CD & Anor & EF & Anor (No. 2) [2019] NSWSC 337

Future Financial Administration - Consideration

1. The Court finds the NSW TAG's submissions persuasive. Effectively what those submissions mean is that GH's taking over of the administration of AB's financial affairs will be delayed for longer than the three months the Court envisaged at the time of the first judgment. The delay will now occur until the NSW TAG's investigation is finished. The Court did not have the advantage of full submissions on relief at the time the Court indicated in the first judgment a timeframe for GH to take over administration of the estate.
2. In the further relief hearing on this issue which has now taken place, the Court is persuaded that two sets of financial administration costs should be avoided. GH is still envisaged to be selected as the appropriate person to manage the day-to-day financial budgeting on behalf of AB. But within that budget, GH will be given full freedom to manage the day-to-day administration of AB's expenses in close consultation with the NSW TAG. This will also have the advantage of preparing GH in due course for the taking over AB's financial affairs.
3. The course proposed by the NSW TAG has another advantage which solves a number of concerns that were expressed in the Court's first judgment (at [176]). The Court identified the difficulty of GH taking up a neutral fully independent role in relation to the committee of the person, so as to bridge both sides of this dispute. That difficulty arose in large measure because of the role GH took in preparing evidence in relation to the investigation of the Power of Attorney issue.
4. But the production of a large volume of documents by EF to the NSW TAG in that investigation, and the request by the NSW TAG to have continuing input from CD and GH in relation to that investigation, makes the earlier appointment of GH as AB's financial manager problematic. The Court wants GH to co-operate, as much as possible, with the investigation being conducted by the NSW TAG. GH has done useful work in analysis of the underlying transactions and it is important that the advantage of that work not be lost. But the price of GH making GH's expertise available to the NSW TAG's investigation is that GH will continue, during the period of the investigation, to be aiding a course that may lead to adverse findings or adverse action against EF. In my view, whilst this is going on, it is undesirable for GH to be appointed as AB's financial manager.
5. GH can be so appointed in due course, but once the investigation is finished. The Court envisages in the orders made below that the proceedings will be re-listed by the NSW TAG when the investigation is concluded. Subject to questions about whether any further action is to be taken on that investigation, at that point, the Court is likely, if circumstances are otherwise unchanged, to appoint GH as AB's financial manager. In the meantime, GH will undertake the role of managing AB's day-to-day expenditure that the NSW TAG has suggested. This role does not involve so great an independent discretion to GH that it should increase tension with EF. And it will prepare GH to ultimately take over the financial administration of the whole of AB's estate.
6. Should any problems arise in the administration of these orders the Court has granted general liberty to apply. The Court will also make orders directing the parties to co-operate with the NSW TAG in its investigation. The extent of that co-operation is simply directed to be "reasonable". Obviously, because these parties are still operating to a degree at arm's length, each party may need to take their own legal advice about the full extent of that co-operation and in the answering any questions from the NSW TAG. Again, if any dispute arises about the giving of such co-operation, then the matter can be re-listed before the Court.

Costs - Submissions

1. The plaintiffs submit that it is proper that EF pay the plaintiffs' costs of the proceedings and that there be no order as to EF's costs, with the intent that EF bear EF's own costs. The plaintiffs do not dispute that the NSW TAG's costs of, and incidental to, these proceedings should be paid out of AB's estate.
2. The plaintiffs submit that they commenced these proceedings in circumstances where EF was allegedly abusing a Power of Attorney and had taken steps to permanently remove AB from AB's home against AB's strongly held wishes with a background of attempts to sell AB's home. It is said that EF's questionable conduct was the effective cause of the proceedings. Moreover, the plaintiffs say that they were substantially successful in the proceedings in reversing the decision to move AB to the Nursing home and in achieving a position in which EF resigned as AB's Attorney. The plaintiffs say that for their part the proceedings were motivated only by AB's best interests.
3. In the alternative, the plaintiffs submit that irrespective of who the Court orders to pay the plaintiffs' costs, that EF should bear EF's own costs of these proceedings.
4. EF's submissions on costs take a different approach. EF submits that the plaintiffs' case that either CD or GH be appointed as committee of the person fail, as the Court maintained the role of the Public Guardian in relation to AB. EF says that both parties had some success in the proceedings and therefore the order which is warranted is that each party's costs, as agreed or assessed, be paid out of AB's estate.
5. The plaintiffs' submissions on costs tended to focus on issues of financial management on which they had some measure of success. EF's submissions on costs tended to focus on the committee of the person issues on which EF had some success, but at the cost of reversing EF's decision to place AB into the Nursing Home.
6. The first observation to the Court would make is that it must be borne in mind that the main hearing of these proceedings before the first judgment was concerned not with financial issues but almost entirely about AB's accommodation and the continuation of the Public Guardian as the committee of AB's person.

Costs - Consideration

1. These various arguments are displaced by a central consideration in these proceedings, AB's future welfare. Nothing is more important than the best interests of the protected person in proceedings such as these. But the history of these proceedings brings that issue into particular focus in the current dispute about costs between AB's two children. These two siblings have demonstrated incapacity to co-operate with one another about most aspects of AB's welfare. A costs dispute is just the latest example of this lack of co-operation.
2. In its first judgment (at [194]), the Court gave the parties an opportunity to resolve their costs dispute and expressly encouraged them to do so. But they did not bridge their differences on the issue of costs.
3. Despite the importance of AB's welfare, which all parties profess to be their primary motivation, from the beginning this case has been a bitterly fought contest between these two siblings. It is no part of the Court's task to try and unravel the origins of the dispute between CD and EF. It may indeed go back to a time that neither of them really remembers. Nor is it the Court's task to try and solve it, if that is indeed now even possible.
4. But it must be said that the siblings' dispute presently has evolved into something of a struggle for dominance in the recognition, affection and respect of AB. The contest has been relentless from long before this litigation commenced. Whilst the proceedings have produced an outcome which seems to be accepted on all sides to be in the best interests of AB, the tragedy of this matter is that the same outcome could have been achieved by two siblings who were prepared to co-operate fully in the best interests of AB, with far less inconvenience to AB and without the involvement of the Court.
5. The continuation of this dispute is not in AB's best interests. Whilst AB is probably barely aware of the worst of the mutual recriminations that the Court has seen, the existence of the dispute tends to reduce the availability, range, depth and quality of family support for AB. It is not difficult to infer this. To provide the best support for AB requires greater effort on the part of all family members than it would otherwise have done if the dispute did not exist. It is self-evident, for example, that family tensions mean that care giving for AB must be managed to a timetable that does not lead to an increase in family tensions. The Court cannot eliminate this dispute between these two siblings. But it can try to attenuate the effects of the dispute, so it has less effect on giving support to AB.
6. From the recent history of this matter with which the Court is familiar, there is more than a slight risk that any costs order that the Court might now make between these two siblings would itself become a weapon in their continued warfare. The pursuit of costs orders by one against the other would add yet another source of contention between them that would make peace (or even an armistice) between them a more remote possibility. A trade-off between making cost orders between the siblings and AB's welfare is therefore inevitable.
7. This is an overriding consideration here. The making of a costs order between the two siblings is not in AB's interests. Some of their controversy will be quelled if much of the outstanding costs are finally dealt with, so that both siblings can now put the costs issues behind them as far as possible.
8. To achieve this, two principal costs options remain for consideration. The first is that each party bear their own costs. And the other is that each party's costs be paid out of AB's estate. The Court has decided that it will order that the costs of both CD and EF will be paid out of AB's estate. There is some symmetry in this result: both children have at all times claimed to be acting in the best interests of AB. Subjectively, that is what they both believed. Objectively, there is justification for both their points of view.
9. The other option is not attractive. The disadvantage of ordering each party to pay that party's own costs is that it will occasion a lingering sense of resentment in both CD and EF; that they will have to bear a substantial financial burden of doing no more than what in each of their eyes was pursuing a contest in AB's best interests. Each child is likely to blame the other for the resulting financial burden. That is likely to produce further tension between them. This would ordinarily be the most attractive option. But AB's estate is sufficiently substantial that it can satisfy these costs orders over the longer term. The quantum in the estate was discussed in the Court's first judgment and that discussion need not be repeated. The parties have provided evidence of their costs to date. EF's legal fees from a previous firm acting amounted to $128,451.25. Up until November 2018, further costs of $170,000 have been incurred by EF. On the plaintiffs' side, total legal fees for a similar period of $370,143.65 have been incurred.
10. But AB's estate faces potential short term cash flow problems associated with the sale of properties. The payment of the children's costs ordered here will therefore have a priority after all expenditure directed to the health and welfare of AB.
11. But not all the costs incurred to date can be dealt with this way. This costs order will exclude costs associated with EF's alleged past maladministration of AB's power of attorney ("the Power of Attorney issue"). That matter is still the subject of ongoing investigation by the NSW TAG. If any maladministration under colour of the power of attorney is demonstrated against EF on a final basis, it would not be appropriate for those costs to be borne by AB's estate. So the costs associated with the Power of Attorney issue will be excluded from this costs order.
12. But how are those costs to be separated out? Estimating the relative proportion of these costs was the subject of the Court's further directions for supplementary submissions. The parties provided submissions dealing with this question. The Court has not wholly adopted the analysis of either party. But the submissions provided have been helpful in determining what the Court should do about the costs of the Power of Attorney issue.
13. It is undesirable for the Court to leave at large the question of the division of the parties' costs between assessment of costs associated with the Power of Attorney issue, and the costs of all other issues. Trying to define a line of demarcation between these matters will itself become a source of dispute. The Court therefore needs to fashion a result which is as fair as possible but which eliminates a future demarcation dispute.
14. The right approach is one that allocates a fixed percentage of the parties existing costs up to the date of this judgment (a) to the Power of Attorney issue; and (b) to all other matters. The allocation between the two categories of costs can never be perfect but if done as fairly as possible, once done the advantages of doing so are strong and will reduce the potential for other contests.
15. Apportioning Costs. CD estimates that 5 per cent of the plaintiffs' claimed costs in these proceedings relate to the investigation into the past administration of AB's estate. CD submits that EF never provided the documents that had been requested of EF from EF's time as Attorney and therefore the resulting dearth of material made for light reading by the plaintiffs. And it is true, as the plaintiffs submit, that the work was limited because after the proceedings were commenced Kunc J made orders on 16 October 2017 restraining EF from exercising powers under the Power of Attorney. And on 30 November 2017 EF voluntarily vacated office as AB's Attorney.
16. Moreover, the Court managed the proceedings so that EF's past management of the financial affairs of AB would not be the subject of the final hearing but would be deferred. That being said, CD filed GH's detailed affidavit analysing AB's bank accounts.
17. Ultimately, shortly before the final hearing, EF indicated that EF would be advocating the appointment of the NSW TAG's financial manager and would not advance EF to take up that role. That reduced the need for CD and GH to undertake any further investigations.
18. The Court ordered on 24 July 2018 that EF provide the NSW TAG with all documents concerning all related to EF's management of AB's financial affairs. Some nine boxes of documents were produced on 13 October 2018 to the NSW TAG. CD and GH have not been directly involved in the analysis of any of those documents as yet.
19. Despite the plaintiffs' estimate of 5 per cent of their claimed costs relating to the Power of Attorney issue, the Court is inclined to the view that the figure is considerably higher than this. Notwithstanding the Court's attempts to quarantine argument about the Power of Attorney issue into a future hearing, it constantly intruded into the hearing conducted by the Court, to the point that the Court reminded the parties on a number of occasions of the need for the deferral of further discussion about it.
20. Moreover, the work done by GH, in my view, in the past analysis of EF's administration of the Power of Attorney is greater relative to the plaintiff's costs than 5 per cent, a matter that can be inferred by examining the extent and quality of the evidence GH provided. And there is not to be forgotten the communications that have taken place between the parties and the NSW TAG to discuss the conduct of its further investigation. In my view, all these costs come to something much more like 15 per cent of the plaintiffs' costs of the proceedings.
21. EF took a somewhat different approach. EF declined to estimate the relative percentages of work on the administration of the Power of Attorney and on other matters. EF took the view that EF's present solicitors, John Hertz and Associates were only involved in representing EF after March 2018, so EF's submissions were limited to events since that time. Although this approach is understandable, it tends to mask the work that must have been done on behalf of EF on the Power of Attorney issue. In my view, these costs must have been not insubstantial and no less a proportion of EF's costs than those that are attributable to this issue as a proportion of CD's costs.
22. The Court will therefore allocate 15 per cent of the costs of each party incurred in these proceedings to date as attributable to the Power of Attorney issue.
23. The parties now know what proportion of their past costs will be paid out of AB's estate. They also know what proportion of their costs will be reserved. The parties can set the clock running on their future costs from today, 1 April 2019 from this certain platform.
24. Other issues. The question of the NSW TAG's costs of these proceedings and of the Power of Attorney issue needs to be addressed. The NSW TAG's costs of these proceedings should be paid out of the second defendant's estate. The role played by the NSW TAG has been highly beneficial to the second defendant, the preservation of AB's estate and the resolution of the issues between CD and EF. The Court will order those costs to come out of the estate, as the NSW TAG has submitted.
25. The NSW TAG'S costs of the continuing investigation of the Power of Attorney issue should also come out of AB's estate in the short term. In the longer term, depending upon the result of the investigation those costs may be borne not by AB's estate but by another party. It is appropriate therefore that the ultimate burden of those costs be reserved. But in the meantime, those ongoing costs which may be the result of retaining experts to undertake the investigation will need to be met. But CD's, GH's and EF's rights to argue about the burden of those costs in the longer term will remain. The orders made below reflect this.

Conclusion and Orders

1. Accordingly, the Court makes the following orders and directions: 1. Subject to the operation of Orders (3) and (6), order that the NSW Trustee and Guardian ("Trustee") be appointed as financial manager of the estate of the Second Defendant pursuant to s 41(1)(b) of the NSW Trustee and Guardian Act 2009. 2. Direct that the Second Plaintiff provide the Trustee by 26 April 2019 with an annual budget detailing the estimated reasonable day-to-day living expenses (including all medical expenses and private caring costs) of the Second Defendant. 3. Direct the Trustee to provide the Second Plaintiff with access to sufficient funds on a regular periodic basis, and at least quarterly, to enable the Second Plaintiff to administer and pay for the Second Defendant's day-to-day living expenses generally in accordance with the annual budget provided to the Trustee in accordance with Order 2 hereof. 4. Direct the Second Plaintiff to keep detailed records and receipts of all amounts paid by the Second Plaintiff on behalf of the Second Defendant in performance of their role as defined by Order (3). 5. Direct the Second Plaintiff to account to the Trustee at the end of each quarter for all funds spent on behalf of the Second Defendant in accordance with their role as defined by Order (3). 6. The Court notes that following completion of the Trustee's investigation into the First Defendant's past management of the Second Defendant's financial affairs ("the Trustee's investigation") the Court's intention is that the Second Plaintiff will be appointed as financial manager of the estate of the Second Defendant pursuant to s 41(1)(b) of the NSW Trustee and Guardian Act 2009. 7. The Trustee shall list the proceedings for the making of orders for the appointment of the Second Plaintiff as financial manager in accordance with Order (6) and for any further directions, as soon as in the Trustee's opinion the Trustee's investigation is complete. 8. Direct the Plaintiffs and the First Defendant to reasonably co-operate in the conduct by the Trustee of the Trustee's investigation. 9. Order that the Trustee's costs of and incidental to these proceedings, and to the Trustee's investigation, be paid out of the Second Defendant's estate on the indemnity basis. 10. The Court reserves for further consideration the questions of who will finally bear: (a) the Trustee's costs of these proceedings; (b) the Trustee's costs associated with the Trustee's investigation; and (c) the Trustee's costs of any further litigation that may result from the Trustee's investigation. 11. Order that the plaintiffs' and the first defendant's costs of these proceedings on the ordinary basis, excluding any costs associated with the Trustee's investigation or the recovery of moneys associated with the Trustee's investigation or the recovery of moneys associated with the first defendant's administration of the Second Defendant's power of attorney to the First Defendant ("the Excluded Costs"), be paid out of the Second Defendant's estate; 12. The payment of any costs ordered pursuant to Order (11) will occur only in priority after all expenditure directed to the health, cost of living and general welfare of the Second Defendant. 13. The Court assesses the Excluded Costs as representing 15 per cent of each party's current costs incurred in these proceedings, up to the date of this judgment. 14. The Court reserves for further consideration the question of which party will bear the burden of the Excluded Costs until after the conclusion of the investigation by the NSW TAG and after completion of any aspects of these proceedings consequent upon that investigation. 15. Grant to the Second Plaintiff and their legal representatives reasonable access to view the documents already provided by the First Defendant to the Trustee as part of the Trustee's investigation but such access shall only be for the purpose of furthering that investigation under the direction of the NSW TAG. 16. Direct the parties to consult about how this judgment can be published with pseudonyms. 17. Order that these reasons may only be published to the parties to these proceedings and their immediate families. 18. Grant liberty to apply.**********

Amendments 09 April 2019 - No publication restriction 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: 09 April 2019