The powers of an attorney: being under the thumb**

An issue that often arises is the exact extent of the powers an attorney may exercise on behalf of a donor.

One of the leading cases in this area is Taheri v Vitek [2014] NSWCA 209.

In summary the key aspects of the case were as follows:

1. The wife appointed her husband under a power of attorney and granted the husband the standard ability ‘to do on my behalf anything I may lawfully authorise an attorney to do’.
2. The attorney document (as is often the case) also empowered the husband as attorney to act despite any benefit that may pass to him.
3. The husband later used his appointment as attorney to sign on behalf of his wife and guarantee a purchase of land by a company the husband was sole director of.
4. The wife subsequently attempted to avoid her obligations under the guarantee on the basis that the document and wider transaction did not benefit her.

The court held that the wife was bound to comply with the guarantee, regardless of whether the transaction was for her benefit. The decision was primarily based on the term in the appointment document that allowed the husband to act even if the transaction did not benefit his wife.

It was however also confirmed that even if the appointment of attorney document does not specifically confirm an attorney can act against the interests of the donor, the attorney’s actions may still be binding. The reason for this general approach of the courts is to ensure certainty for third parties who reasonably rely on the apparent authority of an attorney.

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** For the trainspotters, the title of today's post is riffed from the Rolling Stones song ‘Under my thumb’.

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