CKJ is 87 years old and lives with her son pending a move to her home she recently purchased in Suburb AB in regional NSW. She purchased that home with the proceeds of sale of her former home at Suburb YZ, also in regional NSW. CKJ has two children - DTD and FZN.
In 1987, CKJ executed an Enduring Power of Attorney appointing DTD as her attorney. On 7 June 2022, CKJ executed a new Enduring Power of Attorney revoking all previous instruments and appointing FZN as her attorney (the 2022 EPOA).
On 21 June 2022 DTD submitted an application seeking the appointment of a financial manager for CKJ. The application was made at a time when CKJ was in the process of selling her home in Suburb YZ and DTD expressed concern that CKJ was at risk of dissipating the proceeds of sale with an adverse impact on future living and care options. DTD was also concerned about the allegedly adverse involvement of FZN in CKJ's financial decisions.
The matter was first listed for hearing on 3 August 2022 and adjourned to 6 September 2022. CKJ was granted leave to be represented by Owen Salmon, solicitor. DTD was granted leave to be represented by Robert McCourt, solicitor. Directions were made for the filing of evidence.
DTD lodged two applications seeking to review the 2022 EPOA. By the application filed 3 August 2022, DTD sought orders including the provision of accounts and directions to produce records regarding transactions approved under the instrument.
At the end of these Reasons for Decision are lists of the parties to the application and the witnesses who attended the hearing. [Appendix removed for publication.]
[2]
What did the Tribunal have to decide?
The questions to be considered by the Tribunal are:
Is CKJ incapable of managing her affairs?
Is there a need for another person to manage CKJ's affairs and is it in her best interests for a financial management order to be made?
If so, who should be appointed financial manager?
[3]
Is CKJ incapable of managing her affairs?
CKJ attended the hearing in person. In order to take her evidence without the perceived pressure or influence of other persons involved in the hearing we took her evidence alone at the commencement of the hearing. After taking her evidence we provided a summary of what she said to the other participants when they returned to the hearing room.
The preparation of the hearing was characterised by a large volume of correspondence between the solicitors that was also sent to the Tribunal. Some of it was relevant and useful but much of it went to matters that were not in issue in the hearing. We read that material.
CKJ was a pleasant witness who appeared to understand all questions put to her and had a competent understanding of her financial circumstances when compared against contemporaneous documents. Her evidence was to the following effect:
1. She does not believe she needs a financial manager. She recently sold her home in Suburb YZ and used the sale proceeds to buy a property in Suburb AB that she feels is more suitable to her needs.
2. She sold the home in Suburb YZ for about $1,000,000 and purchased the property in Suburb AB for around $800,000. She will use some of the remaining funds to purchase a second-hand car and conduct some minor renovations.
3. The Suburb AB property has a veranda and a garage. It is a single level building with less stairs than the Suburb YZ property. The Suburb YZ property had 10 steps at the front and Suburb AB only three steps. The improvements she is considering are fresh carpet and new bathroom fittings.
4. She chose a home in Suburb AB because she has friends in that suburb as well as in another suburb in regional NSW, Suburb CD.
5. She sold her old car (for not much money). She observed that it is not cheap to buy a second-hand car at the moment. She has a current driver's licence that is valid for two years. She wants to purchase a car to be able to drive to Suburb CD to do the shopping.
6. CKJ hopes to buy a dog for companionship. She also thinks it will keep her active by taking it for walks. She is conscious that owning a dog can be expensive so has not made a commitment to that purchase as yet.
7. She is currently living with her son in Sydney but intends to move to Suburb AB.
8. CKJ receives an age pension. She does not do online banking. Her preference is to do her banking in person at the post office or her bank. She has no debts and pays for her usual bills by cheque.
9. CKJ chose FZN to be her attorney under the 2022 EPOA because she believes he is reliable. She has had no cross words with either of her children and is distressed by the applications. She does not feel pressured for money by her children.
10. One of her favoured recreational activities is to play amateur poker at the a hotel in Suburb CD.
11. If she was asked for an "early inheritance" by her children, she would decline.
We accepted CKJ's evidence. It was measured, detailed, accurate and responsive to all questions put to her.
Mr Salmon produced a copy of the Settlement Adjustment Sheet for the purchase of the property at Suburb AB. It showed the property was purchased for $775,000 with the amount due on settlement of $736,430.86. The Statement of Adjustment for the Suburb YZ property showed it was sold for $1,000,000. Those figures are relevant as they show CKJ had an accurate understanding of the purchase and sale prices of both recent transactions. It also showed there is an excess of funds available to CKJ for her ongoing needs (approximately $87,000 after the discharge of the mortgage).
Dr Z conducted an MMSE cognitive screening test on 18 July 2022 and CKJ achieved a score of 28/30 with no changes since her previous assessment in 2021. Dr Z stated that he observed no significant cognitive impairment. An earlier report of Dr Z dated 20 December 2021 described CKJ as "presently alert and oriented and appropriately interactive".
The test for determining a person's capability to manage his or her affairs has been described as follows (P v NSW Trustee and Guardian [2015] NSWSC 579, [307]-[308]):
"Is a person reasonably able to manage his or her own affairs in a reasonably competent fashion, without the intervention of a [financial manager] charged with a duty to protect his or her welfare and interests?
…
[A] focus for attention is whether the person is able to deal with (making and implementing decisions about) his or her own affairs (person and property, capital and income) in a reasonable, rational and orderly way, with due regard to his or her present and prospective wants and needs, and those of family and friends, without undue risk of neglect, abuse or exploitation."
In considering whether the person is "able" in this sense, consideration may be given to:
past and present experience as a predictor of the future course of events;
support systems available to the person; and
the extent to which the person, placed as he or she is, can be relied upon to make sound judgments about his or her welfare and interests: see Lindsay J in CJ v AKJ [2015] NSWSC 498, [38], and P v NSW Trustee and Guardian [2015] NSWSC 579, [309].
The relevant time for considering whether a person is incapable of managing his or her affairs is not merely the day of the hearing but the reasonably foreseeable future (McD v McD (1983) 3 NSWLR 81 at 86). See Lindsay J in Re W and L (Parameters of Protected Estate Management Orders) [2014] NSWSC 1106 at [20].
Mr McCourt made submissions in support of the financial management application. Although the documentary evidence his client filed was extensive, he was commendably focused on the question as to whether CKJ is incapable of managing her financial affairs as a threshold question.
Mr McCourt submitted that the Tribunal should not place undue weight on Dr Z's opinion and that it must be weighed against the greater factual matrix presented in DTD's evidence.
He relied on the following matters to point to an incapability to manage finances:
1. CKJ has a constrained ability to mobilize independently and is of advanced age.
2. There is evidence that there is unopened mail including bills.
3. At one stage, CKJ's home insurance was unpaid.
4. Payment of the mortgage on Suburb YZ was in arrears. There was a letter of demand from a law firm.
5. CKJ's phone was disconnected due to an unpaid bill.
6. CKJ is physically frail and has experienced weight loss. The nearest shop is 555 metres from her Suburb AB home which is too far for her to regularly reach by foot. CKJ commented here that she would do her shopping in Suburb CD when she has purchased her new car.
7. CKJ has been approved for a Level 2 Care Package following an ACAT assessment.
8. CKJ is elderly and, according to the life tables, will live for an estimated further six and a half years. There is a possibility that she will need to find new accommodation suitable to her needs in the reasonably foreseeable future. If she moves to full time care, then someone suitable will need to consider the accommodation agreement.
9. The home she purchased is in a declared flood zone. That indicates a poor decision-making ability.
10. CKJ appears to spend a disproportionate amount of her funds at the club by reference to regular cash withdrawals at the club.
Mr McCourt submitted that a financial management order "will take the heat out the conflict between [FZN] and [DTD] and not adversely affect [CKJ]".
Mr Salmon responded to Mr McCourt's submissions as follows:
1. At least some of the bills were unpaid because they were going to a PO Box that was not accessible by CKJ (we inferred it was DTD's PO Box). CKJ relied on DTD to forward the correspondence to her. That issue will be corrected following the hearing.
2. The mortgage to a commercial bank has been discharged so the issue of mortgage arrears is no longer relevant.
3. We should rely on Dr Z's notes as they are from a disinterested medical practitioner.
4. The existence of an ACAT package is good for CKJ as it means she will receive at least some services in the home (including shopping if needed).
5. There is an excess of funds following the sale of Suburb YZ, discharge of the mortgage and purchase of Suburb AB of $87,000.
6. CKJ's home has a current home and contents insurance policy.
7. To the extent that cash funds were withdrawn at the local club on a regular basis CKJ does make a withdrawal and uses those funds for her regular expenses. They are not used solely at the club.
[4]
What the Tribunal decided
The Tribunal decided, under s 36(1) of the Powers of Attorney Act 2003 (NSW) not to carry out a review of the enduring power of attorney made by CKJ on 7 June 2022 and dismissed the application for a review of the enduring power of attorney made by CKJ.
[5]
What did the Tribunal have to consider?
The Tribunal may, on the application of an interested person, decide to review the making or the operation and effect of a reviewable power of attorney, or not to carry out such a review: Powers of Attorney Act, s 36(1). As a consequence of reviewing the making or operation and effect of a reviewable power of attorney, the Tribunal may decide whether or not to make an order under s 36 of the Powers of Attorney Act (s 36(2)).
The Tribunal may make a number of orders relating to the making of a power of attorney including the following:
An order declaring that CKJ did or did not have mental capacity to make a valid power of attorney;
An order declaring that the power of attorney is invalid (either in whole or in part) if the Tribunal is satisfied:
1. CKJ did not have the capacity necessary to make a valid enduring power of attorney;
2. The enduring power of attorney did not comply with the requirements of the Powers of Attorney Act;
3. the enduring power of attorney is invalid for any other reason, for example, dishonesty or undue influence.
The Tribunal may make a number of orders relating to the operation and effect of a power of attorney if it is satisfied:
that it would be in the best interests of CKJ to make the order;
that it would better reflect the wishes of CKJ to make the order.
These orders include:
An order varying a term of, or a power conferred by, the power of attorney
An order removing a person from office as attorney
An order appointing a substitute attorney to replace an attorney who has been removed from office or who otherwise vacates the office
An order reinstating a power of attorney that has lapsed by reason of any vacancy in the office of power of attorney and appointing a substitute attorney to replace the attorney who vacated office
An order directing the attorney to:
1. furnish accounts to the Tribunal or someone nominated by the Tribunal;
2. lodge a copy of all records and accounts of dealings and transactions made under the power;
3. require that the records and accounts be audited and that a copy of the report of the auditor be furnished to the Tribunal;
4. submit a plan of financial management for approval.
An order revoking all or part of the power of attorney
Such other orders as the Tribunal thinks fit
If on a review of the enduring power of attorney, the Tribunal decides not to make an order under s 36 of the Powers of Attorney Act, it may, if it considers it appropriate in all of the circumstances to do so, decide to treat the application for review as an application for a financial management order under Pt 3A of the Guardianship Act 1987 (NSW).
[6]
Should the Tribunal conduct the review?
In Susan Elizabeth Parker v Margaret Catherine Higgins & Ors [2012] NSWSC 1516, Slattery J stated [at 80]:
"On an application for s 36 review such as this the Court must first exercise a discretion under Powers of Attorney Act, s 36(1) to decide whether or not to conduct a s 36 review. In my view the Court does not have to conduct a full review of all documents associated with the operation of the subject power of attorney to do this. Something short of a full review must be able to justify the exercise of the s 36(1) discretion as to whether or not the Court should conduct a full s 36 review. In the circumstances of this case the Court can glean sufficient information to exercise the s 36(1) discretion by undertaking a general survey of what... (a party )...has produced."
The Tribunal decided not to conduct a review of the enduring power of attorney for the following reasons.
Evidence in the financial management application was treated as evidence in the application to review the 2022 EPOA. We do not repeat it for the purposes of the application.
There were two applications lodged by DTD but the second was lodged to address a procedural error and we were not asked to consider them separately.
Mr McCourt submitted that the 2022 EPOA should be reviewed on the basis that FZN was not a suitable person to manage CKJ's affairs in the event she is unable to do so herself. He pointed to the following matters that FZN is not suitable to the role:
1. There have been discussions in early 2021 in which FZN requested an "early inheritance".
2. FZN was made bankrupt in 2015 (he was discharged from bankruptcy in 2018). Mr McCourt fairly submitted that the fact of bankruptcy does not of itself support a contention that FZN is inappropriate for the role, but it is sufficient to say that FZN has had challenges in managing his own finances and has been unable to accumulate assets in his own right.
3. During the COVID-19 pandemic, FZN applied for rent assistance on the basis that he was living in Suburb YZ at his mother's house and paying rent to her, at a time when he actually lived in East Sydney. That pointed to a questionable character.
CKJ's evidence was that there were discussions of an early inheritance, but she did not support the proposal. We agree that an event of bankruptcy in the past is not, of itself, sufficient to disqualify a person from acting as an attorney under an enduring power of attorney instrument. FZN was discharged from bankruptcy some four years ago. There was no evidence that he is not now unable to manage his finances.
We were unable to form a concluded view on the evidence as to what weight, if any, should be given to the application for rent assistance by FZN. It was unclear why it was made or if rent assistance was granted. If it was unlawful then that is a matter for Centrelink.
We accepted FZN's evidence that he has not made any decisions as his mother's attorney. At present she makes all decisions for herself and gives instructions to her solicitors regarding the sale and purchase of the Suburb AB and Suburb YZ properties. In circumstances where he has made no decisions under the 2022 EPOA, we were not satisfied that he is not suitable to act in the role at some time in the future (if CKJ loses capacity). CKJ made an informed decision to choose her son as her attorney. He has assisted her on an informal level in recent months (for instance by offering accommodation in Sydney) and that assistance is not impugned. If she loses confidence in him, she is competent to revoke the instrument.
Finally, there is no practical utility to make an order regarding the 2022 EPOA as CKJ remains competent to make a fresh instrument if she chooses to do so.
[7]
I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.
Registrar
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 23 November 2022
Overall, we were satisfied that the matters raised by Mr McCourt were addressed by Mr Salmon on behalf of CKJ. To the extent that there have been unpaid bills (including a mortgage arrears) those issues have been identified and addressed by CKJ. With the sale of Suburb YZ there is no mortgage debt. CKJ has an excess of funds and a home she owns without an encumbrance. She is a person who is elderly and, by reason of advancing age, becoming frail. Against that, however, Dr Z was satisfied that she remains mentally alert. She is also approved for a care package which she can use to arrange food purchases or for personal assistance. We accepted that the cash withdrawals were used to fund weekly expenses and in part for entertainment at the club.
We formed the firm impression that CKJ has a competent understanding of her finances. She is aware of her assets, appreciates the need to pay her debts as and when they fall due and, although would like to spend money on discretionary items (like a pet dog and second-hand car), is mindful that purchases must be sensible and within her means.
We did not accept that a financial management order should be made to reduce the level of conflict between FZN and DTD. That is a matter that should be resolved by them in the interests of their mother. It would be an onerous and erroneous use of the powers of this Tribunal to make a financial management order to resolve disputes between children in circumstances where we were satisfied that a person is presently capable of managing her financial affairs. That is sufficient to dismiss the application to appoint a financial manager.