February 2024

The number of registration of Enduring Power of Attorney (“EPOA”) in the High Court Registry has shown a rising trend in recent years. The Enduring Powers of Attorney Ordinance Cap.501 enables a Donor to appoint an Attorney to handle his or her financial affairs even after the Donor becomes mentally incapacitated by way of an EPOA. As the document is of vital importance if a person unfortunately becomes mentally incapacitated, it has to be certified and witnessed by a legal practitioner for identity of the Donor and also by a medical practitioner for mental capacity of the Donor at the time of execution.

While the control of the Attorney under the EPOA is so important, in particular the Donor has no mental capacity upon the use of the EPOA by the Attorney, the Ordinance has some sanctions in this connection. Section 11(1) of the Ordinance affords protection to the Donor, by providing that the court may, on the application of an “interested party”, require the Attorney to produce records and accounts and make an order for auditing, revoking or varying the Attorney’s powers or in cases where the court is satisfied that the interests of the Donor so require, to remove the Attorney. Section 12(1) of the Ordinance explicitly states that the Attorney’s duties towards the Donor are of a fiduciary nature. Section 12(2) of the Ordinance sets out that the Attorney has a duty to exercise the power honestly with due diligence, keep proper accounts and records, not to enter into any transactions where a conflict of interest would arise with the Donor and not to mix the property of the Donor with other property.

In brief, in case of breach of fiduciary duty on the part of the Attorney under the EPOA, an “interested party” can take out an application to the court for relief, though who can be an “interested party” under the Ordinance is not defined. A beneficiary of the estate of the Donor or a direct relative of the Donor is likely to be an interested party. The situation may become undesirable if the Donor is single with no direct relative surviving and a third party, for example a close friend, co-habitant or church member of the Donor, is literally not eligible to seek relief from the court to sanction the wrongful or dishonest act of the Attorney under the EPOA.