EXAMINING ACCESS TO FORMAL JUSTICE MECHANISMS FOR VULNERABLE OLDER PEOPLE IN THE CONTEXT OF ENDURING POWERS OF ATTORNEY.

• Date: 01 January 2019
• Author: Purser, Kelly

INTRODUCTION

As Australia faces the reality of an ageing population, the incidence of elder abuse is expected to rise. (1) Older people may be vulnerable to abuse for a variety of reasons including ill health, frailty, isolation, disability and/or cognitive impairment. (2) Abuse can take many forms, including neglect as well as physical, psychological, sexual, and financial abuse. (3) This last category of abuse, and the (inadvertent) role played by enduring powers of attorney (EPAs) in its facilitation, is the focus of this paper.

EPAs provide a mechanism through which a person can appoint a substitute decision-maker to make a legally recognised decision on her or his behalf in the event that the person becomes personally incapable of making the decision in question. Theoretically, EPAs promote autonomy as the individual can nominate a person or persons they trust to make decisions for them after the loss of legal capacity. However, there is a growing evidence base suggesting that the misuse of EPAs provides a relatively unchecked vehicle for elder abuse. (4) This is because once the donor loses capacity, she or he can no longer scrutinise the conduct of the substitute decision-maker/s. While the EPA itself can create a risk of abuse, there may also be other factors contributing to and heightening the risk of financial abuse for older adults such as dependence, disability, failing physical health, depression, socio-economic status, cognitive impairment, and social isolation. (5)

Although elder financial abuse (including financial abuse through enduring power of attorney mis-use) is attracting increased attention, the evidence base is still relatively limited. (6) This is particularly the case in relation to access to justice issues, i.e. whether and how older people can avail themselves of remedies for where abuse has taken place. Furthermore, where remedial action is sought, there is limited evidence as to legal outcomes after what can be protracted, costly and emotionally draining litigation. Litigation may need to be taken against family members upon whom the individual is reliant, further increasing the complexity of the situation. Whether the claim is brought on the basis of statutory or equitable principles will also be relevant. The objective of this paper is to add to that evidence base by exploring the ability of vulnerable older people to access formal justice mechanisms to seek redress from abuse perpetrated through the misuse of a valid EPA, and the obstacles they may face.

The first part of this paper considers issues of definition in relation to a number of key concepts in this context: when an individual becomes 'older'; what constitutes a valid EPA; what constitutes 'elder abuse' and, specifically, the nature of 'elder financial abuse'; and the meaning of financial capacity. The second part of this paper discusses the prevalence of elder financial abuse. The third part of this paper identifies themes emerging from the reported judgements dealing with elder financial abuse including who the victims and perpetrators of elder financial abuse are, the risk factors, and access to justice issues (including how people sought formal redress e.g. by way of equitable relief). The role played by legal professionals and other stakeholder/gatekeepers, such as banks and staff in residential aged care facilities and/or community-based home-care providers, in the identification and prevention of elder financial abuse is also examined. The final part of this paper concludes by setting out practical suggestions and considerations for legal practitioners preparing EPAs in order to minimise the potential opportunities for elder financial abuse created by the misuse of EPAs.

II DEFINITIONS

Given the lack of precise terminology in this context, we will first outline the definitions adopted in this paper.

A Older

According to the World Health Organization (WHO), the term 'older' is generally linked to the age at which someone can retire (although variations between countries exist). (7) The terms 'older' and 'elder' are often used interchangeably, but this usage raises difficulty where 'elder' has a specific meaning within a particular culture. (8) Use of 'elder' or 'elderly' to refer to older persons generally has also been criticised as ageist. (9) The term 'elderly' was rejected in preference for the term older persons in 1995 by the United Nations Committee on Economic Social and Cultural Rights of Older Persons. (10) Accordingly, the language of 'older' and 'older persons' is adopted in this paper, although 'elder abuse' (as the generally recognised term used to described the financial abuse of older persons) is used with reference to financial abuse.

The category of 'older persons' generally refers to people aged sixty or sixty-five and over (in Australia, 'older' for Indigenous and Torres Strait Islander peoples includes fifty and over). (11) The term 'older' and 'older persons' is used in this paper to refer to persons aged sixty-five years and over). (12) A sub-category of the 'old, old', including persons aged 80 or 85 and older, has also been recognised. (13) Identification of an 'old, old' cohort with distinct needs reflects the increased age-related risk of developing mentally disabling diseases, including neurodegenerative conditions affecting cognition such as dementia (although age does not automatically equate to impaired capacity), together with increasing physical frailty. These physiological changes give rise to increasing reliance and dependence on others, and may be a source of vulnerability (including vulnerability to abuse) for persons in the 'old, old' cohort. As with capacity, chronological age in itself is not equivalent to heightened vulnerability to abuse, either for the 'old, old' or for older persons generally. (14)

B Enduring powers of attorney

Enduring powers of attorney (EPAs) provide a formal substitute decision-making mechanism whereby the person executing the EPA (the principal) can appoint another person or persons (the attorney) to make decisions about property and finances on the principal's behalf after the principal has become incapable of making his or her own legally recognised decisions. Although in some Australian jurisdictions, such as Queensland and the Australian Capital

Territory, an EPA can also be made to appoint someone to make personal and/or health-care decisions, this paper focuses on the use of EPAs in relation to property and finance. An individual must be over eighteen and have capacity to be able to execute and/or revoke an EPA, or to be appointed as an attorney. Appointments can be made severally such that attorneys can make decisions independently, or jointly where all attorneys must make the decision. Attorneys have significant obligations at law under the various statutory regimes, (15) and in equity as the attorney/principal relationship is fiduciary in nature. (16)

Ideally, EPAs facilitate individual autonomy by enabling a person to appoint a substitute decision-maker directly rather than having an administrator appointed for that person. EPAs are relatively inexpensive and accessible, with no ongoing maintenance costs, registration, or court intervention required. (17) As noted by Justice Lindsay in Smith v Smith (18) EPAs are promoted 'as a "self-help" alternative to more formal regulatory appointments of an office holder to manage the affairs (the estate and/or the person) of a person who, unable to manage his or her own affairs, is in need of protection.' (19) At the same time, the absence of public intervention and oversight which makes the EPA an accessible, inexpensive and 'easy' alternative also creates a heightened risk of financial abuse. (20) The risk of abuse is inherent in the private exercise of authority over another person's money and property, a risk that is intensified where the individual is no longer capable of monitoring the way in which that authority is being used. It has been suggested that EPA abuse is especially likely where inheritance expectation is involved i.e. where a person is named as a beneficiary under a will. (21)

The recent 'paradigm shift' towards supported decision-making (enabling persons with diminished capacity to continue to make their own decisions, so far as is possible and for as long as is possible), rather than substitute decision-making, poses a different kind of challenge for estate planning. Supported decision-making has been proposed by some commentators as a complete replacement for all forms of substitute decision-making, which has been criticised as discriminatory and destructive of autonomy. (22) Others have proposed a continuum on which supported and substitute decision-making co-exist: supported decision-making for as long as possible, allowing for substitute decision-making (including EPAs) if and when the point is reached when supported decision-making becomes unfeasible. (23) That is, once a person completely loses financial capacity and is unable to participate in financial decision-making, a substitute decision-maker will be required. Accordingly, substitute decision-making will continue to be necessary where there is a total loss (as distinct from diminution) of financial capacity, and issues of access to justice following the misuse of an EPA will persist. The continuum approach to supported decision-making has been formally introduced, for example, into legislation in Victoria. (24) Therefore, the response to the risk of EPA associated financial elder abuse should be consistent with a rights-based framework which ensures respect for individual autonomy and dignity, (25) while retaining the necessary protective mechanisms for adults who have lost financial capacity.

C Financial capacity

Financial capacity is a multidimensional, complex concept which addresses the ability of an individual to autonomously control her or his financial affairs in line with her or his own...