Ability One Financial Management Pty Limited v JB by his Tutor AB [2016] NSWCATGD 33 | Case summary

The review of the appointment of the financial manager

As noted in the Tribunal's Reasons for Decision on 18 December 2015 at [53], this was the second application by Mr EXE to review the appointment of Mrs MZS as Mrs BME's financial manager. The previous application was heard on 10 February 2015 and the Tribunal confirmed Mrs MZS's appointment. Refer to [10] and [11] above and to the Tribunal's reasons for its decision on 10 February 2015.
The grounds for Mr EXE's present application were not adequately stated in the application itself or the accompanying statement. At the hearing on 18 December 2015, and again on 22 March 2016, Ms Fraser confirmed to the Tribunal that the grounds were that the level of spending of Mrs BME's estate was not sustainable, that money was being spent on things of marginal value and that Mrs MZS had said that she was not interested in preserving the estate. Ms Fraser said that this was not reasonable financial management of the estate.
At the hearing on 18 December 2015, it had been agreed by the parties that a proper and sensible course would be to adjourn the application for the review of the appointment of Mrs MZS as financial manager for a short period until the NSW Trustee and Guardian had completed its review of the accounts for Mrs BME's estate for the period 2 December 2014 to 1 December 2015, which were due to be lodged by Mrs MZS on 1 January 2016, as the results of that review would inform the consideration of the application. The Tribunal was informed that following lodgement, the accounts would be examined by a compliance officer who would prepare examination notes and a report, and that that would take only one or two weeks.
As it transpired, as appears from reports to the Tribunal from the NSW Trustee and Guardian dated 15 March 2016 and 3 May 2016, the accounts were lodged and examined and 'not passed'. A review of the decision not to pass the accounts was requested by Mrs MZS, in the light of clarifications of expenditure items provided by her.
A report on the review was provided on 22 March 2016. That report recommended that the status of the accounts remain as 'Not Passed'. The 'Reasons for Recommendation' were stated as: 1. While the PM [private manager] has made every effort to genuinely provide the client [Mrs BME] an optimum quality of life in recognition of her rapidly deteriorating cognitive state, the manager has exceeded her expenditure authority by not obtaining NSWTG approval for her provision; 2. Notwithstanding the manager's good intent, the levels of expenditure disclosed in the accounts are not considered sustainable; 3. Despite the receipt of an inheritance of $80,450 during the accounting period, the closing balance of cash at bank at the end of the period is $29,000 which represents a large depletion in cash assets; 4. Having regard to (2) and (3) above, the estate's major asset, the jointly owned property in regional NSW may have to be sold as proposed by the manager to fund the shortfall in the provision of the client's care and other costs.
The NSW Trustee and Guardian's report to the Tribunal dated 3 May 2016 confirms these matters and provides further details. That report sets out the 6 stated reasons for not passing the accounts in the first instance, Mrs MZS's response to those reasons and the reasons for the NSW Trustee and Guardian's confirmation of the 'not passed' status as set out in [36] above. The NSW Trustee and Guardian also stated in that report that: There is no suggestion that the manager has inappropriately used the client's [Mrs BME's] funds and the manager was advised she needs to in future provide more accountability of expenditure and seek approval for expenditure outside her authorities.
The NSW Trustee and Guardian's report also set out unresolved issues in relation to the estate including a pending request from Mrs MZS for approval to commence legal proceedings under s 66G of the Conveyancing Act 1919 (NSW) to appoint a trustee to sell the property in regional NSW. The NSW Trustee and Guardian stated: NSWTG [the NSW Trustee] have deferred a decision in respect of this, requesting that the owners [Mrs BME and Mr EXE] try to reach an alternative outcome to avoid heavy legal costs. To date no outcome has been reached. It is noted that the client's husband [Mr EXE] has not suggested an alternative funding solution to client funding requirements and also is making no contribution to client care costs.
The NSW Trustee and Guardian also noted that Mrs MZS had lodged a projection of income and expenditure for the estate for the period May 2016 to December 2017 and commented in part: … (b) the projection of income includes the sale proceeds of a motor vehicle (presently before the NSWTG for a decision). The projection discloses that client's funds will be depleted by October 2016 and future funds will need to be provided from the future property sale [meaning the property in regional NSW]. …
In the light of these matters, early in the hearing the Tribunal made observations to the parties along the following lines: Things have crystallised considerably since the hearing on 18 December 2015 when the application was first adjourned: (1) the NSW Trustee has reviewed the accounts for the estate for the year to 1 December 2105 and declined to pass them; (2) in so doing the NSW Trustee has stated that: (a) the levels of expenditure are not considered sustainable; (b) however, [Mrs MZS] has 'made every effort to genuinely provide [Mrs BME] an optimum quality of life in recognition of her rapidly deteriorating cognitive state'; and (c) 'there is no suggestion that the manager has inappropriately used [Mrs BME's] funds and the manager was advised she needs to in future provide more accountability for expenditure outside her authorities'. (3) the costs of [Mrs BME]'s ongoing care needs necessitate the consideration now of the sale of her house at [regional NSW], which she owns with her husband and in which [Mr EXE] still resides. Further, It is apparent that the consideration of the possible sale of the [property in regional NSW] is the most significant decision now needing to be made in the management of [Mrs BME]'s estate; It is also apparent that there is significant conflict between [Mrs MZS] and her father, [Mr EXE], and that the possible decision in relation to the property will likely have a significant impact on [Mr EXE], and on the already difficult relationship; In these circumstances, it is arguable that it may be in the best interest of [Mrs BME] that the present difficulties in the relationship between her daughter and husband not be exacerbated by [Mrs MZS], as financial manager, having to make that decision and to pursue the course of selling the house; That is, it may be better for [Mrs BME]'s interests for that decision to be made by a neutral party, independent of [Mrs MZS] and [Mr EXE]; In that case, the appropriate course might be to pass the management of [Mrs BME]'s estate now to the NSW Trustee to consider that decision independently. If that were to occur there may be the added advantage that there could be no suggestion that the decision was motivated by anything other than the best interests of [Mrs BME]. Further, the NSW Trustee may also be more effective in liaising with [Mr EXE] to reach some agreement to avoid the need for any expensive court proceedings in ensuring [Mrs BME]'s care needs and other needs are able to be met. That would be in everyone's interests. With these considerations in mind, the Tribunal would like to ask [Mrs MZS] whether she considers that a sensible course, and, therefore, whether she would seek the revocation of her own appointment as financial manager to facilitate the NSW Trustee's appointment (section 25U(4)(a)). The Tribunal would propose to adjourn for a short time to allow [Mrs MZS] to consider what has been said in conjunction with her lawyer and others. If [Mrs MZS] does not seek the revocation of her own appointment as financial manager, the Tribunal will need to consider whether in all the circumstances, it would be in [Mrs BME]'s best interests now to appoint the NSW Trustee, and, therefore, to revoke [Mrs MZS]'s appointment, including for the reasons the Tribunal has outlined.
Before the adjournment, Mr Latham, for Mrs MZS, stated that the sale of the property in regional NSW was a last resort that they were trying to avoid, if possible, but there were no discussions between Mrs MZS and Mr EXE. He raised the question whether a hybrid structure was possible with the NSW Trustee and Guardian making the decision in relation to the property and Mrs MZS dealing with the rest of the estate.
Mr Leigh Avery, for the NSW Trustee and Guardian, was asked by the Tribunal for the NSW Trustee and Guardian's views about that possibility. He said that the decisions were needed on how Mrs BME's care was to be managed and financed, and that either the NSW Trustee and Guardian or Mrs MZS should handle the lot.
Following the short adjournment, Mr Latham advised the Tribunal that Mrs MZS would not seek the revocation of her own appointment. He conceded that the issue of the sale of the property was the major issue facing the estate. However, he said that the impact on Mrs BME's interests was not as the Tribunal had suggested as Mrs MZS's relationship with her father could not get any worse and Mrs BME was no longer aware of such things. He said that Mrs BME does not now know that Mrs MZS is her daughter, or Mr EXE, her husband. He added that the decision on the sale of the property was already with the NSW Trustee and Guardian as supervisor of the financial manager, and that Mrs MZS had invited discussions with Mr EXE about alternatives but to no avail.
The Tribunal notes that Ms Fraser, for Mr EXE, stated at that point that s 66G of the Conveyancing Act was not the only statutory avenue for sorting out the property interests, and referred to possible Family Law Act 1975 (Cth) proceedings by Mr EXE due to the separation from his wife 'even though the separation was involuntary in a sense'. She said that Mrs BME had had the benefit of an inheritance and shared savings, so the division might not be 50/50.
In the circumstances, the Tribunal proceeded to hear the balance of the proceedings.
Ms Fraser questioned Mr Leigh Avery, Senior Client Service Officer with the NSW Trustee and Guardian. First she asked him whether he was satisfied that all expenditure by Mrs MZS was properly incurred for the benefit of Mrs BME. Mr Avery stated that he had not been through the accounts for the estate himself but that the accounts had been examined twice by senior people and that was the view. He said that some things had been done without approval but for Mrs BME's benefit. Ms Fraser asked him about expenditure one week in July 2015 of 'over $6,000 for a holiday in Queensland. Mr Avery confirmed that he was not in a position to speak about particular aspects of the accounts.
Mrs Fraser asked Mr Avery about some evidence Mr Ruspandy of the NSW Trustee and Guardian's office had given at the hearing on 18 December 2015. Mr Ruspandy had said that '…in her last email dated 19 November she [Mrs MZS] told me that her mother has approximately $50,000 and after that we approved $12,000, which left probably roughly $38,000…' Ms Fraser referred to 15 November when paraphrasing Mr Ruspandy's evidence. She said that Mrs BME's bank account shows that the balance in that account on 13 November 2015 was only $16,000. She asked Mr Avery whether that would concern him. Indeed, the bank statement showed that on 19 November 2015 the account had a balance of $95,512 having received a deposit of $80,450 on 18 November 2015. The question appeared to be based on false premises and was unfair. The $80,450 deposit, which Mrs MZS had been anticipating, was the payment of an inheritance due to Mrs BME. An 'advance' on that inheritance of $40,000 had previously been paid to Mrs BME by way of loan from her brother. Netting off the $40,000 advance due to be repaid once the inheritance had been received left approximately $55,000 in the bank account as at 19 November 2015. This accorded with what Mr Ruspandy said that Mrs MZS had told him. Clearly there was nothing in this point raised by Ms Fraser. The evidence before the Tribunal was that the advance was repaid on 24 November 2015 and is part of the withdrawal of $52,262 from the bank account that day.
Ms Fraser also asked Mr Avery about the loan agreement for the advance of $40,000 from Mrs BME's brother. She referred to a letter [email] from Mrs MZS to the NSW Trustee and Guardian on 17 December 2015 advising of the deposit of the $40,000. The Tribunal pointed out that the document showed that the letter [email] had originally been sent on 18 July 2015 and was resent on 17 December 2015. The question was again based on a false premise and was unfair. It was not pursued. The Tribunal impressed on Ms Fraser the need to be accurate particularly in these informal hearings. Mr Avery was appearing at the hearing by telephone.
Mr Avery confirmed that the NSW Trustee and Guardian had not approved beforehand the repayment of the $40,000 advance included in the withdrawal of $52,262 on 24 November 2015. He said that the NSW Trustee and Guardian would have wanted to know the reasons for the payment. The Tribunal notes that it was one of the matters referred to by the NSW Trustee and Guardian in its reasons for declining to pass the accounts. Mrs MZS explained the withdrawal in her clarifications about the accounts. The details have been summarised above. The Tribunal noted that the short-term advance to be repaid out of the pending inheritance was not in the nature of a normal commercial loan. Indeed, the loan agreement (Deed of Loan), a copy of which was before the Tribunal, allowed for the advance to be netted against the inheritance before payment of the balance of the inheritance. Had that occurred there would have been no need for a subsequent withdrawal for repayment.
Ms Fraser also asked Mr Avery about the loan agreement. She asked whether the stated 12% rate of interest was high. He said that he could not comment on that. There was no evidence before the Tribunal that interest had been claimed or paid. Indeed, the evidence was that it had not. Further, the loan agreement states that interest was only payable 'from the date on which distribution is first advised by a law firm until final payment' not from the date of the advance.
Ms Fraser also asked Mr Avery about an entry in the bank statement for 1 December 2015. The entry was for a withdrawal of $4,000 identified as 'Withdrawal Online 12141XX'. She noted that the NSW Trustee and Guardian had previously refused to approve payment of $4,000 to Mr NDS, Mrs BME's son who lived in the United States, for accommodation costs for a Christmas visit to Australia to see his mother. She said that the refusal had been due to concerns about depletion of the estate. The NSW Trustee and Guardian had approved airfare costs ($12,000) associated with the visit that included Mr NDS's children, Mrs BME's grandchildren. Ms Fraser sought to elicit from Mr Avery whether that withdrawal was in direct defiance of the NSW Trustee and Guardian's previous refusal in respect of accommodation costs. Mr Avery was not able to answer. Ms Fraser did not seek to question Mrs MZS or Mr NDS about the entry. The circumstances of the entry remained unclear.
Ms Fraser asked Mr Avery whether the forward budget provided by Mrs MZS [on 29 April 2016] had been reviewed. He said that it had been 'looked at a little but it was dependent on the outcome of today'. Ms Fraser asked him about the projected dry cleaning costs of $70 per month for someone in Mrs BME's position. Mr Avery said that they had not approved the budget yet.
Ms Fraser also asked Mr Avery about the amounts for carers. He noted that the carers need to have insurance etc. and that that had been brought to Mrs MZS's attention.
Ms Fraser asked Mr Avery whether the expenditure had exceeded that anticipated by the NSW Trustee and Guardian. He said that there had been some one off capital expenditure to set up the house for Mrs BME initially. He added that their concern was depletion and how that was going to be dealt with in the future. He said the depletion concerns had been raised with Mrs MZS when the accounts were examined and when she had come in to see him [on 23 March 2016]. He said that if Mrs MZS's appointment as financial manager was confirmed his recommendation would be to require six monthly accounts to ensure compliance.
Ms Fraser asked Mr Avery whether Mrs MZS had paid the security deposit required. Mr Avery explained that the need for a deposit had been replaced by the new security bond arrangements. He said that the financial manager was being required now to prepare the form for passing on to the insurers and that the premiums were likely to be required in the next month or month and a half.
Mr Avery agreed with Ms Fraser that Mrs BME's shares had been sold without the NSW Trustee and Guardian's approval. [The value of the shares was approximately $8,000 and the proceeds of the sale were deposited into Mrs BME's bank account on 18 February 2015].
Ms Fraser asked Mr Avery what not passing the accounts meant. Mr Avery said that Mrs MZS had provided explanations and they have acknowledged the issues but still have not passed the accounts. The Tribunal asked Mr Avery whether the NSW Trustee and Guardian was looking to have Mrs MZS replaced as financial manager. He answered no. He said that they did not believe there had been any wrongdoing. Ms Fraser referred to s 118 of the NSW Trustee and Guardian Act that requires compliance with orders of the NSW Trustee and Guardian. Mr Avery stated that Mrs MZS was on notice that the situation needed to change. He reiterated that his recommendation would be for six monthly accounts and that they would probably request a set of accounts as at the end of June 2016.
The Tribunal inquired of Mrs BME's condition. Mrs MZS stated that she may need to go into a facility soon. She noted that Mrs BME was becoming faecally incontinent and does not now know that Mrs MZS is her daughter. She said she will need to make a decision about that [as guardian].
Ms Fraser raised whether, if Mrs BME went into a facility and the property in regional NSW was sold, she would be entitled to a fully concessional place. She said that Mr EXE had made inquiries and Mrs BME would be entitled to a fully concessional place now, so there may be no need to sell the house.
Ms Fraser told the Tribunal that Mrs MZS, as financial manager, had demonstrated excessive spending which had put at risk Mrs BME's future as no money was left for the rest of her life without selling the house at regional NSW. She asked, rhetorically, 'Would [Mrs BME] want garden gnomes etc. rather than a roof over her husband's head?' and, later, 'Would she want fripperies instead of a roof over [Mr EXE] head?' The emphasis on Mr EXE's interests was noted. Ms Fraser also said that it was ridiculous to think Mrs BME's needs would end on her entry into a nursing home (although this did not necessarily sit well with her earlier comments referred to in [59] above). She said that the authorities were to the effect that the manager needs to 'think' in the shoes of the protected person and that Mrs BME had been content in the past with a modest life in regional NSW amongst her friends. The implication was that Mrs BME should be provided with nothing more now notwithstanding her illness and decline.
Mrs MZS gave evidence to the Tribunal that she did not spend $6,000 on a holiday at Queensland. She said that the accounts presented to the NSW Trustee and Guardian explained all of the bank account entries. [The accounts were not before the Tribunal.] She said that everything she had done had been based on what she thought her mother would want. She said that her mother had declined rapidly in the last month, but that everything had been directed to stimulating her to preserve her cognitive ability as long as possible. She said that her mother had never been happier than the last two years - she had been busy with activities and with friends around. She explained that everything had had a time - the garden gnomes provided an activity for a while, and trips until her mother could not benefit from them anymore, and sewing until she could not do that anymore. She said that her mother had been bored and lonely in regional NSW, with untreated depression. She said that that may have been one reason why the dementia had come on. Mrs MZS noted that spending patterns can change when you are given a death sentence - 'frugality may go out the window'. She said her father was not happy about spending money on her mother.
Ms Fraser made submissions to the Tribunal. In relation to the $40,000 advance on the inheritance she said that lack of transparency was the point. She said we don't know if the $40,000 advance was deducted before the $80,000 was paid. The implication of the submission was that we don't know if the $40,000 withdrawn on 24 November 2015 was for the stated purpose (repayment of the advance) or for some hidden purpose. There was no evidentiary basis laid for that implication.
In relation to the $4,000 withdrawal on 1 December 2015, Ms Fraser submitted that it was very clear that the amount was transferred to Mr NDS despite the non-approval of the NSW Trustee and Guardian and in defiance of the NSW Trustee and Guardian. As noted earlier at paragraph 51 above, that was not as clear to others. No sufficient evidentiary basis had been laid for the submission. Further, Mrs MZS's evidence was that explanations for all entries in the bank account had been provided to the NSW Trustee and Guardian. As far as the Tribunal was aware, the NSW Trustee and Guardian was satisfied with the explanation given. It was not one of the matters queried when the accounts were not passed.
Ms Fraser then submitted that there was entry after entry of high levels of withdrawal from the bank account, which on their face were unexplained. The Tribunal noted that the NSW Trustee and Guardian had reviewed the accounts twice and said that there was no suggestion of inappropriate expenditure. The Tribunal indicated that, in these circumstances, unless Ms Fraser wanted to take the Tribunal to particular entries in the bank account statement, the submission would lack force.
Ms Fraser said that there were large numbers of cash payments including to carers, and asked 'How do you verify that?' She said that it was impossible for the NSW Trustee and Guardian to be satisfied and then, perhaps a little inconsistently, that the estate had been exposed to risk in relation to carers concerning superannuation, insurance, and tax. This submission seemed to assume to some extent that the carers were employees of the estate. That was not established.
Ms Fraser did not specifically address the ground of challenge that '[Mrs MZS] had said that she was not interested in preserving the estate' (refer to [33] above). The Tribunal understood that that ground was based on an email from Mrs MZS to the Tribunal dated 17 December 2015. In that email, Mrs MZS stated: 'I am not interested in preserving [my mother's] estate. I'm interested in my mother's welfare, safety and most importantly her happiness.' It is clear to the Tribunal that Mrs MZS was saying that she was not interested in preserving her mother's estate as an end in itself. Rather, she was interested in utilizing the estate for her mother's benefit - to ensure her welfare, safety, and happiness.
Ms Fraser said that the budgets for the future were 'in the realms of fiction' and again referred to the dry cleaning costs, and to the amount included for groceries and other items. She said that there was an 'air of some unreality'. Mr Avery noted in response that the budgets had not yet been approved. Ms Fraser said that this was not Mrs BME's life but the life Mrs MZS has made for her. She said that the estate should be entrusted directly to the NSW Trustee and Guardian.
At this point the Tribunal inquired further of Mr Avery as to the NSW Trustee and Guardian's position. Mr Avery told the Tribunal that if Mrs MZS was confirmed as manager of the estate, he would be recommending that the budgets be reviewed, that six monthly accounts be required and they look at the depletion issues and how to resolve them, that is at some form of agreement regarding the property. He said that he hasn't any reason to recommend the removal of the manager. He said that Mrs MZS had provided optimum care but acted outside authorities although she had addressed the issues. He said that he was reasonable happy with what Mrs MZS had said in relation to the accounts but that she will require ongoing support to ensure she fully complies with their requirements. He said that it was quite normal for managers to have to learn the ropes and the question was whether the client was getting appropriate care. He said that the non-passing of the accounts was a 'first strike' and if there was another strike they may then seek to review the appointment, but that 'you have to give managers a chance to rectify issues'.
Mr Latham, for Mrs MZS, handed up written submissions that he spoke to. In broad summary he submitted that the level of proposed spending of Mrs BME's estate was sustainable given her interest in the house at regional NSW, and the reduction in discretionary expenditure consequent on Mrs BME's continuing decline due to her progressing, and already well progressed, frontal lobe dementia. Mr Latham also submitted that rather than expenditure on things of marginal value, the expenditure on Mrs BME's activities and interests had significantly enhanced her enjoyment of her life during her decline. He also submitted that Mrs MZS had met her duty to preserve Mrs BME's estate in her interests while meeting her needs, subject to the realisation of Mrs BME's interest in the property in regional NSW. In relation to the NSW Trustee and Guardian, Mr Latham submitted that Mrs MZS is willing to obtain its further guidance and assistance, and that Mr Avery has indicated that the NSW Trustee and Guardian has been happy with the way Mrs MZS has responded. Mr Latham stated that Mrs MZS would be happy to submit six monthly accounts and to participate in the process of addressing issues facing the estate. He noted that the NSW Trustee and Guardian was not seeking the removal of Mrs MZS. He also stated that the NSW Trustee and Guadian was in no better position than Mrs MZS in seeking to deal with Mr EXE in relation to the property in regional NSW, and that Mrs BME was no longer aware of the difficulties in the relationship between Mrs MZS and her father.
At the end of the hearing the Tribunal reserved its decision.

Consideration and decision

It is worth remembering at the outset that the discretions reposed in the Tribunal to appoint managers of estates under management (protected estates), or to remove or replace them, are exercised for purposes that go beyond the mere investment of funds, their proper management and disbursement, the keeping of accounts and other financial responsibilities. In the case of a protected person, in this case Mrs BME, they include ensuring that the person has a quality of life which is as beneficial to the person as the resources available to the manager permits: Holt & Anor v Protective Commissioner (1993) 31 NSWLR 227 at 238C.
The Court of Appeal in Holt also recognised that the precursor provision to s 25M of the Guardianship Act (which deals with who can be appointed as a manager of a protected estate), in terms not relevantly distinguishable for present purposes, saw a hierarchy of choices, indeed a sensible one, in the reference to the possible appointment of a 'suitable person' as manager before reference to the possible appointment of the Protective Commissioner (now the NSW Trustee and Guardian): Holt at 238G. Section 25M of the Guardianship Act was added after the decision in Holt.
This hierarchy observed by the Court of Appeal has been placed in a broader context (of reforms to the administrative framework for the administration of protected estates in NSW) in a series of judgments by Lindsay J in the Protective List of the Equity Division of the Supreme Court. In Ability One Financial Management Pty Limited and Anor v JB by his Tutor AB [2014] NSWSC 245 at [30-36], his Honour said: 30 In another judgment, written with these proceedings in mind, attention was drawn to institutional and social changes which seemed then, and still seem, to point to a fundamental shift (since the seminal judgment of the Court of Appeal in Holt v Protective Commissioner (1993) 31 NSWLR 227) in the mindset of government about the optimal administrative framework for the administration of protected estates in New South Wales: M v M [2013] NSWSC 1495 (11 October 2013). 31 At paragraph [46] of that judgment I made the following observations: "If I am not mistaken [the NSW Trustee's] current attitude to estate management... includes a working assumption that, although ever present to serve as manager of any protected estate management of which is committed to it, [it] should endeavour to facilitate deployment of private managers and to focus attention on its supervisory function in the monitoring of management of protected estates by private managers. Whereas once the Protective Commissioner [a predecessor of the NSW Trustee] may have been viewed as a manager of 'first resort', the NSW Trustee is more inclined to see itself as a manager of 'last resort'". 32 In the course of these proceedings, the NSW Trustee expressly embraced those observations as accurate. 33 This underscores the importance of the Court, in consultation with affected interests, working out how best to adapt to change. In a decision-making environment undergoing a process of change, attention needs to be given to identification of what can change, and what must remain constant, to serve the ends for which decisions are made. 34 With that objective in mind I set out in M v M, at [50], a series of propositions as non-exhaustive "guidelines" that might be consulted upon a consideration by the Court of questions about the identity of a manager of protected estate. 35 As each of the participants in these proceedings has accepted those propositions as correct, I reproduce them here: "As presently advised, and subject to reconsideration in light of further experience and argument in contested cases, I adopt the following propositions as non-exhaustive 'guidelines' (or, in deference to Kirby P's observations in Holt v Protective Commissioner (1993) 31 NSWLR 227 at 241E-F and 243E-F, a "framework of approach" or a 'checklist of considerations') that might be borne in mind when the Court is called upon to make a decision about the identity of a manager of a protected estate or the substitution of one manager for another: (a) First, the jurisdiction the Court is called upon to exercise is not a 'consent jurisdiction'. An order for the appointment, removal or replacement of a particular manager is not to be made merely because a party, or some other person, seeks it, consents to it or acquiesces in it: JJK v APK (1986) Australian Torts Reports 80-042 at 67, 881 (first guideline); JMK v RDC and PTO v WDO [2013] NSWSC 1362 at [60]-[62]. The Court is bound to exercise an independent judgment because of the public interest element in the decision to be made and the possibility, if not the fact, that the protected person lacks the mental capacity requisite to informed decision-making. (b) Secondly, the governing purpose of the jurisdiction exercised by the Court is protection of the welfare and interests of the particular protected person concerned: Holt v Protective Commissioner (1993) 31 NSWLR 227 at 238B-C and 241A-B and F-G. (c) Thirdly, any decision made affecting the welfare or interests of a protected person must be made in a manner, and for a purpose, calculated to be in the best interests, and for the benefit, of the protected person: Holt v Protective Commissioner (1993) 31 NSWLR 227 at 238D-F and 241G-242A. (d) Fourthly, care needs to be taken in all decision-making affecting a protected person to focus on the facts of the particular case, preferably with due consultation with the protected person, his or her family and carers who may be well placed to inform the Court of the protected person's particular circumstances: Holt v Protective Commissioner (1993) 31 NSWLR 227 at 238C-239B, 240D, 241B-F and 243E-F; Re L [2000] NSWSC 721 at [10]. (e) Fifthly, in the choice of a manager consultation of the welfare and interests of a protected person may favour appointment of a member of his or her family over the appointment of an institutional manager: Holt v Protective Commissioner (1993) 31 NSWLR 227 at 238G-239B. (f) Sixthly, decisions need to be made in the context of a prudential management regime that can be administered, without strife in the simplest and least expensive way, in the interests of the protected person: HS Theobald, The Law Relating to Lunacy (Stevens and Sons, London, 1924), pp 380 and 382. (g) Seventhly, regard needs to be had to the value and nature of the property comprising a protected person's estate in deciding upon the identity of a manager or an appropriate management plan: Holt v Protective Commissioner (1993) 31 NSWLR 227 at 242E and 243D-F. (h) Eighthly, recognition needs to be given to the status and obligations of a manager of a protected estate as the holder of a fiduciary office. This means that the Court, managers and other affected persons need to be alive to the importance of avoiding, or at least minimising, exposure of a protected person to dangers associated with a manager having a conflict between a duty owed to the protected person and the manager's personal interests: Holt v Protective Commissioner (1993) 31 NSWLR 227 at 239B and 242B-C; Re L [2000] NSWSC 721 at [12]. Nevertheless, it must also be recognised that the liability of a manager of a protected estate to account may differ from that of a trustee of an ordinary trust to the extent necessary to accommodate the protective purpose of the manager's appointment: Countess of Bective v Federal Commissioner of Taxation (1932) 47 CLR 417 at 420-423. (i) Ninthly, in conformity with fiduciary law, the office of a manager of a protected estate must generally be regarded as a gratuitous one unless, by an order of the Court or by legislation, a special arrangement to the contrary is made: Gell v Gell (2005) 63 NSWLR 547 at 553-554 [21]-[23]; Macedonian Orthodox Community Church St Petka Incorporated v Bishop Petar (2008) 237 CLR 66 at 93 [69]. (j) Tenthly, in deciding whether, when and on what terms a manager of a protected estate is to be allowed remuneration out of the estate, care needs to be taken not to shift the focus of decision-making from what is in the best interests, and for the benefit, of the protected person to a perceived "right" on the part of any, or any prospective, manager to remuneration. If a manager is to be allowed remuneration, a decision to that effect must be driven by the perspective of the protected person, not the perspective of the manager: Fletcher, Ex parte (1801) 6 Ves Jun 427; 31 ER 1127; Re Walker (1848) 2 Phil 630; 41 ER 1087; Re Westbrooke (1848) 2 Phil 631; 41 ER 1087; G v B (Powell J, 27 May 1992) BC 9201855 at 13. (k) Eleventhly, the primacy given to the protective purpose of the Court's jurisdiction carries with it, as a correlative, the absence in any manager (public or private) of a legal entitlement to be, or to remain, manager of a particular protected estate: Holt v Protective Commissioner (1993) 31 NSWLR 227 at 237F-238F. (l) Twelfthly, a decision about whether a manager should be replaced may need to be approached differently from one made about the identity of an appointment as an initial manager because of a perceived need to identify an acceptable reason (ie, one governed by the purpose of the protective jurisdiction and consideration of the best interests of, and benefits available to, the protected person) for change. Depending on the facts of the particular case this may, but will not necessarily, involve recognition that an applicant for change bears, at least, a forensic onus to establish a case for change: Holt v Protective Commissioner (1993) 31 NSWLR 227 at 237F, 238B-F, 239C-G and 242A-B. (m) Thirteenthly, a manager, or prospective manager, of a protected estate needs to have given thoughtful attention (in the case of a private manager, in consultation with the NSW Trustee and, in the context of the Corporations Act, the Australian Securities and Investments Commission) to the development, and operation, of a plan for management of the protected person's estate: Re L [2000] NSWSC 721 at [11]-[12]; Re McL [2001] NSWSC 280 at [3]-[5]. (n) Fourteenthly, although disputes about the management of a protected estate may at times need to be determined in an adversarial setting, an exercise of protective jurisdiction is not inherently, or necessarily, adversarial in nature. That reality finds expression in the Court's approach to orders for costs in protective list proceedings. The Court ordinarily exercises its discretion, not by reference to a rule that costs follow the event, but having regard to what, in all the circumstances, seems proper: CCR v PS (No 2) (1986) 6 NSWLR 622 at 640. (o) Fifteenthly, part of the role of the Court in its exercise of protective jurisdiction is to give consideration to the manner and form of a decision-making process calculated to ensure that the protective purpose of the jurisdiction is duly served. (p) Sixteenthly, in the context of the current legislative and administrative regime for management of protected estates, the Court will ordinarily require that any substantial decision it may be called upon to make affecting a protected estate, beyond the routine, is made on notice to the NSW Trustee, allowing the NSW Trustee to be heard in an appropriate case and inviting its assistance where necessary." 36 MB v Protective Commissioner (2000) 50 NSWLR 24 at 46 [126] - 47 [129] should be added to the list of authorities here cited, as a demonstration that a manager (in that case, the Protective Commissioner) may be replaced, simply, on the ground of a breakdown in personal relationships between the manager, the protected person and the protected person's carer. Hodgson CJ in Equity's judgment also illustrates that, in serving the interests of the protected person, an incoming manager may have an obligation to hold an outgoing manager to account: 50 NSWLR 32 [36] - 33 [37] and 37 [64].
Further, at [55-56] in Ability One, Lindsay J noted that: 55 The public administrative regime that underpins the Court's exercise of protective jurisdiction has the NSW Trustee at its core. The Court looks to the NSW Trustee to play a leading role, either as a manager or as a monitor of managers, in ensuring due management of the estate of a protected person. 56 Division 2 of Part 4.5 of the NSW Trustee and Guardian Act (referred to in s 25M(2)(b) of the Guardianship Act) contains provisions (in ss 63-70) designed to permit the NSW Trustee to monitor, and the Supreme Court to supervise, the performance of managerial functions by a person appointed to manage a protected person's estate.
See also in this context, Lindsay J's comments at [10-20] in M v M [2013] NSWSC 1495.
In Ability One at [286], Lindsay J also noted: 286 An appointment of a manager to a protected estate focuses attention on a particular point of time, the time of appointment. Neither the Court nor NCAT has administrative responsibility, or resources, for close, ongoing supervision of a manager once appointed. That role belongs to the NSW Trustee. It is one thing for the Court, or NCAT, to say, on evidence placed before it at a single point of time, that a candidate for appointment as a private manager is "a suitable person". It is quite another to administer a regulatory regime consequent upon, and subsequent to, the appointment of a manager.
Of course, when an application is made to the Tribunal to review the appointment of a manager, the responsibility at that point in time again falls on the Tribunal, but it is a responsibility that is, within the administrative framework that has been established for the administration of protected estates in NSW, properly informed by the views of the NSW Trustee and Guardian which has had ongoing responsibility to monitor the performance of the manager.
In this context, the Tribunal refers to Lindsay J's sixth 'guideline' set out in M v M at [50(f)] quoted above. The administration of the prudential management regime in the simplest and least expensive way in the interests of the protected person, when coupled with the Tribunal's guiding principle set out in s 36(1) of the Civil and Administrative Tribunal Act to 'facilitate the just, quick and cheap resolution of the real issues in the proceedings', and the fact that the NSW Trustee and Guardian is bound by principles in s 39 of the NSW Trustee and Guardian Act that are similar to the principles in s 4 of the Guardianship Act binding the Tribunal, sensibly requires the Tribunal to pay deference to the views of the NSW Trustee and Guardian when matters raised against the manager are matters within the monitoring undertaken by the NSW Trustee and Guardian (as opposed to matters that the NSW Trustee and Guardian could not reasonably be expected to know at a particular point). In this regard refer also to 'guideline' 16 in [50(p)]. The deference to be paid is not blind deference, a proper regard not a complete submission, as the responsibility always remains with the Tribunal, but the views of the NSW Trustee and Guardian may, in the appropriate case, weigh heavily in the Tribunal's consideration. This is such a case in relation to the performance of the manager.
That brings us to the question of onus. The jurisdiction of the Tribunal is entirely a matter of statute. The Civil and Administrative Tribunal Act, which established the Tribunal, expressly provided in s 38(2) that the Tribunal was not bound by the rules of evidence and may inquire into and inform itself on any matter in such manner as it thinks fit, subject to the rules of natural justice. Such a provision indicates that the Tribunal's procedures may be more inquisitorial (or administrative) than adversary. That would not be surprising in the context of a jurisdiction of a protective nature under the Guardianship Act. Refer, for example, to the decision of Hodgson J in Roberts v Balancio (1987) 8 NSWLR 436 at 440F-G, relying on the observations in Official Solicitor v K [1965] AC 201 quoted at 439D-F and 439G-440B.
The protective nature of the Tribunal's guardianship (including financial management) jurisdiction is found primarily in the requirement in the Guardianship Act to observe the principles in s 4 of that Act when exercising functions under that Act with respect to persons who have disabilities, the first one of which is that the welfare and interests of such persons are paramount. Section 4 is quoted in its entirety in [28] above. The Civil and Administrative Tribunal Act itself, presumably for more abundant caution, expressly provides in schedule 6 clause 5 that the Tribunal when exercising its jurisdiction under the Guardianship Act in relation to persons who have disabilities, is under a duty to observe the principles referred to in s 4 of that Act. Refer also to s 36(5) of the Civil and Administrative Tribunal Act and cl 5(2) of Sch 6 to that Act.
The obligation upon the Tribunal to protect the welfare and interests of the disabled person in matters before it under the Guardianship Act, runs counter to any strict application of the usual adversary onus (the legal, or ultimate, onus) to an applicant. Nevertheless, the applicant will often be required to meet a forensic onus to show some reason why the status quo should be changed. This may include introducing evidence in support of the application that is capable, if unanswered, of supporting findings of fact that may warrant the Tribunal taking the action applied for.
In the specific case here, the application for the revocation of the appointment of a manager of a protected estate (and the appointment of another manager in their stead), the Tribunal's power is found in s 25U(4)(b), already quoted in [31] above, which reflects in its own terms the s 4(a) principle that the welfare and interests of the protected person are paramount. In such a case, the applicant bears a forensic onus to put before the Tribunal evidence upon which the Tribunal could rely in reaching a satisfaction that for some particular reason that protected person's best interests required the revocation of the manager's appointment. As Lindsay J said in M v M at [50(l)]: (l) Twelfthly, a decision about whether a manager should be replaced may need to be approached differently from one made about the identity of an appointment as an initial manager because of a perceived need to identify an acceptable reason (ie, one governed by the purpose of the protective jurisdiction and consideration of the best interests of, and benefits available to, the protected person) for change. Depending on the facts of the particular case this may, but will not necessarily, involve recognition that an applicant for change bears, at least, a forensic onus to establish a case for change: Holt v Protective Commissioner (1993) 31 NSWLR 227 at 237F, 238B-F, 239C-G and 242A-B.
Consistently, at an earlier point, the applicant must disclose in the application grounds that would warrant a review (s 25T of the Guardianship Act) - [33] above.
If the Tribunal comes to the view that it is in the best interests of the protected person to revoke the order it is 'duty bound' to do so: see, for example, KW v Protective Commissioner and Ors [2008] NSWADTAP 5 at [12--13]. If, however, the Tribunal does not come to that view, it has no authority to revoke the order absent the consent of the manager (s 25U(4)(a)) or the revocation of the financial management order itself (s 25U(4)(c)).
Given the ongoing supervision of the NSW Trustee and Guardian and the stated willingness of Mrs MZS to work with the NSW Trustee and Guardian to improve transparency and compliance with its authorities and directions, and the NSW Trustee and Guardian's own view that Mrs MZS's performance to this point does not warrant application by it for her removal, although it does warrant more support and regular reviews (at least in Mr Avery's foreshadowed recommendation), the Tribunal is not satisfied on the evidence before it that for reasons of Mrs MZS's performance it is in Mrs BME's best interests to revoke her appointment. The matters raised against Mrs MZS, seen in the context of her efforts to provide her mother with an optimum quality of life in the face of her illness and its inexorable progression, and against the background of the estate's interest in the house at regional NSW, do not satisfy the Tribunal of the need to replace Mrs MZS in Mrs BME's interest. That is not the end of the matter, however.
It is in Mrs BME's best interests to explore obtaining access to, or appropriate return from, the value in her one large asset, being the half share in the house at regional NSW. That house is half owned (apparently now as tenants in common) by Mr EXE. Mrs BME's estate has very little income at this point (essentially only the aged pension), and very limited cash reserves or other assets that could be turned to account to fund her ongoing care needs and enjoyment of life. In terms of non-cash assets, and apart from the house, there appears only to be a motor vehicle with a possible sale value of $7,000 according to the NSW Trustee and Guardian's report dated 3 May 2016.
It also appears to the Tribunal that it is in Mrs BME's best interests to avoid, if possible, embarking upon expensive court proceedings (such as under s 66G of the Conveyancing Act) to force the sale of the house, until other options have been properly explored. By other options, the Tribunal means possible non-curial resolution including by way of a negotiated agreement with Mr EXE for the sale of the house, or for an alternative proposal for the funding of Mrs BME's needs without the sale of the house. By 'properly explored' the Tribunal means that those options need to be explored fully, quickly and effectively in Mrs BME's interests. If that exploration does not prove fruitful, Mrs BME's estate will likely have no option but to take urgent curial action to enforce its rights against the property.
It is clear to the Tribunal that the breakdown in the relationship between Mrs MZS and her father, Mr EXE, (which has been described essentially as irretrievable on behalf of Mrs MZS) is such as to be a significant, indeed likely insurmountable, impediment to the effective exploration of possible non-curial resolution of the issue concerning the house. As a non-curial resolution, if possible, would be in Mrs BME's best interests, any obvious impediments to that should be removed to the extent it is within the Tribunal's power to do so. In the Tribunal's view, the revocation of the appointment of Mrs MZS as manager of Mrs BME's estate, and the appointment in her stead of a neutral, independent manager, the NSW Trustee and Guardian, would best promote Mrs BME's interests and welfare by opening up the possibility of effective discussions towards a non-curial resolution of the issue concerning the house. That possibility does not appear to exist, realistically, under the current arrangements.
The Tribunal is not intending to imply any criticism of Mrs MZS in reaching this view. Rather, it is simply taking a pragmatic view of how Mrs BME's interests can be best promoted from this point in relation to the single, most important issue now facing her estate. It is Mrs BME's interests that the Tribunal is bound to protect. Having reached the view that it has, the Tribunal is duty bound to revoke Mrs MZS's appointment and to appoint the NSW Trustee and Guardian in her stead.
With the difficult relationship between him and his daughter, and its effect, relegated to the background in relation to the issue of the house, Mr EXE may be able to see more clearly his wife's care needs, and other needs, and her right to access her share of the value of the house in some way to properly meet those needs. The Tribunal hopes that he will do so and act accordingly to ensure Mrs BME has the best quality of life that she can.

Ability One Financial Management Pty Limited v JB by his Tutor AB

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Judgment (11 paragraphs)

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Legislation Cited (5)

Cases Cited (12)