DOZ v NSW Trustee and Guardian

Background.

1. FCO is a 76-year-old man with dementia, with severe cognitive impairment. He has been a permanent resident of an aged care facility in Victoria since April 2019. Before then, he was a resident of an aged care facility in New South Wales from March 2017. This followed an admission to two Hospitals where his cognitive impairment was diagnosed, following concerns about his well-being while being cared for at home.
2. On 25 February 2021 the NSW Trustee and Guardian made a decision to sell the property where he had lived, with three of his sons DOZ, ERN and FCX (since deceased). The applicants, DOZ and ERN, say they received the decision dated 16 March 2021 and then sought an internal review.
3. The internal review letter affirming the decision is dated 25 May 2021. It noted and rejected offers made by and on behalf of DOZ and ERN which would allow them to continue to occupy the property. This included offers of lump sum payments to the father's account from BOZ, as well as payment of rent by the two brothers at the rate of $270 per fortnight each, and a proposal to let the vacant unit which another son FCX had occupied with FCO - which had since been renovated - at the rate of at least $530 a fortnight.
4. Following receipt of the internal review decision the application for administrative review of that decision under the Administrative Decisions Review Act 1997 was filed on 2 June 2021. There is no contest that it was made within time.
5. The administrative review was listed for hearing before me on 1 September 2021 by phone in accordance with the Tribunal's Covid -19 procedures.
6. The NSW Trustee has given both DOZ and ERN a notice to vacate the premises under the Residential Tenancies Act 2010 (NSW). Proceedings seeking possession have been issued under that Act.

Materials before the Tribunal.

1. In considering the administrative review application I have had regard to the following written materials: 1. administrative review application with attachment filed 2 June 2020; 2. applicants evidence bundle, including statements and applicant's submissions - pages 1 to 62; 3. applicants additional evidence bundle filed 31 August 2021; 4. section 58 documents filed by the NSW Trustee and Guardian; 5. NSW Trustee and Guardian's submissions; 6. calculation sheets prepared by a friend of and tendered by the applicants.

The hearing.

1. The hearing was the bedevilled by technical issues. Initially, it was to take place using a virtual hearing room. However, this proved unusable with participants unable to hear each other.
2. The hearing was then conducted by phone. However, during the course of the hearing there were two major disconnections.
3. The first, early on, before any evidence was taken, and the second, after DOZ had given evidence.
4. When reconnected following the second disconnection the parties representatives agreed to proceed with submissions only, apart from the agreed tender of a document prepared by a friend of the applicants who had also provided a statement for the applicants, which document was headed Current Income and Expenses. This showed projected estate income and expenditure for FCO's estate based on a number of scenarios.
5. I was content to follow that procedure. The calculations prepared by the friend were admitted in evidence and the parties proceeded to make their submissions, following which I reserved my decision.

Jurisdiction.

1. Section 63 of the Administrative Decisions Review Act 1997 (NSW) (the ADR Act) says that in determining an application for review the Tribunal is to make the correct and preferable decision having regard to the material before it, and any applicable written or unwritten law. It is well established that in considering an application for review the Tribunal is not constrained to have regard only to the material that was before the Commissioner but may have regard to any relevant material before it at the time of the review: Drake v Minister for Immigration and Ethnic Affairs (1979) 46 FLR 409.
2. The Tribunal's power to review decisions of the NSW Trustee is derived from section 62 of the NSW Trustee and Guardian Act 2009 (NSW) which allows an affected person to apply for administrative review under the ADR Act. This Tribunal in turn has jurisdiction to hear applications for administrative review under the ADR act in accordance with section 30 of the Civil and Administrative Tribunal Act 2013 (NSW) (the CAT Act).
3. In this case, I am satisfied that both DOZ and ERN are affected persons under section 62(2)(c) of the NSW Trustee and Guardian Act 2009 (NSW) as they are, in my opinion, adversely affected by the decision to sell their father's and their home.
4. The Tribunal therefore has jurisdiction to review the decision to sell FCO's family property.

The family property.

1. The family home is a property FCO owns south of Sydney, which, at the time of his admission to hospital, he shared with three of his four adult sons. They are DOZ, ERN and FCX (since deceased) and FCW. FCW lives in Victoria.
2. The home consists of three units: the first and second floor of the main structure each comprise a three-bedroom unit, and there is a detached two-bedroom unit at the back of the block. At the time of his admission to hospital FCO lived in one of the units in the main structure with FCX, who acted as his carer. ERN lived in the other large unit, while DOZ lived in the two-bedroom unit at the back.
3. The home has been the family home for many years. When first purchased it was a single story structure. Over the years the family has modified and built up the property to its current state, with members of the family doing most of the physical labour involved. FCO was a traditional patriarch, who was a strict disciplinarian, but wished to keep his family together and operating as an interdependent unit. According to his sons he was a gambler and could be brutal.
4. The there is evidence that the unit at the back of the property was constructed in the 1990s, as a place for DOZ to live in return for his operating a Kebab truck business, which provided a source of income for himself and the family. The unit was constructed by the family, with DOZ putting in substantial labour himself.
5. FCO separated from his wife around 2002. From then on, they occupied separate units in the main structure, with the wife sharing with the youngest son and ERN. DOZ was living in his own unit on the property.
6. According to the sons statements their mother died in 2010, although a chronology they provided says she died in 2014.

Guardianship and financial management orders made.

1. Following FCO's admission to hospital in 2017 an application was made to the Guardianship Division to appoint a guardian and financial manager for him. On 1 March 2017 the Tribunal appointed the Public Guardian as his guardian to make decisions about his accommodation, medical and dental treatment, and services for 12 months. At the same time the Tribunal committed the management of FCO's estate to the NSW Trustee and Guardian.
2. The guardianship order has subsequently lapsed following FCO's placement at the aged care facility in Victoria.

NSW Trustee decision with respect to the property.

1. It appears that after the financial management order was made the NSW Trustee made a decision to lease the home to the three sons, who were then living there, for a total rent of $300 per week. This decision was made on 1July 2018. There is no dispute that the sons never paid any rental in accordance with this decision.
2. DOZ and ERN say that FCX refused to pay rent to live in his own home and that they were wary of doing so when he was not paying. It is to be noted that at that time DOZ was himself considering and getting advice on his rights with respect to his contributions to improvements and construction on the property. The NSW Trustee's decision with respect to rental noted that, "when the property is assessed as an asset (for Social Security purposes), any rental arrangement would need to be reviewed based on affordability." The house was exempt from the assets test for a period two years, expiring in August 2019.
3. DOZ made an application to NCAT to review that decision, which was referred for mediation. However, DOZ withdrew the application before mediation occurred.
4. On an unspecified date around this time FCX died.
5. Without apparent consultation with or approval from the NSW Trustee and Guardian, his surviving brothers renovated the unit he lived in to make it suitable for rental. DOZ says that approximately $25,000 plus labour was expended in doing so.
6. Two years after FCO first entered an aged care facility, the value of the home began to be taken into account under the assets test, when determining his entitlement to an aged care pension. This resulted in his pension being reduced from $926.20 per fortnight to $396.40 per fortnight - a substantial reduction. Centrelink acknowledged that the house could not be sold while the brothers were residing in it and treated it as disregarded property under the hardship provisions. However, it was nonetheless deemed to be an income producing asset with a notional income of $529.30 per fortnight from 1 August 2020. This notional income resulted in the reduction of FCO's aged pension.

The present financial position of FCO's estate.

1. The property is mortgaged to a bank with approximately $19,000 outstanding. The mortgage is up to date with payments of $135.00 due each fortnight. These payments are being paid form the FCO's account with the NSW Trustee.
2. There are two caveats on the property securing debts owing to the aged care facilities where FCO has lived. As of 15 January 2021, the outstanding arrears owing to the NSW aged care facility were $11,350.04 with interest of $1,138.58 ( a total of $12,488,62). As of 3 August 2020, the Victorian aged care facility was owed $62,741.75. How that sum is calculated is unclear. There are also outstanding debts for rates and unpaid water and electricity bills.
3. In submissions the NSW Trustee advised that the current debts total $114,921.36 comprise of:

• First mortgage - $18,105.74
• Unpaid electricity - $5,431.64
• Rates - $6,014.34
• Water rates - $2,152.00
• NSW aged care facility - $12,488.62
• Victorian aged care facility - $70,729.02

1. There is no evidence before me as to when the outstanding electricity fees were incurred.
2. FCO is required to pay the aged care facility where he lives a basic daily fee which varies with changes to his pension entitlement (and which is in turn subject to income and assets test). The total monthly payment required of FCO was $1,587.50 for June 2021 ($52.92 a day for a 30 day month).
3. As a result of the deeming provisions, Centrelink has attributed deemed income to FCO, calculated on the basis of the current deeming rate applied to the value of the property attributed by Centrelink. This has reduced his aged pension payments to (now) $407.00 per fortnight. The basic shortfall between FCO's pension income of $407.00 per fortnight and his daily fees per fortnight ($52.92 x 14 = $740.88), is $333.88 a fortnight.
4. It is agreed between the parties that the property is valued at $700,000, if not more. The unit in which FCO used to reside (Unit 1) has been renovated but is not now rented. A rental estimate from L J Hooker dated 3 June 2020, suggests it should fetch a rent of $530 per week and unit 2, with a garage, $450 per week, while unit 3, without a garage, should fetch $350, a week. The units can be legally let out separately.

FCO's will

1. There is no evidence that FCO has made a will. If he dies intestate, then his estate will be divided between his three surviving sons. As I understand it FCX died without leaving any children.

Financial contributions by the applicants.

1. The applicants have been making voluntary financial contributions to FCO's trust account since May 2020 of $250 per fortnight each, increasing to $270 per fortnight each from 7 September 2020 and fortnightly since. DOZ is now paying $307.

The applicants individual circumstances.

1. Both DOZ, who is now on a disability support pension, and CRZ, a jobseeker recipient, are receiving ongoing psychological treatment. DOZ has only received a pension in the last few years. Both are single and are living in what they say their father intended as their permanent home. BOZ has a number of physical injuries which limit his functional capacity, including a left rotator cuff tear, left elbow tendinitis and a ruptured left bicep tendon. He claims to have made substantial financial and physical contributions to the construction and maintenance of the property, especially unit 2. Recently he renovated the unit his father had lived in at a cost - he says - of $25,000.
2. ERM has not worked for many years and survives on Centrelink payments - jobseeker.

The applicable law.

1. The Guardianship Division of the Tribunal made a financial management order committing FCO's estate to the management of the NSW Trustee and Guardian on 1 March 2017. As a consequence of the Tribunal's order, Division 1 of Part 4.5 of Chapter 4 of the NSW Trustee and Guardian Act 2009 (NSW), management of the estate by the NSW Trustee applies to him, as a managed person, and to his estate,
2. Section 39 of the Act provides: It is the duty of everyone exercising functions under this Chapter with respect to protected persons or patients to observe the following principles - (a) the welfare and interests of such persons should be given paramount consideration, (b) the freedom of decision and freedom of action of such persons should be restricted as little as possible, (c) such persons should be encouraged, as far as possible, to live a normal life in the community, (d) the views of such persons in relation to the exercise of those functions should be taken into consideration, (e) the importance of preserving the family relationships and the cultural and linguistic environments of such persons should be recognised, (f) such persons should be encouraged, as far as possible, to be self-reliant in matters relating to their personal, domestic and financial affairs, (g) such persons should be protected from neglect, abuse and exploitation.
3. The NSW Trustee has all functions necessary and incidental to the management and care of a managed person's estate: see section 56. This includes the significant powers given to the NSW Trustee relating to property and other matters in section 16. This includes such things as the power to sell, lease, and mortgage real property and to enter arrangements and compromises. The trustee may execute and sign documents for the purpose of exercising a function in its protective capacity: see section 58.
4. Section 59 provides: 59 Application of money of managed estates The NSW Trustee may apply money of the estate of a managed person towards any one or more of the following purposes - (a) the payment of the debts and engagements of the person and the repayment of expenses chargeable to the estate of the person, (b) in the event of the death of the person, the person's funeral expenses, (c) the maintenance of the spouse of the person or any child, parent or other person dependent upon the person, or for whose maintenance the person provided when not a managed person or would be expected to provide, (d) the payment of all proper costs incurred in or about the care, protection, recovery, sale, mortgage, leasing, disposal and management of the estate of the person, (e) the preservation and improvement of the estate of the person, (f) the taking up of rights to issues of new shares, or options for new shares, to which the person may become entitled by virtue of any shareholdings, (g) the maintenance (including future maintenance), clothing, medicine and care, past and present, of the person.
5. In BEY v NSW Trustee and Guardian [2014] NSWCATAD 8, Senior Member Goodchild noted, with respect to the position of the NSW Trustee as manager of a managed persons estate, that in Protective Commissioner v. D & Ors (2004) NSWCA 216 McColl JA (Mason P and Giles JA agreeing) said, at 173, that: "The manager stands in the shoes of a person who is unable to manage his/her affairs by virtue of circumstance beyond his/her control. The manager exercises a protective and benevolent function, protective in the sense that the manager's task is to ensure the estate is managed in a manner to secure the protected person's estate for the person's continued maintenance. In this respect the 1983 Act and its predecessors reflected the 'parental and protective' jurisdiction historically exercised by the Crown both in exercise of his prerogative and pursuant to the Prerogative Statutes."
6. As was made clear in BEY and by Senior Member Lucy in EPO v NSW Trustee and Guardian [2021] NSWCATAD 220 at [30] this remain the case under the NSW Trustee and Guardian Act 2009, which continues to reflect the protective nature of the jurisdiction.
7. It should also be noted that the word "maintenance" where it occurs in s 59 - with respect to the maintenance of the managed person, or those were maintained, or would be expected to be maintained, when the person was not under management (see s 59(c) and (g)) - is not confined and should be given a wide meaning.

The applicants position.

1. Central to the applicant's position is the fact that they have been living at the family home without being required to pay rent for many years. They both say that they contributed to the acquisition of that property by work on the construction and maintenance of the units and, in DOZ's case, he says he also contributed by making financial contributions to the household. Both gave evidence to the effect that their father constructed the property to provide an ongoing home for the family.
2. The NSW Trustee does not dispute that the brothers contributed. To the acquisition, construction and management of the home.
3. The brothers' position is that the property should not be sold. Instead, they propose that they each continued to pay rent at their current rates; that is, $270 a fortnight for ERM and $307 a fortnight for DOZ. They propose that the third unit be rented out at a market rate and rely on the assessment of L. J. Hooker that it can be rented out at $530 a week. The rent they each propose to pay is significantly below the market value is assessed by L. J. Hooker. On a fortnightly basis this would yield income to FCO of $1,637 a fortnight. There is no evidence before me of what precise effect this would have on FCO's pension, although it seems clear that it would result in a reduction - if not the elimination - of FCO's pension entitlement.
4. In addition, DOZ proposes to make a cash contribution of $35,000 from his superannuation to his father's trust account to help pay some of the outstanding accounts. Of this, DOZ already has $20,000 but says he can easily withdraw a further $15,000. In submissions the NSW Trustee questioned the wisdom of such withdrawals from superannuation and noted that there was no proof that these funds are available.
5. During the hearing to the applicants tendered a series of financial projections based on varying scenarios prepared by a friend who has been acting as an advisor to the brothers. In each scenario FCO's aged pension is assumed to remain static at $407.30 ($10,580 per year) and his expenses are fixed as follows Basic daily fee $19,071.00 Personal Expenses $3,000.00 Mortgage Repayments $3,530.00 Property Expenses $7,000.00 NSW Trustee and Guardian fees $9,220.00 TOTAL Expenses $41,821.00

1. No figure is included for medications and other medical expenses.
2. In the first scenario, unit one is rented out $550 a week ($530 a week is the estimate) and both DOZ and ERN pay paying $270 per fortnight. This, with FCO's pension, is said to yield an income of $51,020, which would yield a surplus of income over expenses of $9,199 per year.
3. The second scenario assumes that a lump sum is applied to paying off the mortgage, resulting in a slightly larger surplus.
4. The applicants argue that the decision to sell FCO's property is not the correct and preferable decision in the circumstances. They say that FCO has always made provision for DOZ and ERN by providing good quality accommodation for them at his property. This was the situation for many years prior to him becoming a managed person. They say it was reasonable for them to expect and, indeed, he encouraged them to expect, that he would continue to provide them with accommodation. They submit their continued accommodation is therefore expenditure authorised by section 59(c). They acknowledge that the NSW Trustee also has an obligation under section 59(a) to pay FCO's debts, but they submit that, "it is reasonable to expect that the creditors would wait until the management of the property ceases and it is sold to recover the amount they are owed."
5. They therefore argue that the decision to sell the property should be set aside and options which will allow them to remain living on the premises investigated and adopted.

The NSW Trustee's position.

1. At its heart the position of the NSW Trustee is a simple one. The NSW Trustee says that none of the proposals advanced by DOZ and ERN will see their father's debts paid and ongoing payment of his care costs met. The sale of the property is said to be, "regrettable but inevitable."

Consideration.

1. In making decisions under Chapter 4 of the NSW Trustee and Guardian Act 2009, which is headed "Management functions relating to persons incapable of managing their affairs", section 39 provides a series of principles which everyone exercising functions under the Act is obliged to follow. First and foremost, of these, is section 39(a) which says: (a) the welfare and interests of such persons should be given paramount consideration.
2. The other principles that follow, such as preserving family relationships and ensuring the least restriction in a protected person's freedom of decision and freedom of action, cannot be elevated over and above the maintenance of the person's welfare and best interest as the paramount consideration.
3. In the present case the evidence points to FCO being asset rich and income poor. It seems clear that much of his life has been devoted to the acquisition and improvement of the property on which the three units now stand. That endeavour by him has been supported by his sons, who have undertaken construction work on the property over many years, and in DOZ's case by financial contributions towards the improvement of the property. I accept that there was a general understanding within the family that the property was the family home and that DOZ and ERN were free to live there. Their physical and financial contributions to the construction were required by their father in earlier years.
4. In my view, the ongoing provision of housing for DOZ and ERM is consistent with FCO's provision of housing for them prior to him becoming a managed person. It is assistance that FCO would likely have provided, and, in the circumstances, have been expected to provide, to his sons for so long as he could do so. The provision by the NSW Trustee of FCO's funds to continue providing housing for DOZ and ERN is therefore a purpose for which NSW Trustee is authorised to expend his funds. Being authorised to do so, however, does not necessarily mean it is in FCO's best interest that this occur.
5. The reality of FCO's situation is that he is now in an aged care facility and is likely to remain there for the rest of his life. The payment of his fees to ensure his ongoing welfare is therefore a priority. In saying that, I acknowledge that FCO is not now under threat of eviction, but the fact that he owes more than $70,000 in arrears of residential fees to his current provider - and in excess of $12,000 to his previous provider of residential care - is a cause of real concern. The proper maintenance of his needs and ensuring his continued accommodation and care is an essential part of ensuring his welfare and best interest.
6. The reality of FCO's financial situation is that the vast majority of his debts are owed to residential care providers. While they have placed caveat's over the property in an effort to secure their interests, they are not secured creditors. The only secured creditor is the mortgagor, who is not threatening to take any action with respect to the mortgage. There are also considerable debts for local council and water rates and an unpaid electricity account.
7. At the heart of the decision made by the NSW Trustee to sell the property is the fact that only by selling the property can FCO's debts to aged care accommodation providers be repaid within a reasonable time.
8. Not selling the property necessarily involves substantial parts of the debts to the age care accommodation providers remaining unpaid. Even if all of the $35,000 that DOZ says he will pay, were paid to the accommodation providers, there would remain an outstanding debt to them of more than $37,000, with no guarantee of further payment.
9. It should also be noted that there is no independent evidence before me which verifies that DOZ can access the full $35,000 from his superannuation.
10. Implicit in the applicant's submissions is that the aged care providers should be required to wait to be paid while the DOZ and ERN continue to reside at the property. There is no evidence of the aged care providers views with respect to such a proposal.
11. I have no doubt that it is in DOZ and ERN's best interest that they continue to reside - on the equivalent of concessional rents - in their father's property. To pay rent for accommodation in the open market, on their limited incomes, will undoubtably prove difficult. As I understand their submission, they argue that, if they continue to make the contributions they are currently making and rent out unit 1 for $530 a week - then, with time, there will be repayments made to the aged care providers over a period of years.
12. I am not necessarily persuaded that this is the case. The scenarios presented by the applicants do not take into account what changes the additional income from rent may make in reducing FCO's pension entitlements. They also do not take into account whether any changes in FCO's assessed income for the purposes of the income test, will result in a change in the daily fee he is charged by the aged care facility. The variabilities and uncertainties are such that I am unable to draw any firm conclusions about the consequences FCO's rental income increasing will have on his overall financial well being.
13. In my opinion, the real problem in this case is the extent of the debts to aged care providers. Under the proposals put by the brothers their father's interest in having the aged care providers paid their outstanding fees, is to be deferred in favour of his interest in maintaining family relationships by keeping a roof over their heads. While the NSW Trustee as the manager of his estate clearly has the power to apply his money towards their continued accommodation, I am not persuaded that this is in FCO's best interest. It must be remembered that it is his welfare and best interests that are paramount; not that of his sons. While the importance of maintaining FCO's continuing family relationships and cultural connections must be taken into account when making decisions for him, they do not override his welfare and best interest as a paramount consideration.
14. In my opinion, the decision made by the NSW Trustee to sell FCO's is the correct and preferable decision.

Conclusion

1. In the light of the above the Tribunal makes the following orders: 1. Pursuant to s 64 of the Civil and Administrative Tribunal Act 2013 the disclosure of the names of the applicants, the protected person and their family members is prohibited. 2. The decision made by the NSW Trustee to sell FCO's property is affirmed.

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 28 September 2021