VCAT – Guardianship and Administration
This page is relevant to residents of Victoria – the Victorian Civil and Administrative Tribunal is a State tribunal.
VCAT deals with many areas of law. This page deals with its jurisdiction in “guardianship” matters – this is a broad concept, but refers to matters where a person’s affairs are under some form of administration, or are intended to be.
A person’s affairs might have to be administered by another person or body because of incapacity such that they cannot manage their own affairs.
The Tribunal’s main area of operation in the guardianship division is in relation to financial (enduring) powers of attorney and administration orders.
This legal practice deals principally in these areas.
The Tribunal has wide powers in relation to powers of attorney, for example it can (this list is not exhaustive)
- give an opinion about a power of attorney – for instance, whether has been validly signed and/or otherwise complies with the relevant legislation
- award compensation for breaches by an attorney (see our elder financial abuse website in relation to this)
- revoke, suspend or vary a power of attorney
- require an attorney to provide accounts
- declare whether a transaction undertaken by an attorney is valid
- give authority for or an opinion whether a transaction by an attorney involves a conflict of interest
- resolve disagreements between attorneys
- declare whether a revocation of a power of attorney is valid
- relieve an attorney from personal liability
An elderly person’s capacity to make a financial power of attorney often arises at VCAT (often in the context of family disputes/sibling disputes).
This is an important area of oversight by VCAT because:
- an attorney is in a fiduciary relationship* to the donor of the power
- an attorney with full powers (which is invariably the case) can do anything the donor of the power could do if s/he had capacity
- the donor of the power, who has lost capacity to make her/his own decisions, cannot then revoke the power if something goes wrong
When does a person have capacity to make a power of attorney?
This is a relativey complex area of law.
The legislation controlling powers of attorney (the Powers of Attorney Act 2014 (Vic.)), states that the person must have “decision making capacity“, and goes on to provide some things that the person must understand (s23(2) of that Act). The legislation states that understanding a decision to make a financial power of attorney “includes understanding the following matters” – these matters are (the donor of the power is called the “principal“):
- that the principal may place conditions in the power and give instructions in the power about the exercise of the power
- when the power can commence (for example, that it can commence immediately or only upon incapacity, or at some other defined time)
- that once the power does commence, the attorney can do anything the principal could do as defined in the power
- that the principal can revoke the power when the principal has capacity, but cannot revoke it when s/he loses capacity
- that the power contines even if the principal loses capacity (this is the legal meaning of “enduring”)
The person making the power may understand these matters after an explanation given by, for instance, an advisor like a solicitor.
In practice it is often difficult to determine whether capacity is present and the Tribunal is often called upon to make determinations. Medical evidence will invariably be needed.
Where there is no financial power of attorney in place, and the person (with an incapacity) needs a decision or decisions to be made of a financial or legal nature, the Tribunal may be called upon to make an administration order.
An administration order is like a financial power of attorney, but the administrator is chosen by the Tribunal.
An application has to be made to the Tribunal for an administrator to be appointed, under the Guardianship and Administration Act 2019 (Vic.).
Anyone over the age of 18 can apply to be the administrator, but the person must be suitable as provided for in the Act. An organisation can be appointed, such as State Trustees.
The Tribunal will look closely at the suitability of the applicant, including the applicant’s expertise and the relationship of the applicant to the person to be represented.
The person to be represented’s will and preferences, where they can be ascertained, must be taken into account.
The Tribunal must favour a relative of the person rather than a non-relative.
Many other relevant considerations will be taken into account.
The person appointed may be given full powers or limited powers, according to the needs and circumstances of the person to be represented.
An order for remuneration of the person appointed as administrator may be given. If an organisation such as State Trustees is appointed a remuneration order will usually be made.
The administrator will have to file financial accounts with the Tribunal on an annual basis, or as ordered.
Note that administration orders relate to financial and legal matters only, not in relation to personal/guardianship matters. Those matters are the subject of guardianship orders.
These orders are also controlled by the Guardianship and Administration Act.
The process to obtain a guardianship order is similar to that for the administration order. A person may apply for both an administration order and a guardianship order, but when the application is made there must be a current need for a decision to be made.
Guardianship matters are in practice almost always about where the person is to live and who can see the person.
Powers of attorney compared with administration and guardianship orders:
All financial, legal and personal/guardianship powers can be given in a power of attorney.
It is desirable, and good estate planning practice, for a person to make a financial power of attorney (Enduring Power of Attorney (Financial)). You then appoint the person of your choice. If you lose capacity and accordingly cannot make the power of attorney, and a decision has to be made, then someone will have to apply to VCAT for an administration and/or a guardianship order. You will have no choice who this person is, and there will be costs and delays involved. If an organisation like State Trustees is appointed your estate will incur costs, often significant costs.
You can now appoint a person (or persons) in the Enduring Power of Attorney (Financial) to carry out both financial/legal and personal/guardianship decisions. You only need the one document to achieve this (since the change to the legislation in 2015).
*in the context of a power of attorney, a fiduciary relationship is special relationship between the donor of the power and the attorney. It is a relationship of trust and good faith where the fiduciary (the attorney) must act in the best interests of the donor. This is a relationship recognised by law. A fiduciary must not put his/her own interests ahead of the interests of the donor, or act where there is conflict in relation to those respective interests.