is referred to as FJN (VCAT reference G93618) and the wife as MNG (VCAT reference G93619). Collectively they are referred to as ‘the principals’. VCAT has allocated those random initials to keep their identities confidential. 
2.	For the same reasons, that is to protect their identities, I refer to others involved in the proceeding, as follows:
a.	YVS is the applicant daughter of FJN and MNG;
b.	WQS and TYS, the respondents, are the former attorneys and sons of FJN and MNG; and
c.	EQX is the principals’ second daughter. 
3.	YVS applied to VCAT for orders of compensation made under section 77 of the Powers of Attorney Act 2014 (Vic) (the POA Act) naming her two brothers as respondents.
4.	The principals had executed two Enduring Powers of Attorney – the first, on 25 February 2011 (the 2011 POA) under which they each appointed their sons, jointly and severally. The second POA (the 2015 POA) was executed on 5 January 2015 under which the principals revoked the 2011 POA and appointed WQS as their sole attorney.
5.	In her Points of Claim dated 20 February 2023, the applicant identifies twenty-seven transactions as being ‘improper’ (the impugned transactions). The first of the impugned transactions was conducted on 12 January 2016 and the last on 31 October 2019.
6.	In her opening submissions, Ms D Foy of Counsel for the applicant submitted that the application included an application for a declaration about the validity of the 2015 POA. Mr A Klotz of Counsel objected on the basis that the Points of Claim were limited to the claim for compensation. Ms Foy conceded that the claim was limited to compensation and the hearing proceeded on that basis. 
7.	Both matters were heard together. The hearing was conducted, in-person, on 18 December 2023. An accredited Macedonian-speaking interpreter was present and interpreted for those who required his assistance. By agreement, the parties filed and served their closing submissions by 20 December 2023 and my decision was reserved to be provided with these written reasons which are written from my review of my notes taken at hearing and a review of the documentation filed.
DOCUMENTS
8.	The following are the documents relied upon and referred to by Counsel at hearing and considered by me in deciding this matter:
a.	Application dated 14 May 2021;
b.	Enduring Power of Attorney executed on 25 February 2011;
c.	Enduring Power of Attorney executed on 5 January 2015;
d.	Affidavit of YVS sworn 19 November 2021;
e.	Applicant’s Points of Claim dated 20 February 2023;
f.	Respondents’ Points of Defence dated 3 April 2023;
g.	Applicant’s witness statement dated 7 May 2023;
h.	EQX’s witness statement dated 17 November 2023;
i.	TYS’s witness statement dated 17 November 2023;
j.	WQS’s witness statement dated 17 November 2023;
k.	Closing submissions on behalf of applicant dated 20 December 2023; and
l.	Closing submissions on behalf of respondents dated 20 December 2023.
THE LAW ABOUT COMPENSATION
9.	The claim was brought under section 77 of the POA Act which states:
77	Compensation for acts of attorney
(1)	The Supreme Court or VCAT may order an attorney under an enduring power of attorney to compensate the principal for a loss caused by the attorney contravening any provision of this Act relating to enduring powers of attorney when acting as attorney under the power of attorney.
(2)	Subsection (1) applies—
(a)	even if the attorney is convicted of an offence in relation to the attorney's contravention; and
(b)	even if the principal has died, in which case compensation is payable to the estate of the principal; and
(c)	even if the enduring power of attorney is invalid or has been revoked or, at the time of the contravention, was invalid or had been revoked.
10.	There are two elements to a claim for compensation under this section. The applicant must show that:
a.	the attorney contravened a provision of the POA Act when acting under the power of attorney; and
b.	the contravention caused a loss to the principals’ estate.
11.	The attorney’s obligations under section 63 are as follows:
63	Duties of attorney
(1)	An attorney under an enduring power of attorney—
(a)	must act honestly, diligently and in good faith; and
(b)	must exercise reasonable skill and care; and
(c)	must not use the position for profit, unless permitted under section 70; and

(d)	must avoid acting where there is or may be a conflict of interest unless the attorney is authorised by the power, the principal or VCAT; and
(e)	must not disclose confidential information gained as the attorney under the power unless authorised by the power or by law; and
(f)	must keep accurate records and accounts as required by section 66.
(2)	Nothing in this section is to be taken to affect any duty an attorney has at common law.
12.	Sections 64-67 and 70 explain in more detail the relevant attorney's obligations:
64	Conflict transactions
(1)	An attorney for financial matters under an enduring power of attorney has a duty not to enter into a transaction in that capacity if the transaction is one in which there is or may be a conflict between—
(a)	the duty of the attorney to the principal; and
(b)	the interests of the attorney, or a relative, business associate or close friend of the attorney.
(2)	Subsection (1) does not apply—
	(a)	to a gift made in accordance with section 67;
…
65	Permitted conflict transactions
(1)	Despite section 64, an attorney for financial matters under an enduring power of attorney may enter into a conflict transaction if the principal, before the time of the transaction, authorises the attorney to enter into—
(a)	the transaction; or
(b)	the kind of transaction; or
(c)	conflict transactions generally.
(2)	Despite section 64, an attorney for financial matters under an enduring power of attorney may continue a conflict transaction that the attorney has entered into and that is not completed, if—
(a)	the principal validates the entering into of the transaction; and
(b)	at the time of validation the principal has decision making capacity for the transaction.
(3)	Despite section 64, the principal under an enduring power of attorney may validate a conflict transaction an attorney for financial matters under an enduring power of attorney has entered into that has been completed if, at the time the principal gives the validation, the principal has decision making capacity for the transaction.
…
66	Keeping records
An attorney under an enduring power of attorney must keep accurate records and accounts of—
(a)	all dealings and transactions made for financial matters; and
(b)	all material dealings and transactions made for personal matters.
67	Gifts
(1)	Subject to any condition or restriction stated in an enduring power of attorney, an attorney for financial matters under the power of attorney may make a gift of the principal's property only if—
(a)	the gift is reasonable having regard to all the circumstances and, in particular, the principal's financial circumstances; and
(b)	the gift is—
(i)	to a relative or a close friend of the principal and is of a seasonal nature or for a special event; or
(ii)	a type of donation that the principal made when the principal had decision making capacity for the matter or that the principal might reasonably be expected to make.
(2)	A gift may be made under subsection (1) even though the gift is made to—
(a)	the attorney; or
(b)	a relative or close friend of the attorney; or
(c)	an organisation with whom the attorney has a connection.
(3)	An attorney must keep a written record of any gift by the attorney—
(a)	that is made to—
(i)	the attorney; or
(ii)	a relative or close friend of the attorney; or
(iii)	an organisation with which the attorney has a connection; and
(b)	the total value of which is of or over—
(i)	the prescribed amount; or
(ii)	if an amount has not been prescribed, $100.
(4)	A record kept under subsection (3) must set out the amount of the gift and the person or organisation to whom it has been made.
…
70	Remuneration of attorney
An attorney under an enduring power of attorney is not entitled to any remuneration unless it is specifically authorised by the enduring power of attorney or by law.
THE STANDARD OF PROOF
13.	The standard of proof in this matter is on the balance of probabilities. As stated by Justice Garde, a previous President of VCAT, in the case of GLS v PLP [2013] VCAT 221 where there are serious allegations made, then it is accepted that the principles of Briginshaw v Briginshaw [1938] HCA 34 apply.
14.	His Honour said that ‘...strong evidence is required – clear and cogent – assessed with care and caution’.
THE CLAIM
15.	In her Points of Claim filed on 20 February 2023 the applicant submitted that VCAT should order the respondents to pay compensation equivalent to the shortfall between the funds which came into their control as attorneys during the period commencing on 14 December 2014 and ending upon the final transaction occurring, and the amounts which they can substantiate that have been properly expended in their exercise of the powers of attorney.
16.	At paragraph 6 of the Points of Claim, the applicant alleged funds were withdrawn and/or transferred from bank accounts in the name of the principals as follows: 
a.	12 January 2016, six months after the 2015 POA, ‘[MNG] withdrew $100,000’ from the principals’ joint account and credited amount of $50,000 to an account in the name of TYS and part of $50,000 into an account in the name of WQS;
b.	12 February 2016, a transfer of $49,864.41 from an account in the name of MNG to WQS; and
c.	on 13 February 2016, a transfer of $31,647.11 from FJN’s term deposit to an account in the name of WQS.
17.	The claim, the evidence at hearing and closing submissions focussed on these three transactions.
18.	In the closing submission filed on behalf of the applicant on 20 December 2023, it was claimed that it was the former attorneys rather than either of the principals who had conducted the transfer of $100,000 on 12 January 2016.
19.	The applicant noted that the former attorneys sought to justify the transfer of funds from the principals’ accounts to the former attorneys on the grounds that they were done at the father’s behest in order to ensure fairness between the principals’ children.
20.	The applicant submitted that WQS had motive in allocating $100,000 to himself and $80,000 to TYS – namely that WQS believed that the applicant had received $92,000 in gifts from the parents between 1995 and 2014.
21.	The applicant disputed that the principals had directed or authorised the transfer of funds to WQS and TYS. She claimed:
a.	the principals had both been noted in 2013 to have dementia which caused them to be unable to manage their finances and this was known to the family;
b.	in June 2015, FJN had become concerned about the use of the Powers of Attorney by WQS and had sought advice from his solicitor; and
c.	it would be inconsistent with their lifelong practices for MNG and FJN to gift such large amounts of money. 
22.	In evidence given at hearing, the applicant acknowledged that her parents had gifted her the sum of $50,000 in 2008. She said that this amount was initially considered to be a loan but that her parents subsequently told her, and her siblings, that the amount was a gift.
23.	The applicant denied the claims by WQS that she had also received $32,000 towards the cost of her daughter’s wedding and later the sum of $10,000 towards the cost of her car.
24.	In the closing submission filed on 20 December 2023, the applicant explained her revised claim as follows:
a.	the respondents breached their duties as attorneys by using the position of attorney for profit in breach of section 63(1)(c) of the POA Act;
b.	the parents lacked capacity to have authorised the transactions because they had both been diagnosed with dementia in 2013;
c.	even if it was accepted that the parents had capacity and could authorise the transactions, the former attorneys did not ‘exercise reasonable skill and care’ in managing their parents’ finances in the manner that they did i.e., by reducing their cash resources to only their pension payments, thereby breaching s 63(1)(b); and
d.	the former attorneys had acted in their own interests, in making the transactions, which were contrary to their parents’ interests by reducing their funds very significantly, irrespective of their wishes, thereby breaching s 63(1)(d).
25.	Accordingly, in the light of those breaches, the Tribunal should order that the respondents should compensate the estates of their parents by the amount of $181,511.52 being the total of the three transactions conducted on 12 and 13 February 2016.
THE DEFENCE
26.	In their Points of Defence filed on 3 April 2023, WQS and TYS admitted receiving the funds referred to in paragraph 16(a) to (c) inclusive herein but claimed that the applicant had failed to prove her claim with clear and cogent evidence of two fundamental matters:
a.	that WQS and TYS had received or were responsible for transferring the principals’ money to themselves in their capacity as attorneys and not in their personal capacity; and
b.	that even if WQS and/or TYS acted as attorneys in relation to the transfer of money from their parents’ accounts, the applicant did not prove that such transfers were not authorised by the principals.
27.	The attorneys claimed that during their lifetime, the principals had given $92,000 in financial assistance to the applicant and, prior to his death, FJN told WQS that the principals wanted the sons to receive the same. 
28.	WQS claimed that there were times when his father asked to be taken to the bank to make the transfers. In the Points of Defence, WQS said ‘When we went to the bank, I do not remember who signed for the transfer of money – if it was my father who signed, or I who signed as power of attorney’ and ‘I didn’t ask my father to transfer me money. It was something he wanted to do out of fairness. I have no doubts that he knew exactly what he was doing’.  In closing submissions filed on behalf of the former attorneys it was asserted that receiving the funds claimed to have been withdrawn by FJN was not a breach of the POA because FJN authorised what the applicant claimed to be a conflict transaction. 
29.	Both former attorneys said that TYS ceased to be an attorney for his parents on 5 January 2015 and could not be held responsible for any of the impugned transactions which occurred on or after 12 January 2016. The former attorneys claimed the action against TYS was misconceived and there was no remedy available against him. Mr Klotz submitted that given that VCAT could not make an order about the validity of the 2015 POA, any claim for compensation could only be brought against WQS who acted as sole attorney during the period of the impugned transactions.
30.	WQS denied that his father had dementia and claimed that he was competent up until a week before his death in 2019. Mr Klotz for WQS submitted that the ‘evidence’ submitted by the applicant that the parents lacked capacity from 2013 should be accorded no evidentiary weight because the doctor failed to identify the assessments that had been done or the patient history he took instructions on. In addition, the applicant had not called the doctor as a witness to give evidence and be cross examined. Counsel for the former attorneys submitted that the applicant had failed to produce cogent evidence to displace the presumption that FJN had capacity at the relevant time. 
31.	Mr Klotz submitted that the evidence that the applicant relied upon was no further than her personal concerns, suspicions and assertions. The claim should fail because the applicant had failed to prove her case.
DISCUSSION AND FINDINGS
32.	It was not in dispute that in early 2016 WQS and TYS had, between them, received funds totalling $181,511.52 from the joint accounts of their parents, the principals.
33.	Both WQS and TYS had been attorneys under the 2011 POA until 5 January 2015 when the 2015 POA was executed under which WQS was appointed sole attorney and all previous enduring powers of attorney (financial) were expressly revoked. 
34.	In the circumstances where the applicant conceded that she had not pleaded that VCAT declare the 2015 be invalid, I was not required to make any findings about the validity of the 2015 POA or the revocation of the 2011 POA. The matter proceeded and was decided on the basis that the 2015 POA was valid.
35.	I was thereby satisfied that TYS ceased to be an attorney for the principals on 5 January 2015 and satisfied that from that date, WQS acted as sole attorney. All impugned transactions were conducted when WQS acted as sole attorney under the 2015 POA. I was satisfied that TYS could not be liable for any compensation to the principals’ estates in respect of this claim.
36.	While the decision-making capacity of the principals was not required to be proven in order to make an application for compensation, it was relevant in these proceedings because WQS maintained that the transfer of funds was initiated by and authorised by FJN.
37.	Section 65(3) of the POA Act provides that a principal may validate a conflict transaction if, at the time, the principal has decision making capacity for the transaction.
38.	At hearing, it was conceded by the parties that at the relevant times, the mother (MNG) lacked capacity and that it was the father who was present at the bank with WQS and TYS when the first impugned transaction was conducted. This was at odds with the point 6(a) of the Points of Claim, where the applicant stated that it was MNG who withdrew $100,000 the principals’ joint account and credited amount of $50,000 to account in the name of TYS and part of $50,000 credited to account in the name of WQS. I have assumed that to be an error in the Points of Claim and have proceeded on the evidence that it was FJN who was claimed by WQS to have either conducted or authorised the transactions. 
39.	The applicant relied on the following to refute WQS’s claim that FJN had the capacity to have conducted or authorised the impugned transactions:
a.	the statement issued by Dr P. Dzartov dated 4 June 2013;
b.	a letter written by the principals’ solicitor, Mr L Christie, on 5 June 2015 to WQS in which he states that FJN had recently attended and sought assistance to understand what documentation, arranged by WQS, the principals had signed in early 2015. Mr Christie met with WQS on 11 June 2015 and told WQS that he considered the 2015 POA to be invalid, and gave him copies of the reports of Dr Dzartov; and
c.	her own knowledge of her father.
40.	In closing submissions for WQS, Mr Klotz submitted that the statements by Dr Dzartov should be accorded no evidentiary weight, because:
a.	the statements failed to disclose the basis for the opinion that FJN lacked capacity; 
b.	the statement was not contemporaneous with the execution of the 2015 POA or the impugned transactions; and 
c.	Dr Dzartov had not been called as a witness so that his evidence could be tested. 
41.	Mr Klotz said those matters together with the applicant’s evidence were insufficient to displace the presumption contained within the POA Act that a person has capacity.  
42.	Mr Klotz also submitted that the letters written by Mr Christie to WQS on 5 June 2015 and to the principals on 15 June – which was submitted by the applicant to demonstrate incapacity – showed that Mr Christie had accepted and acted on FJN’s ‘instructions’.  Mr Klotz submitted that this demonstrated that Mr Christie, the long-standing lawyer for the principals, was unconcerned about the Doctor’s diagnosis and opinion in June 2013 and in June 2015 considered FJN to have capacity to give him instructions on a legal matter – six months before the first impugned transaction. 
43.	I found that argument by Mr Klotz to be unhelpful.  Decision-making capacity is relative to the task at hand.  A person may have the capacity to seek and understand advice but lack capacity to make complex decisions.  The fact that Mr Christie acted on the questions raised by FJN does not assist me in deciding whether the Principal had capacity to authorise a gift or the conflict transaction.
44.	In his oral evidence, WQS said his father did have not have dementia and had ‘a clear understanding of everything’ until a week before his death. He said the proof of this was having been assessed as not needing to be in the dementia section of the aged care facility into which he moved in February 2016.
45.	That evidence by WQS was not germane to the issue I had to be satisfied about, which was whether FJN had decision-making capacity on 12 and 13 January 2016 to authorise the specific transactions of gifting his sons. It did not persuade me that FJN had – or lacked – decision-making capacity.
46.	Mr Klotz submitted that the onus of proof in the application for compensation lies with the applicant. I accept that as generally true however, where WQS’s defence was that his father had capacity to authorise a conflict transaction, then I consider the onus shifts to require him to prove that. WQS has not done that.
47.	I was satisfied that the reports of Dr Dzartov are sufficient as to constitute ‘evidence to the contrary’ as required by section 4(2). I acknowledge that the reports lacked detail but they were sufficient to put WQS on notice, if he needed it, that his father had a condition which his doctor considered made him unable to ‘make any rational decisions for himself’. While that opinion was given in 2013, WQS received that advice at latest in June 2015 – six months before the transfer of funds – when Mr Christie gave him the reports from Dr Dzartov. 
48.	I was not persuaded by Mr Klotz’s submission that I should attach no weight to the opinion because it was not contemporaneous with the transfer of funds in January 2016. The reports of Dr Dzartov state that the principals both had dementia affecting their short-term memory. While no evidence was given on that point, dementia is known to be a progressive condition. Again, I was satisfied that the report of Dr Dzartov was sufficient to put WQS on notice that he should not rely upon his own view that his father retained decision making capacity. 
49.	 Both TYS and WQS had an interest in claiming their father to have had decision-making capacity. Their interests were in conflict with those of the principals. Their assertions that FJN had capacity to have authorised the conflict transactions were not persuasive. I was not satisfied that FJN had the requisite capacity to have authorised the transactions.
50.	WQS did not claim the transfer of funds to be a gift; he claimed it to be a conflict transaction authorised by his father. To the extent that it matters, I was not satisfied that the transfer of funds to WQS could satisfy the definition of gift within the POA Act. The transfer of funds could not be considered:
a.	to be reasonable having regard to all the circumstances because it amounted to nearly all of the principals’ cash assets;
b.	while it was to a relative, it was not of a seasonal nature or for a special event: or
c.	the type of donation that the principal made when he had decision making capacity.
51.	I have considered the issue of whether I can be satisfied that WQS was acting as attorney or in his personal capacity. I was satisfied that on the balance of probabilities WQS was acting as sole attorney when the impugned transactions were conducted. The following were influential:
a.	the evidence given at hearing by WQS as to who conducted the transactions was unconvincing.  He variously said he couldn’t remember who had conducted the transaction, he believed it was his father and then acknowledged that even if it had been him, he had done so on the request of his father; and
b.	while the onus of proof rests with the applicant, WQS and his lawyers focussed their material and submissions on the conflict transactions having been authorised by the principal and it is for WQF to prove that defence. Something more than mere assertions was needed to show that the authority was given and that the Principal had the capacity to give it.
52.	I was comfortably satisfied, to the Briginshaw standard, of the following:
a.	WQS acted as sole attorney under power for the principals from 5 June 2015;
b.	on 12 and 13 January 2016, both principals lacked decision-making capacity to have validated the impugned transactions conducted on those dates;
c.	the impugned transactions conducted on 12 and 13 January 2016, were, more likely than not, conducted by WQS acting as attorney under power;
d.	the impugned transactions conducted on 12 and 13 January 2016 constituted breaches of the POA Act, relevantly section 63 (a), (b), (c) and (d); and
e.	the contravention of the POA Act by WQS caused loss to the joint estates of FJN and MNG in the total amount of $181,511.52.
53.	I order that WQS compensate the joint estates of FJN and MNG the amount of $181,511.52. 

B. Hoysted
Acting Deputy President