Introduction
By its very nature, this paper, should focus on some of the more practical and procedural workings of the Protection of Personal and Property Rights Act 1988 (“the Act”). I promise not to disappoint, but nor do I want to go over ground about which many in this audience will be well familiar. More particularly so, given that but for reasonably significant amendments in 2008 and 2017,[1] this legislation has been in existence for more than 33 years. Although it was unquestionably progressive for the times, times have changed.
At the outset it is important to provide some contextual background to the law and the mounting pressure for reform having regard to New Zealand's burgeoning elderly population; the predicted increase in people with impaired capacity due to dementia and the corresponding growth in the aged care sector.[2]
Some commentators have argued that the social setting in New Zealand is vastly different today than it was in the 1980’s and that the legislation is no longer fit for purpose.[3]
In her seminal 2016 report for the New Zealand Law Foundation, Alison Douglass, a senior lecturer at Otago University and barrister specialising in health and disability law, said:[4]
... Thirty years on, the range of people to whom the PPPR Act applies, and the social environment are very different. The current legal framework is inadequate to respond to the explosion of elder care and the needs of older adults. Changes in the law are important now because of the aging population and prevalence of Alzheimer’s disease ...
... Importantly, the PPRA lacks an adequate oversight mechanism. There has never been a public body that champions it and educates the public and working professional within the health and disability sector about it. For the legal framework to have more integrity, a clear and precise law is needed that is accessible to all ...
Ms Douglass went on to opine that the law is needlessly complex and unclear about two essential concepts. First, the bright legal line, determining whether intervention is permitted in people's lives. Second, the concept of best interests – the standard for making decisions about a person who is unable to do so for themselves. “Best interests” she says, is not a specified decision-making standard within New Zealand, as it is in England; that such a standard should be included in revised law and within our Code of Patient Rights.
Setting the scene
The Act aims to protect the personal and property rights of people who cannot fully – or at all – manage their own affairs.
Underpinning the law is the presumption that every person has capacity, unless the contrary is proven:
a. to understand the nature and to foresee the consequences of decisions in respect of matters relating to her/his personal care and welfare; and
b. to communicate decisions in respect of those matters.[5]
Moreover, the fact that a person may be acting recklessly or with imprudence is not in and of itself sufficient grounds to invoke the jurisdiction of the court under the Act.
Under the Act, court means the Family Court, which has originating jurisdiction in all things. Any party to a proceeding, affected by a final order, may appeal to the High Court as of right,[6] but must first obtain the leave of the court to appeal in relation to an interim or temporary order.[7] The Family Court has a discretion to suspend the operation of any final or interim orders made in whole or in part, pending an appeal but must stipulate, in the body of the order.[8]
Second appeals from the High Court to the Court of Appeal can only be brought if leave has been granted by the Court of Appeal.[9] Every appeal to the Court of Appeal – except on a question of law – will be by way of rehearing of the original proceedings (in the Family Court) as if those proceedings had originated in the Court of Appeal.[10] The Family Court has a discretion to suspend the operation of any final or interim orders made, pending an appeal.
Outside the jurisdiction of the Family Court, and where a vast majority of the business under the Act is done, is the making and operation of enduring powers of attorney[11] which I will have more to say about later in the paper.
Process and procedure
The Act provides for the guardianship of adult persons and the property management of those unable to manage their own affairs. It allows for substitution of decision making, under the supervision of the Court when subject persons have lost their capacity to make decisions. But, it also allows individuals to appoint someone to make decisions in their place, should they lose capacity in the future, by signing an Enduring Power of Attorney.
Criteria for determining capacity
To determine capacity – or lack thereof – the Court will look to the subject person’s ability to follow a logical sequence of thought, in order to reach a decision.[12]
This involves consideration of whether the subject person can:
a. Communicate choice;
b. Understand relevant information;
c. Appreciate the situation and its consequences; and
d. Manipulate information.[13]
Some subject persons may only have partial incapacity. For example, they may have lost the ability to communicate verbally, but are still able to comprehend what is said.[14]
Their capacity may be limited in a particular area of life, making it necessary to consider, both the degree of impairment and how it impacts on their ability to manage their day-to-day affairs.[15]
Where people have lost capacity to make decisions, or manage their affairs, orders can be sought under the Act.
Personal orders
Section 10, the Act, provides a variety of options which allow the Court to tailor orders to meet the subject person’s specific needs. Orders will usually expire after 12 months, but could expire sooner, if there is no further ongoing need for the orders made.
The Court can also specify a date for the orders to be reviewed, and in so doing, stipulate who should apply for review at the appropriate time. The emphasis on review is consistent with the primary objective of the Act (see above) to ensure:
a. that any intervention is proportionate to the degree of incapacity; and
b. that the subject person is at all times encouraged to “to enable or encourage [the subject person] to exercise and develop such capacity as she/he has to the greatest extent possible.”[16]
Section 10 allows orders to be made that provide for:
a. a subject person to enter (or leave) an institution that is not a mental health facility;[17]
b. the provision of living arrangements of a particular type;[18]
c. medical advice or treatment;[19] and
d. the provision of education, rehabilitative, therapeutic, or other services.[20]
Welfare guardianship orders
Welfare guardianship is one of the personal orders that can be made under section 10 the Act.[21]
Section 12 provides that a welfare guardian can only be appointed if the Court is satisfied that:
a. the subject person “wholly” lacks the capacity to make or communicate decisions relating to her/his personal care and welfare; and
b. the appointment of a welfare guardian, is the “only satisfactory way” to ensure that “appropriate” decisions are made as to the subject persons care personal care and welfare.[22]
The Court will not appoint a welfare guardian unless he/she is appropriate for the role.[23] In determining whether a person is appropriate the Court must have regard to the factors set out at section 12 (5) namely –
a. that the proposed appointee is capable of carrying out the duties of a welfare guardian in a satisfactory manner, having regard to the needs of the subject person, and the relationship between that person and the proposed appointee;
b. that the proposed appointee will act in the best interests of the subject person;
c. that there is unlikely to be any conflict of interest arising; and
d. that the proposed appointee consents to the appointment.
Generally, only one welfare guardian can be appointed, unless the Court considers it would be appropriate to do otherwise.[24]
As far as is practicable, the Court will endeavour to ascertain the wishes of the subject person before appointing a welfare guardian.[25]
On the making of an order, the Court will specify a date by which it is to be reviewed, being no later than 3 years after the date of its making.[26]
On its own motion, or at the request of the applicant, the Court may make interim orders under section 10 and 12, pending the making of final orders.[27] However, an interim order will not expire after 6 months, but may be varied or discharged, pending the making of a final order.[28]
Property orders
Under section 11, the Court may make interim and final orders for the appointing a suitable person to “administer [on behalf of a subject person] any property or income or benefit belonging to that person.” This is a more limited form of relief than the appointment of a property manager, and will generally be in relation to property that does not exceed $5,000 in value, or income / benefits in excess of $20,000 per annum.
Before making an order to administer property, the Court need only be satisfied that the order is necessary, that the subject person in not already having his/her property managed, and that there are no other available options.[29]
Under section 31, on application made for that purpose, the Court may appoint one or more suitable persons to act as manager of all of the subject’s property, or part thereof.[30] Before so doing, (as with the appointment of a welfare guardian)[31] the Court must satisfy itself that the proposed appointee is capable of carrying out her/his duties in a satisfactory manner, will act in the best interests of the subject person, and consents to the appointment, if made.[32]
Temporary orders can be made for no more than 3 months, but those orders can be varied or discharged at any time before the making of final orders.[33]
Part 4 of the Act speaks to the functions, duties, and powers of a property manager, which, for the most part, should be read in conjunction with Schedule 1 of the Act. The primary responsibility of a property manager is to manage the subject person’s property in such a way that best promotes the interests and self-reliance of that person. To the extent that she/he is able, a property manager is obliged to consult with the subject person, and exercise their powers consistently with the terms of a personal order, if one is in existence.[34]
Section 42 provides that a personal order will have precedents over a property order.
The role of property manager is an onerous one. Specifically, she/he:
a. must prepare a statement of the property within 3 months of the commencement of managership, and within 30 days of each anniversary of the managership, and within 30 days of the managership ceasing;[35]
b. failure to comply with (a) above is an offence under the Act, punishable by a fine not exceeding $1,000 upon conviction.[36]
Subject to these specific and onerous requirements a property manager is indemnified under the Act, provided she/he has not acted in bad faith, or without reasonable care.[37
Procedure
Part 6 of the Act deals with procedure from the commencement of the proceedings, through to, and including, the final hearing. The procedures are unexceptional, but for the fact that the Court is required to appoint a lawyer to represent the subject person, unless satisfied that the subject person has, or will retain a lawyer privately.[38]
The roles and responsibilities of lawyer for the subject person are closely prescribed under the Act. Specifically, upon appointment she/he must as soon as is practicable:
a. contact the subject person to explain the nature and purpose of the application(s) before the Court, and ascertain and give effect to the subject persons wishes in respect of the proceeding;
b. evaluate solutions for the problem for which orders are sought, having regard to the need to find outcomes that will be proportionate, in relation to the degree of incapacity or incompetence of the subject, and that will enable or encourage the subject to develop and exercise such capacity or competence that she/he may have.[39]
Typically, the lawyer for the subject person will file a report ahead of the first pre-hearing conference, so as to assist the Court in identifying the issues and actions required.[40]
While the subject person may be present at Court, for the purposes of a hearing, she/he may be excused if the Court is satisfied that the person wholly lacks the capacity to understand the nature and purpose of the proceeding, or her/his attendance or continued attendance is likely to cause serious mental, emotional or physical harm.[41]
Generally, the lawyer for the subject person will make a recommendation in her/his first report ahead of the pre-hearing conference, as to whether or not the subject person should be excused and the reasons therefore.
Part 7 of the Act deals with appeals and reviews, which were mentioned earlier.
Enduring powers of attorney
Before the Act, a conventional power of attorney automatically lapsed when the donor of the power no longer had the capacity to understand and appreciate the consequence of the power granted, even though this was often the time when the power was needed the most.
Antidotally, Enduring Powers of Attorney (“EPA”) are now commonplace, frequently done in conjunction with a will, and/or estate plan. Under an EPA, the powers only come into effect, when the donor no longer has capacity. These powers may be as broad or as specific as the donor wishes.
In 2008, Part 8 of the Act was amended, as a result of concerns raised by the New Zealand Law Commission in its 2001 report misuse of enduring powers of attorney.[42] The Law Commission found that, although most attorneys were honest and acted judiciously, some had been found to abuse or misuse their powers. When introducing the legislation to the House of Parliament in December 2006, the then Minister for Senior Citizens, Honourable Ruth Dyson, stated that the bill was designed to prevent the abuse and neglect of older people, through the misuse of enduring powers of attorney. She said:
It strengthens the positions relating to enduring powers of attorney so that the welfare and rights of vulnerable people are better protected. The bill is based on the principle that their welfare and interests should be the first and paramount consideration.[43]
While the 2008 amendment introduced some technical changes into the law, it is mostly known for:
a. introducing the requirement that a donor had to have the necessary capacity when executing the power; and
b. putting in place guard rails to mitigate against the misuse of EPA’s by less than scrupulous attorneys.
Donors of EPAs must obtain independent legal advice, so as to ensure that they understand the effects and implications of their actions. The EPA must be in a prescribed form,[44] and a certificate must be appended to the deed, certifying that the person witnessing the donor’s signature, has explained to the donor:
a. the matters referred to in the prescribed form;
b. his or her right to suspend or revoke the EPA;
c. in relation to property, the donor’s right to appoint more than one attorney, or a trustee corporation; and his or her right to stipulate whether and if so, the attorney’s dealings with the property are to be monitored.[45]
Witnesses must be independent of the donor, appropriately trained and authorised to certify an EPA.[46] The witness must certify that she/he explained certain matters to the donor, was independent of the donee, and had no reason to suspect that the donor was mentally incapable at the time of signing.[47] This may involve obtaining a medical assessment from an appropriately qualified professional, to independently confirm that the donor was mentally capable of understanding the effects and implications of the deed.[48]
An EPA is activated when the donor becomes mentally incapable – something that can generally only be assessed with the benefit of professional advice, either from a medical practitioner, experienced in assessing mental capacity, a specialist geriatrician, a psychiatrist, or psycogeriatricain.
In the event of doubt or dispute, over questions of capacity – in relation to the triggering of an EPA – the Court has jurisdiction to make determinations under section 102 the Act. Specifically, the Family Court has jurisdiction to determine:
a. whether or not any instrument is an EPA; or
b. whether or not the donor of an EPA is mentally incapable.[49]
Where the Court is satisfied that the donor has become mentally incapable, it has wide powers to make a variety of determinations/directions., including, among other things, the making of a will.[50]
EPAs may be revoked by the donor, while she/he is mentally capable of doing so,[51] or suspended by a donor who has been, but is no longer mentally incapable,[52] by the attorney through the giving of written notice to the donor, when she/he is not mentally incapable, or when the donor is mentally incapable, by filing a notice in Court.[53] If, together with that notice, the attorney must file a report stating that:
a. she/he considers it is in the interests of the donor that a welfare guardian be appointed in relation to the donor’s personal care and welfare, and or that a property manager be appointed in relation to the donor’s property; or
b. that she/he considers it is not necessary that for a welfare guardian or property manager be appointed and why that is so.[54]
The Court may revoke appointments of an attorney, on application made by the attorney under section 101 the Act, on application by any of the persons listed in section 103 (1) of the Act, or any other person with the leave of the Court.[55]
But while the 2008 amendments were aimed at tightening up the law, these changes have not succeeded in stemming the flow of abuse by those in positions of trust and confidence. In Vernon v Public Trust,[56] the attorney spent over $436,000 of his 91-year-old fathers’ money over 5 years, allegedly on his care, but for the most part, on himself and his family. The attorney claimed that expenditure of over $400,000 was with his father’s consent.
The High Court rejected these claims and had no difficulty finding that the majority of the funds had been misappropriated through fraud and other deceptive conduct. The son was ordered to repay $280,000 by way of restitution. This decision was subsequently appealed but upheld by the Court of Appeal, who rejected the sons claims that he was acting as agent not as a fiduciary. The court held that while an EPA appoints the donee to act as the donor’s attorney or agent, it does not operate to exclude the imposition of equitable obligations.
…[the] agent must discharge his or her duties towards the principal with the utmost loyalty, honesty, and good faith. He or she must ensure that he or she does not benefit himself or herself at the donor’s expense. And he must act always in the donor’s best interests, in particular where a power is granted for the purpose of preserving and managing the donor’s property.[57]
Shortly put, the duties of a fiduciary always apply to an attorney acting under an EPA, whether the donor has mental capacity, or not.
Mental capacity – the threshold test
Sound mental functioning can fluctuate within us all – even at the best of times. But for the maker of a will, EPAs and or the triggering of same, this can be a challenging and critical assessment – especially in respect of elderly and infirm persons.
The capacity threshold for the making of an EPA, is arguably not onerous.[58] It will generally be met if the donor has an ability to understand and process relevant information, the general terms of the EPA and the choices available together with an understanding of the decision-making process.
Much has been written and spoken about capacity by learned and well-informed people to whom I respectfully defer for the purposes of this paper.[59] Dr Jane Casey aptly summarised the threshold test this way:
…Capacity is not only task-specific but time and situation specific. Accordingly, the review of a will maker’s decision-making, needs to focus on the ability to appreciate their social and contextual circumstances and the ability to provide a rationale for changes in the disposition. The ability to understand and appreciate the situation and foresee the consequences of decision-making are fundamental components to decide in all tests of capacity… [emphasis added]
Conclusion
Given New Zealand’s aging population, it is essential that Government recognise and ensure that elder legislation is relevant, workable, and responsive to those that need it the most. The Act is old but the serious issues arising under it, which I have attempted to address in this paper, continue to evolve.
If we have learned anything over the past 33 years, it is that elder law is a dynamic and highly specialised field, calling for a holistic approach and collaborative approach by health social and legal professionals.
I began this paper by highlighting that some commentators say that the Act, in its present form, has passed its use by date. You can be the judge of that. Certainly, there has been much needed reform of recent times to address issue of concern, but arguably, too slow and not enough.
[1] Sections 93A, 93B, 94 & 94A et ors under Part 9 the Act.
[2] Dementia is a leading cause of incapacity and is expected to affect over 78000 New Zealanders by 2026. See Ministry of Health New Zealand Framework for Dementia Care (2013).
[3] Alison Douglas, Mental Capacity: Updating New Zealand’s Law and Practice (Report for the New Zealand Law Foundation, Dunedin, July 2016).
[4] ibid at footnote 2 above.
[5] Section 5.
[6] Section 83 (1).
[7] Section 83 (2).
[8] Section 82.
[9] Section 84.
[10] Section 85 (2).
[11] Part 9 the Act.
[12] Re F T Auckland Family Court PPPR 68/94 11 January 1994.
[13] K R v M R 2004 2NZLR 847 (HC).
[14] Re S (Hospital patient: Foreign curator) ([1996] Fam 23 (fam)).
[15] Public Trust v CMS [2010] NZFLR 145 (FC) .
[16] Section 8.
[17] Section 10(1)(d).
[18] Section 10(1)(e).
[19] Section 10(1)(f).
[20] Section 10(1)(g).
[21] Section 10 (1)(k).
[22] Section 12 (2).
[23] Re Blackwell Family Court Auckland FP4-20-89 3 October 1989, Robinson DCJ.
[24] Section 12 (6).
[25] Section 12 (7).
[26] Section 12 (8).
[27] Section 14.
[28] Section 14 (3) and (4).
[29] Section 11 (1).
[30] Section 31 (1).
[31] See commentary on section 12 (5) above.
[32] Section 31 (5).
[33] Section 30 (7) and (8).
[34] Section 43.
[35] Section 45 (2).
[36] Section 45 (4).
[37] Section 49.
[38] Section 65 (1).
[39] Section 65.
[40] Section 68 and 69.
[41] Section 74.
[42] NZLC R71, 2001.
[43] Honourable Ruth Dyson (7 December 2006) 636 NZPD7035.
[44] See section 94 A. see also the protection of personal and property rights (enduring powers of attorney forms) regulations 2008.
[45] Section 94 A (6).
[46] Section 94 A (8).
[47] Section 94 A (7).
[48] Section 99 D.
[49] Section 102 (1).
[50] Section 102 (2) see especially (j).
[51] Section 106 (1)(a).
[52] Section 100 A.
[53] Section 104 (1).
[54] Section 104 (2).
[55] Section 102 A.
[56] [2015] NZHC 1928 (HC); [2016] NZCA 388.
[57] Ibid paragraph 37.
[58] Vicki Ammundsen: Capacity – ADLS Cradle to Grave Conference, 2018.
[59] A Douglass, G Young and J Mc Millan, Assessing Capacity: A New Zealand Guide for Doctors and Lawyers, (Victoria University Press, 2019). See also NZLS; Mental Capacity Forum – Readings June 2019; ADLS: Dr Jane Casey, Consultant Psychogeriatrician: The Practicalities (and Pitfalls) of Assessing Testamentary Capacity (2019.)