Clematis 29 September 2017
ADULTS WITH IMPAIRED
DECISION MAKING CAPACITY AND A POWER OF ATTORNEY UNDER SOUTH AFRICAN
CIRCUMSTANCES
Social workers and
medical practitioners all have some form of experience of adults with impaired
decision-making capacity. You can give moving testimony of family members
battling with this occurrence and not always knowing what they are allowed or
not allowed in terms of the law. Medical practitioners and social workers might
also be at a loss of how to deal with such a situation on a practical and day
to day level.
During my years of
practice, I was consulted on numerous occasions to assist family members with
legal advice on this topic. I held Court appointments to act as a curator-ad-litem and to report to the
High Court in terms of the High Court Rules. This is the very last thing
children [because it is normally the children that has to act] want to do and
mostly there is not enough money to pay the legal fees.
Given the situation, the
very last thing on anybody’s mind will be the legal principles that relates to
a power of attorney [“PoA”] and it is perfectly understandable. It stands to
reason that this situation should of necessity be cleared out prior to such a
situation arising but for a sudden emergency such as a motor vehicle collision
or such like trauma.
The thrust of this
article is to give an overview of South African law pertaining to a PoA vis-à-vis an adult patient with impaired
decision-making capacity. Please note that I am not referring to overseas legal
principles for a very good reason, namely it is completely different from our
legal situation.
Please note that this
article does not constitute legal advice; you are advised however, to consult
your own lawyer. Each case hinges on its own facts and circumstances.
What is to be done in
such a situation? Let us limit us to, for instance, where a patient develops dementia – it develops over time and
gives ample time to the patient and family to obtain legal advice before it is
too late. Unfortunately, this does not happen often; in fact, family almost
always get to a lawyer when dad or mom are far gone! How tragic, because
lawyers can do a lot to bring some kind of rationality into the situation.
A PoA is a unilateral act
with only one party acting and that is the principal who executes a written PoA.
An agreement by contrast is a multilateral act between two or more parties. A
testament is also a unilateral act – it is executed only by one party and that
is the testator or testatrix.
In this article, I stick
to the legal relationship vis-à-vis
the PoA, an aging parent [the principal] and an adult child [the agent].
REQUIREMENTS FOR A PoA IN
THIS CONTEXT
The requirements for a
valid PoA may be summarised as follows:
- · The aging parent must, when granting the PoA, have contractual capacity and so must the adult child have contractual capacity.
- · It must be physically and juridically possible [only lawful acts] to execute the PoA.
· If a PoA is subject to a suspensive
condition, it must be fulfilled. A PoA may therefore be granted with the
intention that it will become legally effective only when a future condition is
fulfilled. If that future condition is fulfilled, then the PoA is legally
effective.
CAPACITY OF THE PARTIES
The principal [your dad
in this article]
If
your dad gives you a PoA, it is a question of fact whether he was mentally
capable of doing so at the time. If he was mentally not capable of signing the
PoA, it is a nullity from the beginning and of no force and effect. If,
however, he was capable of understanding the nature and consequences of the
particular act, then that PoA is valid until he loses his legal capacity to
act.
Incidentally,
the same argument hits at the validity of the execution of a testament. If the
testator/testatrix is of unsound mind and incapable of managing his/her own
affairs, and such a person purports to execute a testament, that testament is
tainted from the beginning with a nullity and maybe set aside by a Court of
law.
The agent [you acting on behalf of your dad]
If you lack mental
capacity to act, then you cannot act in terms of the PoA at all. You cannot
even act on your own behalf, let alone on behalf of someone else. It is also a
question of fact whether you were mentally capable of acting legally at the
time.
TYPES OF PoA
General
A general PoA is exactly
that and it means that the agent can more or less do anything that the
principal [your dad] could have done if he had chosen to do it personally. You
are however, bound by the specific terms and conditions in the PoA and you
cannot go beyond that.
Special
A
special PoA grants specific powers to the agent to do a limited number of
things, for instance the PoA to give transfer of property. The agent is bound
to execute only that specific thing, in this instance to pass transfer of the
property from the owner to the new owner. When that is done, the PoA is no
longer of any force or effect. This specific PoA to transfer property is
prescribed by law.
Another
example is where you got the PoA to buy a specific motor vehicle for a specific
price that is sold at a specific motor dealership – the PoA comes to its
natural end when you have executed it exactly.
If
you have however, not executed it exactly, then your dad [being the principal]
might ratify your actions later. It goes without saying that if your dad lacks
the mental capacity, he cannot ratify it.
FORMALITIES
The
type of PoA I am referring to in this article is by nature and form reduced to
writing. The document is the source of the agent’s powers to act on behalf of
the principal.
Generally,
there are no prescribed formalities for a PoA.
It
is not subject to stamp duties at all.
SCOPE AND EXTENT OF
AGENT’S AUTHORITY
The
scope and extent of the agent’s authority is clearly described in the written
PoA and you should have regard to that. The principal is free to limit the
powers he gives to his agent or to extend it as wide as is possible.
The
PoA’s you can buy at bookstores are generally extremely wide and all inclusive.
If that is what your dad wants to grant you, that is fine.
When
there are ambiguities the PoA should be interpreted in a normal manner like any
other legal instrument.
It
goes without saying that there are certain acts that are in its nature outside
the scope and extent of a PoA for example the agent cannot get married to
anybody on behalf of the principal. Another example is that the agent cannot
vote in a governmental election on behalf of his principal.
LEGAL EFFECT VIS-Á-VIS 3RD PARTIES
When
an agent enters into a contract in terms of a valid PoA, he is not bound by
that agreement. The principal and not the agent, is bound to the other party in
terms of the contract. The agent is protected from liability arising from the
agreement.
Let
us briefly examine the situation where the agent knows that the principal is no
longer of a sound mind and is incapable of managing his/her own affairs and
despite that knowledge, continues to act in terms of the PoA. What is the
position then? Shortly, the agent will become liable to the other contracting
party in terms of the contract. In light of the fact that the principal [your
dad] is incapable of signing the PoA, he cannot ratify your actions and you
remain bound. The other contracting party might hold the principal liable and
the principal consequently have a right of recourse against his agent.
TERMINATION OF A PoA
PoA’s
come to an end some time or another.
Once
again, the PoA is the primary source to determine when and how it comes to an
end. Having regard to a special PoA, it comes to its natural end when the agent
has executed his/her duties.
The
PoA might even have a clause stipulating how and when it comes to an end. For
instance, it might stipulate that it comes to an end at a specific date or on
the fulfilment of a specific condition.
The
PoA comes to an end in the event of the death of either the principal or the
agent.
The
principal may at any time revoke the authority to act on his behalf.
It
becomes clear that if the principal is no longer in a mental state to manage
his/her own affairs and is of unsound mind, then he/she cannot revoke the
authority – it terminates automatically under these circumstances. This is how
it works presently under SA law because there are no principles in respect of
an enduring power of attorney in place to legalise the situation.
What
is the situation where the PoA states that it is irrevocable? The general rule
in law is that a principal has the power to revoke a PoA. The South African
Reform Commission [“SALRC”] states that there is authority to the contrary; it
should be noted that this is still open for debate and for the Constitutional
Court to pronounce on it; I am of the view that the legal sentiment is
overwhelmingly against it.
Change of status of the principal
If
the principal can no longer legally act for himself, then the PoA has come to
it end. In other words, if the principal has lost his legal capacity by reason
of him being of an unsound mind, the status of that principal has changed and
consequently the relationship between the principal and the agent has been affected
negatively and came to an end. This occurrence goes to the heart of the matter!
The
termination of a PoA occurs automatically when the principal dies.
Change of status of the agent
If
the agent dies, that is the end of the PoA.
It
goes now without saying that if the agent becomes of unsound mind, then it is
also the end of the PoA.
If
the agent’s estate is sequestrated, that terminates the PoA.
In
the event where the agent is an unmarried female and she gets married her legal
status has changed. Does it have a negative effect on the PoA? In the distant
past, it had indeed a negative effect especially if she married in community of
property. Do you remember the days when a husband who was married in community
of property, had the marital power over his wife? Well, that is thankfully
something that indeed belong to the distant past.
The
Matrimonial Property Act 88 of 1984, as amended, is applicable and presently
the marital power of husbands is excluded in terms of section 12 of this Act.
This means, that although the legal status of an unmarried woman changes with a
marriage in community of property, it does not affect the PoA negatively.
APPOINTMENT OF A CURATOR
FOR THE PATIENT
When
a person loses his/her legal capacity to legally partake in the legal sphere,
it is necessary to approach the High Court for the appointment of a curator. A
curator acts in his/her own name on behalf of the person, as opposed to the
actions of an agent in terms of a PoA. An agent in terms of a PoA does not act
in his/her own name but in the name of the principal.
It
is an expensive and time-consuming exercise to obtain such an appointment. The
applicant who approaches the Court must file affidavits and medical reports
from two medical practitioners of which one should be a psychiatrist. The court
first appoints a curator-ad-litem [an
advocate or an attorney] who must investigate the situation and report back to
the Court. If the Court is satisfied with this report it might issue an order
appointing a curator bonis who then
takes charge of the affairs.
This
is the legal way of doing things under these tragic circumstances.
Unfortunately,
in a great number of cases, it doesn’t happen at all; even the SALRC is aware
of this situation. People that continue acting in terms of the now defunct PoA
is taking the law into their own hands and are exposed to being held liable in
personal capacity to the full extent.
This
situation cries out loud for Government to act speedily and to rectify matters.
THE CONCEPT OF AN ENDURING
PoA?
It is definitely not
operative in the RSA.
It is, however, operative
in inter alia England, Scotland,
Australia, Canada, New Zealand and some states in the United States of America.
The SALRC is working on
it for a number of years. It should be noted however, that it has submitted its
report to the relevant Minister and that is as far as my information goes! Your
guess is as good as mine – we simply don’t know what is going to happen.
I have in the past
presented a number of lectures to interested parties about this situation and I
am acutely aware of the necessity of having something like an enduring PoA in
place. We are also aware that on a day to day level, people continue to act on PoA’s
that are legally no longer in force because the principal’s mental capacity
have been so impaired that he no longer has legal capacity. The agent, mostly
the patient’s child, is at risk to be held liable in law for acting on an
invalid PoA.
POSSIBLE SOLUTIONS TO THE
CURRENT PROBLEM
Seek legal advice well in
advance to see how to effectively address the situation.
You should seek legal
assistance in good time to draft, for instance, a valid agreement between the
parent and a child. There is a world of a difference between an agreement, a
PoA and a curator bonis.
If an agreement, for
instance to act as a manager of the business of the aging and frail father, is
concluded prior to him losing his legal capacity, that agreement is not tainted
by the subsequent deteriorating parent – this is how I see matters. This kind
of agreement might be the solution for the lack of an enduring PoA and it might
be tailor made to suit the parties best interest.
If a parent is still of a
sound mind but starts suffering from any sort of dementia you should also have a good look at the testament. It
becomes important not to have a financial institution to be appointed as an
executor in the estate – rather stick to a family member who knows what is
going on. If it is a financial institution, it will request the family member
in any case to step in and to submit documents and information to it to
administer the estate. I am of the view that it is the last and probably the
ultimate good deed to your ailing parent to look after him or her and their
affairs in a legally sound way.
Please get in touch with me to discuss this situation further.
NEELS
COERTSE
PRACTISING
ATTORNEY & NOTARY
E-mail address: neelscoertse@wirelessza.co.za
48
MIDDLE ROAD
MORNINGSIDE
SANDTON
011-783-2248
084-456-1030
