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

Supreme Court of NSW|2017-06-07|Before: Lindsay J

Plaintiff: Maurice Blackburn Lawyers Defendant: - Protected Estate Manager: Mackinson & d'Apice File Number(s): 2015/003771572017/00023642

INTRODUCTION

This judgment deals with an application by the mother (a single parent) of a disabled, seven-year-old child (a "protected person" within the meaning of section 38 of the NSW Trustee and Guardian Act 2009 NSW) for the manager of her child's estate (Perpetual Trustee Company Limited ACN 000 001 007) to be removed and replaced by another licensed trustee company, Australian Executor Trustees Limited ACN 007 869 794.
The application demands a pause for thought because the original appointment of a protected estate manager (on 4 February 2016, approximately one year before the present application was filed in the Court) was comparatively recent and, leaving aside the "pros" and "cons" of particular managers, there is a natural apprehension that: 1. an application for a change of manager so soon in management of an estate may be a manifestation of problems that need to be addressed; and 2. the application, and any consequent change of manager, might unnecessarily expose the estate of the protected person to substantial expense, given the costs of making an application and fees incurred upon a changeover of manager.
The defendant's estate (derived from an award of personal injury compensation) is presently of the order of $9.257 million.

APPLICABLE PRINCIPLES

The jurisdiction exercised by the Court is governed by the purpose it serves (namely, the provision of care for those not able to take care of themselves): Secretary, Department of Health and Community Services v JWB and SMB (Marion's case) (1992) 175 CLR 218 at 258-259; NSW Trustee and Guardian Act 2009 NSW, section 39. Consideration of the welfare and interests of the particular protected person concerned is paramount: Holt v Protective Commissioner (1993) 31 NSWLR 227 at 238B-C and 241A-D and F-G; NSW Trustee and Guardian Act 2009 NSW, section 39(a).
Building upon the seminal judgment of the Court of Appeal in Holt v Protective Commissioner (1993) 31 NSWLR 227 at 238-241, M v M [2013] NSWSC 1495 at [50] set out "guidelines" 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.
Those "guidelines" have been drawn to attention in subsequent judgments, particularly Ability One Financial Management Pty Limited v JB by his tutor AB [2014] NSWSC 245 at [36] (which must be read with Re Managed Estates Remuneration Orders [2014] NSWSC 383); Re W and L (Parameters of Protected Estate Management Orders) [2014] NSWSC 1106 at [51]-[52] ; Re LSC and GC [2016] NSWSC 1896 at [40]-[41]; and SLJ v RTJ [2017] NSWSC 137 at [20]-[26].
The following propositions, extracted from M v M, can be taken as uncontroversial: 1. 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. The jurisdiction the Court is called upon to exercise is not a "consent jurisdiction". The Court is bound to exercise an independent judgement 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. 2. 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. 3. 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. 4. 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. 5. Recognition needs to be given to the status and obligations of a manager of a protected estate as the holder of a fiduciary office. 6. 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. 7. 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. 8. 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. 9. 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. 10. In the context of the current legislative and administrative regime for management of protected estates in NSW, 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.

CONTEXTUAL BACKGROUND

In Holt v Protective Commissioner (1993) 31 NSWLR 227, the Court of Appeal liberalised the jurisprudence relating to the selection, removal and replacement of protected estate managers. Since that time legislative and administrative developments have accommodated, and encouraged, a migration from public to private management of protected estates. Those developments have been accompanied by an appreciation of a need for there to be greater flexibility than formerly may have been the case in effecting a change of managers, public or private.
In two recent judgments relating to the competitive environment in which licensed trustee companies now operate, attention has been drawn to an ongoing need to place each individual protected person, and his or her family and carers, centre-stage: Re LSC and GC [2016] NSWSC 1896 at [40]-[41]; SLJ v RTJ [2017] NSWSC 137 at [20]-[26] .
The environment in which licensed trustee companies operate has been rendered more competitive by two particular developments. First, the liberalising effect of Holt v Protective Commissioner (1993) 31 NSWLR 227 in encouraging families to be more actively involved in the management of estates than was formerly the case. Secondly, as evidenced by Ability One Financial Management Pty Limited and Anor v JB by his tutor AB [2014] NSWSC 245, the entry into the field of private managers for reward who are not licensed trustee companies.
Beneficial though increased competition in this realm may be, care needs to be taken to ensure that commercialisation of the provision of protected estate services does not subordinate, but rather serves, the interests of persons under protection.
The time has passed, if it ever existed, when an institutional manager (public or private) could view its business as one, essentially, of funds management rather than, substantively, the business of a service provider. Families of persons under protected estate management are commonly anxious to preserve an estate (with maximum returns and minimum expenses), acutely conscious of the possibility that, at some indefinite future time, the estate might be exhausted in the midst of ongoing need. Families are also commonly sensitive to the possibility that they are taken for granted by institutional managers, especially if prompt attention is not given to their requests for assistance, and if personnel changes (or decision-making structures) within the institution deny them a means of establishing a personal relationship with an experienced manager familiar with their particular case.
The concerns of families here mentioned have been brought to the attention of the Court, not only in the current proceedings, but across a broad range of Protective List proceedings.

THE PRESENT APPLICATION

The plaintiff's application has been dealt with, on the papers, in chambers, without formal opposition.
The application was made by a summons filed in fresh proceedings (numbered 2017/00023642) rather than, as it should have been, by way of a notice of motion filed in the original proceedings (numbered 2015/0 00377157) in which the defendant was declared incapable of managing her affairs, and Perpetual Trustee Company Limited was appointed manager of her protected estate, pursuant to section 41 of the NSW Trustee and Guardian Act 2009 NSW. It is necessary, therefore, to record the respective case numbers of both sets of proceedings so as to ensure that they are administratively linked.
Upon an initial review of the summons and affidavits filed in support of the plaintiff's summons, I directed that requisitions be addressed to the plaintiff inviting her to elaborate the case she seeks to make.
As a preliminary to specific questions addressed to the plaintiff, the Court's requisitions recorded the following observations: "Under the current regulatory regime, the Court attributes high importance to the views of a protected person's family, particularly where, as here, that person is as young as [the defendant]. Nevertheless, the Court must be satisfied that an order for a change of manager is for the benefit, and in the interests of the protected person, especially so soon after the appointment of the manager sought to be removed."
The requisitions addressed to the plaintiff included an invitation to her to file: (a) an affidavit explaining in greater detail why she is dissatisfied with Perpetual Trustee Company Limited's management and why she considers it would be in the defendant's interests to have Australian Executor Trustees Limited appointed as a substitute manager; and (b) an affidavit deposing to the attitude of particular family members (the defendant's father and maternal grandfather) to the application.
The requisitions also asked: (a) whether any (and, if so, what) consideration had been given to how much a change of manager would cost the defendant's estate in terms of additional management fees; (b) whether the plaintiff had any (and, if so, what) objection to the Court directing that Perpetual Trustee Company Limited and the NSW Trustee each provide a report to the Court on the course of management of the defendant's estate so far; (c) whether the Court has made, or been asked to make, an order authorising a statutory will to be made for the defendant; (d) whether the parties propose to remain resident, as they presently are, interstate; and (e) if so, what (if any) consideration has been given to engagement of an interstate regime in lieu of the NSW regime for protected estate management.
The plaintiff's responses to these requisitions demonstrated a sense of frustration in her personal engagement, or lack of engagement, with staff of the manager; a perception of under-servicing and over-charging on the part of the manager; a perception that a change of manager will, over time, reduce the defendant's estate's exposure to management fees; an understanding that the question whether an application should be made for a statutory will is presently under consideration by the manager; and a preference to remain within the NSW regime of protected estate management for the time being notwithstanding that the parties presently reside interstate. An affidavit sworn by the plaintiff's solicitor deposed to conversations with each of the defendant's father and grandfather confirmatory of support for the plaintiff's application. No objection was raised to the Court directing that Perpetual Trustee Company Limited and the NSW Trustee each provide a report to the Court; but the plaintiff asked that any report by Perpetual Trustee Company Limited include a report on all fees and costs associated with management of the defendant's estate.
The Court's requisitions to the plaintiff were copied to Perpetual Trustee Company Limited and the NSW Trustee. Upon receipt of the plaintiff's responses to the requisitions, an invitation was issued by the Court to each of Perpetual Trustee Company Limited and the NSW Trustee to respond. This was an invitation to respond rather than a direction to report.
Perpetual Trustee Company Limited took up the invitation by filing two lengthy affidavits dealing with its management of the defendant's estate, one of which affidavits elicited from the plaintiff an affidavit in reply affirmed by an officer of Australian Executor Trustees Limited.
Having considered all the material emanating from the plaintiff and Perpetual Trustee Company Limited, the NSW Trustee determined that it was neither necessary nor appropriate for it to intervene in the proceedings, a judgement with which I am comfortable. This is not a case in which there is a necessity for a formal report by the NSW Trustee to be provided as an aid to the Court's decision-making.
Disposition of the plaintiff's application does not require a determination of the justice, or otherwise, of her complaints about Perpetual Trustee Company Limited's management of the defendant's estate.
It is sufficient that I am satisfied: (a) that the relationship between the plaintiff (as the mother, and carer, of the defendant) and Perpetual Trustee Company Limited as manager of the protected estate of the defendant has broken down irretrievably; (b) that a change of manager is for the benefit, and in the interests, of the defendant as a protected person; and (c) Australian Executor Trustees Limited is a "suitable person", within the meaning of section 41(1)(b) of the NSW Trustee and Guardian Act 2009, to be appointed as manager of the defendant's estate in lieu of perpetual Trustee Company Limited.
In making findings that the relationship between the plaintiff and Perpetual Trustee Company Limited has broken down irretrievably and that a change of manager is warranted, I allow for the fact (as I perceive it to be) that the role of any protected estate manager is likely to be one which requires the manager, from time to time, to make decisions, in the best interests of the protected person, likely to give rise to resentment in the breasts of the protected person, his or her family or carers. I also allow for the fact that the plaintiff's application is supported by family members whose primary concern is the welfare of the defendant within the family context. Significance also attaches to the fact that the plaintiff has obtained legal advice, not only before making her application, but also in her consideration of the Court's requisitions.
In my assessment, the plaintiff's application is one made, and adhered to, with due deliberation after a careful process of weighing costs and benefits, with the benefit of professional advice, after consultation with responsible members of family. That assessment, and the requisite findings, having been made I am prepared to accede to the plaintiff's application despite initial misgivings.
Although I have dealt with the current application "on the papers", I am mindful that, in some cases, it might be important for the Court to hear personally from affected persons before making orders for a change of protected estate manager. My preparedness to dispense with that requirement in the current proceedings should not be taken as a precedent for other cases, each one of which must be determined on its own facts.

ORDERS

I make orders to the following effect in disposition of the plaintiff's application: 1. DECLARE, pursuant to section 41(1)(a) of the NSW Trustee and Guardian Act 2009 NSW, that the defendant remains incapable of managing her affairs. 2. ORDER that the estate of the defendant remain subject to management under the NSW Trustee and Guardian Act 2009. 3. ORDER, pursuant to section 41 of the NSW Trustee and Guardian Act and section 47 of the Interpretation Act 1987 NSW, that Perpetual Trustee Company Limited be removed as manager of the estate of the defendant. 4. ORDER, pursuant to section 41(1)(b) of the NSW Trustee and Guardian Act and section 47 of the Interpretation Act 1987, that Australian Executor Trustees Limited be appointed manager of the estate of the defendant subject to the orders and direction of the NSW Trustee. 5. ORDER that Australian Executor Trustees Limited may not do anything in reliance on its appointment as manager of the estate of the Defendant until the NSW Trustee has authorised it to assume management of the Defendant's estate. 6. ORDER, pursuant to section 68 of the NSW Trustee and Guardian Act, that Australian Executor Trustees Limited give such, if any, security in respect of its management of the defendant's estate as the NSW Trustee may determine to be appropriate. 7. ORDER, pursuant to section 64 of the NSW Trustee and Guardian Act, that Perpetual Trustee Company Limited take such steps as may be necessary or expedient to transfer management of the estate of the defendant from itself to Australian Executor Trustees Limited. 8. ORDER, subject to further order, that the only reward to Australian Executor Trustees Limited as manager of the estate of the defendant be by way of remuneration disclosed to the Court. 9. ORDER, subject to further order, that any payment or other reward that might be paid to or at the direction of Australian Executor Trustees Limited as manager of the estate of the defendant, or a financial adviser retained by Australian Executor Trustees Limited as manager, as a result of the investment of the defendant's estate in a financial product be accounted for to the estate of the defendant. 10. ORDER that the plaintiff and the manager of the estate of the defendant advise the defendant in writing, after she has attained the age of 17 years, but before she attains the age of 18 years, of the right to apply to the Court to seek a revocation of the declaration and orders subjecting her estate to administration as a protected estate. 11. ORDER that, after the defendant attains the age of 17 years and prior to her 18th birthday, the manager of her estate provide a report to the Court (including a medical assessment as to the defendant's then capacity) in relation to whether or not the defendant has sufficient capacity to manage her own affairs and whether or not these management orders should or should not be revoked or varied. 12. ORDER that the costs of plaintiff, the defendant and Perpetual Trustee Company Limited be paid out of the estate of the defendant on the indemnity basis. 13. ORDER that the solicitor for the plaintiff, no later than 14 June 2016, provide a copy of these orders to: 1. Perpetual Trustee Company Limited; 2. Australian Executor Trustees Limited; and 3. The NSW Trustee 1. ORDER that, at the time of providing a copy of these orders to the NSW Trustee, the solicitor for the plaintiff also provide to the NSW Trustee a copy of the Summons and all evidence adduced in the proceedings to the extent not already provided to the NSW Trustee 2. ORDER that all parties (including the NSW Trustee, Perpetual Trustee Company Limited and Australian Executor Trustees Limited) be at liberty to apply, generally, as they may be advised. 3. ORDER that these orders take effect on 28 June 2017.
Orders 10 and 11 are similar to orders made on 4 February 2016 when protected estate management orders affecting the defendant were first made. Their provenance and purpose are explained in Re AAA; Report on a Protected Person's Attainment of the Age of Majority [2016] NSWSC 805.
Otherwise the orders made in disposition of the plaintiff's application are similar to those made in M v M [2013] NSWSC 1495 at [55] allowing, inter alia, for the fact that that case related to replacement of the NSW Trustee rather than (as here) replacement of a private manager.
For the sake of completeness, and not otherwise, I formally record that nothing in orders such as these made today is intended to release an outgoing manager from any breach of fiduciary obligations attaching to the office of manager. Orders of this character are not intended to preclude an incoming manager from satisfying itself about the regularity of management of the estate under management.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 07 June 2017

At a glance

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