Permanent powers of attorney allow you to appoint a person (“Permanent lawyer“) to act on your behalf in the event that you are unable to do so. Any transactions, including gifts, with your attorney (whether or not actively acting as your attorney) or a relative, business associate or close friend of the attorney will increase an Presumption of impermissible influence.
What is a presumption of influence?
This means that a transaction is assumed to have been brought about by either the Enduring Attorney or a relative, business partner or close friend of the Enduring Attorney through the undue influence of the Enduring Attorney.
Unless proven otherwise, this transaction can be overturned by a court.
An example of where the presumption is made is when a person appoints one or more of their children to be their permanent advocate and gives the child a gift. It is believed that the child exerted improper influence over his or her parents that caused the gift to take place. It is up to the permanent attorney to break the presumption.
In order to rebut the presumption, the permanent attorney must provide evidence that the donor of the permanent power of attorney completed the transaction as a result of his own “full, free and informed thinking”; otherwise the transaction could be put aside.
Interestingly, the presumption also applies to a transaction when a standing attorney is not involved in the transaction and may not have been aware that the transactions were between a relationship, a business partner, or a close friend of the standing attorney. The appointment of a permanent attorney is sufficient to establish the presumption.
What elements are considered to refute the presumption of undue influence?
A recent case agency has examined practical concerns regarding transactions between a principal and a permanent attorney.
The Birch v Birch Ors affair concerned a transaction between a principal and a standing attorney. In this case, the relevance of a parent-child relationship was examined by the Queensland Court of Appeal, where a son (who was his mother’s lawyer) successfully refuted the presumption of undue influence.
The mother had transferred her stake in an agricultural property to her son, who was also the mother’s permanent attorney.
While the son did not act as a permanent attorney when the transfer of ownership was completed (i.e. the mother signed the transfer herself), the presumption of undue influence was raised by another son as the transferee was the mother’s permanent attorney.
Decision of the court of appeal
The appeals court found that although there was a presumption of influence, nothing about this transaction, which the son, as the enduring attorney, was aware of, which was not shared with the mother. She could decide for herself whether it was in her interest to transfer the shares to her son or not.
The court also found that although there was a relationship between the school principal and the permanent attorney, their mother-son relationship was relevant and the gift could be explained by a mother’s gratitude and affection for her son.
The court also found that the Rector and her husband intended their son to inherit their shares in the family business and that the Rector’s donation of their share prior to her death was consistent with their intention.
Even if a mother-son relationship does not always suppress the presumption of undue influence, it can be relevant to a specific case and in some cases critical.
However, the rebuttal of the presumption almost always requires independent legal and usually financial advice from the client, which was the case here.
Although the son was successful in this appointment, it should be noted that the mere existence of a family relationship between the lawyer and the school principal does not automatically disprove the presumption of undue influence. It is always advisable to seek separate legal and financial advice from the donor.
Do you need legal advice?
Caution is advised when there are transactions in which a lawyer receives a financial advantage from the client or can be perceived as such.
If you intend to give financial benefit to your attorney or are the recipient of financial benefit, it is important that you seek legal advice as soon as possible.
You can contact us by phone or email to arrange your consultation; either in person in one of our offices, by telephone or via video conference.
The content of this article is intended to provide general guidance on the subject. Expert advice should be sought regarding your specific circumstances.
Comments are closed.