Who should be the financial manager?
186In appointing a financial manager, as in making all other orders under the Act, the Tribunal must act with the interests of the person concerned as the paramount consideration and in accord with the other principles set out in s 4 of the Act.
187Section 25M of the 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.
188The matters or "guidelines" which a Tribunal should consider when determining who to appoint as a financial manager are discussed by Lindsay J in M v M [2013] NSWSC 1495 at [50]. There his Honour, albeit in the context of an application to replace a financial manager, said:
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.
189Mr KCC impressed the Tribunal as a sincere and honest witness. He is well qualified in commercial matters as disclosed in his curriculum vitae. During the course of the hearing Mr KCC endeavoured to explain to Mr BES that he would act in Mrs HLT's best interests, that he had time to devote to her affairs, and that he hoped, with time, to effect some sort of peaceful resolution to the clear animosity displayed by Mr BES towards Mr GAU, and to modify Mr GAU's views of Mr BES.
190Mr GAU supported Mr KCC's appointment for a period of one year with a review of the order at the end of that time.
191The Tribunal accepts Mr KCC can devote time to Mrs HLT's affairs. He conceded to do so properly would require him to engage accountants. The Tribunal found he would use his best endeavours to act in Mrs HLT's best interests.
192The Tribunal finds any financial manager appointed will need to appoint accountants to investigate Mrs HLT's financial affairs including her interest in the trust and role as governing director of Company A. Because of the evidence before the Tribunal relating to the demand for loan accounts in the Trust on behalf of Mr GAU as executor of Mr FOT's estate, and the pending family provision claim, it is likely an independent solicitor will need to be retained by Mrs HLT's financial manager. She will need representation in the Supreme Court costs proceedings by a guardian at litem. The Tribunal accepts the engagement of such experts could be made by either Mr KCC or the NSW Trustee.
193Mr BES's evidence, both written an oral, demonstrated a hostile, abusive attitude to Mr KCC. Mr BES has made assertions that Mr GAU was improperly withdrawing funds from his mother's account between 2010 until Ms MMR closed the account in March 2012. The Tribunal is satisfied that he does not trust Mr KCC to investigate, or to take any remedial action in respect of such funds, if on investigation, there is substance to his allegations. In these respect we note the table of withdrawals provided by Ms MMR from Mrs HLT's bank account does disclose regular withdrawals, albeit not as asserted by Mr BES of $1,200 each fortnight, but of varying amounts in that range.
194A financial manager will also need to look at the terms and conditions of Mr GAU and Mrs OEU's occupation of property A, and take into account how the funds applied from the proceeds of sale of the Hotel to discharge the mortgage used to purchase this property and property C should be treated. This is likely to be a difficult exercise for Mr KCC who would no doubt be exposed to conflicting positions of Mr BES and Mr GAU on this issue.
195Of more significance is the role Mr KCC would have to undertake as financial manager in respect of property D. Ms MMR asserted Mr BES and Mrs NES had vacated property D shortly prior to the resumed hearing. It is likely the property, which is subject to the lease the validity of which is questionable, will have to be sold. Mrs HLT's furniture may need to be removed from storage, and the circumstances of [Mr BES's son's] acquisition of the motor vehicle investigated.
196The Tribunal was satisfied from the attitude displayed by Mr BES, particularly in closing submissions, that sadly he has no confidence in or respect for Mr KCC. The Tribunal was satisfied from the attitude displayed by Mr BES that it would be extremely difficult for Mr KCC to work with him or to investigate transactions which have involved Mr BES and his family members.
197Weighing the undoubted attributes which Mr KCC would bring to the role, against the disqualifying factors involved a fine balancing of those factors by the Tribunal in exercising its discretion.
198The Tribunal found the following factors supported Mr KCC's appointment:
- the benefits to Mrs HLT of his personal concern for her well being;
- his familial relationship;
- his commercial experience, together with financial benefits given his voluntary role as against the fees charged by the NSW Trustee.
199The Tribunal found the following matters supported the appointment of the NSW Trustee:
- the trustee is independent and has considerable expertise in the management of complex estates;
- there would be no financial disadvantage to Mrs HLT in the engagement of solicitors or accountants as charges would be incurred whether retained by Mr KCC or the trustee;
- the appointment of the trustee would avoid conflict between Mr KCC and family members particularly Mr BES which conflict is likely to adversely impact on management of Mrs HLT's estate; and
- all parties accepted that the NSW Trustee could be appointed although this was not Mr KCC's primary position or that of Mr GAU.
200Ultimately the Tribunal determined that the NSW Trustee should be appointed as financial manager. In doing so we gave significant weight to the following matters:
- The independence of the office;
- That there would be no costs saving to Mrs HLT whether the NSW Trustee or Mr KCC instructed accountants and or solicitors to act;
- That Mr BES and Mr GAU would both have access to a neutral arbitrator in respect of their competing allegations of improper or imprudent financial dealing with their mother's assets and income;
- Mrs HLT's age and state of health and the benefit to her to bringing the proceedings to a conclusion with a final financial management order being made;
- That by reason of the neutrality of the NSW Trustee and the trustee's corporate experience that matters are likely to be resolved in the least expensive way and with minimum strife if the trustee is appointed. This is to be compared with appointing Mr KCC, who is inherently likely to run into difficulties in dealing with Mr BES. This last finding is consistent with guideline 7 of the guidelines suggested by Lindsay J in M & M.
201Ultimately the Tribunal determined, for the reasons exposed above, that Mrs HLT's best interests will be served by a final financial management order with the NSW Trustee as her financial manager.