OPINION: Power of attorney and the authority that goes with it
To enter into a legal transaction on behalf of another person, you need the authority to do so. This is usually provided in the form of a written power of attorney (POA), which authorises you as the agent to act on behalf of the person giving the power (known as the person) within the authority contained in the POA.
In terms of law, an agent cannot perform any act which the person has no legal capacity or mental soundness to perform. Therefore, if the person who gives the POA when he or she is of sound mind, later suffers from a mental illness or severe or profound intellectual disability, the authority granted in the POA ends.
An agent cannot perform a legal act which the person cannot do himself/herself.
For many years, the Law Commission has been investigating enacting legislation to introduce an enduring POA, which continues to be valid when a person becomes incapacitated; or only comes into operation when the person becomes incapacitated, but this does not currently exist in South Africa.
As soon as the person becomes mentally incapable of performing the legal transaction themselves, the authority in the POA falls away.
In the past the only avenue for persons who were legally incapacitated and unable to manage their own affairs was for an interested party to apply to court to have a “curator bonis” appointed to manage the financial matters of the person. This is an expensive procedure as it requires applications to the High Court, including the costs of attorneys and advocates and medical reports. This might be well above many older clients’ financial ability especially when the lion’s share of many elderly clients’ income consists of a monthly pension. However, this avenue is available for appropriate persons.
There is a potential alternative to the appointment of a curator bonis. The Mental Health Care Act of 2002 (MHCA) allows an administrator to be appointed for the care and administration of the property of a mentally ill person or a person with severe or profound intellectual disability, without a court procedure. Application is made to the Master of the High Court in the district where the patient resides. The Master is granted the power to appoint an administrator in terms of the procedures set out in the MHCA. An administrator and a curator are treated similarly by the Master.
The applicant initiates the procedure using a form MHCA 39/CB11, available on the Master’s website or from the Master’s offices. Information required includes the grounds on which the applicant believes the person is incapable of managing his or her affairs, and a medical report showing that the patient is not of sound mind and able to manage his or her own affairs. The Master will cause an investigation to be conducted by an advocate or attorney.
However, the Master ensures that the cost of the investigator is contained. The relatively inexpensive and expeditious administration order procedure which exists is a very useful process to consider.
Jenny Gordoni is the head of retail legal support at Alexander Forbes.