Is there recourse against an administrator or guardian who fail to appropriately manage a represented person’s affairs? The answer is yes. The existing law of negligence allows a claim in damages to be brought against an administrator. The Guardianship and Administration Bill 2018 (“the Bill”) will also bring in new compensation provisions and offences where a guardian or administrator dishonestly uses their powers to obtain a financial advantage.
Guardians and administrators are appointed by the Victorian Civil and Administrative Tribunal (VCAT). A guardian makes lifestyle decisions (where to live, medical treatments) and an administrator makes financial and legal decisions on behalf of a represented person. This article deals with administrators’ liability.
Compensation Claims Against Administrators
A represented person is and remains entitled at common law to claim compensation from an administrator in negligence. There are few reported Court decisions of claims against an appointed administrator – the majority resolve prior to issuing proceedings or prior to hearing. In practice, examples of administrators’ breaches of duty of care include a failure to secure a represented person’s assets, failure to adequately manage a represented person’s estate or failing to invest their assets in their best interests.
The Bill will in some respects now make it simpler for compensation claims to be brought against an administrator, whether the claim is made by the represented person or by an interested party. Interested parties will include an executor of the represented person’s deceased estate, the nearest relative of the represented person, the Public Advocate or any other person determined to have a special interest in the represented person’s affairs. The compensation provisions in the Bill will apply even if an administrator is convicted of an offence, the represented person has died, or the order appointing the guardian or administrator is no longer in force.
Section 181 will allow the Supreme Court or VCAT to order an administrator to compensate a represented person for losses caused by them by contravening the Bill when acting as administrator. This provision mirrors the attorney compensation provision (section 77 of the Powers of Attorney Act 2014 (Vic)). An administrator will be entitled to seek to be excused from personal liability if they establish that they were acting honestly and reasonably and ought fairly be excused.
Specific Transactions Undertaken by Administrators
Section 78 of the Bill allows the represented person themselves or an interested person to apply to VCAT on “any matter arising out of a dealing or transaction in relation to that financial matter” and VCAT will have broad powers to “make any order in relation to the application which VCAT considers appropriate”. An interested person can include anyone who would be entitled to the property of the represented person, or a share of that property under any law.
Take Away Points
Individuals or organisations that are involved with represented persons or their family members should note:
- A represented person or their family or friends can apply to VCAT on any matter arising out of a specific dealing or transaction in respect of that financial matter.
- If a represented person or their family or friends are concerned about the management of their affairs by an administrator generally, they should take steps to investigate what has occurred.
- If, following an investigation, a breach of duties resulting in loss is identified, a represented person or their family or friends are entitled to bring a compensation claim against an administrator.
- Individuals or organisations currently appointed as administrators should make themselves aware of the new obligations, offence and compensation provisions incorporated in the Bill.
If you have any questions regarding a guardian or administrator abusing their powers for their financial advantage or any other matter mentioned in this article, please do not hesitate to contact us.
This article is part of our Guardianship and Administration Bill series:
Click here for Guardianship and Administration Bill 2018 – Overview.
Click here for Guardianship and Administration Bill 2018 – Supported Decision-Making