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Directions

Explanation of use of directions in Power of Attorney

Updated 2 February 2023 · 5 min read

A Direction Regulates The Core Terms Of A Power of Attorney

If you review the suggested framework for a Power of Attorney you will see that a Power of Attorney consists of various parts, including provisions dealing with identification of various officeholders, commencement and termination of the Power of Attorney, conditions of appointment, identification of tasks an agent may perform and similar.

By contrast, a direction acts to qualify the effect and operation of those other matters set out in the Power of Attorney.

Directions and limitations serve a similar purpose, however typically speaking:-

many limitations might be capable of being cast in the form of a directions
many directions cannot be cast as limitations

Drafting Directions

When drafting a direction, care is required to ensure that the direction:-

does not offend applicable legal principles
has a clear meaning
does not conflict with other terms recorded in the Power of Attorney (including any other directions)

Reading Directions

When reading a direction, it is typically best to:-

identify the core terms dealing with identification of agents, the tasks they are authorized to perform and the term (i.e. lifespan) of the Power of Attorney
read the direction as intended to qualify those matters
remember that every Power of Attorney is different and should be read as a whole

Giving meaning and effect to the terms of any legal document is an art for lawyers.

Unless the meaning of a direction is entirely clear it may be open to closer scrutiny, potentially resulting in unforeseen outcomes.

Directions May Be Used For A Wide Range of Purposes

Directions might deal with:-

the term of the Power of Attorney
termination of the appointment of an agent or all of a certain class of agents
how a certain task is preferred to be performed
satisfaction or application of conditions
who may substitute for whom as a successor agent
the term of appointment of an agent
certain tasks an agent is required to perform in particular circumstances
when agents appointed under the Power of Attorney may commence to perform the authorized tasks
how an agent may accept appointment
entitlement of an agent to remuneration or expenses
requirement for an agent to provide a copy of the Power of Attorney to certain persons at certain times
access to records, disclosure of confidential information and similar

Where conditions of appointment are imposed under a Power of Attorney, it may be good practice to useful to:-

include a direction to the effect that any agent in breach of a condition must resign
include a condition of appointment that each agent (or any agent using a class condition) not be in breach of a condition

Examples of Use of Directions

There are some examples illustrating how directions may be used under the heading Using Directions To Control Outcomes in this Wiki.

Failure to Comply With a Direction

Where a direction (or limitation) requires an agent to do or not do something, failure to comply may present grounds upon which to question the performance of an agent.

The following are touchstones might assist if speculating about the consequences of an agent not complying with a direction:-

failure to comply with a direction (or limitation) is capable of sounding in liability on the part of the agent damages in respect of breach of fiduciary duty
the position is qualified by considerations such as good faith defences
the prospect of different outcomes in different circumstances is a factor, for example outcomes might be different where:-
- an agent is under various directions to take reasonable steps to do certain things and for example, one of those things is not done well and the remaining directions are well complied with
- an agent is shown to have heeded no directions
- one direction was plainly more significant than others and not complied with

These examples conveniently illustrate the significance of the precise terms of the Power of Attorney.

Tips For Defining Directions

It is generally preferable to direct that an agent “take reasonable steps to…[insert task]…” as opposed to directing “agents must …[insert task]…”

In some instances, absolute directions may be warranted, where a principal is emphatic something be done this may be appropriate.

The effects of the inclusion or exclusion of any positive duty to act should be considered in the context of any direction, particularly if the agent perform a positive act to comply with the direction.

Directions Should Not Be Inconsistent

Directions must be consistent with other terms, including other directions, recorded in the Power of Attorney.

Example (Inconsistent Directions)

Here are examples of inconsistent directions:-


Direction 1	My agent can only exercise authority if I have capacity after 1 January 2036
Direction 2	My agent may exercise authority after 1 January 2036 whether or not I have capacity

Power of Attorney Must Be Read As A Whole

The only way to be certain that a Power of Attorney does not contain inconsistent directions is to read the Power of Attorney as a whole.

For example, if a direction and limitation are inconsistent, this would not be apparent unless the whole of the Power of Attorney had been read, probably in conjunction with the effects of the other terms of the Power of Attorney that the direction and limitation seek to qualify.

Many lawyers would recommend drafting of directions and related provisions in a Power of Attorney be done by a lawyer,given their impact effects and need to be appreciated as part of the whole terms.