EPOA & undue influence – A look at Baker & Ors v Affoo & Ors [2014] QSC 46

The presumption of undue influence can be complex.  In the case of an Enduring Powers of Attorney (EPOA”) a person (“the principal”) is allowed to appoint an attorney to make decisions for the principal in relation to health matters, personal matters and/or financial matters.

They are vital documents, particularly in circumstances where the principal has lost their capacity to make decisions.

In cases where the principal is elderly or in some way dependant upon their attorney, it is important for attorneys to take precautions. They need to be aware of the serious legal duties they have to the principal when they enter into a transaction.

The Queensland Supreme Court case of Baker & Ors v Affoo & Ors [2014] QSC 46 is a clear example of the risks involved.

The Facts

The case involved the applicants (“the Bakers”) and the respondents (“the Affoos”) who have a lengthy, complex and interesting history.

What happened?

The late Edward (“Ted”) Blair (deceased) was 89 when he transferred his beloved Kilcoy farm (“the Property”) to a trust (Somerset View Trust), to benefit his close friend and neighbour William (“Bill”) Affoo.

The property was transferred over two separate transactions to Bill’s two sons, Shaune and Christopher, as Trustees of the Somerset View Trust. During this time however, Bill had been appointed attorney under an enduring power of attorney for Ted.

Around the same time of the transfer, Ted prepared a new will without the knowledge of his three children and gave them only $200 each. The residue of the estate was given to Bill and  Ted also appointed Bill and his wife Rhonda as executors to the estate. It was apparent that Ted’s intent was to keep his estate out of the hands of his children, and to prevent a family provision claim, effectively leaving the Estate with Bill and Rhonda.

Ted’s children, the Bakers, commenced an Application against the Affoos, arguing that the transfer of the Property by Ted was as a result of Bill’s “undue influence” under the Enduring Power of Attorney.

The Decision

In these circumstances, property had been transferred from a principal to a relative of an attorney.

Section 87 of the Powers of Attorney Act 1998 (Qld) presumes that undue influence occurs where a transaction occurs between a principal and his/her attorney (or a relation, business associate or close friend of the attorney). That is, it is presumed there was a use of power or influence to pressure the principal into entering a transaction.

The court considered whether the Affoos were able to rebut the section 87 presumption of undue influence.

The Hon Justice Jackson found that despite some evidence being put toward as to Ted’s capacity and intentions at the time, the respondents were unable to rebut the section 87 presumption of undue influence and, on that basis, ordered:

  1. a constructive trust (court imposed trust order) be declared over the Property;
  2. the trustees Christopher and Shaun transfer the property to the executors of the estate; and
  3. the respondents pay the applicants’ costs.

The matter was adjourned for a further hearing in relation to the Family Provision Claim argument.

Our Concluding Remarks regarding Undue Influence 

It is possible that in Bill’s mind, he was acting in a manner which he believed reflected the interests and wishes of his best friend Ted. He accepted the gift of the property and believed that there was no attempt to exert undue influence.

There was evidence that Ted had the intention to disinherit his children for several years prior to his death, however due to his age and dependence upon Bill, among other things, the Affoos were not able to satisfy the court that undue influence had not occurred.

The presumption of undue influence is not the only provision under the Powers of Attorney Act 1998 (Qld) that attorneys should be aware of. There are many other provisions that attorneys should consider when exercising their powers for health, personal and financial matters.

Failure for an attorney to properly consider their duties and requirements, especially in sensitive circumstances such as in Baker & Ors v Affoo & Ors [2014] QSC 46, may expose the attorney to risks of litigation. In this regard, attorneys should prioritise seeking independent legal advice.

For more information regarding EPOA & Undue Influence:

  • an Enduring Power of Attorney, whether it be obtaining one or understanding your duties and requirements; or
  • if you have concerns that a loved one has been unduly influenced;

Please contact our Business Development Team on (07) 3252 0011 to arrange an appointment with one of our Brisbane Estate Lawyers.

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