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[2008] WASAT 127
General information, not legal advice.
State Administrative Tribunal (WA)
2008-06-04
Original judgment source is linked above.
Guardianship and administration - Review of administration requiring administrator of elderly man to investigate circumstances of a transaction entered into by him and to decide whether an application should be made to have the transaction set aside - Decision by administrator not to make such an application - Family members of represented person seeking to have administrator removed so that an application to set aside the transaction could be made - Consideration of Tribunal's jurisdiction on such a review - Finding that represented person remained a person for whom an administration order could be made - Review of factors relevant to issue of whether application to set aside transaction should be made - Finding that administrator's decision was reasonable and that it would not be in the best interests of the represented person for an application to be made - Administration order varied to take account of represented person's current needs
1 The Tribunal reviewed an administration order made in January 2007 in respect of an elderly man whereby the Public Trustee was appointed as the man's plenary administrator and was directed to investigate a transaction entered into by the man shortly before the appointment of the administrator involving the sale of the man's interest in land, buildings and a business to the man's longstanding de facto partner (from whom he was at the time separated) and members of the partner's family - and to decide whether an application should be made to set aside the transaction under s 82 of the Guardianship and Administration Act 1990 (WA).
2 Soon after that order, the man and his partner reconciled and married, and the Public Trustee determined that a s 82 application should not be made, but that, rather, the transaction should proceed and that there should be some adjustment to the ownership interests of the man and his now wife in another property that was their matrimonial home.
3 A son of the man's previous marriage was aggrieved by the Public Trustee's decisions. Because a s 82 application can only be made by an administrator, the son applied to the Tribunal to have the administration order reviewed, with a view to obtaining orders removing the Public Trustee as administrator and having a new administrator appointed who would be able to make a fresh decision about whether to make a s 82 application.
4 The Tribunal considered a preliminary issue that the Tribunal may have no jurisdiction to review the original administration order in that way. The Tribunal rejected that submission, considering that on a review the Tribunal can make any order or direction that could be included in an administration order and that the Tribunal had a wide review jurisdiction to supervise the decisions and activities of administrators.
5 On the evidence before it, the Tribunal was satisfied that the man remained a person who was unable to make reasonable judgments regarding his estate by reason of a mental disability, namely a cognitive impairment, and that he continued to be in need of an administrator.
6 The Tribunal reviewed the evidence that was available to inform the Public Trustee's decisionmaking, and other evidence available to the Tribunal. The Tribunal was satisfied that the decisions made by the Public Trustee were reasonable and reasonably represented what the Public Trustee, and the Tribunal, considered to be the man's best interests - namely that a s 82 application should not be made. Accordingly, the Tribunal was not prepared to alter the original administration order in a way that would enable such an application to be made.
7 However, the Tribunal was satisfied that once the sale transaction was finalised the man's needs in relation to an administrator could be met by his now wife being appointed as administrator. Because the wife had an interest (as one of the purchasers of the business) that conflicted with that of the man - concerning the final settlement of one aspect of the sale transaction - the Tribunal decided that the Public Trustee should continue to be the man's administrator in relation to only that part of his estate with the power to negotiate and finalise that aspect. The wife was appointed as the man's plenary administrator in relation to the balance of the man's estate.
8 KWD is an elderly man, having been born in June 1924. He was, therefore, at the time of the events the subject of this decision more than 80 years of age and at the time of the hearing was 83 years.
9 For more than 20 years KWD had lived in a de facto basis with his partner JID, who is approximately 20 years younger than he is. In 1995 KWD purchased land on the outskirts of Perth and thereafter constructed buildings suitable for the conduct of the business of wedding receptions and other functions. From about 2000 he and JID conducted that business, but in early 2005 placed the property and business on the market for sale, whilst still conducting the business. By November 2006 the property and business had not been sold and at around that time KWD entered into an agreement (dated 14 November 2006) (the November agreement) by which he sold the property and business to JID as to one undivided quarter share, CDM (who is JID's son) as to one half undivided share, and to RPM (who is another son of JID) and PMH (who is RPM's partner) together as to one undivided quarter share. The purchase price was to be $1.5 million for all land and the business, including all licences, permits and other authorities etc. The November agreement was subject to the buyers obtaining finance of $1.75 million from a bank as well as a number of other conditions. The buyers were to give notice of satisfaction of all conditions by 31 January 2007 and settlement was to occur five business days after all conditions were satisfied.
10 At the time of entering into the November agreement the relationship between KWD and JID was experiencing difficulties and the parties had physically separated at that time. Soon afterwards they reconciled their differences and in January 2007 they married.
11 In December 2006 Mr BMD (who is a son of KWD from KWD's earlier marriage) and one of his sisters, JDN, applied to the Tribunal under the Guardianship and Administration Act 1990 (WA) (GA Act) for orders that a guardian and an administrator be appointed for KWD and that an undated enduring power of attorney by which KWD purported to appoint JID as his attorney be revoked. The basis of the applications being made to the Tribunal was said to be the concerns held by BMD and JDN for their father's well being and, in particular, their concerns that the November agreement may not have been in his best interests.
12 In due course the Tribunal, on 8 January 2007, gave leave to BMD and JDN to withdraw the application for the appointment of a guardian and one other matter. After a hearing conducted on 12 January 2007, the Tribunal (consisting of Senior Member Toohey, Member Mansveld and Senior Sessional Member Stanton) ordered (the January order) that:
"1. The Public Trustee ... be appointed plenary administrator of the estate of [KWD] with all the powers and duties conferred by the [GA Act].
13 Section 82 of the GA Act is a provision that empowers the Tribunal, on the application of a person's administrator and if certain requirements are satisfied, to make orders setting aside certain types of transactions, including the disposition of property, entered into by the person within two months before the person was declared, under s 64(1) of the GA Act, to be in need of an administrator.
14 The Public Trustee, acting as KWD's administrator, subsequently decided not make an application to the Tribunal under s 82. Rather, the Public Trustee negotiated with the purchasers variations to the November agreement, which are embodied in a Supplementary Deed dated 1 June 2007 made between KWD and JID (the Supplementary Deed).
15 By the Supplementary Deed, KWD and JID acknowledged that they were presently equally entitled to beneficial ownership of the property and the business as well as all other assets owned by them jointly or individually by either of them. The parties agreed that the November agreement should proceed but that, upon its completion; (a) JID would be the legal and beneficial owner of an undivided 25% interest in the property and business; (b) KWD would be the legal and beneficial owner of the nett cash proceeds of sale of the property and business after payment of all the various amounts to be paid out in accordance with the November agreement, which was to be not less than $300,000; and (c) KWD and JID would be the legal owners of a residential property in South Perth (the South Perth property) where KWD and JID live, free of all encumbrances, but that JID would transfer to KWD a 20% undivided legal and beneficial interest with the effect that KWD and JID would then be the beneficial owners of the South Perth property as to (for KWD) a 70% undivided interest and as to JID a 30% undivided interest as tenants in common.
16 The Supplementary Deed provided that KWD and JID executed that document by way of settlement of all property issues at common law, equity or pursuant to the Family Law Act 1975 (WA) (FL Act), and so as to be as far as practicable a full and final settlement of financial issues between them - but not affecting the rights and obligations of the parties under the FL Act or the testamentary rights of each of them.
17 BMD was aggrieved by the Public Trustee's decision to proceed in that way and to not make an application to the Tribunal under s 82 of the GA Act. He subsequently commenced proceedings in the Supreme Court in an attempt to prevent a completion of the various agreements, but was unsuccessful in doing so. In July 2007, BMD applied to the Tribunal pursuant to s 87 of the GA Act seeking leave to apply for the review of the January order (matter GAA 1376 of 2007) and pursuant to s 86 of the GA Act for that review (matter GAA 1377 of 2007). BMD sought various orders, including that the Public Trustee as administrator be ordered to show cause why the power to commence a s 82 application to set aside the sale of the property and business was not exercised, and that the Public Trustee should obtain further evidence about the value of the property.
18 In the course of the proceedings it became clear that BMD sought, in effect, to have the Public Trustee directed to make a s 82 application or, alternatively, removed as administrator of KWD's estate so that a new administrator could be appointed - who would conduct a further investigation and make a fresh decision about whether a s 82 application would be made to the Tribunal in an attempt to overturn the November agreement as modified and implemented.
19 At a preliminary hearing conducted on 14 September 2007 the Tribunal granted BMD leave to apply to have the January order reviewed and the Tribunal also made orders regarding the filing of submissions and the identification of expert valuation witnesses, and made orders regarding how such expert evidence would be taken by the Tribunal at a final hearing. Various documents were subsequently filed by the parties, but the Tribunal's orders regarding consultation between expert witnesses were not complied with.
20 In the meantime, because the date for the statutory review of the January order under s 84 of the GA Act (pursuant to Order 5 of that order) was approaching, the Tribunal commenced matter number 2105 of 2007 for that purpose. The two reviews under s 84 and s 86 came on for a hearing on 12 and 13 December 2007. BMD represented himself, Mr Rorrison represented the Public Trustee but not KWD, and Mr Robinson represented JID.
21 The Tribunal made it clear, both at the hearing in December 2007 and at an earlier directions hearing that it would not and could not deal with the matter under s 82 of the GA Act by considering whether orders should be made under that section setting aside the transaction - because no such application had been made by the administrator as required by s 82. Rather, the Tribunal approached the matter on the basis that it was reviewing the January order in accordance with Pt 7 of the GA Act and that its powers were those set out in s 90(1) of the GA Act , pursuant to which the Tribunal:
"... [M]ay, as it considers necessary in the best interests of the represented person, confirm the [administration order under review] or by order -
(a) amend the order so as to make any provision that may be included in a[n] ... administration order ...;
(b) revoke the order, or revoke the order and substitute another order for it; or
(c) without limiting paragraphs (a) and (b) -
(i) revoke the appointment of any ... administrator;
(ii) appoint a new or additional ... administrator;
22 In exercising those powers, the Tribunal must first consider whether the requirements for the making of an administration order (as set out in s 64 of the GA Act) remain satisfied and whether, in the circumstances of the case, the best interests of KWD require the exercise of any of the s 90 powers as set out above. Further, in exercising the powers available to it the Tribunal must observe the principles set out in s 4(2) of the GA Act, which relevant to this case are that:
23 Apart from the above general matters of principle, we observe that as a matter of general approach we have examined the Public Trustee's decisions as those of a trustee who has made a discretionary decision, albeit in the particular statutory environment of the GA Act. As was observed recently by Wilson J in the Supreme Court of Queensland (in a context that bears some similarity to, but is not identical to that in the present case) in Jacques v Public Trustee of Qld [2008] QSC 108 at [20], a trustee has a duty to exercise his own judgment in determining the question in issue and the exercise of the discretion must be properly informed. The trustee must act in good faith, responsibly and reasonably, informing themselves of relevant matters - which may be limited to simple questions of fact but on occasions will include taking advice from appropriate experts: see also Scott v National Trust for Places of Historic Interest or Natural Beauty [1998] EWHC 318; [1998] 2 All ER 705 per Robert Walker J at 717. Further, a heavy onus will lie upon a person seeking a review of a trustee's decision: Re Whitehouse [1982] Qd R 196 per Macrossan J at 203 204.
24 Both Mr Rorrison and Mr Robinson submitted that the Tribunal has no jurisdiction, in effect, to conduct a review of the Public Trustee's actions and decisions as KWD's administrator to proceed with the sale transaction as modified and to not make an application under s 82. For the Public Trustee it was submitted (Statement of Issues, Facts and Contentions (SIFC) dated and filed 26 October 2007 at par 1 and par 2) that in this context the Tribunal's jurisdiction is limited to that contained in s 13(d) of the GA Act (which confers jurisdiction on the Tribunal to "... review ... administration orders and to make orders consequential thereon") and Pt 7, which refers to the various types of reviews that can or must be undertaken and which includes s 90 as set out above. It was submitted on behalf of JID (submissions dated and filed 10 October 2007) that s 90 of the GA Act would not enable the Tribunal to make the sorts of orders sought by BMD requiring the Public Trustee to take certain actions and that, having made the January order, the Tribunal would not have the power of its own motion to make orders under s 82. The Public Trustee having done what it was ordered to do by the January order regarding a possible s 82 application the Tribunal could not now, in effect, review the Public Trustee's decisions. In his oral submissions Mr Robinson suggested that the Tribunal was functus officio once the January order was made.
25 We do not agree with those submissions, which we consider misstate the Tribunal's jurisdiction to monitor and, in certain circumstances, supervise and direct the exercise of an administrator's functions and powers. For example, apart from the jurisdiction conferred by s 13(d) referred to in the previous paragraph, s 13(b) of the GA Act confers jurisdiction on the Tribunal to make orders as to the functions of, and for giving directions to, administrators. That power, together with the express provisions of s 90(1), which permit the Tribunal to include in an administration order, on a review, any provision that may be included in such an order, and to revoke the appointment of an administrator and to appoint another administrator, gives the Tribunal, we consider, ample jurisdiction to review the terms and operation of the January order in KWD's best interests.
26 It is not unusual for the Tribunal to review administration orders where it is alleged that the appointed administrator has not carried out the functions conferred on him or her in the represented person's best interests - indeed the Public Trustee not infrequently refers such matters to the Tribunal for review as a result of information received in the course of examining accounts submitted by an administrator under s 80 of the GA Act. If not satisfied that the administrator has performed the functions conferred in the represented person's best interests, or that directions need to be given as to how the function should be exercised, the Tribunal will give directions or, if necessary, order that a new administrator should be appointed - with or without directions regarding the matter in issue.
27 We do not accept the suggestion that the Tribunal is now functus officio, and we consider that we should proceed to review the terms and operation of the January order.
KWD's capacity to make reasonable judgments about his estate
28 The first matter about which s 64 of the GA Act requires the Tribunal to be satisfied is that KWD continues to be a person who "is unable, by reason of a mental disability, to make reasonable judgments in respect of matters relating to all or any part of his estate". At the time of the making of the January order the Tribunal heard medical and other evidence on that point, and was satisfied that the requirement was made out.
29 The issue of KWD's capacity was again raised by reports received by the Tribunal subsequent to the making of the January order from two medical practitioners - a physician, Dr MD Donaldson, and a psychiatrist, Dr J Spear.
30 At the January 2007 hearing Dr Donaldson gave evidence to the Tribunal that KWD had a mild cognitive impairment affecting memory, that he had a clear understanding of the strategic issues in regards to the nature of his business, but that he (that is, Dr Donaldson) thought that KWD did not have financial skills and did not have the ability to manage the daytoday running of his business and had not done so for some time. He thought that KWD would have difficulty understanding the full implications of a fairly complex legal transaction relating to the sale of the business but he had an understanding of the outcome he sought from the sale.
31 In a report dated 26 September 2007, Dr Donaldson reported that he had seen KWD in September 2007 and that KWD reported his memory as being as good or better than at the last review in November 2006, although KWD agreed that his short to medium memory was less good - but KWD regarded himself as capable of handling his affairs. Dr Donaldson again considered that KWD did not suffer from dementia but rather had a mild cognitive impairment.
32 In an undated report (but received by the Tribunal on 28 February 2007), Dr Spear reported on his assessment of KWD. Dr Spear reported that there was no evidence of memory, language or comprehension impairment or of judgment. He appeared aware of how to pay bills and the implications of not doing so, and was aware of how to handle contingencies where cash flow problems arise. Overall, he appeared competent to manage his own finances and appeared capable of making a Will and of making decisions regarding medical treatment.
33 In a subsequent report date 12 September 2007, Dr Spear reported that KWD appeared aware of his income, including his pension, appeared able to monitor bank accounts, and appeared aware of his assets. On cognitive assessment he was fully oriented for time and place, and there was no impairment of short-term memory, concentration or comprehension. There was no evidence of cognitive impairment or dementia and Dr Spear thought KWD was capable of making decisions regarding his finances, place of residence and medical treatment.
34 Further reference will be made below to the oral evidence given to the Tribunal at the hearing by Dr Spear and Dr Donaldson.
35 At the hearing KWD answered questions put to him by us. He was able to describe the purchase of the land and the development of the business, and that he and JID had run the business together for some years. He was aware that in late 2006 agreements had been entered into that changed the arrangements; he said that he and JID had entered into a company or partnership with JID's sons. He thought that a company had become the owner of the land and that the shareholders were, mainly, JID and himself but also JID's sons. He was not sure what the shareholding of JID and himself was in the company but he thought it was probably 25%. KWD subsequently said in response to further questions that it was possible that it was JID who owned the interest in the land and business, and that he did not have an interest. He confirmed that he and JID had purchased the South Perth property together and owned it jointly. He did not think that there had been any change to the ownership arrangements of the South Perth property in the arrangements for the sale of the land and business.
36 KWD was not able to identify what he thought the value of the property had been in 2006, or in earlier years when attempts were made to sell it. He thought that there had been a few offers put by real estate agents but that they were too low to be accepted. He said that he had a vague recollection of discussing the proposed arrangement involving the purchase of the property by JID and her children. He had discussed the matter with JID but had not otherwise been involved in negotiations. He did not know how much money was owing on the property, secured by mortgages that had to be paid out on the sale, saying that "I don't go into that sort of thing". Likewise he knew that there might have been some money owing on the South Perth property to be paid out of the proceeds of sale, but he was not sure how much.
37 KWD exhibited some confusion about the role of the Tribunal and that of the Public Trustee, and on a number of occasions said he was confused about what the Public Trustee had done following his appointment as administrator. He said that he did not know whether there had been any changes made to the original agreement once the Public Trustee became involved. When asked specifically whether he recalled what the value was that was put on the property when it was sold, KWD said that he probably would have known but he does not now remember it. He could not recall the values that had been placed on the property by various valuers.
38 KWD also made it clear that he was not happy about the Public Trustee handling his financial affairs because he thought that was restrictive and he preferred that JID and he have control of their affairs.
39 KWD also said that he did not want to reverse or change the sale arrangement in any way and was happy with the final outcome.
40 Dr Spear gave oral evidence to the Tribunal. He said that it was not possible for him to say whether KWD had understood the November 2006 document because he (that is, Dr Spear) personally did not understand it and thought that KWD would need legal and other advice in order to understand it. He thought that KWD would have been capable at the time of understanding such advice. Dr Spear said he differed from the conclusion of Dr Donaldson that KWD suffered from a mild cognitive impairment. Dr Spear subsequently said that his focus when assessing KWD was in relation to his testamentary capacity, which focussed more on daytoday household financial management rather than on a complex transaction. In answer to a question from the Tribunal he said that it would be reasonable to think that KWD should have been able to remember and understand in what sort of entity his assets were held (such as whether it was a company or otherwise) and if he could not do so it would cast doubt on his views about KWD's capacity. Likewise, it would reasonable to expect that KWD would be able to remember a large and significant sum for which his land and business was sold, and if he could not do so then there would be cause for concern about his capacity to understand and manage his affairs.
41 In his oral evidence Dr Donaldson said that when he saw KWD in September 2007 he did not see him clinically as being significantly changed from when he saw him in January 2007. Although KWD seemed to have a strong sense of how he wanted his assets managed in an overall or strategic sense, he did not have a good comprehension of the technical aspects of a complex contract or the implications of a complicated transaction. Dr Donaldson said that it was hard to gauge whether KWD would be able to recall important details of a transaction, such as whether the property was to be held in a company and the value to be put on the property, because these were to some extent details and KWD was not good at details. Dr Donaldson could not recall whether KWD had spoken of a direct personal interest that he might retain in the business or whether he spoke of a jointly owned interest to be retained by he and JID.
42 Dr Donaldson said that he agreed that KWD was competent to make decisions about his medical treatment but Dr Donaldson continued to believe that, because KWD suffered from a cognitive impairment, he did not have the skills to manage his financial affairs.
43 In January 2007 the Tribunal as then constituted was satisfied that KWD was not able to make reasonable judgments about his estate by reason of a mental disability. We are concerned as to whether or not that continues to be the case. In the end, having given careful consideration to the written and oral testimony of the two doctors and having made our own assessment of how KWD responded to the questions put to him, we have concluded that KWD does have a cognitive impairment that, we consider, at the least significantly affects his memory and ability to retain details. As a consequence of that impairment, which we consider is a mental disability for the purposes s 3 and s 64(1) of the GA Act, he is presently unable to make reasonable judgments about his estate - bearing in mind that the assets that make up that estate are intrinsically bound up in the November 2006 agreement as subsequently varied and the various issues that have been raised in these proceedings about whether they were or were not in his best interests.
44 We have arrived at that conclusion because we consider that KWD demonstrated considerable confusion about the structure and details of the transaction itself, the role of the Public Trustee, and the issues before the Tribunal. He was confused about whether he had a direct or indirect interest in the property and business and any income that they might generate; he believed that what ever the interest was it was held via a company; and he either never knew or could not now recall the values placed upon the assets and the amounts owing and secured by them that had to be discharged prior to settlement of the transactions. We accept that KWD does have a firm view about not wanting to interfere with the transactions and wants to be left alone to enjoy his retirement, but we are not satisfied that he has a sufficient understanding of his situation and how it has arisen, or the implications of it and how they might be addressed (or not) to be able to make informed judgments about his affairs.
45 For those reasons we have concluded that KWD remains a person in respect of whom an administration order could be made by reason of his inability to make reasonable judgments about all of his estate. For the reasons set out below we consider that there is a continuing need for an administration order. We also consider who should be appointed as administrator and what continuing functions are required by the administrator. Before doing so, however, we turn to address the main issue raised in this proceeding by BMD - that the Public Trustee has, by not making an application under s 82 and by administering KWD's estate so as to complete the transaction in the way the it did, not acted in KWD's best interests and that the January order should be varied in a way that accommodates BMD's concerns.
Assessment of the administration by the Public Trustee thus far
46 BMD's position was that the January order should be varied by removing the Public Trustee as administrator, appointing a new administrator, and requiring that new administrator to again investigate the circumstances of the transaction and make a new decision about whether to apply to the Tribunal under s 82 of the GA Act. He thought that the new administrator should be himself, or himself and his sister, JDN. BMD thought that this result was appropriate because at the time of entering into the transactions KWD did not understand and did not have the capacity to understand the nature of the transactions, that undue influence had been brought to bear on him at the time by JID and her family, the value placed on the property in the transactions was inadequate, the Public Trustee had failed to consider the question of valuation subsequently in a proper manner, and the Public Trustee had failed to consult him and members of his family sufficiently in making the decisions that it had.
47 As we have noted, this proceeding is not one that can involve consideration of the issues that would have to be determined by the Tribunal in an application under s 82 of the GA Act. Rather, we have approached our task in this case by considering whether, on the material before us, having regard to all the circumstances pertaining to KWD's estate since the January order and at the present time, there is sufficient reason to believe that there has been anything done or decided that has not been in KWD's best interests and, in particular, whether it would be in KWD's best interests to reopen the question of whether a s 82 application should be made to the Tribunal and, if so, how that should be achieved.
48 Section 70(1) of the GA Act imposes on an administrator an obligation to act in what is his opinion of the best interests of the represented person. Section 70(2) provides that an administrator acts in a person's best interests if the administrator act as far as possible in the (nonexhaustive) ways set out; namely:
"(a) as an advocate for the represented person in relation to the estate;
(b) in such a way as to encourage the represented person to live in the general community and participate as much as possible in the life of the community;
(c) in such a way as to encourage and assist the represented person to become capable of caring for himself and of making reasonable judgments in respect of matters relating to his person;
(d) in such a way as to protect the represented person from financial neglect, abuse or exploitation;
(e) in consultation with the represented person, taking into account, as far as possible, the wishes of that person as expressed, in whatever manner, or as gathered from the person's previous actions;
(f) in the manner that is least restrictive of the rights, while consistent with the proper protection, of the represented person;
(g) in such a way as to maintain any supportive relationships the represented person has; and
(h) in such a way as to maintain the represented person's familiar cultural, linguistic and religious environment."
49 A number of the above matters were referred to by the parties in the course of the proceedings, and they are a convenient framework within which the administration of KWD's estate under the January order can be reviewed. Some of the factors are, of course, more relevant than others.
50 In considering the oral and documentary evidence before us we must observe that in many respects the hearing was not entirely satisfactory. A considerable quantity of written material had been filed by the parties, particularly BMD, and much of it was not referred to in any detail or at all during the hearing. BMD presented his own case at some length but he did not (despite a number of requests by the Tribunal that he do so) clearly distinguish between those matters upon which he could give evidence himself and those matters which were submissions - or, often, unsubstantiated assertions or conclusions about what BMD thought were the facts or the motives of persons involved in the various events. As it turned out, many of the facts in the case regarding the major sequence of events were not in serious dispute.
51 We do not consider that the matters set out in s 70(2)(a), (b) and (c) of the GA Act are particularly relevant to the case, and only the Public Trustee referred to one of them - item (c). We accept the point made by the Public Trustee in his SIFC at par 4 that KWD was incapable of managing the business that he had previously operated and it was doubtful that he would have been able to continue to service the amounts owing in relation to the business and the South Perth property. Allowing the sale transaction to proceed allowed KWD to discharge his debts, to receive a lump sum amount, to allow him to travel as he wished, and generally to enjoy his retirement. In view of KWD's advanced years, his limited decision-making capacity, his complicated financial position, his difficult personal situation due to the deterioration in (but subsequent resumption of) his relationship with JID, the differences that had emerged with BMD and his other children, and an overall need to stabilise all these matters so that KWD could enjoy his remaining years with as much financial security and settled personal life as possible, we consider that the approach of the Public Trustee was to be an advocate for KWD's interests rather than anyone else's interests, and to resolve matters relating to his estate in a way that would allow him to live a retired life that was as settled as possible.
Protect from financial neglect, abuse or exploitation: s 70(2)(d)
52 It was this aspect of the matter that was most disputed. BMD's position was that KWD had been financially exploited by JID and members of her family by entering into a transaction that was not in his interests. Much of BMD's evidence and submissions to the Tribunal focussed on the question of what was a proper value to be placed on the property and business over the years in question. For that reason it is necessary to examine the efforts made to sell the property commencing in early 2005 and the various values that have been placed upon it.
53 In January 2005 KWD granted a real estate and business agent, John Garland International (Garland), authority to offer the land and business for sale at a listed price of $4.5 million (Attachment 3 to the Public Trustee's submission of 21 September 2007). It appears that the property was extensively marketed by Garland. Attached to a submission filed by BMD in the Tribunal on 11 December 2007 is a copy of an advertisement apparently placed in an English magazine sometime during 2005 by Garland offering the property and business for sale at £1.5 million - which at the time would have equated to between $3.5 million and $4 million.
54 However, in November 2006, Mr Garland provided a letter to KWD (Attachment 4 to the Public Trustee's submission of 21 September 2007), which confirmed that:
55 In November 2005 Egan valued the land and business on the instructions of CDM to obtain what was described as "... the current market value [on a going concern basis] ... for security lending and asset management purposes". The valuation was:
56 In December 2005 KWD accepted a conditional offer to purchase the property and business as a going concern from a company (the purchaser) for a total price of $3.5 million, being $3.25 million for the land and $250,000 for business. Reference was made to this agreement at the hearing in the context of it not having ultimately proceeded and that it had been a requirement of the purchaser that forward bookings of the business were to be cancelled - and that this had had a serious detrimental impact on the business for some time thereafter. Mr Rorrison undertook to provide copies of that agreement to the Tribunal and this eventually occurred, revealing that the offer had been subject to a condition that the buyer was able to obtain finance of US$10 million by 23 January 2006. If finance was obtained, a non-refundable deposit of $1.5 million would be paid by 24 January 2006 and final settlement would occur by 31 March 2006. Solicitors for the purchaser subsequently advised KWD's solicitors that finance had not been obtained and the agreement was at an end.
57 Because the documents relating to that agreement were not available at the hearing, and because the documents make no reference to any requirement for the cancellation of bookings, the Tribunal arranged for copies of the documents to be made available to the parties and invited them to make written submissions concerning the circumstances of the making of the offer, the origin of the requirement to cancel bookings, and the significance generally of the agreement to the matters before the Tribunal - in particular the issue of the value of the property and business in November 2006. The Public Trustee commented that because of the paucity of evidence any conclusion would be speculative. BMD noted that the documents did not require the cancellation of bookings, but that the offer was only indicative evidence of the value of the property at that time and that other evidence regarding valuation is of greater significance.
58 On behalf of JID, Mr Robinson informed the Tribunal that the offer had resulted from a telephone enquiry from a named person as to whether the property and business was for sale. The person concerned had subsequently stayed at the property, during which he said that he was prepared to buy the land and business for $3.5 million. The documentation resulted from that approach. At the end of December 2005 the person concerned had orally requested that KWD and JID cease taking further bookings for functions. It was submitted that the purchaser had not conducted any due diligence in relation to the proposed transaction and there was no evidence that the purchaser was ever in a position to satisfy the finance condition or otherwise complete the purchase.
59 In December 2006 a further valuation of the property and business was undertaken, by Knight Frank, on instructions from CDM, representing an assessment of the market value of the land and property for security purposes (Attachment 8 to Public Trustee submission of 21 September 2007). The valuation reviewed sales data for comparable properties and concluded that the market value for the land was $1.535 million. Improvements to the land were valued using an estimate of current replacement costs less a 3% depreciation rate for the age of the improvements (six years), resulting in a value for improvements of $2.8 million and a total value for land and improvements of $4.335 million.
60 Having been appointed as administrator under the January order, the Public Trustee engaged Agnello Property Valuations (Agnello) to value the land and business as well as the South Perth property. The South Perth property was valued at $625,000 and the land and business were valued on a going concern basis, with an effective valuation date of 14 November 2006. A copy of the valuation of the land and business is Attachment 8 to the Public Trustee's submission of 21 September 2007. Agnello concluded that the property and business had a value of approximately $2 million using a direct comparison with other sales approach; a value of $2.48 million using an approach that added depreciated value of improvements ($1.498 million) and land value ($982,488), and a value of $2 million using a capitalisation of income from the business approach (capitalising expected future profitability of $200,000 per annum at a capitalisation rate of 10%). Agnello's conclusion was that the valuation range was between $2 million and $2.5 million with a preferred value of $2.2 million.
61 BDM produced for the Tribunal a report prepared for him by Mr Richard Bosward (Bosward), a certified practicing accountant, who, in August 2007, analysed and compared the Knight Frank valuation and the Agnello valuation. Bosward noted that the Knight Frank valuation was one based primarily on the summation of values for the land and improvements, and that Knight Frank had not believed that the direct comparison with comparable sales approach would provide an accurate valuation. This was compared with the Agnello approach of attempting to establish values by more than one methodology, namely a direct comparison approach, a capitalisation of earnings approach, and (the least favoured by Agnello) a summation approach.
62 Bosward favoured the Agnello approach of tackling the problem from multiple directions, but favoured the Knight Frank approach to the summation methodology for its more robust analysis of the summation components. Bosward concluded that Agnello's approach to building valuation was deficient because it did not show detailed calculations and that the ratio of Agnello's insurance value of improvements to sale value appeared too high.
63 Bosward also identified issues that he thought needed further consideration by the Public Trustee. Although the Public Trustee had quite properly obtained the Agnello valuation so as to be in a better position to deal with any taxation matters that may arise, Bosward thought that because the Knight Frank valuation was significantly higher than the Agnello valuation issues would arise in relation to the proper calculation of capital gains tax that might be payable by KWD on any profit realised on the sale. In relation to this particular issue, we note that at the hearing we were informed by Mr Rorrison and Mr Henrison (another officer of the Public Trustee) that the Commissioner for State Revenue had accepted (with Valuer General advice) the Agnello valuation of $2.2 million for stamp duty purposes and that advice had been received from KWD's accountant of long standing (a Mr Beavis) that no capital gains tax would be payable on any disposal by KWD at values up to $2.5 million, and that at $3 million the tax would be $2552, increasing for higher values (letter dated 5 February 2007 and attachments from Mr Beavis to the Public Trustee).
64 Against that background BMD contended that the Public Trustee should have placed greater weight on the Knight Frank valuation (because it was a sworn valuation) or should have obtained a further valuation in an attempt to reconcile the differing valuations that had been obtained. Further, BMD contended that the Public Trustee should have been prepared to accept a conditional offer made by him to purchase the property for $3 million that was made by BMD whilst the Public Trustee was investigating KWD's affairs following the January order. Generally, the Public Trustee should have consulted BMD and other members of KWD's family (other than JID) to a greater extent in making the decisions that it did.
65 In relation to the question of value, we understand that the Public Trustee's overall position, as set out in the Public Trustee's SIFC, submissions filed 21 September 2007 and Mr Rorrison's oral submissions, can be summarised as follows:
66 Having considered carefully all the evidence and submissions made to us relating to the question of value, we have concluded that the Public Trustee's position, as outlined above, was a reasonable one. In the end we are satisfied that the land and business represented a fairly unique set of assets and was difficult to value. We accept that genuine efforts were made to sell, but without success; there was a need to recognise JID's interest in the property and to find a way to relieve KWD of the debt that he had at the time. On the evidence before us we are not persuaded that considerable weight should have been placed on the Knight Frank valuation because we are not persuaded that its approach towards the value of the improvements was appropriate. Overall, the implied value of $2 million that was achieved was above the other valuations and near the final Agnello value.
67 Whether a better price may have been achieved had the property been placed on the market for auction in early 2007 is a question that cannot now be answered, nor was it one that was ever a realistic possibility given the existence of the November agreement and the approach of the Public Trustee - which was, for the reasons referred to, that carrying out the November agreement was preferable and in KWD's interests given his particular circumstances at the time, provided that a fair price could be achieved in a way that equalised the interests of KWD and JID.
68 We consider that the modified November agreement achieved that and we cannot conclude that any of the evidence before us demonstrates that the actions of the Public Trustee have been other than to protect KWD from financial neglect, abuse or exploitation.
Taking into account the wishes of the represented person: s70(2)(e)
69 Mr Rorrison contended that, from meetings held with KWD, the Public Trustee was satisfied that KWD broadly understood the nature and effect of the November agreement and that in the first half of 2007 he wanted it completed, having written letters to that effect to his family members and to the Public Trustee - see Attachments 10 and 11 to the Public Trustee's submission of 21 September 2007, in the latter of which he also refers to the desire to "get on with" his retirement without interference from BMD and to travel to England to see his elderly sister in a nursing home and to attend a commemorative service relating to his war service.
70 At the hearing we formed the opinions set out above regarding KWD's capacity to make reasonable judgments about his financial affairs based on his confusion about, and poor recall of, important details of the transaction. Nevertheless, we accept that KWD still has a sufficient understanding of the broad nature of the transaction and his current situation that we should place considerable weight on his views. He was clear in his evidence that he is happy with the current arrangements, whereby JID and her children own the business and that JID's children are operating it in what he considers to be a very successful way. He is also happy about his retirement arrangement, living in the South Perth property with JID.
71 In summary, we consider that the Public Trustee was entirely justified in, and indeed obliged to, place great weight on the views of KWD as consistently expressed by him, and we should do the same.
72 It is apparent, as the Public Trustee contended, that given his advanced age and his deteriorating mental capacity, KWD's future care is of considerable importance. Equally, it is apparent that any supportive relationship that KWD has must be maintained. It is, we think, a matter of regret that the proceedings under the GA Act, and other proceedings in the Supreme Court, have been perceived as necessary to try to resolve the differences that have arisen. KWD said at the outset of the hearing that he saw the proceedings as an attempt to take away his ability to control or influence his own affairs.
73 From our own observations at the hearing we consider that there is a close and supportive relationship between KWD and JID, and that JID is the person who has been most responsible for caring for KWD in recent years, despite the relatively short (in the context of the length of their total relationship) separation at the end of 2006. We consider that KWD's relationship with JID is the most important factor in his future care and well being, and the maintenance of that supportive relationship of great importance to KWD's best interests.
74 BMD said at times that he did not want to interfere in the relationship between KWD and JID. That stance sits uneasily with the many comments made by BMD about JID's motives - such as that JID's relationship with KWD "... was used to engineer and complete this fraudulent transaction" (BMD's SIFC dated 10 December 2007 at [40]); and that JID had "all along ... other intentions" and had wanted to "back her interests" rather than just approach the possible sale of the land and business as one that should simply seek the best possible price (submission of BMD made on 14 December 2007 at T:169). It seems to us that BMD has (wrongly, in our opinion) formed an adverse opinion about JID and her family, and what he believes to be their longterm motives to disadvantage his father.
75 Despite the strong views expressed by BMD, we do accept that ultimately his primary motivation is what he perceives to be in his father's best interests and we have no doubt that BMD's siblings are motivated by concern for their father's interests. It was apparent at the hearing that, despite the somewhat adversarial stance adopted by BMD, KWD still cared what his children thought and that he did not want to put his relationship with them under any greater pressure than was inevitable in the proceedings.
76 We have not overlooked the importance of maintaining, so far as it is possible, the relationship between KWD and his children. However, and in summary, we consider that the maintenance of KWD's relationship with JID is of greatest importance in any assessment of KWD's best interests and should be given more weight than any other relationship.
77 Both Mr Rorrison and Mr Robinson submitted at the hearing that any application made under s 82 of the GA Act would constitute very significant litigation and would involve many parties not involved in the present proceeding. Such litigation would place very considerable burden on KWD's financial resources as well as having an emotional cost, and it was possible that a s 82 application would be unsuccessful. We agree with that assessment of the scale and possible cost of such proceedings.
Conclusions regarding Public Trustee's decision regarding s 82
78 Having regard to the various matters set out above, we conclude that the Public Trustee understood the nature of the task with which it was confronted, made enquiries and took advice from sources that were reasonable in the circumstances, and in the end, made a decision that represented what the Public Trustee honestly and reasonably considered to be in KWD's best interests having regard to all the matters referred to in s 70(2). As we have said, this proceeding cannot be a de facto s 82 case, but inevitably some of the matters relevant to such a case have been canvassed. Our own assessment of the material before us is that, in our opinion, it would not have been, in mid2007, in KWD's best interests to embark upon a s 82 case in an attempt to overturn the November agreement, and it is not now in KWD's interests to attempt to overturn that agreement as subsequently renegotiated.
79 The final position, as completed with the Public Trustee's involvement as KWD's administrator, settled KWD's financial affairs as well as adjusted the assets of KWD and JID. To that extent the financial arrangements involving KWD were never just about the sale of the land and business - a position that BMD asserted was the case.
80 Our conclusion is that BMD has not discharged the heavy onus that we consider rests on him if we were to be satisfied that, in the exercise of our review function, we should remove the Public Trustee as KWD's administrator and appoint a new administrator who could again investigate and decide whether a s 82 application should be made. It follows that we do not need to consider who should be appointed for that purpose.
81 We do, however, need to consider whether KWD continues to need an administrator for all or part of his estate. At the hearing it became clear that (apart from any need in relation to a possible s 82 application, which we have resolved above), KWD's financial affairs are now relatively straight forward, consisting of his part ownership of the South Perth property, a sum of approximately $300,000 invested in the Public Trustee's common fund at that time, a small pension from the United Kingdom, and a part Australian aged pension.
82 However, at the time of the hearing, one aspect of the completion of the sale transaction remained outstanding - namely the disposition of an amount of approximately $90,000 held in an escrow account representing deposits paid in advance by customers of the business. Dealing with the amount involved agreement as to how it was to be allocated between the vendor and the purchasers. At the time of the hearing it was expected that agreement would be reached soon after the hearing and the Tribunal would be advised. In the event the Tribunal sought advice from the Public Trustee as to progress on this point and was advised (in April 2008) that the matter remained unresolved and a further meeting would be held that month in an effort to finalise the issue. The Tribunal has not been further advised and assumes that no finalisation has yet occurred.
83 It is our assessment that KWD remains a person who has a need for an administrator for the following reasons:
84 At the hearing we canvassed with the parties the question of whether, if the s 82 issue was resolved in the manner set out above, KWD would need an administrator and, if so, who that administrator should be. There was consensus that there may not be a continuing need for the Public Trustee to continue in the role in those circumstances. JID was identified as a possible administrator, but her interest in the $90,000 referred to above (as KWD's wife on the one hand and as one of the purchasers of the business on the other) was also identified as placing her in a position where her interests may conflict with those of KWD.
85 Section 68 of the GA Act provides relevantly that to be appointed as an administrator (who is over the age of 18 years) must consent to act and be a person who will act in the represented persons best interests and be "otherwise suitable" to act as administrator - taking into account the compatibility of the proposed appointee with the represented person, the wishes of the represented person, and whether the proposed appointee will be able to perform the proposed functions.
86 KWD was clear at the hearing that he would prefer JID to handle his financial affairs in future (as she had done in the past) if he were to have an administrator. Apart from the question of a possible conflict in relation to the money in escrow we consider that JID is a suitable person to perform that role.
87 In written submissions, Mr Robinson on behalf of JID submitted that any conflict could be overcome by JID disclosing the existence of the conflict as she had already done - but, in any event, if she were to be appointed as an administrator for KWD then JID would consent to orders that the finalisation of the escrow issue be resolved by an independent third party expert. In his written submissions BMD continued to assert that JID's position of conflict should bar her from being appointed as administrator.
88 Our conclusion is that the situation should be dealt with by appointing two administrators with differing functions in relation to different parts of KWD's estate. The Public Trustee should remain as an administrator but for the sole purpose of, on behalf of KWD, negotiate and finalise KWD's entitlement to all or part of the amount retained in the escrow account as part the sale of the land and business. In addition, JID should be appointed as plenary administrator of all the rest of KWD's estate, including any monies received from the Public Trustee resulting from the finalisation of KWD's entitlement to any of the funds retained in the escrowed account.
89 For the reasons set out above the final orders to be made by the Tribunal are as follows:
Upon the review of an administration order made on 12 January 2007 concerning KWD under s 84 and 86 of the Guardianship and Administration Act 1990 (WA) it is ordered that the order be revoked and that administration orders in the following terms be made:
I certify that this and the preceding [89] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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