Conflict Transactions under the Powers of Attorney Act 2014 (Vic)

The Powers of Attorney Act 2014 (Vic) (the Act) provides strict rules that attorneys under an enduring power of attorney (POA) are subject to.

Conflict Transactions

Section 64 of the Act provides that an attorney for financial matters under a POA is under a duty not to enter into a conflict transaction.

A ‘conflict transaction’ is defined as a transaction where there is, or may be, a conflict between the duty of the attorney to the principal under the enduring POA and the interests of:

  • The attorney;
  • A relative of the attorney;
  • A business associate of the attorney; or
  • A close friend of the attorney.

Permitted Conflict Transactions

Despite this duty against entering into conflict transactions, section 65 of the Act refers to permitted conflict transactions.

If an attorney wishes to enter into a conflict transaction, they must first seek authorisation to do so from the principal or the Victorian Civil & Administrative Tribunal (VCAT). Authorisation should be sought from VCAT in circumstances where the principal lacks capacity in relation to the decision to enter the conflict transaction.

In circumstances where a conflict transaction has already been entered into, validation of the transaction can be sought from the principal or VCAT, whether the transaction has been completed or is still in progress.

In such circumstances, the Principal will again only be able to validate the transaction provided that they have decision-making capacity in relation to the transaction, at the time of the validation.

Where the principal or VCAT validate a conflict transaction that has already been entered, the transaction is taken to be valid from the date of commencement of the conflict transaction.

Authorisation and Validation from VCAT

In order to seek authorisation or validation of a conflict transaction from VCAT, an ‘Application for Order Powers of Attorney 2014’ form must be completed and lodged with VCAT.

The application allows for reasons for the application to be listed. In addition, a supporting affidavit can be annexed to the application, providing evidence in support of the client’s claim for authorisation or validation of a conflict transaction.

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