AC v OC

The hearing

1. At the end of these Reasons for Decision are lists of the parties to the application and the witnesses who attended the hearing. [Appendix removed for publication.]
2. At a directions hearing on 18 August 2016, the Tribunal made an order appointing a separate representative for Miss LBJ. Elizabeth Dray appeared as separate representative at the Tribunal hearing.
3. At the outset, the Tribunal found that it had jurisdiction to deal with this particular application because although the subject person and the applicant were outside NSW (i.e. in Queensland), the money the subject of the application was within NSW. Initially there was some uncertainty about where the money was, but the Tribunal accepted the evidence of Ms MPD that the last information she had was that it remained in the District Court bank account in regional NSW.
4. The Tribunal has jurisdiction to appoint a private financial manager and may make a financial management order for a person of any age see AC v OC (a minor) [2014] NSWSC 53.

What did the Tribunal have to decide?

1. The questions to be considered by the Tribunal are:

• Is Miss LBJ incapable of managing her affairs?
• Is there a need for another person to manage Miss LBJ's affairs and is it in her best interests for a financial management order to be made?
• If so, who should be appointed financial manager?

Is Miss LBJ incapable of managing her affairs?

1. The Tribunal spoke to Miss LBJ by telephone at the hearing. Miss LBJ told the Tribunal that she left school in mid-year 11. She told the Tribunal that she was currently undertaking a Certificate III in Hospitality at Brisbane TAFE - this course is "online" because she lives in regional Queensland about 1,000 km north of Brisbane.
2. Miss LBJ does not receive a Centrelink benefit but is being supported by her mother. She has no physical or mental disability but is under a legal disability of being under the age of 18 years of age. She has no current intention to move from living with her mother. She was doing the hospitality course in order to obtain employment while she studied the course she really wants to do, namely a Certificate IV in Justice Studies. She said she was interested in law and justice. After completing that course, she hoped to undertake a further course being a Diploma of Justice Studies.
3. Elizabeth Dray, the separate representative, told the Tribunal of Miss LBJ's background and that she and her mother have a close relationship. She revealed that Miss LBJ was diagnosed with anxiety and depression a few months ago. Elizabeth Dray reported that her mother believes that her emotional and mental health is improving.
4. Elizabeth Dray considered that Miss LBJ would not be capable of managing her own financial affairs
5. The Tribunal accepts the opinion of Elizabeth Dray and finds that Miss LBJ is incapable of managing her affairs as a matter of fact and also because she is legally incapable, being under the age of 18 years.

Is Ms MPD an appropriate person to be financial manager?

1. Elizabeth Dray provided a detailed analysis of the family finances and submitted it would be in the best interests of Miss LBJ for her mother to be appointed as financial manager.
2. The Tribunal spoke to Ms MPD and asked her about Miss LBJ financial position.
3. In response to a direct question from the Tribunal about whether Miss LBJ had any other assets apart from the money sitting in the District Court bank account in regional NSW, Ms MPD said Miss LBJ did own "part of a house". Further questioning revealed the following: 1. In about 2013, Miss LBJ received the $125,000 from the workers compensation insurer. This was paid directly to her mother Ms MPD. 2. Ms MPD borrowed by way of a mortgage from a commercial bank the amount of $189,000. 3. Ms MPD purchased the home in which they presently live for the sum of $320,000 at regional Queensland property. The home was purchased in the name of Ms MPD. 4. Ms MPD said that she used some of Miss LBJ's $125,000 towards the purchase price of the house. She said there was no documentary record of how much was contributed. When asked how much was contributed by Miss LBJ, Ms MPD said that she couldn't remember. 5. Ms MPD did contribute some capital to the purchase including legal costs. 6. Ms MPD has been responsible for payments on the mortgage since the time of purchase. The balance of this mortgage as at 29 May 2014 was $194,837.29, that is, about $6,000 more than was originally borrowed. 7. Ms MPD said that the house was not put in Miss LBJ's name because she was under 18 years of age but she intended to do this when she turns 18.
4. Ms MPD told the Tribunal that she is in receipt of the disability support pension. She is unable to work due to injuries from a motor vehicle accident in 2010. She said she was a little behind in the mortgage payments at the minute but was slowly making up ground.
5. The Tribunal was concerned that this was the first time it had heard about what happened to the $125,000. For instance, it was not recorded in the application for the appointment of financial manager signed by Ms MPD on 22 March 2016. Part 3A of that form asks for information about Miss LBJ's financial circumstances. Under "Assets" the space is simply struck through. This would have been the appropriate place to disclose that Miss LBJ is a part-owner of a residential home. Elizabeth Dray told the Tribunal that Ms MPD had not told her that the home in which they lived was part-owned by Miss LBJ.
6. Further, the application for appointment for financial manager contains an electricity account for various electricity rate notices for the home as well as bank statements relating to the mortgage balance but the Tribunal was not able to find any reference to that property being partly owned by Miss LBJ.
7. The Tribunal was told by Ms MPD that she had not tried to hide the fact that Miss LBJ's money had been used towards the purchase of the home in which they live. However, the Tribunal can find no reference to it in the application form or in the papers accompanying the application. It wasn't until the specific questions were asked during the hearing that the Tribunal became aware of this arrangement.
8. Miss LBJ has no other significant assets or debts.
9. Ms MPD submitted to the Tribunal that she should be appointed as financial manager because she has been responsible for Miss LBJ's welfare, has always met her needs, wishes her to follow her dream of attending University and has consulted a financial institution regarding possible forms of investment.
10. Further, Ms MPD said the appointment of her as financial manager would avoid the fees involved in appointment the NSW Trustee and Guardian.
11. Elizabeth Dray, the separate representative reported that Miss LBJ would prefer the compensation monies to be paid to her mother.

Consideration

1. In appointing a financial manager, as in making all other orders under the Guardianship Act 1987 (NSW), the Tribunal must act with the interests of the person concerned as the paramount consideration and in accordance with the other principles set out in s 4 of the Guardianship Act.
2. Section 25M of the Guardianship Act provides that, if the Tribunal makes a financial management order, it may appoint a suitable person to manage the person's estate or may commit the management of the estate to the NSW Trustee and Guardian.
3. In this case, there would be a clear advantage in appointing a private person, in order to avoid the fees of the NSW Trustee and Guardian. However, the Tribunal was concerned how Ms MPD had dealt with the first amount of $125,000 she had received on behalf of Miss LBJ. It had been used to purchase a home that was legally in the name of Ms MPD. There was no documentary record of Miss LBJ being a part-owner of that home nor even any record of the amount of Miss LBJ's money which went towards the purchase price.
4. Even accepting that Ms MPD is unsophisticated in financial affairs, such an arrangement is inconsistent with the obligations of a trustee of monies. The Tribunal decided that it was inappropriate to appoint Ms MPD as financial manager for Miss LBJ. In making this decision, the Tribunal took account of the submission of the separate representative that Miss LBJ wished for her mother to be her financial manager. However, the probity issue is of higher priority in this case.

Is there a need for a financial management order and is it in Miss LBJ'ss best interest that a financial management order be made?

1. This is a significant question in this case because it is possible for the money to be paid directly to NSW Trustee and Guardian without the formal appointment of a financial manager.
2. Section 77 of the Civil Procedure Act 2005 (NSW) that relates to money recovered in any proceedings on behalf of a person under a legal incapacity. It provides that such monies are to be paid into court (sub-section (2)). That has occurred in this case. Sub-section (4) provides as follows: 77 Payment of money recovered on behalf of person under legal incapacity … (4) Money paid into court under sub-section (2) is to be paid to such persons as the court may direct, including: (a) if the person is a minor, to the NSW Trustee and Guardian, or (b) if the person is a protected person, to the manager of the protected persons estate."
3. The current application could be dismissed on the basis that the Tribunal found that Ms MPD was not an appropriate person to act as financial manager. Such an order would allow Ms MPD to approach the District Court in regional NSW for the payment out of the money directly to the NSW Trustee and Guardian pursuant to s 77(4)(a) of the Civil Liability Act 2005 (NSW), without the formal appointment of a financial manager.
4. However, the Tribunal found there was a need to appoint a financial manager and it would be in the best interests of Miss LBJ to do so because such an order would allow the financial manager to secure all of Miss LBJ's assets, not just the money in the District Court in regional NSW. In particular, the Tribunal found a need to secure her interest in the home at the regional Queensland property which is presently unsecured. A financial manager might consider taking whatever steps it deems appropriate (such as the registration of a caveat or by some other means) to secure Miss LBJ's interest in that asset. The Tribunal found that it would be in Miss LBJ's best interests for that to be done.
5. The Tribunal notes the District Court has the ability pursuant to section 77(4) (b) of the Civil Procedure Act (set out above) to pay the money to a financial manager appointed by the Tribunal because Miss LBJ is a "protected person". This is because she becomes a "protected person" as a result of a financial management order. Section 74 of that Act defines "protected person" as having the same meaning as it has in the NSW Trustee and Guardian Act 2009 (NSW), and s 38 of the NSW Trustee and Guardian Act defines protected person as "…a person in respect of whom an order is in force under...the Guardianship Act 1987 that the whole or any part of the person's estate be subject of management under this Act".
6. The Tribunal's authority to make financial management orders derives from the Guardianship Act but when the Tribunal makes a financial management order, the order provides that the person's estate is 'subject to management' under the NSW Trustee and Guardian Act
7. Thus, if the appropriate application is made to NSW District Court in regional NSW by the financial manager, the money can be paid out to NSW Trustee and Guardian under s 77(4) of the Civil Procedure Act.

Who should be appointed as financial manager?

1. There being no other person available the Tribunal appointed the NSW Trustee and Guardian.

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I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar 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: 28 February 2017