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POWERS OF ATTORNEY BILL 2000 (No. 61)

Second Reading

Mr LLEWELLYN (Lyons - Minister for Primary Industries, Water and Environment - 2R) - Mr Speaker, I move -

That the bill be now read the second time.

As you will see, I will refrain from a detailed analysis of the clauses of the bill. The bill contains many issues which are designed to simplify the common law. As an aid to members a comprehensive analysis and commentary on the bill is contained in the clause notes. The current Powers of Attorney Act 1934 requires five important amendments:

new provisions for the registration of powers of attorney;

upgrade provisions for enduring powers of attorney to bring them into conformity with the Guardianship and Administration Act 1995;

the adoption of provisions for the mutual recognition of interstate powers of attorney;

inclusion of provision to allow the appointment of 'positions' rather than a named person to act as attorney;

provision of simple forms for making a power of attorney.

The Powers of Attorney Act 1934 was quite a simple and modern act when it was written. However over the years, and on a number of occasions, the act has been the subject of substantial amendments. The Government took the view that if further significant amendments were to be made to this relatively short act, then it ought to be rewritten in a coherent way and in simple modern plain English.

Leaving aside for the moment the question of the registration of powers of attorney which is discussed later, most of the current act and the provisions in this bill for the mutual recognition of interstate powers of attorney are required to enable transactions to take place.

This comes about because there used to be considerable gaps in the common law on the issue of principal and agent. For example, if a person left an attorney to look after the person's affairs while they were absent from the State, at common law there was considerable doubt about whether the donor remained bound by the acts of the attorney once the donor returned to the State. As we will see, without registration people who dealt with attorneys acting under a power of attorney had to make extensive inquiries to ensure the donor had not revoked the power of attorney. The common law as it stood was quite unsatisfactory. Without the act many modern transactions could not take place.

In modern commerce there is a much higher utilisation of powers of attorney than in the past, due principally to the mobility of people and commerce.

The current Powers of Attorney Act 1934 assumes that financial and property transactions are effected on a time scale consistent with the pace in the 1930s when the act was originally passed. No account is taken of the fact that interstate and international transactions often require the execution and registration of documents in a number of jurisdictions at the same time. The current act does not take into account the short notice or short time span in which transactions are frequently required to be effected in modern times.

There are two classes of problems which have come to light. The first situation where a power of attorney is registered in another jurisdiction either as a power of attorney - or some other document such as a debenture, mortgage and so on. Often as a result the original is not available for use in Tasmania.

The second class of problem is where there is insufficient time to enable a dispatch of power of attorney executed outside Tasmania to be registered in Tasmania, before settlement is reached, or the time for the execution of a document expires.

At present if the power of attorney does not arrive in Tasmania on time, the settlement of the transaction must be abandoned until the original power of attorney arrives, or as an alternative a new power of attorney is made and transmitted to Tasmania by the mail or a courier service. All States except Victoria have opted to retain legislation providing for the registration of powers of attorney. There are six main advantages in providing for the registration of powers of attorney.

Firstly, it is an aide in proving that the power of attorney was made. It provides a method by which a person dealing with the attorney appointed under the power of attorney can check to ensure that it is the 'original' document.

Secondly, it will greatly assist in the cases where the original power has become lost or destroyed by accident, as it is now proposed to enable people to prove that a power of attorney exists, by producing a copy from the interstate register.

Thirdly, a major advantage in providing for the registration of powers of attorney is to simplify the problem facing people dealing with a person appointed as an attorney under a power of attorney, of being able to satisfy themselves that the power of attorney has, or has not, been revoked.

Fourthly, without registration if the donor of a power of attorney - that is the person who makes the power of attorney - wants to revoke the power of attorney, the donor would have to seek out the attorney and serve the attorney with the revocation. This can only be done if the attorney can be located. I will return to this issue again in a minute.

The fifth element is that there is a very practical advantage of registration. It will mean that people who are dealing with an attorney will be able to make a search of the register, to make sure that the power of attorney has not been revoked at the time when the attorney signs the document

Finally, the introduction of the mutual recognition provisions will make it much easier for people involved in interstate transactions, to register powers of attorney and obtain the advantages of registration, yet at the same time complete interstate transactions quickly.

The abolition of the registration of powers of attorney can cause problems. Difficult practical problems are now arising in places where registration has been abolished. In those places where the donor of power of attorney wishes to revoke that power of attorney, then the donor must serve notice of the revocation on the attorney. This assumes the attorney can be located.

If there is no provision for registration and if the attorney cannot be located or worse, and the attorney chooses to go on purporting to exercise powers under the revoked power of attorney, innocent people dealing bona fide with the attorney have no means of checking up to ensure that the power has not been revoked. Research has shown that it was this particular problem of potential dishonesty which led the parliaments in England and its colonies, to introduce legislation for the registration of powers of attorney last century.

Therefore, by making provision for the registration of the revocation of the power of attorney or other notices showing the incapacity of the attorney, it provides an outside source of information whereby the person dealing with the attorney can check up and determine whether or not the power has been revoked. In Tasmania members of the legal profession, when canvassed, were emphatic in their support of the retention of the registration of powers of attorney. The government accepts the soundness of this view and for this reason has continued with the statutory provision for the registration of powers of attorney.

There have been a number of instances where a large international company was attempting to invest in Tasmania. A power of attorney had been made outside Tasmania but it was not possible to get the physical document into Tasmania for over a week. This created significant embarrassment in this State. Alternative strategies for these cases have to be found. The Government believes that the provision for the limited mutual recognition of powers of attorney and the provision for electronic lodgement of powers of attorney, will overcome most problems currently faced. At the same time they will retain the advantages of a system of registration of powers of attorney.
A recent practice has developed over the last ten years or more, here and interstate, whereby when an institution makes a power of attorney it appoints a 'position' as the attorney rather than to nominate a person to act as an attorney. This type of attorney document is frequently used by banks and other institutions where there may be a number of persons occupying a position at any given time. Rather than having a separate power of attorney document executed every time a new person occupies that position, an attorney document is created to appoint an attorney by reference to the position the attorney holds rather than nominate a particular person.

There are some legal reservations about this current practice as there is no statutory authority for it. However, as it is now widespread and has been established in Tasmania for well over ten years and as it is a sensible solution to a practical problem, it would seem appropriate to give it legislative sanction. One of the important reasons for doing this, is to give people dealing with an attorney acting under such a power, some protection or relief from having to make excessive inquiries, as to the bona fides of the person purporting to act as attorney in these cases.

The solution contained in this bill is to legislate to give statutory recognition to the practice and provide that a person may in a power of attorney appoint a class of persons to act as the donor's attorney without naming any individual in that class of persons; and where a person who is a member of that class of people purports to act under that power of attorney as an attorney for the donor, states in writing that he or she is a member of that class of persons, and is authorised to act as attorney, then the person dealing with that attorney is not under a duty to check that the attorney has authority to act under that power of attorney.

It would seem clear public policy that if institutions, or other people, chose to make powers of attorney of this kind, then the donor, that is, the person or institution making the power of attorney, should bear the consequences of improper use rather than force the 'other side' in the transaction to make impossible inquiries as to the authority of the attorney. This policy is reflected in the bill.

It is relevant to note that this issue of the need to 'look behind' the document is currently recognised by the banks and other institutions involved in these types of powers of attorney. A consumer protection provision is usually inserted in this type of power of attorney. These provisions purport to relieve the person dealing with the attorney from checking up on the attorney'sbona fides.

There is considerable legal doubt about the effectiveness of these 'consumer protection' provisions in the absence of statutory authority for it. This bill will clear up the doubt in these cases.

I refer now to Part 5 of the bill dealing with 'Foreign Powers of Attorney' which is mostly concerned with the issue of limited mutual recognition of the registration of powers of attorney. These provisions relate both to conventional powers of attorney and those made in a simplified statutory form.

One solution to the registration requirement for powers of attorney is 'Full Mutual Recognition'. While the general concept of mutual recognition in commerce is straightforward, its application to powers of attorney is not. There are existing statutory schemes in Australia for mutual recognition on other matters, for instance, there is legislation which provides that a product which can be lawfully sold in the jurisdiction in which it was produced or imported can be sold in other jurisdictions. Legislation also provides that a person who can practise a profession in any one jurisdiction can practise that profession in any other jurisdiction.

Another example is where an order made in one jurisdiction committing a person to an institution of a particular kind is sufficient to commit the person to a similar institution in another jurisdiction.

Finally, an order issued by a court in one jurisdiction for the payment of a fine may be registered in another jurisdiction for its enforcement et cetera. In those cases, each jurisdiction maintains its own different laws which continue to govern relevant local matters, namely, the sale of locally produced products; locally qualified professional persons; the orders of local tribunals committing persons to institutions; the enforcement of locally imposed fines etc.

The proposals for mutual recognition of powers of attorney in this bill seek to overcome the problem caused by powers of attorney having different legal effects in different jurisdictions, namely, the need to execute separate instruments of appointment of attorney for each jurisdiction, to ensure that the instruments have the intended legal effect in each jurisdiction and, if necessary, can be registered in the jurisdiction.

A scheme of full mutual recognition would only be appropriate if it enabled the preparation of the one instrument to have exactly the same intended legal effect in each jurisdiction.

A scheme for 'full mutual recognition' cannot be applied by providing that the applicable law is the law of the place it happens to be executed, because it may have been executed in that place for use in a different jurisdiction. Equally the law of the place of use cannot be applied because for 'full mutual recognition' it should be available for use in a number of different jurisdictions.

It seems that the only way in which the one document can be prepared with the same legal effect in each Australian jurisdiction is for each Australian jurisdiction to enact uniform laws about the requirements of the execution of powers of attorney and their legal effect. It would be possible under such a uniform scheme to maintain differences that are incidental to legal effect, for example, the requirement of registration of a powers of attorney or for payment of stamp duty as required in some States. This is the scheme adopted by the Standing Committee of Attorneys-General and it is the scheme incorporated in this bill.

The problems sought to be overcome by mutual recognition in this bill include the problems concerning the requirement for registration. Some of those problems can be addressed by a limited form of mutual recognition, namely, by providing that the requirement for registration of the jurisdiction in which a document executed by the attorney is to be used can be satisfied by registration of the power of attorney in any other Australian jurisdiction, and by facilitating the registration in local jurisdictions of powers of attorney executed in other jurisdictions.

Under such a limited scheme the legal effect of the power in the local jurisdiction in which it is sought to be used would continue to be determined by the law of that local jurisdiction. The provisions included in the bill are the draft provisions approved by the Standing Committee of Attorneys-General of Australia.

Mr Speaker, in the course of the preparation of this bill, both the bill in draft form and the detailed clause notes were circulated in 1999 to some 45 individuals and organisations. The groups and individuals targeted for consultation were those known to have an interest in the issue of powers of attorney. They included lawyers, the finance industry - banks, credit unions and others - as well as trustee companies. Consultation extended to national representative bodies and where appropriate interstate offices of some organisations. In the event ten replies were received either in writing or over the telephone. This is perhaps an unfair representation of the interest in the bill because a number of replies were made on behalf of individuals by representative bodies, such as the Property Law Group of the Law Society of Tasmania and the Australian Finance Committee.

I am most pleased that the quite innovative provisions in the bill for statutory recognition of the practice of 'appointing positions' and the 'mutual recognition' provisions received strong consumer support at both a State and national level.

Mr Speaker, I believe this bill is quite innovative, and is both suitable and adaptable to modern life and commerce while providing sound protection for the public. I commend the bill to the House.

I would, however, like to foreshadow my intention of moving a very minor amendment to the bill during its second reading. Parliamentary counsel have identified a minor inconsistency between the wording of clause 31(2) and clause 30. I will move the amendment to address that inconsistency that is there.

Mr LLEWELLYN (Lyons - Minister for Primary Industries, Water and Environment) - Mr Speaker, at the close of the parliamentary sitting last Thursday night I had completed the second reading speech on the Powers of Attorney Bill and I moved that the adjournment occur at that stage so, having completed the speech, I am content and move that it be read the second time.

Mrs SWAN (Lyons) - The Opposition will be supporting this legislation, Mr Speaker, and I will make some remarks - I know it is quite a long second reading speech but I have in fact contacted the members of the Property Law Group associated with the Law Society and they have indicated to me that they are in fact satisfied with it. I know that the second reading speech indicates that members of the Real Estate Institute have been contacted and there is a broad range of people, as I understand it, who have been asked for submissions and they have indicated their support for the redrafting of this bill which of course relates principally to the powers of attorney and also the laws that apply to third parties who deal with such agents, and of course a power of attorney is a most important matter within property law and within the law as a whole because it seeks to represent a donor with regard to a broad range of most important matters and thus it is most important, of course, that we get the legislation right.

But, as I indicated, I have had some contact and been in receipt of the information that the Property Law Group in particular are satisfied with the arrangements. As they say themselves, there is a need in the changing commercial world to upgrade the provisions with regard to mutual recognition and there have been some occurrences just recently within the State where there is a compromising situation if powers of attorney cannot be registered quickly enough and we are in fact sitting around waiting for that power to be registered in the State of Tasmania or for a new power of attorney to be drawn up and that becomes extremely complicated in a world of commercial transactions because of course you can in fact lose commercial deals on that basis and it has the effect of complicating life here in Tasmania in a way which is not appropriate for an economy that needs to be at the forefront with regard to its commercial activities.

Thus it is important that we move ahead with the changes that are occurring and, as I say, it is important for us to have this bill in front of us which represents the redrafting of the 1934 act and the Government has decided that, while a number of amendments have occurred to this act over a period of time, this is the opportune moment for a total redrafting of the bill and the opportunity to place some simple terminology inside that bill so that it is easier to use, and we of course agree with that proposal.

Of course, currently as we know, the situation under what will soon be the repealed act - and we hope will be the repealed act - will provide that powers of attorney are in fact being registered under the Registration of Deeds Act 1935, under the register that is kept pursuant to that particular act, and independently there is a need to create a new register because of course the conversion of general law land title is almost complete and that of course was what the Registry of Deeds was created for in the beginning. So that particular register will soon be closed, as I understand it, to any new registrations and thus we have a need to create a new register, so this is an opportune moment to set up a powers of attorney register.

I know, Minister, that you have indicated that there has been some debate with regard to the proposition of registration within the bill and the determination was that we should in fact have registration which seems to me to be a sensible way to go. The State of Victoria, I understand, is the only State that does not apply registration but we would have to say that the very proposal of being able to facilitate commerce and get some limited mutual recognition of the powers can only be facilitated by having that registration process consistent with those in other States and therefore it seems a sensible move to be doing precisely that.

The minister has of course indicated in his second reading speech that there are a number of reasons for the registration process, not the least of which is proving that the power of attorney was actually made and that gives the person who is actually dealing with that power of attorney the ability to check on the original document. It is obviously of pertinence when an original power of attorney has been lost or destroyed and of course we are then able to get in touch with the register and provide a copy of that particular deed that may have been lost.

A third advantage of course is being able to simplify the problems of people who are dealing with a power of attorney in that they are then able to go to the register and check whether or not that particular power has been revoked and that of course is a much better mechanism than having to seek out the attorney and then find out whether or not there is a power of attorney still in existence and that of course, as we know, can be a particularly frustrating business, in fact incapable of being achieved in some instances, I have no doubt.

Fourthly, it allows the position that, when a revocation of the power is to occur, the revocation can in fact be lodged on the register with the registrar, as I understand it, and this of course changes the position that if in fact there is no register to turn back to we are in a position where we have to seek out the attorney and serve that document on the attorney and that of course can be a complicated matter.

The fifth element that offers advantage is that capacity to search the register at any time to see whether revocation has occurred, so there are a number of advantages that the minister has already indicated in his second reading speech which make a great deal of sense with regard to registration of the powers and we certainly agree with that proposal.

There are a number of other matters of course that are dealt with inside this legislation and, again, they have been mentioned in the second reading speech. It will go on to upgrade the provisions for enduring powers of attorney and bring them into conformity with the Guardianship and Administration Act 1995 and it will again, as I mentioned, adopt some provisions with regard to limited mutual recognition with interstate powers of attorney and also include or at least ratify the position with regard to the appointment of powers of attorney by position which is a commercial practice at the moment that I understand is something that has some need of clarification and certainty within the law, in that there is some current uncertainty with the situation regarding what is an existing and often-used commercial practice.

It also goes on to provide simple forms for the making of a power of attorney and of course those of us who have looked at the old deeds appreciate the intricacy of such deeds. That is not to say you cannot use those deeds; it is quite possible, as I understand it, that we can go on to use those old forms but we can, if we choose, choose one of the more simplified forms that we find at the back of the bill and that no doubt will iron out a number of problems for those who do not want complicated accounts to be listed for their power of attorney.

I will just mention a little to do with the mutual recognition proposal in that the arrangements there - and there has been some debate about this, as I understand, because of the capacity to ensure that a law, if made here, has exactly the same application in every other jurisdiction and thus it has been believed that a limited form of recognition to be done by uniform law is the better way round it, in that we have a provision that will then ensure that the law of place, if you like, is appropriate. If we are seeking to have that power of attorney registered elsewhere, then the law of place may not be the appropriate vehicle to choose. We have a situation where local laws - and of course we would understand that there would be a number of local laws that apply to powers of attorney, such as the differences that exist in different jurisdictions with regard to stamp duties, as an example, would then be allowed to apply. So limited mutual recognition done by uniform means is the way the Government has chosen. That seems to be a sensible means, as I see it, and that will allow the application of differing local laws, that perhaps do not impact totally on the power itself but have an ancillary effect, and allow local law to continue to apply with the ramifications that it has towards the power, but still allow the registration of a power of attorney to be effected in different jurisdictions in a similar format.

As I understand it, in talking to the head of the Property Law Group, the current arrangement could leave you in a position where you are actually required to register your power of attorney seven times over and that would all come accompanied by a fee. I think the current fee is something in the order of $200, so you would have that duplicate effect where, if we are now moving towards the initial lodgment of a power of attorney through all jurisdictions that maintain a register, then of course we have a much cheaper arrangement and we also have a much more efficient arrangement in that it can be lodged and then similarly lodged throughout other jurisdictions without the complication of independently lodging with each register. So we see a deal of sense with regard to those matters.

Minister, I have some questions that I do want to put to you in Committee because it is a fairly long and, as I know you would acknowledge, a not complicated perhaps but certainly intricate bill and there are a number of questions that I would like to put with regard to the effects of some of the provisions, so I will be requesting that we go into Committee. I think that is perhaps all I need to make comment on at this time.

Mr Llewellyn - I do have an amendment that I need to read.

Mrs SWAN - Yes, I appreciate that; of course you will have to go into Committee. I think that is probably all I need to make note of, other than some small note with regard to, as I say, the commercial practice of appointing positions. As you indicate, through your second reading speech, it is appropriate for those commercial institutions that wish to do that, and already currently do that, that they -

Interruption .

Mrs SWAN - I apologise, Mr Deputy Speaker, I had no idea my phone was on.

With regard to the positions that are currently being nominated for powers of attorney, it seems, as you have suggested in your second reading speech, that it is sensible that the commercial institution that undertakes that proposal is the one that bears the brunt of anything that goes wrong and that those third parties who deal with a commercial institution that appoints a power of attorney by position should not be implicated or suffer as a result of dealing with someone who is in fact presenting as an appropriate power of attorney and thus, as you suggested in your bill, it is appropriate that it be reflected in this legislation and we would agree with that. On that point I would simply say that we agree in principle with the bill but would like to ask some questions in Committee.

Mr LLEWELLYN (Lyons - Minister for Primary Industries, Water and Environment) - Mr Deputy Speaker, I thank the Opposition for their support for the legislation and the comments the member for Lyons and shadow spokesperson has made. She really has spoken more to the second reading speech about the issues relating in the speech without seeking further questions about it but we can certainly take those question you have in the Committee stage, so I commend the bill to the House.

Bill read the second time.