New Zealand Law Society - Acting as an attorney under an EPA (property) while donor client may still be mentally capable – duty to communicate with client

Acting as an attorney under an EPA (property) while donor client may still be mentally capable – duty to communicate with client

A Standards Committee has disciplined a lawyer where he acted as attorney for an elderly client over several years under an enduring power of attorney (EPA) in relation to property, that came into effect while she was still mentally capable.

The Committee found that, in deciding to begin and continue acting as attorney, Mr B relied on third party accounts of whether the donor was able to manage her affairs, without any direct communication with her or sending her a letter of engagement. It concluded he had breached several of the Conduct and Client Care Rules and the Trust Account Regulations, determined unsatisfactory conduct and ordered him to apologise and reduce and refund fees and commission.


The lawyer, Mr B, practised in a city and had acted for Mr and Mrs C for many years. Under an EPA, Mrs C appointed Mr C to be her attorney in relation to property, with Mr B as Mr C’s successor. The EPA came into effect while she was mentally capable and would continue in effect if she became mentally incapable.   

Less than two years after Mrs C granted the EPA to Mr C and not long after they moved into a retirement village in a different part of the country, Mr C died. Mr B was contacted by several sources (close friends/extended family and the retirement village) who were aware of his status as successor attorney. They reported that Mrs C was having difficulty managing her affairs; the retirement village provided a note of a consultation with a doctor which referred to dementia. Based on this, Mr B decided to begin acting as Mrs C’s attorney under the EPA, assuming responsibility for her finances. Mr B did not contact Mrs C directly.

Mr B continued to so act for more than three years. At one point, he transferred term deposits from her accounts into his firm’s trust account so that he could have daily oversight of them; he noted this also had the advantage of better interest rates. Mr B kept in contact with the retirement village management and “others”, however, he did not communicate directly with Mrs C.

Mrs C later instructed a local lawyer, wanting to replace Mr B with an attorney who lived locally. Mr B’s firm sought to deduct fees from Mrs C’s funds in the trust account. Mrs C then complained about that and Mr B’s conduct, particularly his lack of communication with her. She also sought a full refund of fees.

Lawyer did not attend the client personally

The lawyer said he believed he had been entitled to rely on the information he received from the management team of the retirement village. He also noted that, over the entire period, Mrs C did not communicate with him, make any enquiry as to her finances or express any dissatisfaction with his dealing of her affairs. He believed that he was entitled to rely on that silence as confirmation that she was not able to deal with her own affairs and was content that he do so.

However, while the Committee acknowledged that under the EPA Mrs C did not have to lose mental capacity before Mr B could act as her property attorney, it said that best practice would have been to meet with Mrs C and discuss the possibility of him managing her affairs on her behalf or seeking a medical certificate as to whether or not she had the capacity to manage her own affairs if her competence was under question. The Committee noted that Mr B did neither, instead relying on “anecdotal evidence from third persons, two of who were not registered medical practitioners”.

The Committee also acknowledged that, if Mrs C had been certified as being incapable of handling her own affairs, Mr B would not have been obliged to communicate directly with her. It said, however, that Mr B had not produced such a certificate.

Because of his lack of direct communication with Mrs C, the Committee found that Mr B had breached rule 3 (competence), rules 3.4 and 3.5 (provision of client care information) and rule 7 (disclosure and communication of information to clients) of the Conduct and Client Care Rules. The Committee also found that, by not issuing regular statements every 12 months to Mrs C, Mr B was in breach of reg 12(7) of the Trust Account Regulations.


While the Committee did not find Mr B’s were excessive, it concluded that Mr B’s firm was not entitled to deduct his final fee from the money held on trust for several reasons. Those included that there was no specific authority to do so, his authority as attorney had been revoked by that time, there was no letter of engagement reserving such right and the firm was aware of dissatisfaction over the fees. The Committee determined that Mr B’s conduct in deducting the fee was a breach of the Trust Account Regulations.


The Committee determined that Mr B’s breaches amounted to unsatisfactory conduct. It ordered him to apologise to Mrs C and reduce the final fee. It also ordered Mr B and/or the firm to refund the commission on interest it had deducted; the Committee noted that was not on the basis that it was unreasonable but because Mrs C had not been given a letter of engagement and therefore had not been on notice that the deduction would be made. Mr B also had to pay $500 in costs to the Law Society.