The applicant assessed and weighed the terms of the instrument Mr G was going to make, the client's understanding of the document and its effect, coupled with the urgency of the matter, both from the client's perspective, he had not received a settlement statement 12 months after the sale of his property and the non-payment of his accommodation fees, the conflict of interest that had arisen and the applicant's assessment of capacity in consultation with two other lawyers, decided to support Mr G's dignity and autonomy and allowed him to maintain and maximise his sense of purpose and involvement in his own affairs as much as possible;
In relation to Weller, it was submitted that this case can be clearly distinguished given the detailed communications between the solicitor acting for the complainant and the applicants' associates attempting to elucidate the expenditure of Mr G's funds;
In Winefield v Clarke [2008] NSESC 882 ('Winefield'), evidence was introduced as to what a prudent solicitor would do if retained to advise an intending donor of land to a family member. It was found that these steps were not followed in Winefield. However, in Mr G's case, the applicant and his associates all believed that he had capacity himself to give detailed instructions to revoke his existing attorney and to fully understand the nature of the document which he was going to sign.
[2]
The Tribunal is comfortably satisfied that at the time Mr De Marchi facilitated the execution of a new Power of Attorney for Mr G on 4 October 2018, Mr De Marchi had the following information:
Mr De Marchi asked an employee 'to obtain a doctor's note regarding capacity due to his previous power of attorney claiming he does not have capacity', as evidenced in a file note made by the employee;
The file note made by Mr De Marchi, dated 6 September 2018, stated, in part, that the 'Case worker said he [Mr G] is not capable of making decisions';
The letter from Winter dated 18 September 2018, which referred to the psychiatric history of Mr G and attached the North Western Mental Health report, dated 11 January 2017, and quotes a conclusion from the report that Mr G does not have capacity to manage his finances or to make lifestyle decisions;
The North Western Mental Health report, dated 11 January 2017, which states that Mr G does not have capacity to manage his finances or to make lifestyle decisions;
Mr G's existing Power of Attorney, Mr P, had raised with Mr De Marchi in a telephone call on 6 September 2018, that Mr G had memory issues;
Mr G's previous issues with cognitive function were alcohol related and he had continued to drink alcohol;
Mr G was elderly;
Mr G was living in a nursing home.
The Tribunal is satisfied that there were a number of red flags to warn Mr De Marchi that Mr G's capacity to execute a new Power of Attorney was in serious doubt. The Tribunal is satisfied that Mr De Marchi was aware at the time of executing the Power of Attorney on 4 October 2018, as his staff had recorded the need for a medical report on 3 September 2018, and Mr G's Power of Attorney had claimed, that Mr G lacked capacity. Mr De Marchi had made the file note on 6 September 2018, that Mr G's social worker had said Mr G did not have capacity to make decisions.
Mr De Marchi relied upon a number of matters which he said indicated that the presumption of capacity had not been disturbed. These included:
Mr De Marchi was concerned that Mr G's human rights were respected by his Power of Attorney and that a proper financial accounting had not been provided to Mr G by his Power of Attorney;
Mr De Marchi had clear instructions that there was a shortfall in funds after the sale of his home;
Mr De Marchi and his staff were of the opinion that Mr G fully understood his existing Power of Attorney and the Power of Attorney that he proposed to make appointing Mr M. Mr De Marchi relied upon the observations of Mr G by three of his employees. Mr G had good rapport with all the staff at the law firm. He did not have isolated attendances;
Mr G showed sophistication in attending the office, making appointments, attending appointments on time and paying money into trust;
Mr G's difficulties as a migrant to Australia;
Mr G's proposed new Power of Attorney understood the duties of a Power of Attorney;
Mr G brought his new Power of Attorney into the law firm office and introduced him;
The law firm attempted to have Mr G attend a medical appointment for a further medical opinion;
As submitted above by the VLSC, the urgency or importance of the protection of a person or their interests is not relevant to the assessment as to whether the person has capacity to execute a Power of Attorney. Further, a person's learnt social interactions may not indicate their level of capacity, particularly to a person who is not trained to assess a person's capacity.
Mr De Marchi submitted that the only contemporary medical report related to Mr G's capacity was from Dr Pauline Griffiths, dated 3 August 2017, which stated that Mr G had a mild cognitive impairment. Mr De Marchi's office had attempted to obtain an up to date medical report without success. Dr Griffiths medical report did not indicate that Mr G had capacity at the time of the report. Further, an unsuccessful attempt to obtain a medical report is not relevant to a determination of the capacity of a person.
The Tribunal finds that Mr G's wisdom as to making a decision to replace his Power of Attorney and appoint a new Power of Attorney and the choice of the new Power of Attorney, is not relevant to the assessment as to Mr G's capacity to take such action.
Mr De Marchi submitted that documents from Mr G's accommodation provider show that Mr G was dissatisfied with Mr P as his Power of Attorney, before he consulted the law firm. The Tribunal finds that Mr G's concerns legitimate or otherwise are not determinative of the assessment as to Mr G's capacity to enter into a new Power of Attorney. On either Mr G's or Mr P's version of events, there was good reason for questions to asked about the conduct of the Power of Attorney. On the version of events most favourable to Mr P, Mr G did not have capacity to make financial decisions but Mr G had agreed for Mr P to be paid $20,000 to prepare Mr G's home for sale and arrange for the sale and Mr G had forgotten about this agreement. The question arises whether Mr P should have engaged in this conduct in the circumstances. The Tribunal need go no further than to accept that there were legitimate matters being raised about the conduct of Mr G's existing Power of Attorney.
Mr De Marchi submitted that Mr G had made reasonable requests for information, his accommodation fees were not being paid by his Power of Attorney and he had not received a full accounting in value of the property. The Tribunal finds that Mr G's concerns and requests for information legitimate or otherwise are not relevant to the assessment as to Mr G's capacity to enter into a new Power of Attorney.
Mr De Marchi stated that he relied upon all the materials provided to the Tribunal and on the file note which shows Mr G introducing Mr M, his proposed new Power of Attorney, and setting out why Mr G no longer trusts his Power of Attorney. The Tribunal finds that that Mr G's wisdom and reasons for making a decision to replace his Power of Attorney and appoint a new Power of Attorney and the choice of the new Power of Attorney, are not relevant to the assessment as to Mr G capacity to take such action.
The Tribunal finds that reading the Power of Attorney to Mr G and asking him if he understood the document and receiving a yes or no answer, evidence that Mr G was orientated as to time and space, Mr G's recall of poetry or literature and Mr G's general demeaner or appearance, do not assist with the assessment of Mr G's capacity to enter into the Power of Attorney on 4 October 2018. As discussed above, a person's learnt social interactions may not indicate their level of capacity.
The Tribunal is not satisfied that the factual matters relied upon by Mr De Marchi assist him in justifying his assessment as of 4 October 2018, that Mr G had capacity to execute a new Power of Attorney. The matters referred to in [44] above and particularly the matters very specific to Mr G in [44 (a) to (f)] should have individually and collectively indicated to Mr De Marchi that there were serious concerns with Mr G's capacity to execute the new Power of Attorney. The Tribunal also finds that the file notes and the conduct of Mr De Marchi in asking Mr G to obtain an updated medical report satisfy the Tribunal that Mr De March did, in fact, have those significant doubts about Mr G's capacity.
[3]
Did the client have capacity on 4 October 2018 to execute a new Power of Attorney?
[4]
In relation to Mr G's capacity at the date of the execution of the Power of Attorney, the following matters support a finding that Mr G lacked capacity:
The report, dated 11 January 2017, states in part that Mr G had undergone a comprehensive neuropsychological assessment on 29 December 2016, which concluded that he does not have capacity to manage his finances or to make lifestyle decisions. Mr P was advised to activate Mr G's Power of Attorney;
The medical report from Dr Pauline Griffiths, dated 3 August 2017, states that Mr G is orientated as to time and space and that he understands his property has been sold;
The medical report from North Western Mental Health, dated 19 November 2018, states Mr G has a long history of a depressive disorder, alcohol use disorder and cognitive impairment, particularly of executive function. A clinical neuropsychologist report from 18 October 2018, assessed Mr G as disoriented to time and his executive function was impaired. He lacked the capacity to make reasonable financial decisions. An assessment in 2013, showed severe alcohol related executive dysfunction and amnesia. On 19 October 2018, Mr G stabbed his cousin, Mr P, with a small fruit paring knife. On 23 October 2018, Mr G's mental state was reported as poor insight and impaired judgement. He had new onset delusions on the background of a depressive disorder, dependent personality traits, recurrent suicidal gestures, alcohol use disorder and cognitive impairment, particularly executive dysfunction. Mr G was assessed on 16 November 2018, and it was found that Mr G's judgement and insight into his mental illness was limited due to his cognitive impairment. The report, dated 19 November 2018, provided the opinion that prior to the incident on 19 October 2018, Mr G was unwell and was experiencing delusions and cognitive impairment leading to poor judgement, increased aggression and impulsivity. Mr G's mental illness and cognitive impairment can affect his reasoning, judgement and emotional control;
Mr G's behaviour was considered by staff at his accommodation as dysregulated prior to the assessments in mid-October 2018. He stabbed Mr P on 19 October 2018;
There is evidence that in September 2018, the psychiatric nurse at Mr G's nursing home suggested that he be re-examined as his behaviour had become erratic.
The Tribunal is comfortably satisfied that this history of medical assessments before and after 4 October 2018, along with the reports of Mr G's behaviour and the stabbing of Mr P on 19 October 2018, strongly support a finding that Mr G did not have capacity to execute a new Power of Attorney on 4 October 2018.
Mr De Marchi relies upon the presumption of capacity in the POA Act, the assessments of himself and his staff in the period from 3 September 2018 to 4 October 2018 and Mr G's conduct and wisdom in this period. The Tribunal is comfortably satisfied that the presumption of capacity is displaced by the medical history of assessments and Mr G's behaviour in the relevant period. The assessments of Mr De Marchi and his staff are very limited in detail, did not appear to have been conducted in a systematic or appropriate manner, such as by asking open-ended questions, and appear to be largely based on Mr G's demeaner, competence in a social setting and the apparent wisdom of the decisions he was proposing to make. These matters do not satisfy the Tribunal as to Mr G's capacity for the reasons discussed above.
The Tribunal is therefore comfortably satisfied that as at 4 October 2018, Mr G lacked the capacity to enter into the Power of Attorney which he executed on that date.
[5]
Should Mr De Marchi have made further enquiries as to his client's capacity?
[6]
On the basis of our finding above that Mr De Marchi ought to and in fact did have serious concerns about Mr G's capacity to execute the new Power of Attorney, the Tribunal finds that Mr De Marchi should have taken further action before facilitating the execution of the new Power of Attorney.
As submitted by the VLSC, Mr De Marchi had a number of options open to him at that stage. These included obtaining a further medical opinion, ceasing to act for Mr G, seeking further information from the existing Power of Attorney and/or Mr G's accommodation provider, conducting a far more detailed assessment of Mr G's capacity by the asking of open-ended questions and keeping detailed records of the questions and answers or making an application to the Tribunal under the POA Act or the Guardianship and Administration Act 1986 (Vic).
Mr De Marchi's argument that there was an urgency to the Power of Attorney does not ring true, not only due to the delay in him taking further action after the execution of the Power of Attorney, but also due to the fact that entering into a Power of Attorney in such circumstances as arose in this case, would clearly leave the new Power of Attorney open to challenge. In those circumstances, the executing of the new Power of Attorney would not have achieved the desired result of protecting Mr G's assets.
The Tribunal is also not satisfied that Mr De Marchi was aware that the matter would soon be taken to VCAT, so the Power of Attorney was just for the immediate protection of Mr G's assets. There is no evidence that Mr De Marchi was on notice of any future VCAT application or that he had considered one at the time of execution. Although, Mr De Marchi did indicate that the Power of Attorney pathway was preferable to an application to VCAT, due to the cost involved in applying to VCAT. While the protection of a client's assets may be relevant to a decision to take action quickly, it does not justify taking action which is unlikely to be effective in the protection of those assets in the circumstances.
The Tribunal is not satisfied that there was any reasonable justification for Mr De Marchi's failure to undertake further enquiries as to Mr G's capacity prior to facilitating Mr G's execution of the new Power of Attorney on 4 October 2018. If Mr De Marchi had assessed that urgent action was required to protect Mr G's assets, other options were available, such as an application to the Tribunal under the POA Act or the Guardianship and Administration Act1986 (Vic).
In the circumstances known to Mr De Marchi, including that Mr G had previously been assessed as lacking decision making capacity, the existing Power of Attorney and his solicitor having advised Mr De Marchi of concerns as to Mr G's capacity and the allegation by Mr G that his Power of Attorney was taking his funds, the Tribunal is comfortably satisfied that to facilitate the execution of a Power of Attorney without undertaking further investigation, and in this case, without an up to date medical opinion, was not the conduct of a competent and diligent practitioner.
[7]
The Tribunal considers the proven conduct to be serious, particularly in the circumstances where Mr De Marchi was clearly on notice by statements about Mr G's capacity from the Power of Attorney, Mr G's solicitor and social worker. He was also on notice by his holding of historical medical opinions as to Mr G's previous lack of decision making capacity. These were red flags which were very specific to this case. There were also more generic red flags, such as Mr G's age and accommodation. These matters were set out in the LIV Guidelines. Mr De Marchi recognised that there was an issue with capacity, but did not follow the matter up prior to facilitating the execution of the Power of Attorney. The making of a Power of Attorney has very significant consequences for a person. The person is effectively giving another person power over their assets, to the same extent as the person had themselves, and in circumstances where the Attorney does not need to revert to the person in making decisions. A lawyer involved in facilitating such legal work should do so with a high degree of diligence, which was lacking in this case.
The Tribunal is comfortably satisfied that the proven conduct in relation to each instance of conduct occurred in connection with the practice of law falls short of the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent lawyer. The Tribunal is therefore comfortably satisfied that the proven conduct described in the two allegations each constituted unsatisfactoryprofessional conduct, within the meaning of section 296 of the Uniform Law.
[8]
The VLSC sought for the Tribunal to affirm the decision to impose a reprimand and require Mr De Marchi to undertake one additional unit of CPD in the area of capacity.
The VLSC seeks to maintain a global determination for all of the proven conduct. Generally, global penalties should be avoided in legal disciplinary proceedings, but may be utilised where the charges are "inextricably interwoven".[2]
In Williams, the Tribunal referred to the earlier decision of Stirling v Legal Services Commissioner[3], noting that preferring individual penalties:
[9]
... allows for a sentence on one count to stand where a conviction for another count is quashed. Secondly, it is easier to assess whether a penalty is manifestly excessive or inadequate when each sentence is clearly pronounced on each count. Thirdly, by sentencing for separate offences, the court makes it clear to the public what the penalty for each offence is, thus assisting in the process of general deterrence. Finally, as in this case, adherence to this rule prevents conduct from one charge being used as an aggravating factor in assessing the penalty for another charge.
[10]
In Williams at [145], the Tribunal found that a global penalty may be appropriate:
[11]
... where the charged conduct is constituted by a course of behaviour as opposed to a set of separate events. In these circumstances where the facts of the case are so inextricably interwoven as to make it difficult to meet a clear standard of prescription, a global penalty may be applied.
[12]
In the present case, I find that the proven conduct is constituted by a course of behaviour in relation to Mr De Marchi acting for a client who did not have capacity and failing to make enquiries as to the capacity of a person, when it was clear in the circumstances that such enquiries were required prior to facilitating the execution of a Power of Attorney. The Tribunal is satisfied that the facts of the case are interwoven to the extent that a global determination should be applied.
The principles to be applied by the Tribunal in considering the appropriate determinations are set out in Victorian Legal Services Commissioner v Rose[2023] VCAT 409 at [59]-[62], as follows:
[13]
...The primary aim of any sanction is to protect the public and the professional standards and the reputation of the profession. The focus of the Tribunal is therefore protective and not punitive. However, specific deterrence and general deterrence, which serve to protect the public, depend upon sanctions having a punitive effect.
[14]
...With that protective focus in mind, the Tribunal considers a range of factors in determining penalty including the nature and seriousness of the conduct, any plea of guilty, the relative importance in the case of specific deterrence and general deterrence, past disciplinary history, evidence of character, and other mitigating factors such as medical or psychological evidence.
[15]
...Penalties imposed in other cases may be a useful guide to proportionality, and parity is important, but every case necessarily involves a different combination of factors. Each case is different.
[16]
The Tribunal will consider each relevant factor.
[17]
The Tribunal finds there is a need for general deterrence to be part of the determination consideration to deter other practitioners from engaging in such conduct.
[18]
In deciding the need for specific deterrence in making the appropriate determination, issues such as insight and remorse are relevant.
The Tribunal is comfortably satisfied that Mr De Marchi has displayed limited insight and remorse for his proven conduct. The Tribunal is satisfied that there is a need for the determination to take into account specific deterrence.
[19]
Evidence of character and past disciplinary history
[20]
The VLSC conceded that there had been no previous disciplinary proceedings against Mr De Marchi in the Tribunal. Mr De Marchi has been in practice for a very long time and the Tribunal therefore assumes that he has a clean record for this extended period of practice. This is to Mr De Marchi's credit.
[21]
Mr De Marchi has failed to accept the nature and seriousness of the conduct. He contested the conduct before the VLSC and in this Tribunal.
[22]
The delay in disciplinary proceedings being commenced and finalised, has been recognised as a matter to be taken into account in determining an appropriate outcome. A delay may be a mitigating factor and is considered in the light of the rehabilitation of the person in the period and the fairness of such a delay on the person.
This matter relates to conduct occurring in late 2018. The Tribunal considers that it should take into account that Mr De Marchi had disciplinary matters hanging over him for a period of over six years prior to this proceeding being commenced.
[23]
The Tribunal has taken into account the above matters and, particularly due to the need for specific and general deterrence in this case, it considers it is appropriate to impose a reprimand on Mr De Marchi and require Mr De Marchi to undertake an additional three units of CPD in relation to capacity, over the next three CPD years.
[24]
The Tribunal has therefore decided in this matter is to set aside the decision under review and substitute a new decision that Mr De Marchi is reprimanded and required to undertake an additional unit of CPD in relation to capacity in each of the CPD years ending on 31 March 2026, 31 March 2027 and 31 March 2028.
[25]
[1] The Tribunal has decided to not identify some persons referred to in these reasons, including in direct quotes from other documents.
[26]
[2] See Victorian Legal Services Commissioner v Williams (Legal Practice) [2022] VCAT 806 (15 July 2022), Quigley J President of VCAT ('Williams') at [144].
The decision of Gibbons v Wright[1954] HCA 17; (1954) 91 CLR 423 ('Gibbons v Wright') provides that the test for capacity is that in each matter, each party must have such soundness of mind to understand the general nature of the thing they are doing. The law does not prescribe a fixed standard of senility. The nature of the particular transaction is relevant to the mental capacity needed. There is no evidence that Mr G did not have the capacity when the Power of Attorney was read to him in Italian;
The decision in PBU &NJE v Mental Health Tribunal[2018] VSC 564, provides that the capacity of a person is transaction specific and must be assessed against what a person can comprehend;
In Scott v Scott[2012] NSWSC 1541 ('Scott'), it is stated that the test is whether a person could understand the general purpose of the document when explained, not whether they fully grasp every detail;
In Torok v Becker[2020] NSWSC 1570, it was stated that the focus was on the capacity at the time of the transaction, not a subsequent reduced degree of legal capacity. In this case, the issue was the capacity in October 2018, not in 2016 when the last assessment was undertaken;
The VLSC case that Mr G did not have capacity, is not made with regard to the legislative requirements or the common law of Victoria. The VLSC is wrong in law;
Documents from Mr G's accommodation provider show that Mr G was dissatisfied with Mr P as his Power of Attorney, before he consulted the law firm;
When Mr P became aware that Mr G had engaged lawyers as to Mr P's conduct as his Power of Attorney, Mr P engaged his own lawyers and persuaded Mr G to attend at a bank, withdraw $19,010.00 and give this money to Mr P. The letter from Mr P's solicitor stated that the dispute had been resolved by a family conference. Mr G told Mr De Marchi that he disagreed;
Mr G had made reasonable requests for information from his Power of Attorney, his accommodation fees were not being paid by his Power of Attorney and he had not received a full accounting in value of the sale of the property. He had lost trust in his Power of Attorney. Mr P had admitted a breach of trust of at least $20,000. The Power of Attorney should have avoided acting in conflict. The letter from Winter, dated 18 September 2018, shows an amount of $20,000.00 from the proceeds of the sale were paid to Mr P. The letter also shows that an amount of $101,000 was paid into a bank account for Mr G. The Power of Attorney then paid $10,000.000 of this amount into the Power of Attorney's petty cash bank account. It was Mr G's instructions that he never discussed with Mr P that Mr P would be paid $20,000.00. At no stage was Mr G told there would be any charges by Mr P;
The presumption of capacity has not been rebutted by the respondent in this case, as the VLSC has only relied upon not being satisfied that there had been a full recovery of capacity in this case and the fact that the Power of Attorney remained active since 2017. These were not valid reasons to find that the presumption had been rebutted. The VLSC's reliance on an earlier Power of Attorney being active, assumes an unrevoked Power of Attorney is evidence of incapacity. However, the Power of Attorney had been active since 2013, when Mr G had full capacity. These factual matters could not override the fundamental principle of the current law in the POA Act;
The VLSC's written submissions at [7.46] states that Mr De Marchi relied upon an undated note in which he states that he 'assessed that [the Client] had capacity and was clearly oriented in time and place'. Mr De Marchi stated that he relied upon all the materials provided to the Tribunal and on the file note which shows Mr G introducing Mr M, his proposed new Power of Attorney, and setting out why Mr G no longer trusted his Power of Attorney;
In a decision of the Western Australian State Administrative Tribunal in the matter of MH[2022] WASAT 74 ('MH') at [130], it is stated that the statutory presumption of capacity constitutes the starting position where capacity of a person is in issue. The decision indicates that the person need not prove they have capacity. The position is that the person has capacity until there is clear and cogent evidence to establish the facts on which the Tribunal can be satisfied that the person does not have decision making capacity; and
The applicant seeks that the decision under review be set aside and the complaint closed.
On 4 January 2019, this Tribunal found that Mr G did not have capacity in October 2018 to make the Power of Attorney. This finding can be treated as probative evidence of Mr G's incapacity at the relevant time. In the decision of Victorian Legal Services Commissioner v McNamara[2011] VCAT 1228 at [102], the Tribunal discussed that generally such evidence of incapacity, being the earlier finding of the Tribunal, is inadmissible under the rules of evidence as evidence of the fact of incapacity and that the Tribunal was not bound by the rules of evidence. The member then stated that he would treat the Tribunal's earlier determination of the person's incapacity as evidence of the lack of capacity of the person;
2. In relation to the legal principles regarding capacity, section 4 of the POA Act sets out the matters for the applicant to make an assessment as to the capacity of Mr G. Under section 4(1)(a), it is submitted that Mr G would need to understand the information relevant to and the effect of the decision to revoke the existing Power of Attorney and making a new Power of Attorney;
3. The presumption of capacity is displaced in this case. The VLSC does not rely on the use of a language other than English in this case. There is no complaint regarding the translation or language needs of Mr G. The complaint is that he did not have capacity. In the circumstances of this case, the presumption of capacity is displaced and Mr De Marchi failed to make an appropriate assessment of Mr G's capacity;
4. In the decision of Green v Green[2024] NSWSC 1442 ('Green'), the NSW Supreme Court stated the general legal test for capacity at common law is that:
1. Broadly speaking, the validity of instruments in any proceeding depends upon the possession by the party executing the instrument of a degree of understanding relative to the nature of that which they were doing: Gibbons v Wright[1954] HCA 17; (1954) 91 CLR 423 (Gibbons) at 437 per Dixon CJ, Kitto and Taylor JJ; [1954] HCA 17.
2. The law does not prescribe any fixed standard for capacity as requisite for the validity of all transactions. It is task-specific. It requires, in relation to each particular matter or piece of business transacted, that each party shall have such soundness of mind to be capable of understanding the general nature of what he or she is doing by his or her participation: Gibbons at 437. Thus, the mental capacity required by the law in respect of any instrument may be described as the capacity to understand the nature of that transaction when it is explained: Gibbons at 438.
3. Ordinarily, the nature of the transaction means the broad operation or the "general purport" of the instrument but, in some cases, it may mean the effect of a wider transaction which the instrument is a means of carrying out: Gibbons at 438.
5. Further, the Court stated
1. It has been said that, when considering whether a person is capable of giving a general power of attorney, one would have to be sure not only that they understood that they were authorising someone to look after their affairs but also what sort of things the attorney could do without further reference to them: Ranclaud v Cabban at 57,548 per Young J (as his Honour then was). That approach has subsequently been followed: see e.g. Szozda at [28]-[30]; Scott at [208].
In this case, Mr De Marchi made an assessment of Mr G's capacity on the basis of the merits of replacing the current Power of Attorney and the merits of the proposed new Power of Attorney. These matters were not relevant to the assessment of Mr G's capacity to make a new Power of Attorney;
In Weller v NSW Legal Services Commissioner[2022] NSWCATOD 67 ('Weller'), the solicitor in that matter argued that he had assessed the client's capacity while spending considerable time with the client and relying on his knowledge, observations and opinions established over that time. The Tribunal found that the Law Society's resources for assessing capacity are excellent resources and provide advice as to asking open ended questions, stressing the importance of detailed file notes and obtaining appropriate medical reports from specialist practitioners, including geriatricians. The Tribunal also referred to applying the Law Society Guidelines when concerned about issues of capacity;
In Weller, the Tribunal found that:
On the above basis, the Tribunal in Weller affirmed the decision, as on the evidence available to the solicitor, the client may not have had capacity to retain and process information necessary to hold an informed view;
The VLSC submitted that there were a number of pathways when there are concerns about the about the capacity of a person, including:
Applying to the Tribunal for the appointment of an administrator or advice;
Ceasing to act for the client;
Requesting a further medical report;
Requesting information from the previous Power of Attorney and/or accommodation provider.
In Legal Services Commissioner v Ho[2017] QCAT 95 ('Ho'), the Tribunal was considering whether a practitioner had failed to maintain reasonable standards of competence and diligence in executing a Power of Attorney, as he failed to seek a medical opinion and/or information verifying the client's capacity. The agreed facts were that the solicitor had been advised that the client suffered from an intellectual disability, he did not ask the client open-ended questions and received an unsatisfactory answer to a question as to what the client understood about the documents. The solicitor's failure to take steps, including embarking on a higher level enquiry including open-ended questions to reveal the client's capacity and understanding and to recommend that the client obtain a medical opinion, amounted to unsatisfactory professional conduct;
In HLT[2014] NSWCATGD 5 ('HLT'), the Tribunal considered the Law Society Guidelines when assessing the conduct of the solicitor in considering a client's capacity and noted from the Guidelines the following matters for the client to understand:
The Power of Attorney may specify or restrict the power to be given and instruct the attorney about the exercise of the power;
The power begins at the time chosen by the client in the Power of Attorney;
Subject to the conditions in the Power of Attorney, the attorney will be able to do anything with the client's property which the client could have been able to do;
The types of actions or things the attorney will be able to do under the Power of Attorney without further reference to the client;
The client may revoke the Power of Attorney at any time while they have the mental capacity to do so;
In the decision of Victorian Legal Services Commissioner v O'Brien (Corrected) (Legal Practice) [2024] VCAT 756 (O'Brien), the question was one of testamentary capacity. The Tribunal was of the view that regard should be had to the Law Institute of Victoria Guidelines in relation to client capacity. The Guidelines advise to look for warning signs that a client might lack capacity, including difficulty with recall or memory loss, is disorientated, is in hospital or in a residential age care facility. It is the solicitor's responsibility, when they have doubts about a client's capacity to give competent instructions, to explore the issue further;
In submissions in reply, Mr De Marchi in summary submitted as follows:
Nothing has been submitted by the VLSC that indicated that the presumption of capacity is not the starting point. There is nothing to require the Tribunal to find that the presumption is displaced in this matter. There is no material to override the presumption in this matter. There were a number of people working on Mr G's matter.
Mr G attempted to see a doctor. There was no attempt to avoid a proper assessment.
Reliance is placed on the medical report of Dr Griffith and that they had in the back of their minds that Dr Griffith would come good with the medical report from the geriatrician;
The submission that they did not go through the open-ended questions is not the case. They asked Mr G why he wanted to change and how long had he known the Power of Attorney. Mr G volunteered that he had made a will in favour of Mr P. They had material that the VLSC did not have;
They acted consistently with the POA Act;
The Tribunal should set aside the decision and close the complaint.
In summary, Mr De Marchi made the following written submissions on the VLSC's supplementary list of authorities:
The decision in Green, does not support the VLSC's case. At [66] of Green, the Court endorsed the concept in Gibbons v Wright that the true test of legal capacity is that the party executing the instrument has a degree of understanding relative to the nature of that which they are doing and that the law does not prescribe any fixed standard for capacity, but requires an understanding of the nature of what he or she is doing at the time of the transaction, when it is explained to them;
When this is applied to the present case, there is clear and uncontested evidence that not only was the document explained, but explained in Mr G's own language and that he fully understood its purpose and effect and how it would operate. There was no evidence to the contrary. In Green, the Court noted that a person's capacity can fluctuate over time and also depends on the nature of the assistance that may be available to the person executing the document;
The reliance of the VLSC on Green at page 24 is misguided, as it relies on the Court's assessment of quite different legislation. The Victorian POA Act grants greater flexibility as set out in the applicant's statement of facts and contentions;
At [89] of Green's Case, the judge quoted from the case of which examined a more general power of attorney, created under different legislative requirements than the one applicable in this case, the legislation in the present case is unique, it has unquestionably more generous interpretation of capacity together with examples;
The common law presumes that every adult has legal capacity to make their own decisions, see Goddard Elliott v Fritsch[2012] VSC 87 and also the Charter at section 8;
As a general rule, capacity will be present where a client can:
Understand the information relevant to the decision;
Retain the information;
Use or weighs the information as part of the process of making the decision; and
Communicates their decision;
As a person's capacity may fluctuate one must consider issues of capacity with reference to an ongoing relationship with the client, patterns of behaviour, rather than relying on a one-off meeting to evaluate capacity. If a client has capacity for a particular task, it does not automatically mean that he or she has capacity for other transactions;
Mr G had the capacity for the particular task to revoke and prepare the new power of attorney. Mr G should have been taken to have a legal personality because 'rights and duties involve choice'. This is a foundation principle of the common law and also international human rights, which are protected in Victoria by section 8 of the Charter;
The power the client has given continues even if the donor subsequently loses his or her mental capacity; and
The client is unable to oversee the use of the power, if they subsequently lose mental capacity;
Szoda
In Mr G's Power of Attorney, the scope of the applicant's retainer and the deed he instructed the applicant to prepare, were clearly defined and they contained what Mr G wanted and specified in his circumstances;
The English decisions relied on by the VLSC are quite different legislative instruments to interpret and do not assist the Tribunal;
While Mr G may not have had full capacity to look after all his financial and care needs, it is submitted that the making of a power of attorney under the reigning Victorian legislation, in his own native language, taking into account his limitations and being tailored to his specific requests and needs, was open and available to him, under Victorian law supported by the Charter, even if he did have some diminished cognitive capacity;
Nicholson v Knaggs[2009] VSC 64 is influential, as the Supreme Court assessed the capacity for a will, regarded as a similar discrete act and found it to be lower than for managing an estate, focusing on the requirement of understanding the act itself. It was submitted that the POA Act further codified this decision's specific approach;
In HLT at [151] the Tribunal noted the Law Society Guidelines. In regard to Mr G's power of attorney, the following from the Guidelines is relevant:
The donor may in the document specify or restrict the power to be given to the attorney and instruct the attorney about the exercise of the power;
The power begins at the time chosen by the donor in the instrument of appointment;
The donor may revoke the enduring power of attorney at any time they have the mental capacity to do so;
In Scott, the Court noted that each case must be considered on its own facts. There is no rule of general application relating to all powers of attorney without regard to the particular facts. Attention must be focused on the circumstances of the case, including:
The identities of the donor and donee of a disputed power of attorney;
Their relationship;
The terms of the instrument;
The nature of the business that might be conducted pursuant to the power;
The extent to which the donor might be affected in his or her person or property by an exercise of power;
The circumstances in which the instrument came to be prepared for execution, including any particular purpose for which it may ostensibly have been prepared;
The circumstances in which it was executed;
In Scott, the Court noted that it was not literally a matter of imposing or recognising a different standard of mental capacity in the evaluation of the validity of different transactions. What is required is an appreciation that the concept of 'mental capacity' must be assessed relative to the nature, terms, purpose and context of the particular transaction;
Care must be taken not to elevate helpful passages in potentially analogous cases into rules of general application. A qualitative judgement needs to be made in each case on the facts of the case;
Adopting this assessment to Mr G's case, provides focus on the clarity of reasons and his reasoning process and instructions. He knew what he intended to prevent and the consequences that would follow. Mr G knew and understood the purpose in appointing a new attorney for the stated reason of obtaining a clear accounting of the sale of his property. He was alert and sharp and appeared to know what he was doing as set out in all the applicant's communications with the VLSC;
Regarding Zorbas v Sidiopoulos (No 2) [2009] NSWCA, the Judge noted that in his experience in probate cases 'the most valuable evidence is usually given by the experienced solicitor who witnessed the will as opposed to a very highly qualified psychiatrist whose evidence is based not on any personal observation of the testator, but which has reasoned his or her opinion from medical and hospital notes.'
Adopting this assessment of the Court in Scott, the applicant being an experienced solicitor who witnessed and explained the Power of Attorney as opposed to relying on a dated medical report, not based on current personal observation of the principal, was acceptable. The applicant's and other lawyers' personal engagement and their close personal observation of the client throughout his engagement of the firm, should have been given some weight in the assessment of the client's capacity;
In the present case, the VLSC only gave brief attention to the principle of the presumption of capacity and too quickly disregarded it. On the above authorities, it is submitted that the client's decision to appoint his friend as his new attorney on the terms set out in the power of attorney, was both rational and reasonable given his ongoing dispute with his existing attorney, the failure of the attorney to pay Mr G's accommodation fees and Mr G's inability to obtain a clear financial account from the attorney after the attorney sold his property. Nor did the attorney ever provide a formal explanation for the withdrawal of Mr G's funds to use for his own benefit;
During the observations on his many visits to the office, Mr G was not ever, and did not appear to ever be, under any undue influence from any person when he provided instructions and when he freely executed the relevant instrument;
In O'Brien, the Tribunal discussed that the principles about capacity include that there is a presumption that a person has capacity, capacity is decision-specific, capacity is fluid, what is being considered is the person's decision-making capacity for a decision and not the decision they are making and substitute decision-making is considered a last resort. The Tribunal referred to the definition of capacity to enter into a legal transaction in Gibbons v Wright;
Distinct from the situation in O'Brien's case, Mr G had a common law capacity because he could understand the nature of the particular transaction he was pursuing, the revocation of the then attorney and the appointment of a new attorney, which was being affected by the means of the instrument he requested to be prepared for him. The appointment of a qualified friend, who he had selected after considering the troubles he was having with his existing Power of Attorney;
Mr G had the mental capacity by statute because when the information, the nature of the instrument he was going to make, sign and execute was explained to him, he could retain the information to the extent necessary to make the decision, use or weigh that information as part of the process of making the decision and communicate his endorsement of his decision by signing the document;
The LIV Guidelines set out Testamentary capacity and cited from Bank v Goodfellow(1870) LR 5 QB 549 (Banks), which stated that the person making a will has to understand:
What it means to be making a will;
Broadly, what assets he or she possesses and is leaving to others; and
Who are the people who might reasonably expect to be included in the will.