TXY (Guardianship) [2025] VCAT 106

On 23 December 2008 the principal, TXY, made an enduring power of attorney for financial matters. XPF and WZM were appointed as attorney/s.

State Trustees Limited applied to VCAT for an order that the attorney WZM compensate the principal for a loss.

The attorney WZM must now pay Principal the sum of $296682.61.

The amount of $61,015.14 relating to various other disputed withdrawals from CBA accounts ending ...620 and ...719 is withdrawn. VCAT grants leave to make a further application in respect of this amount.

VCAT makes this order because it is satisfied that:

• - The attorney WZM contravened (did not comply with) section 63 of the Power of Attorney Act 2014 when acting as an attorney under the above power
• - The Principal has suffered loss of $296682.61 which was caused by this contravention

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 (Vic) 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. In these reasons for decision, the principal has been referred to as TXY, to keep her identity confidential.
2. On 11 October 2023, the VCAT received an application from XPF (son of TXY and joint attorney) seeking orders about an enduring power of attorney under section 116(1) of the Powers of Attorney Act 2014 (Vic) (POA Act). On 23 October 2023, the VCAT received a further application from XPF seeking the appointment of a guardian and administrator under the Guardianship and Administration Act 2019 (Vic) (GA Act).
3. On 16 November 2023, VCAT appointed State Trustees Limited (STL) as administrator and suspended the powers of attorney under section 83 of the POA Act until further order. In addition XPF was appointed guardian to make decisions about where TXY lives and medical treatment.
4. On 29 January 2024 the powers of STL were amended to include sections 46(1), 51 and 52 of the GA Act.
5. On 28 March 2024, STL made an application for compensation under section 77 of the POA Act against WZM (son of TXY and other joint attorney). Attached was a statement of claim seeking the sum of $285,710.14.
6. A further application was made seeking advice in relation to a proposed sale of TXY's property. Approval was initially given by VCAT and then following a review hearing on 30 May 2024 WZM was given the opportunity to present his submissions about an equitable interest he claimed to have in relation to the property. At a hearing on 28 June 2024, STL's proposal to sell the property was approved and other incidental orders made.
7. On 5 July 2024, STL amended its claim, seeking an amount of $357,697.75.
8. On 3 September 2024, VCAT recorded that the claim had been amended and directed WZM to file and serve particulars of defence by 1 October 2024.
9. On 1 October 2024 VCAT recorded that WZM had not filed particulars of defence and directed that the compensation claim be listed for hearing.
10. On 20 November, I heard the application. WZM did not attend or lodge any documents with VCAT either by way of seeking an adjournment or by way of particulars of defence.
11. Taking into account the submissions and evidence presented to me, I made my decision. WZM requested written reasons on 20 December 2024. I was on leave until 6 January 2025 so there has been a slight delay in preparing these reasons.

1. The claim is brought under section 77 of the POA Act which states:

(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.

1. The POA Act began operation on 1 September 2015. TXY appointed WZM and XPF as joint and several attorneys on 23 December 2008.
2. The claims made against WZM cover a series of transactions which occurred after 1 September 2015, it being accepted that there is no jurisdiction for VCAT to deal with claims before the operation of the POA Act.
3. VCAT has jurisdiction to deal with claims after this date under section 77.
4. There are two elements to a claim for compensation under this section - the applicant must show that:
   • the attorney contravened a provision of the POA Act, and
   • the contravention occurred when the attorney was acting under the power of attorney and that the contravention caused a loss to the principal's estate.
5. The power of attorney in this case was made on 23 December 2008, i.e. before 1 September 2015. It is what is referred to in the transitional provisions in section 142 of the POA Act as an 'old' power of attorney. This is relevant because section 142 states that an 'old' power of attorney continues to be valid and the laws in force about powers of attorney before 1 September 2015 (under the Instruments Act 1958 (Vic) (Instruments Act) which is now repealed) continue to have effect in relation to an old power of attorney. Subsection 142(2) then lists a number of sections of the POA Act that apply to the old power of attorney as if it had been made under the new POA Act.
6. The duty provisions in the POA Act (sections 63-70) are not listed in subsection 142(2) which gives rise to the question of whether those duty provisions apply to 'old' powers of attorney.
7. The meaning of section 142 has been considered in a number of cases, in particular DLM [2018] VCAT 1638, a decision of Judge Harbison and MYJ [2019] VCAT 792, a decision of Senior Member Steele. In the later decision, the Senior Member analysed and applied the decision of DLM in relation to whether the duty provisions in the POA Act apply to an 'old' power of attorney. She stated as follows:

Interpretation of section 142(2) of the POA Act

1. I prefer Her Honour's first approach to construction, that section 142(2) must mean that section 63 of the POA Act applies to an old power of attorney.
2. Subsection 142(1) provides that an old power of attorney continues to be valid, even though the provisions of the old Act under which it was made are repealed by section 144(2).
3. Subsection 142(1) then goes on to say that the law as in force under the old Act immediately before that repeal continues to have effect in relation to an old power of attorney, subject to subsection 142(2).
4. Subsection (2) lists some provisions of the new Act and says that those provisions apply to an old power as if it had been made under the new Act.
5. Subsection (2) does not say that the other non-listed provisions of the new Act have no application to an old power. There is no reason to read it as having that meaning, particularly given that the words in subsection (1) to which I have referred, namely "as if it had been made under this Act" suggest that the non-listed provisions do apply.
6. If Parliament (relying on its legislative drafters) had intended that the non-listed provisions would not apply to an old power at all, it would have been simple to say so. Parliament did not do that.
7. However, if all provisions of the new Act apply to an old power of attorney, what is the purpose of the careful list of provisions set out in paragraphs (a) to (g) of subsection (2)?
8. The answer is that section 142 explains the way in which the various provisions of the POA Act apply to an old power of attorney, rather than whether each provision applies at all.
9. In section 142(1), the phrase "subject to subsection (2)" governs the relationship between the two subsections. Its effect is that the provisions listed in subsection (2) apply to an old power of attorney without any reference to the old Act; that is, "as if it were an enduring power of attorney made under [the new] Act".
10. That is, the provisions of the new Act listed in subsection (2) apply to an old power of attorney whether or not they are consistent with the law as in force under the old Act.
11. By implication, provisions of the new Act which are not listed there apply to an old power, but not as if the old power had been made under the new Act. Rather, the non-listed provisions apply to an old power only to the extent they are not inconsistent with the law in force under the old Act, because that law applies to the old power by virtue of subsection 142(1).
12. Accordingly, section 63 of the POA Act applies to an old power of attorney, except where section 63 is inconsistent with the law in force under the old Act as the law was before the relevant provisions were repealed on 1 September 2015.
13. It makes sense that the law in place before the new Act should only take precedence in relation to breach of an attorney's duty when there is some conflict between it and the new Act. Thus, if a duty as described under the new Act is different to the duty applying under the law as in force before 1 September 2015, then it is the old standard which should apply rather than the new. In practice, few such issues are likely to arise because, in general terms, the provisions of Division 1 of Part 6 appear to codify the law in force before the operation of the new Act.
14. I agree with this reasoning and therefore am satisfied that section 63 of the POA Act applies.
15. The obligations under section 63 are as follows:

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.

1. I note sub-section 63(2) that, in effect, common law duties are also retained under this section. As to these duties, also known as fiduciary duties, it has been stated:[1]

The objective of fostering loyalty that lies at the heart of fiduciary law dictates that, in carrying out the terms of the power, an attorney must treat the principles interest's as paramount...

1. The Instruments Act states as follows:

125D Requirement to keep records > > An attorney under an enduring power of attorney must keep and preserve accurate records and accounts of all dealings and transactions made under the power.

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.

1. While the wording of section 66 is not identical to that of section 125D, this is simply to take account of the fact that the POA Act powers of attorney cover personal as well as financial matters. The requirement under the Instruments Act is that an attorney 'keep and preserve accurate records and accounts of all dealings and transactions' relating to the power of attorney. The obligation under section 66 is the same.
2. For this reason I am satisfied that there is no conflict between the obligation in relation to record-keeping in section 125D of the Instruments Act and section 66 of the POA Act and hence the obligation in section 66 also applies in this case.

1. The standard of proof in this matter is on the balance of probabilities. And 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.
2. He said that '...strong evidence is required - clear and cogent - assessed with care and caution' in an application involving an allegation of sexual harassment.
3. So while the standard of proof is on the balance of probabilities, the matters to be considered by me are sufficiently serious, i.e. allegations of failing to act in accordance with statutory obligations, that clear and cogent evidence is required before I can be reasonably satisfied that allegations have been made out. I must assess the evidence with care and caution.

1. The amended statement of claim made on 5 July 2024 seeks compensation of $357,679.75 being an additional $71,987.61 to the original amount of $285,710.14 claimed.
2. At the start of the hearing STL advised that they were still seeking evidence in relation to a number of items. They stated that they would like to proceed with the other items and seek leave to make a further claim in relation to those items where they were still awaiting evidence.
3. The statement of claim is lengthy and in summary alleges that WZM made numerous withdrawals from two bank accounts between 21 July 2009 and 23 December 2023 (totaling $254,592.64). In addition he accepted two settlement amounts on behalf of TXY and paid these funds into his own account (totaling $31,117.50). Also an amount of $71,987.61 was received by WXM in relation to TXY's superannuation. Details of the amounts claimed from the bank are set out in Appendix A of these reasons.
4. The claim alleges that the respondent owed various duties to TXY, being both fiduciary and obligations under the POA Act. That the attorney breached these duties as a result of his conduct. While the enduring power of attorney was a joint appointment, investigations showed that WZM was operating TXY's account individually. The claim therefore relates to WZM, not XPF.
5. The claim notes that demands have been sent to the respondent on a number of occasions by mail and email and the respondent has not provided any explanation for his actions. It is alleged that he has breached his obligations as an attorney and his conduct was not in the best interest of TXY.
6. Accordingly TXY is entitled to the compensation claimed.

1. The issues raised in this case are:
   1. Was the attorney acting under the power of attorney?
   2. If the attorney has acted under the power, has he breached sections 63 or 66 of the POA Act?
   3. If so, have the attorney's actions/decisions caused a loss to TXY?

1. VCAT appointed a guardian and administrator on 16 November 2023. There is a report from Dr Wee (geriatrician) dated 26 October 2023 stating that TXY did not have capacity to make personal and financial and legal decisions. Earlier correspondence dated 28 March 2023 notes 'There is an ongoing gradual decline in her cognition...' consistent with her diagnosis of Alzheimer's Disease.
2. In addition, one page of an earlier report from Dr Wee following an assessment on 10 October 2019 was provided. I could not draw any conclusions from this as it was not the full report. Also a letter from Dr Wee dated 22 November 2018 was provided. In reference to cognition this simply stated 'There is some ongoing fluctuation but overall with improvement in her anxiety seems to be causing fewer problems'. Similarly I could not draw any conclusions about TXY's capacity at this time based on this correspondence.

It is noted that the enduring power of attorney came into effect immediately, not when TXY lost capacity.

1. Underlying all of the specific claims, as outlined above, is an allegation that the respondent has consistently, during the period in question, withdrawn funds from TXY's account for his own benefit.
2. Evidence was given that these withdrawals took multiple forms, including transfers to his account, cash withdrawals from the bank, loans, direct payments to himself from superannuation and legal settlements.
3. During the hearing it was pointed out that STL had requested further evidence in relation to a number of claims including cash withdrawals and that this evidence was not available at the date of hearing.
4. As a result, some of the items claimed were withdrawn on the basis that a further claim would be made once this evidence was available. I agreed to this proposal.
5. The items that were withdrawn in relation to the account ending ...791 amounted to $28,400.14 and related to transactions from 21/6/2019 - 3/11/2021, 4/4/2022, 10/6/2022 - 3/2/2023, 2/3/2023, 21/8/23 and 24/11/23 - 22/12/23.
6. The items that were withdrawn in relation to the account ending ...620 amounted to $32,615.00 and related to transactions from 19/11/2019 - 29/11/2019, 5/6/2020, 5/9/2020, 29/11/2022 -19/12/2022, 6/2/2023 and 16/3/2023.

1. WZM has not lodged any information or evidence in relation to the allegations.
2. The evidence presented by STL was clear and showed a consistent pattern of withdrawals or transfer of funds from TXY either to the attorney or for his benefit. In relation to the superannuation and legal settlements there was evidence that the respondent signed documents directing funds be paid to his account. It was explained that the legal settlements related to property disputes and there was no reason why these funds should not have been paid to TXY.
3. I accept that the respondent has been given multiple opportunities to provide an explanation in relation to these transactions and that no explanations have been forthcoming. I have no reason not to accept the evidence and submissions made by STL.
4. I am satisfied that numerous withdrawals have been made which has diminished TXY's estate and that WZM has not provided any explanation in relation to his actions.

Was the attorney acting under the power of attorney?

1. The power of attorney states that it comes into effect immediately. The duties previously referred to therefore also come into affect.
2. WZM had a duty to comply with his obligations to act in the best interests of TXY. There is evidence of transactions and transfers of funds from TXY to himself. I am satisfied that he was therefore acting under the power of attorney. No other explanation has been provided for his actions.

1. No records have been provided by WZM in relation to the withdrawals/transfers set out in the statement of claim.
2. Section 66 requires the keeping of accurate records for all dealings and transactions by the attorney. WZM has therefore not complied with his obligations required by this section.
3. Section 63 requires the attorney to act honestly, diligently and in good faith; and exercise reasonable skill and care.
4. WZM has been given an opportunity to explain the withdrawals that have been made. Numerous relate to withdrawals or transfer of funds to his bank account. Without any explanation about how this occurred I am satisfied that WZM has not complied with his obligations imposed under section 63.
5. The attorney had a fiduciary duty towards TXY. In my view, during the period he has been attorney he has neglected to manage TXY's finances in a situation where those funds were being depleted. His duty to exercise reasonable skill and care was such that he should have taken steps to ensure appropriate management of TXY's finances. There is no evidence that this occurred.

1. Clearly the answer to this question is yes. The following is the loss to the TXY.
2. Based on the uncontested material provided, TXY funds have been depleted as follows:
   • Account ending ... 719 - $20,767.00
   • Account ending ... 620 - $172,810.50
   • Legal settlements - $31,117.50
   • Superannuation withdrawal - $71,987.61

1. As a result of the above evidence, findings and reasoning I ordered WZM to pay TXY the sum of $296,682.61. I also gave leave for a further application in respect of any items withdrawn at the hearing.

[1] GE Dal Pont Power of Attorney 3rd Ed. 2020 at paragraph 8.37.