The Queensland Supreme Court recently explored the validity of numerous enduring power of attorney appointments in the context of temporarily impaired capacity in Lambourne and Ors v Marrable and Ors [2023] QSC 219 (Lambourne).
In the case of Lambourne, Mr Marrable, the founder of Gold Coast Bakeries was hospitalised with a condition which caused him to have impaired capacity, and while on gate leave from hospital, he executed a series of updated enduring power of attorney documents. In this decision, the Court considered Mr Marrable’s capacity and ultimately held that the revocation of the previous enduring power of attorney during hospital leave was valid on the basis that his capacity was no longer impaired despite being an inpatient at the time.
Key takeaways
- An adult is presumed to have capacity for personal or financial matters until the contrary is proven. The onus is on the person seeking an order that the adult’s capacity was impaired to rebut this presumption and prove that the adult’s capacity was impaired.1
- This decision reiterates and demonstrates that an adult’s capacity can fluctuate and is decision-specific.2 Impairment may be temporary. Evidence of impaired capacity for personal decisions may not indicate impaired capacity for financial decisions and these must be assessed separately.
- A principal is not required to have a detailed understanding of their complex financial affairs in order to have sufficient understanding of the “nature and effect” of an EPOA for the purposes of making a valid EPOA. The complexity of a person’s financial affairs or personal circumstances does not require a proportional increase in a principal’s understanding of those affairs.
- While it would be in keeping with sound practice for a solicitor to ask relevant questions of a person proposing to revoke or make an EPOA, the receipt of a recent professional opinion that the principal had the necessary capacity relieves a solicitor of the full extent of that burden.
The context
An enduring power of attorney (EPOA) allows an adult to appoint a trusted person (an attorney) to make decisions about the adult’s personal (including health) matters and/or financial matters when the adult’s capacity to make such decisions is impaired.
Capacity, as defined in Schedule 3 of the Powers of Attorney Act 1998 (Qld) (the Act), means that the person is capable of:
- Understanding the nature and effect of decisions about the matter; and
- Freely and voluntarily making decisions about the matter; and
- Communicating the decisions in some way.
When making a decision about an adult’s capacity, a court or tribunal must presume that the adult has capacity for the matter until the contrary is proven.3 In the context of enduring powers of attorney, there is an implicit presumption that the principal was capable of making the EPOA freely and voluntarily, and that the principal understood the nature and effect of the EPOA.4
The onus is on the person seeking an order that the adult’s capacity was impaired to rebut the presumption of capacity and prove that the adult’s capacity was impaired.5 Noting the nature of these matters and the consequences of finding a lack of capacity, the courts consider that there is a heavy evidential burden upon a party seeking to rebut the presumption and the onus to be discharged is substantial.6
The facts
Mr Harvey Marrable (Harvey) was the primary shareholder of family-owned enterprise Gold Coast Bakeries.
9 December 2020: Harvey executed an EPOA for personal matters in favour of his daughter (Helen) and his grandchildren (Kate and Luke) (the Personal EPOA). He also executed an EPOA for financial matters in favour of Kate and Luke (the Financial EPOA) (together, the 2020 EPOAs). The powers under the EPOAs were expressed to commence when Harvey lost capacity to make decisions for personal (including health) matters and/or for financial matters.
8 June 2022: Harvey was hospitalised with a blood infection. Assessments conducted during the claimant’s admission indicated that Harvey’s capacity was impaired during this time. Harvey’s capacity appeared to improve with treatment of the infection.
17 June 2022: The Applicants raised concerns about Harvey’s capacity and ability to care for himself and opposed Harvey’s discharge.
27 and 28 June 2022: In the presence of a solicitor and while on “gate leave” from the hospital, Harvey executed documents revoking the 2020 EPOAs. Harvey made representations that he wanted to be discharged from hospital to his own home and that he no longer trusted his attorneys to make personal health decisions on his behalf as they were opposing his clear wishes.
12 August 2022: Harvey executed 2 further revocations in respect of the 2020 EPOAs and executed a new EPOA for personal matters and a new EPOA for financial matters in which he named new attorneys (the 12 August EPOAs).
15 August 2022: Harvey executed a final EPOA appointing new attorneys for personal matters and financial matters (the 15 August EPOAs).
The attorneys appointed in the 2020 EPOAs (the Applicants) contended that Harvey permanently lost capacity for personal and financial matters on 8 June 2022 and as such, each of the revocations, the 12 August EPOAs and the 15 August EPOAs were invalid. The Applicants sought declaratory relief under the Powers of Attorney Act 1998 (Qld) (the Act) to the effect that:
- Harvey had impaired capacity for all matters from 8 June 2022, such that his capacity was impaired on the dates of each purported revocation and subsequent EPOA.
- Harvey’s purported revocations and execution of each of the subsequent EPOAs were not valid.
- The powers under the 2020 EPOAs began when the Harvey allegedly lost capacity on 8 June 2022.
Harvey denied that he ever lost capacity and contended that, as he did not lose capacity at any time, the 15 August EPOAs remained valid.
The decision at trial
Capacity sufficient to make an enduring power of attorney
The Court commented on the extent to which a principal must understand his or her complex financial affairs in order to make a valid EPOA regarding financial matters.
Pursuant to section 41(1) of the Act, a principal has capacity to make an enduring power of attorney only if the principal:
- Is capable of making the enduring power of attorney freely and voluntarily; and
- Understands the nature and effect of the enduring power of attorney.
The Applicants contended that, in order to understand the nature and effect of a power of attorney in circumstances where the principal’s assets and financial matters are of increased complexity, the principal must have a proportionately increased contextual understanding of those complex assets and financial matters which are to be delegated to the attorney.7
In the context of this case, the Applicants contended that Harvey could not understand the nature and effect of the power of attorney (and the kinds of decisions which a proposed attorney could make and the powers they could wield under a financial EPOA) unless he could show a detailed recollection and understanding of his assets which included the Gold Coast Bakeries enterprise which underwent a complex restructure in 2021 (after the initial EPOA and before its revocation). At trial, there was an apparent inability for Harvey to recall or understand the details and intricacies of the restructure put in place by him.8
His Honour rejected the submission that there must be a proportionate increase in a principal’s understanding of complex financial matters to make a valid EPOA for two reasons:
- Firstly, requiring a principal to lead evidence of their level of understanding to show a “proportionate increase” in understanding places the evidentiary burden on the principal. This goes against section 111A which presumes that the principal has capacity and places the onus of rebutting that presumption on the person alleging incapacity.9
- Secondly, “it would be contrary to the obvious intention of the Act if a principal, who recognised that he or she was no longer able to engage in complicated business affairs but who knew that his or her wishes… could be acknowledged and fulfilled by the appointment of an attorney, could be denied that because the principal was not able to engage in those complicated business affairs.”10
The Applicants also suggested that the 12 August EPOAs and the 15 August EPOAs were not made “freely and voluntarily”, but rather were the product of undue influence from a proposed attorney, Jason McGifford. The Court disagreed with this contention, and considered that:
“while the criticism of Mr McGifford’s behaviour may be justified and some of his actions may be unworthy, unless his behaviour led to Harvey making decisions about his EPOAs which were not free and voluntary then they are of little moment.”11
The Court further concluded that:
“the maker of an EPOA may rely on others for legal, financial and personal advice both before and after making the EPOA. Reliance is not the same as influence which overrides a free and voluntary act.”12
Harvey’s capacity from 8 June 2022
Medical evidence from Harvey’s admission to hospital and subsequent expert evidence established that Harvey’s capacity was impaired at the time of his admission on 8 June 2022, however the reason for, and permanency of, the impairment remained in dispute. Dr Jones diagnosed Harvey with dementia, while Professor Morris diagnosed Harvey with temporary amnestic mild cognitive impairment.
The Court concluded that the condition which required Harvey to be hospitalised on 8 June 2022 also caused him to have impaired capacity at that time.13 The Court also accepted that it was a “transient condition” which had resolved by the time Harvey attended upon his solicitor on 27 June 2022 and 28 June 2022 to revoke the 2020 EPOAs. From 27 June onwards, Harvey’s capacity was again presumed in accordance with section 111A of the Act.14
In preferring the evidence of Professor Morris over the evidence of Dr Jones, the Court criticised Dr Jones for failing to separate his assessment of capacity for personal decisions from capacity for financial decisions. Dr Jones stated that: “capacity to make a choice about a lifestyle such as where one resides would…overlap extensively with capacity to make financial decisions because both would be intertwined.” Dr Jones did not attempt to assess Harvey’s capacity for financial matters as distinct from personal matters, and this construction of “capacity” is not consistent with how it is defined in the Act.15
The outcome
The Court concluded that:
- On or about 8 June 2022, Harvey Marrable temporarily lost the capacity to make decisions for personal and financial matters. The 2020 EPOAs commenced at that time.
- On or shortly before 27 June 2022, Harvey Marrable regained the capacity to make decisions for personal and financial matters.
- The 2020 EPOAs were validly revoked on 27 and 28 June 2022.
The implications
The case illustrates the importance of ensuring that, when assessing a patient’s capacity, practitioners assess capacity in a way which is consistent with its application under the Act (and differentiates between a patient’s capacity for personal matters from capacity for financial matters). Practitioners also ought to comment, where possible, on how the nature and severity of a patient’s conditions led to the functional and cognitive defects and whether those conditions have led to a temporary or permanent impairment.
The Court also made some comments regarding best practice for solicitors assisting clients with executing EPOAs. On 5 August 2022, Harvey’s solicitors were provided with a report from a clinical neuropsychologist which indicated that Harvey had the capacity to make and revoke an EPOA. Harvey’s solicitor proceeded to assist Harvey with executing new revocations of the 2020 EPOAs and executing the 12 August EPOAs. The Applicants criticised Harvey’s solicitor for failing to ask Harvey any questions about the terms of the EPOAs he was revoking. The Court commented that, while it would be in keeping with sound practice to ask relevant questions of a person proposing to revoke or make an EPOA, the receipt of a recent professional opinion that the principal had the necessary capacity relieves a solicitor of the full extent of that burden.16
The case also clarifies that the complexity of a person’s financial affairs or personal circumstances does not require a proportional increase in a principal’s understanding of those affairs in order for a valid EPOA to be made.
Lambourne and Ors v Marrable and Ors [2023] QSC 219
1 Lambourne and Ors v Marrable and Ors
[2023] QSC 219 [38]
2 Lambourne and Ors v Marrable and Ors
[2023] QSC 219 [48]; Adamson v Enever (2021) 9 QR 33
3 Powers of Attorney Act 1998 (Qld) s 111A
4 Lambourne and Ors v Marrable and Ors
[2023] QSC 219 [42]; Powers of Attorney Act 1998 (Qld) s 41
5 Lambourne and Ors v Marrable and Ors
[2023] QSC 219 [38]
6 Lambourne and Ors v Marrable and Ors
[2023] QSC 219 [43] and [44]; Leigh v Bruder Expedition Pty Ltd (2020) 6 QR 475; Re Caldwell [1999] QSC 182
7 Lambourne and Ors v Marrable and Ors
[2023] QSC 219 [67]
8 Ibid [171]
9 Ibid [102]
10 Ibid [114]
11 Ibid [310]
12 Ibid [313]
13 Ibid [324]
14 Ibid [328]
15 Ibid [321]
16 Ibid [342]
