AHB v NSW Trustee and Guardian

The Decision under Appeal

1. The NSWTG's two decisions and the Tribunal's decision have examined in some detail AHB's case as to why it is not in his mother's best interests to have the home sold and it is in her interests to have it retained. Much of the material focusses on the calculations made by the NSWTG and the expenditures to which it has agreed. AHB has lived at the property since, at least, 2006. He has a personal interest in continuing to live in the property that may not be consistent with the steps that a trustee should take to ensure that his mother's best interests are upheld.
2. AHB does accept that his mother's regular income, a part-pension payment and superannuation payments, is no longer sufficient to cover her needs. But he has pressed a case that her available funds could be bolstered by borrowing money against the security of the property (by way of a reverse mortgage or a line of credit) or by renting out part of the property.
3. AHB has consistently asserted that it his mother's wish that the home be retained. His mother's condition is such that she has been unable to express any wishes in relation to this matter for some years, and that position is not expected to change. There is no reliable evidence of her present wishes, and in any case a trustee of a protected person must give paramount consideration in the management of the person's estate to the welfare and interests of that person: NSW Trustee and Guardian Act 2009 (TG Act), s 39(a).
4. As at April 2014, the value of the home was estimated to be around $1.3m, one likely now to be significantly higher given the surge in the Sydney real estate market in the last 3 years.
5. In the absence of any reliable additional source of income, the NSWTG estimated the shortfall in meeting Ms A's needs as of the order, in the near term, of $10,000-$15,000 per annum, and increasing in the longer term. According to the NSWTG's material, Mrs A's expectation of life, as at April 2014, was four years and it is therefore, now, perhaps two to three years.
6. Around 2014 or 2015 (the exact date is unclear), AHB had without, it would seem, the approval of the NSWTG allowed a room to be occupied by another person in exchange for payment of 'rent'. The NSWTG's delegate in the original decision of 3 July 2015 noted that the NSWTG had been unsuccessful in attempts to recover from AHB the payments received.
7. For the NSWTG's internal review, AHB put forward a new proposal to the effect that he could rent out two rooms for between $16,675 and $25,000 per annum. The internal review decision dealt in detail with the financial and legal difficulties associated with an arrangement of this kind. The delegate rejected this solution.
8. In a letter dated 19 April 2016, 3 days before the Tribunal hearing, AHB offered to pay $1000 per fortnight in return for being allowed to stay in the home. This was the first indication of a development to which we turn later in these reasons. On this occasion, AHB also raised the possibility of a reverse mortgage or a line of credit as a solution to the problem.

The Tribunal's Decision

1. The Tribunal noted that the parties agreed that the current position was unsustainable. The Tribunal set out the five options that had been canvassed as an alternative to sale. They fell into three categories: the payment of a $1000 per fortnight; various forms of tenancy or sub-tenancy; and borrowing against the property in the form of a 'reverse mortgage' or a 'line of credit'. The Tribunal examined and rejected those options.
2. As to the promised payment of $1000 per fortnight the Tribunal said: ◦(1) He provides no evidence that he has the financial resources to make these payments and the undertaking is at odds with his statement in a letter to the NSWTG dated 1 September 2015 in which he states that he is unable to work full time and is not able to pay market rent for the house. ◦(2) The reference provided by a friend of AHB does not indicate that the referee has any knowledge of AHB's financial situation or employment prospects. ◦(3) In a letter to the NSWTG dated 1 September 2015 AHB said that he had retained the use of $1500 obtained through subletting the premises because he had used his money on caring for the protected person's dog. This does not sit well with an assertion of being able to pay $1000 per fortnight to remain in the house.
3. Secondly, the Tribunal referred to the lack of any independent professional evidence (say from a real estate agent) as to what was required to make the property lettable and the costs associated with getting it into lettable condition. It accepted that the NSW Trustee was properly unwilling to hand over control of any letting arrangements to AHB.
4. The Tribunal then examined in some detail the reverse mortgage or line of credit options. These options may have their origin in an observation by Meagher JA in the principal judgment in the Court of Appeal decision of 2014. The NSWTG applied for payment by AHB of its costs of the appeal. His Honour was critical of aspects of the NSWTG's conduct of the proceedings, and ultimately decided that there should be no order for costs against AHB.
5. In the course of giving his reasons on that issue, he said: 42 ... Rather, counsel for the respondent [the NSW Trustee] stated that "one thing to bear in mind is that the current reason for selling, that is liabilities exceed income, was a significant matter the first time around, so to that extent considerations are the same": Tcpt, 18/06/14, p 16 (40). 43 Absent detailed evidence, the correctness of that proposition is doubtful. While the material before the Court did suggest that expenses exceeded income, the annual deficit was not shown to be such as would require the sale of the protected person's home. An obvious alternative which permitted the house to be retained was to fund any annual shortfall by borrowings secured by mortgage over the property. Furthermore, it is clear from the reasons set out above that the mere existence of that annual shortfall was not the basis on which the decision under review was justified before the Tribunal: see [11] above.
6. The Tribunal referred to these observations and said at [35] that: His Honour was proposing that a mortgage was one potential option, not necessarily the preferred option, and that he acknowledged that the subject decision was made for reasons additional to the budget deficit.
7. The latter comment is an allusion to the difficult relationship that clearly exists between AHB and the NSWTG. AHB continues to live in the property, and has sought to make his own arrangements as to letting of the property and securing income. There have been issues over AHB's lack of accountability to the NSWTG for the arrangements he has made and ensuring that any payments received are given to the NSWTG as financial manager of his mother's estate.
8. The Tribunal accepted the NSWTG's evidence that it is not able to source a provider of a reverse mortgage where the borrower is not also the occupier of the house. (As ABH noted at our hearing, that would appear to mean that the reverse mortgage solution to funding shortfalls is not a measure available to protected persons who have had to leave the family home.) The Tribunal also accepted the NSWTG's evidence that a line of credit carries the risk of default on the interest payments, which would jeopardise the loan and risk title to the property.
9. The Tribunal noted that AHB"s case for the retention of the property also involved the unsafe assumption that the present buoyant market will persist for some time to come. The Tribunal noted in that regard at [36] that: Retaining the house as it appreciates in value is only of benefit to the protected person if the house is sold in her lifetime so that she obtains the benefit of the increased sale price. Otherwise the benefit of increased value is enjoyed by her beneficiaries.
10. The Tribunal concluded that the correct and preferable decision was to affirm the NSWTG's decision.

The Appeal

1. The hearing proceeded on 20 January 2017.
2. AHB's notice of appeal did not, on its face, raise any questions of law. First, he contended that the Tribunal member did not attach 'sufficient weight' to his offer of 19 April 2016 to pay a $1000 a fortnight into his mother's bank account. An alleged failure by a court or tribunal to give 'sufficient weight' to evidence does not identify any question of law. As stated by Dixon, Evatt and McTiernan J in House v R [1936] HCA 40; (1936) 55 CLR 499 at 504 It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion.
3. AHB's next criticism is that the Tribunal was wrong to find he had provided 'no evidence that he has the financial resources to make these payments'. He attached to his appeal submissions copies of a series of bank statements dating from May 2016 which showed that he had made regular payments into his mother's bank account, which amounted to $10,000 at the date of lodgement of the appeal (17 October 2016). He said that the NSWTG's projections of an annual deficit of $13,000-$16,000 have not taken into account his rental contributions via his present payments.
4. This criticism also identifies no question of law. It is apparent from the Appeal Panel's stay decision that the detail on which he now relies was not placed before the Tribunal. It cannot therefore be said fairly that Tribunal disregarded any history of payments. In any event if its reasons are read fairly, their ultimate concern was the likely reliability and continuity of any arrangement of this kind.
5. In our view there were no questions of law identified by the grounds of appeal.

New Circumstances

1. In his notice of appeal and again at hearing, AHB sought the leave of the Appeal Panel to extend the appeal to 'other grounds', in effect the merits. He made detailed written submissions in support of that application.
2. AHB informed the Appeal Panel at the beginning of our hearing on 20 January 2017 that he had some time ago procured 'tenants' for the property. They had now been in occupation for several months (the S family). They were paying 'rent' to him He said they wanted to stay long term. They now occupied the principal dwelling, and he lived in a small area to the rear of the property, which he described as a 'granny flat'. It was a room within the overall structure of the main dwelling which he said had been added after the principal dwelling had been built. It had its own entrance, and included a kitchen with cooking facilities and a sink. It had its own toilet to which area was attached a shower. It had its own access to the dwelling's shared external laundry. (His description was confirmed by the inspector's report to which we refer later in these reasons. The room is described in that report as 'bedroom 4'. The pictures attached to the report show its separate entrance and that it is fully integrated in its appearance to the style of the rest of the dwelling. In the report the inspector described the shower as 'make shift'.)
3. AHB informed us that he had entered into a 'lease' with the S family.
4. He asked that this development be taken into account by the Appeal Panel and the NSWTG in relation to the continued appropriateness of the decision to sell his mother's home. We understood that the income he had derived from this arrangement was the main or only source of the $1000 per fortnight that he had been paying into his mother's bank account regularly since May 2016.
5. The NSWTG in reply stated that it opposed any extension of the appeal to consider any issue of this kind especially if no errors of law were identified, as is now the case. The NSWTG outlined its concerns over the rentability of the property, the difficulty of having AHB interposed between it and any actual or prospective occupants and the need for the NSWTG to ensure always that there were sufficient funds to meet Mrs A's care expenses.
6. AHB's evidence, which was not disputed by the NSWTG, provided new information as compared to what was known to the Tribunal below.
7. In our view, it was a material development and needed to be addressed.
8. We reached that view despite what appeared to be a lack of candour and transparency on AHB's part in his dealings with the NSWTG and the Tribunal below. We note that the Tribunal hearing occurred on 22 April 2016, and the arrangement with the S family would most likely have been in progress given the first deposit of $1000 into Mrs A's bank account was made on 10 May 2016. It would appear from the Tribunal's reasons that it did not receive any information about this arrangement, and its nature, during the period that its decision was reserved (22 April to 15 September 2016). It should have been given that information.
9. On the other hand, as AHB's filings of bank statements demonstrated, he has been punctilious in making the fortnightly deposits of $1000, and has complied, in particular, with the conditions of the stay order of 30 November 2016 in that respect.
10. On its face, this stream of income, if it could be made secure, offers a solution to the problem of the shortfall in Mrs A's finances. On its face, the income covers the predicted shortfall, at least in the medium term, and should generate a surplus of some thousands of dollars per year.
11. After some discussion, Ms Sawtell, for the NSWTG acknowledged that a formal lease to the S family is now an option that the NSWTG would be prepared to canvass in the interests of resolution of the dispute, though its preferred position remained outright sale and creation of a secure fund.
12. She said that any lease would have to be a direct one, and not involve AHB. It would have to be for the whole of the premises. That may mean that AHB would have to vacate the property (if the S family did not allow him to continue to reside in the granny flat). The Appeal Panel explained this possible consequence to AHB. Ms Sawtell acknowledged that the NSWTG had, because of the payments of $1000 per fortnight, avoided a shortfall for the time being.
13. The Appeal Panel adjourned the appeal to a date to be fixed. It directed the NSWTG to provide a report to the Appeal Panel and the appellant not later than 24 February 2017 as to the outcome of its further consideration of the option of a lease of the premises.
14. Ms Sawtell filed a report on the due date (Ex R1). It advised that the estimated market rental for the property in its present condition was between $520-$550 per week. If the property Is rented for 52 weeks of the year for $550 per week, then there would be a projected surplus of funds to Mrs A of approximately $11,000. The report then went on to deal with the issues of access to the property; the nature of any lease (including a ban on subletting), the conditions that would attach to a grant of a lease to the S family; and set out the present recommendations of the NSWTG.
15. The report indicated that while the NSWTG's preferred outcome remained that the property be sold, it was prepared to offer a formal 12 months lease to one or more of the three adult members of the S family at a weekly rent of $550 per week, subject to usual creditworthiness and tenancy history checks and subject to several conditions, the most immediate being that the NSWTG be given access to the property by ABH and the S family for the purpose of an inspection of the state of the premises and to assess whether they were in lettable condition.
16. In addition the NSWTG required that any rental payments be made directly to the NSWTG as landlord in its capacity as trustee of Mrs A's estate; and any tenants must make arrangements for payment of utilities such as gas and electricity (with the landlord remaining responsible for rates and any land taxes); and finally that the offer be accepted within 28 days.
17. The Appeal Panel reconvened on 27 March 2013.
18. Ms Sawtell advised that the NSWTG had been given access and an inspection had taken place on 7 March 2017. She tendered the inspector's report, entitled Risk Management Report, prepared by Jeremy Nicholson (ExR2). The dwelling is a freestanding single level house on a block of land with front and rear garden areas. The dwelling has fibro cladding, a tiled roof, and attached carport. Its estimated age is 40 to 50 years. It has a kitchen, a dining room, four bedrooms ('bedroom 4' being the segregated area now occupied by AHB) and a bathroom. The inspector considered the dwelling rentable in its present condition. The inspection found that only deficiency in the dwelling that required immediate action was the installation to current standards of smoke alarms.
19. The report itemised the safety, maintenance and repair steps required to maximise the rental value of the property. The report provided a forecast budget over a three year period. Many of the items related to the painting of various rooms, window frames and the exterior. In addition to the one item that required immediate attention (insufficient smoke alarms) the budget listed six other items that required attention within one year (four relating to safety and two relating to maintenance). It gave an estimated total cost for all of those seven items of $3520.
20. Most of the remaining maintenance and repair items were categorised as of 'low' or 'very low' severity in relation to any risk or hazard that they might create. The report estimated the three year budget, if these items were all attended to, as being of the order of $35,000. That figure was dominated by a proposed expenditure of $15,000 to $20,000 on a new, modern kitchen, and interior and exterior painting work estimated to cost $11,200.
21. Ms Sawtell accepted that the report did not affect the rentability of the property, though she insisted that any lease would be offered to the S family on an 'as is' basis. She reiterated that the NSWTG's preferred outcome remained that the property be sold. However it was prepared to resolve the dispute by offering a lease to the S family.
22. She informed the Appeal Panel that since the last hearing, she had been in contact with the two of the adult members of the S family. They had indicated that they would be happy to take out a lease.
23. In the submissions and background material provided to us at the resumed hearing by AHB (ExA1), there is a long handwritten letter from one of the two people contacted by Ms Sawtell. It is dated 21 March 2017. It is addressed 'to whom it may concern'. It confirms the S family's wish to lease the dwelling. Ms Sawtell did not object to its inclusion in the evidence before the Appeal Panel.

Extension of the Appeal to Other Grounds

1. In Collins v Urban [2014] NSWCATAP 17 at [80]-[85] the Appeal Panel discussed considerations that will usually be relevant to the exercise of the discretion given by s 80(2)(b). At 84 it said: Ordinarily it is appropriate to grant leave to appeal only in matters that involve: (a) issues of principle; (b) questions of public importance or matters of administration or policy which might have general application; or (c) an injustice which is reasonably clear, in the sense of going beyond merely what is arguable, or an error that is plain and readily apparent which is central to the Tribunal's decision and not merely peripheral, so that it would be unjust to allow the finding to stand; (d) a factual error that was unreasonably arrived at and clearly mistaken; or (e) the Tribunal having gone about the fact finding process in such an unorthodox manner or in such a way that it was likely to produce an unfair result so that it would be in the interests of justice for it to be reviewed.
2. Examples (a), (b), (d) and (e) are not relevant to this case. Example (c) in its first illustration ('an injustice which is reasonably clear, in the sense of going beyond the merely arguable') perhaps comes closer. This is not an exhaustive list.
3. The examples do not address the possibility that always exists in cases involving continuing relationships that new information or new circumstances might arise while the case is still before the Tribunal which affect the scope of the dispute.
4. The grant of a secure lease (or leases) as a way of generating additional funds for Mrs A is now a realistic prospect. If accomplished, that should mean that there will be an adequate surplus over expenses in the medium term. Had the Tribunal had this information before it, it may well have reached a different decision.
5. It may be said, in reply, that AHB ought not to be given an opportunity now to make that case as he had this information in his possession when the matter was still before the Tribunal and should have made it available. We have noted earlier in our reasons what appears to have been a lack of transparency by AHB in that regard.
6. But this is an issue that has arisen in a protective jurisdiction of the Tribunal. In this jurisdiction, the exercise of the discretion to extend the appeal to grounds other than questions of law should, we think, be exercised in a way that recognises that the paramount consideration is always the welfare and interests of the protected person, and also gives appropriate regard to other public interests, such as the need for finality in disputes and the avoidance of undue depletion of the protected person's funds by litigation.
7. In this instance we consider that Mrs A's wish is likely to be that her care and lifestyle needs first be funded out of her regular income, and if that is sufficient that her home not be sold. Even though AHB appears to have been less than candid and transparent with the NSWTG and the Tribunal at first instance, there is now, as we have explained, a realistic and sensible possibility for substantially improving Mrs A's income stream which will avoid the need to sell the home. It should not lightly be ignored. In addition, there is now almost a year of regular payments into Mrs A's account, sourced it would appear from the payments made by the S family to AHB.
8. The Appeal Panel advised the parties at hearing that it would exercise its discretion under s 80(2)(b) of the NCAT Act and reconsider the decision under review on that basis.
9. An alternative might have been for the Appeal Panel to remit the matter for reconsideration to the Tribunal at first instance for reconsideration. Neither party supported that option. The present dispute now has a long history in the Tribunal dating back to 2015 (and is the successor to an earlier dispute with an even longer history, as we have outlined, concluding in the Court of Appeal). It is desirable that the dispute be brought to a conclusion, at least at Tribunal level.

Consideration

1. In considering the merits we are, like the Tribunal at first instance, engaged in the review of a reviewable administrative decision, and must decide 'what the correct and preferable decision is having regard to the material now before [the Tribunal]': Administrative Decisions Review Act 1997, s 63(1). For that purpose the material before us is the material that was before the Tribunal plus the new information to which we have referred above.
2. As we have noted above, the Tribunal did in its reasons examine and reject the reverse mortgage and line of credit options as means for securing sufficient funds. At our hearing AHB sought to reopen the Tribunal's decision in that regard. In our view, these were matters fully canvassed before the Tribunal, and we do not grant leave to extend the appeal to a reconsideration of the Tribunal's decision in those respects.
3. AHB welcomed the NSWTG's proposed resolution of the dispute, but submitted that a fairer resolution would be one under which both occupancies were the subject of leases. One lease would be to the S family, and the other to him. His rent, he submitted should be about 10% of that charged to the S family based on the size of the respective floor areas of the two dwellings, so the S family would contribute approximately 90% and he 10% of the overall amount.
4. He submitted that a two lease outcome would better accord with his mother's wishes, which he believed were to retain the property and to provide him with a place to live.
5. Ms Sawtell opposed the two leases option. She referred to the complexity involved in having two leases where one involved a main dwelling and the second involved an area annexed to the main dwelling and which was fully integrated in its appearance into the look and architecture of the main dwelling. She considered that if the S family vacated the home, it would be hard to lease it because of the presence of a stranger in another part of the home, albeit a part with some degree of separation. She also referred to the additional administrative expenses that would be incurred by the office in managing two leases.
6. In our view, the decision made by the NSWTG's officers and the Tribunal on review were the correct and preferable ones at the times they were made. There was, clearly, a shortfall in Mrs A's account which meant that her quality of care might be diminished if it was not remedied. The only practical remedy was to sell the home and in that way create a fund that was secure, predictable, one that would be sufficient to meet her needs in the medium term at least. Because of its size, it was likely to meet those needs even if she lived to an extraordinary age.
7. Section 39 of the TG Act sets out several principles that must guide decision makers in managing the financial affairs of protected persons, with the following being relevant to this case: It is the duty of everyone exercising functions under this Chapter with respect to protected persons or patients to observe the following principles: (a) the welfare and interests of such persons should be given paramount consideration, (d) the views of such persons in relation to the exercise of those functions should be taken into consideration, (e) the importance of preserving the family relationships and the cultural and linguistic environments of such persons should be recognised, (g) such persons should be protected from neglect, abuse and exploitation.
8. We consider that a decision which enables the property to be used to generate income, and which would produce a reasonable surplus of funds upholds the welfare and interests of Mrs A, will contribute to preserving family relationships and does not carry the risk (as a continued shortfall of funds might) of exposing her to either a diminished level of the care appropriate to her needs or neglect.
9. As already explained, it is not now possible to ascertain Mrs A's current wishes. We accept that in the past she would have wished to keep the home for her own enjoyment and pleasure. We agree with the observations of the Tribunal below that decisions that concern the need to sell a major asset such as a home are not to be influenced by the wishes of offspring desirous of preserving assets because of their interest as possible heirs.
10. In our view the correct and preferable decision now is one that incorporates entry into a lease as the preferable option for securing sufficient funds, with sale of the home remaining as the default option. We consider that a secure lease would provide a level of income in the medium term sufficient to ensure that Mrs A's welfare and interests are properly respected.
11. There is, we concede, a greater administrative burden for the NSWTG in managing a lease relationship than in managing the substantial fund that would be generated by a successful sale of the property.
12. We think it preferable that there only be a single lease of the property. While, we accept, it is legally possible for there to be a lease of the main dwelling and a separate lease of the granny flat, there is force in Ms Sawtell's objections.
13. It would be simpler and easier for any future marketing purposes, and managing issues such as access to the property and the like, to have one exclusive lease for premises of this kind, essentially a home on a suburban block of land. We agree that there may be difficulties in getting tenants who might not wish to share the dwelling with another person, even though that person lives in a segregated part of the dwelling. In this instance there is the further complication that AHB has, in effect, controlled entry, occupation and use of the dwelling now for many years, and may wish to have his own say in who is to be given a lease of the premises.
14. We agree with the NSWTG that the offer to the S family should be made on an 'as is' basis as to the general state of repair of the premises, with the exception of the immediate safety concern (smoke alarms).
15. Our decision will mean, we acknowledge, that AHB will not have any security as to whether he can continue to stay in the dwelling. He will be dependent in that regard on the goodwill of the S family, if they meet the approval checks and accept the offer of the lease within the time stipulated.
16. As we see it, AHB has been in an uncertain position as to his continued occupancy for many years.
17. In that sense, despite his submissions to the contrary, the rejection of his second option does not involve a major change in his situation.
18. He has occupied the premises since his mother moved out with the permission of the NSWTG. As the history of this litigation reveals, the NSWTG's preferred position for several years now been has been that the home be sold, which, had it occurred, would have meant that AHB would have been required to find somewhere else to live.
19. Accordingly we will vary the decision under appeal as set out in the orders below. We should emphasise that if the S family does not take up the lease offer, then the decision to sell is to proceed, and, as foreshadowed in Ms Sawtell's report, if the premises are not immediately vacated it will be open to the NSWTG to take any necessary steps to secure the decision, such as obtaining orders for eviction.

Orders

1. Leave granted to extend appeal to other grounds to enable consideration of new circumstances.
2. Decision under appeal is varied as follows: (1) The NSWTG to offer the S family a lease of the subject property for a period of 12 months at a weekly rental rate of $550 per week, that includes the following conditions: (a) That the tenant be advised that they have no authority to sublet the realty and any breach of the condition nullifies the tenancy; (b) That all services to the realty not be registered in the name of the protected person (apart from water rates and land rates); (c) That all rental proceeds are payable direct to NSWTG; and (d) That the proposed tenant enter into the tenancy agreement within 28 days (from the date of notification of the offer in writing by NSWTG). (2) If the proposed tenant fails to enter into the tenancy agreement as provided in (1), the decision to sell the property is affirmed. 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: 04 April 2017