Avoid conflict transaction
73 Avoid conflict transaction
An attorney for a financial matter may enter into a conflict transaction only if the principal, or the court under section 118(2), has authorised the transaction, conflict transactions of that type or conflict transactions generally.
Note—
However, see section 105 (Relief from personal liability).
Despite subsection (1), if an attorney enters into a conflict transaction without obtaining an authorisation mentioned in subsection (1) for the transaction, a conflict transaction of that type or conflict transactions generally, the principal may retrospectively authorise the transaction if the principal has capacity to do so.
A conflict transaction authorised under subsection (2) is taken to be, and to have always been, as valid as if it had been entered into under an authorisation given by the principal before the attorney entered into the transaction.
Note—
See also section 118(3) in relation to the retrospective authorisation of particular transactions by the court.
Subsection (5) applies if an attorney enters into a conflict transaction without obtaining an authorisation mentioned in subsection (1).
To remove any doubt, it is declared that, until the conflict transaction is authorised under subsection (2) or section 118(3), the attorney has acted contrary to subsection (1).
A conflict transaction is a transaction in which there may be conflict, or which results in conflict, between—
the duty of an attorney towards the principal; and
either—
the interests of the attorney, or a relation, business associate or close friend of the attorney; or
another duty of the attorney.
Examples—
1 A conflict transaction happens if an attorney for a financial matter buys the principal’s car.
2 A conflict transaction happens if an attorney for a financial matter lends the principal’s money to a close friend of the attorney.
3 A conflict transaction happens if an attorney for a financial matter rents the principal’s residential property to the attorney or a relative of the attorney.
4 A conflict transaction happens if an attorney for a financial matter uses the principal’s money to pay the personal expenses of the attorney, including, for example, the attorney’s personal travel expenses.
5 A conflict transaction happens if an attorney for a financial matter buys the principal’s house.
6 A conflict transaction does not happen if an attorney for a financial matter is acting under section 89 to maintain the principal’s dependants.
However, a transaction is not a conflict transaction merely because—
the attorney is related to the principal; or
the attorney may be a beneficiary of the principal’s estate on the principal’s death; or
by the transaction the attorney, in the attorney’s own right and on behalf of the principal—
deals with an interest in property jointly held; or
acquires a joint interest in property; or
obtains a loan or gives a guarantee or indemnity in relation to a transaction mentioned in subparagraph (i) or (ii).
Also, to remove any doubt, it is declared that the making of a gift or donation under section 88 is not a conflict transaction.
A conflict transaction between an attorney and a person who does not know, or have reason to believe, the transaction is a conflict transaction is, in favour of the person, as valid as if the transaction were not a conflict transaction.
In this section—
joint interest includes an interest as a joint tenant or tenant in common.
This Act’s bill:Explanatory memorandum
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