FINANCIAL MANAGEMENT - application for revocation of a financial management order -whether subject person has regained capacity to manage affairs - meaning of capability to manage one's own affairs - conflicting expert evidence - legal tests of capability - additional factors noted by Lindsay J in CJ v AKJ - [2017] NSWCATGD 45 - NSWCATGD 2017 case summary — Zoe

NSWNSWCATGD

FINANCIAL MANAGEMENT - application for revocation of a financial management order -whether subject person has regained capacity to manage affairs - meaning of capability to manage one's own affairs - conflicting expert evidence - legal tests of capability - additional factors noted by Lindsay J in CJ v AKJ

[2017] NSWCATGD 45

NCAT Guardianship|2017-04-19|Before: Lindsay J

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At a glance

Source facts

Court

NCAT Guardianship

Decision date

2017-04-19

Before

Lindsay J

Source

Original judgment source is linked above.

Judgment (45 paragraphs)

[1]

What the Tribunal decided

The Tribunal decided not to revoke the financial management order which had been made for Mrs BFE on 18 December 2017. It decided to vary that order.
The Tribunal revoked the appointment of NSW Trustee and Guardian as Mrs BFE's financial manager and instead appointed her granddaughter Mrs DAQ.
The financial management order, as varied, is to be reviewed by the Tribunal within 18 months.

[2]

Mrs BFE and her family

Mrs BFE was at the time of the hearing aged 86 years. She has in the past been diagnosed with cognitive impairments and anomic aphasia, and sustained a stroke in November 2015. It is reported that Mrs BFE's recovery from that stroke was complicated by delirium, atrial fibrillation, chest infection, and significant deconditioning. In late-2015, she had a prolonged period of care in the Intensive Care Unit of public hospital A and was then transferred to public hospital B for a substantial rehabilitation program. Mrs BFE self-discharged from that program on 8 February 2016. Her current diagnosis and cognitive ability is in issue in these proceedings.
Mrs BFE presently lives in western Sydney with her daughter, Ms TED, who is also known as [Ms TED]. Mrs BFE also has another daughter, Ms MED, who lives in Ireland, a brother, Mr FEN, and a granddaughter, Mrs DAQ, who is the daughter of Ms TED.

[3]

Previous proceedings, hearings and orders

The current hearing was in a real sense the culmination of important matters concerning Mrs BFE's financial affairs. Those matters have been before the Tribunal on a number of occasions in the last 18 months, a number interlocutory orders have been made and substantial documentary material has been produced. In order to provide a complete background to the present hearing, I have summarised the various proceedings in greater detail than might normally be expected. However, for completeness these Reasons should be read in conjunction with the Reasons for Decision from the hearings on 4 April 2016, 28 September 2016, and 2 February 2017.
On 18 December 2015, following a hearing, the Tribunal made two orders concerning Mrs BFE. They were: 1. a guardianship order, under which the Public Guardian was appointed as her guardian for 12 months with authority to make decisions on her behalf about her access to others, accommodation, health care, medical and dental consent, and services; and 2. a financial management order under which the management of her estate was committed to NSW Trustee and Guardian.
In early 2016, the Registry received from Ms TED two applications. The first of these, received on 14 January 2016, sought the revocation of Mrs BFE's financial management order. The second application, received on 4 March 2016 sought a review of her guardianship order. The hearing of both applications was adjourned on 3 April 2016 and again on 2 June 2016.
On 2 June 2016, the Tribunal ordered that Mrs BFE was to be separately represented in all proceedings pending before the Tribunal. On 11 August 2016, the Tribunal ordered that Ms TED was to be legally represented in all proceedings pending before the Tribunal.
At a hearing on 28 September 2016, the Tribunal: 1. reviewed the guardianship order and ordered that it should lapse with immediate effect; 2. under s 25A(b) of the Guardianship Act 1987 (NSW), refused the request to review the guardianship order on the basis of the order already been lapsed; and 3. adjourned the requested review of the financial management order for approximately eight weeks to a date to be set by the Registrar.
On 24 January 2017, the Registry received from Mrs BFE's granddaughter Mrs DAQ a document which purported to be an application for a financial management order for Mrs BFE. Following discussions with Registry staff, Mrs DAQ agreed that, as Ms TED's application for revocation of the financial management order had already been listed for hearing, the document she had lodged should not be treated as a separate application, but rather as her written submission in relation to Ms TED's financial management application and in particular as a submission supporting Mrs DAQ's appointment as financial manager. I treated the document on that basis.
On 2 February 2017, the matter was listed for hearing before me and again it was adjourned. The basis for that adjournment was threefold: 1. Most of the time allocated for that hearing was devoted to private discussions between the parties and some family members, which had been undertaken at my suggestion with a view to narrowing the issues. 2. I found that proceeding with a hearing on that day would deny procedural fairness to NSW Trustee and Guardian and to some family members, because an enduring power of attorney dated 8 March, under which Mrs BFE appointed Ms TED as her attorney was produced for the first time at that hearing and NSW Trustee and Guardian and some family members had not previously been aware of it. 3. Mrs DAQ should be given the opportunity to confirm her wish to be considered for appointment as financial manager for Mrs BFE and if she did confirm this she should have the opportunity to lodge further relevant submissions or documentation.
On 2 February 2017, I also set the matter down for a directions hearing before me on 16 March 2017. At the directions hearing: 1. I made Legal Representation orders, under which Mrs BFE would be represented by Mr David Lalic, Solicitor and Ms TED would be represented by Mr Keiran Kelly, Solicitor (replacing Mr Peter Ives, Solicitor); 2. I directed Mrs BFE and Ms TED to identify, file, and serve various documents; 3. I noted that Mr Vaughan Massey as Separate Representative would lodge certain documents prior to the hearing, that an expert report by Dr Z could be supplied to the other relevant expert, Professor Y and that it was desirable for both Dr Z and Professor Y to be available to participate in the hearing; and 4. I set the matter down for hearing on 19 April 2017.
The purpose of the hearing on 19 April 2017 was therefore to resume the hearing of Ms TED's application for the revocation of the financial management order which had been made for her mother Mrs BFE.

[12]

The legal principles and authorities

The Supreme Court of New South Wales has provided guidance in several decisions as to how the Tribunal should assess a person's capability to manage his or her affairs. In earlier cases the Court based its test predominantly on the ability of the subject person to conduct the ordinary everyday affairs of people. It was said that if by reason of an inability to do this the person would be disadvantaged or there would be a real risk that they would be disadvantaged or that their money or assets would be at risk of dissipation, then they would properly be treated as being incapable of managing their affairs.
However, that approach has been reviewed and altered in more recent cases. In P v R [2003] NSWSC 819, Re D [2012] NSWSC 1006, and PB v BB [2013] NSWSC 1223, it has been emphasised that the Tribunal should not be relying just on hypothetical notions such as "the ordinary affairs of people" but rather should focus on the capability of the particular person to deal with his or her actual assets and to do what he or she is proposing to do with them. In P v R, Justice Barrett said that the task of the Tribunal in these circumstances: "…is to make a judgment as to the capacity and ability of the person concerned to cope with the ordinary routine affairs of living, particularly so far as they concern the person's property. …The requisite judgment is to be made in the light of objective physical facts concerning the relevant person's property, money and other assets and the way the person is able to look after them. If there is a lack of capacity, the reason for it does not matter."
In PB v BB and subsequently in P v NSW Trustee and Guardian [2015] NSWSC 579, Justice Lindsay confirmed that the question focuses attention on the particular circumstances of the person under consideration.
In CJ v AKJ [2015] NSWSC 498, Justice Lindsay set out his preferred approach in considering whether a person is or is not capable of managing his or her own affairs. He said that a court or tribunal dealing with this issue should focus on whether the person is able to deal with (that is to make and to implement 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.
His Honour went on to say that in considering whether a person is "able" in this sense, the Court or Tribunal may give attention to: 1. past and present experience as a predictor of the future course of events; 2. support systems available to the person; and 3. 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.
His Honour also noted: "Consideration of the question of a person's capacity to manage their affairs depends upon an assessment of his subjective circumstances, including the support available to him from his family and the extent to which he, placed as he is within a benign domestic environment, can be relied upon to make sound judgements about his welfare and interests…(and whether) within the community of his family, and with their ongoing support, he is able to take care of himself, his property and his finances" (At [54].)
Disability in the guardianship sense is not an element of the test for incapability for the purposes of considering a financial management application: GW v Protective Commissioner & Ors [2003] NSW ADTAP 51.
The relevant time for considering whether a person is incapable of managing his or her affairs is not merely the day of hearing but the reasonably foreseeable future: McD v McD (1983) 3 NSWLR 81, 86. In Re W and L (Parameters of Estate Management Orders) [2014] NSWSC 1106, Justice Lindsay accepted that proposition and adopted earlier observations in P v NSW Trustee and Guardian, that: "Any decision to make, or to revoke, a financial management order, by its very nature, requires a backward glance designed to elucidate the present and the future; a firm grasp of present realities; and an element of anticipation of future problems and solutions. Management of the estate of a person in need of protection involves an exercise in risk management."

[14]

The report of Professor Y

Professor Y is a Forensic Psychologist and is a Professor Emeritus in a medical school in a university in Sydney. She is a Fellow of the International Association for the Scientific Study of Intellectual Disability, a Member of the Australian Psychological Society College of Forensic Psychologists, and is a registered psychologist and has been practising as a forensic psychologist for over 25 years. Professor Y states that she is nationally and internationally recognised as an expert in forensic psychology, especially in the field of people with intellectual disability in the justice system and that she has published widely in this field.
Professor Y saw Mrs BFE on 31 August 2016. Significantly, her report records that she was asked expressly to address particular aspects of Mrs BFE's capability of managing her own affairs. She was asked to consider whether Mrs BFE could deal with her affairs in a reasonable, rational and orderly way, with due regard to her present and prospective wants and needs without undue risk of neglect, abuse or exploitation. That of course is a digest of the tests of capability applied by Justice Lindsay in CJ v AKJ as cited at [35] above. Professor Y appears to have directed her analysis to issues based upon those tests and other established legal tests, namely whether Mrs BFE: 1. "can manage the ordinary affairs of living, including banking, buying and selling, and keeping track of her assets and liabilities and income and expenditure; 2. has a reasonably sound understanding of her assets, liabilities, sources of income and financial obligations, 3. has a reasonably sound understanding of the complications, pitfalls and risks of what she or others proposed to do with their assets and money (and whether there is a substantial risk that assets or money will be lost as a result); and 4. has the ability to identify situations where others may attempt to benefit from her assets or money through unfair dealing (and thereby create a real risk that she will be disadvantaged or will suffer loss)."
Professor Y applied certain psychological tests to Mrs BFE: the Kaufman Brief Intelligence Test, 2nd edition and the Vineland Adaptive Behaviour Scales-II.
In summary, Professor Y concluded as follows: 1. The tests indicated that Mrs BFE was functioning in the range of low average cognitive reasoning for both verbal and non-verbal tasks at a level lower than 82% of her age peers. 2. They also indicated that her adaptive behaviour was in the range of borderline intellectual ability and lower than 95% of her age peers. 3. Mrs BFE had a disability, namely a decline in cognitive functioning most likely as a result of her stroke, with resulting low average cognitive reasoning, borderline impairment for skills of adaptive behaviour, aphasia, and memory impairment. She was partially incapable of managing her person and required supervision and social habilitation. 4. Specifically in relation to financial management, Professor Y observed that Mrs BFE relied almost exclusively on her daughter Ms TED as her source of information about NSW Trustee and Guardian generally and the management of her assets. 5. Mrs BFE did not and could not manage the ordinary affairs of living and lacked an understanding of her assets and liability and her income and expenditure. 6. Mrs BFE lacked a sound understanding of the complications, pitfalls and risks of what she and her daughter Ms TED proposed to do with her assets and money. Significantly she reported that neither Mrs BFE nor Ms TED expressed a clear plan further managing Mrs BFE's assets or money, except that they had a vague discussions about selling some of her properties. In Professor Y's opinion there is a substantial risk that Mrs BFE's assets and money may be dissipated or lost unless an independent financial manager continues to manage her affairs. 7. Mrs BFE did not have the ability to identify possible situations of unfair dealing, as indicated by her transfer of the quasi-entirety of her cash assets to her solicitor and their subsequent alleged misappropriation. (I summarise those circumstances at [65] to [72] and deal with them further below.) 8. Mrs BFE needed a financial manager.

[15]

The report of Dr Z

Dr Z is a Clinical Neuropsychologist and his report states that he has 15 years of experience with neuropsychological assessment and the evaluation of cognitive capacity in adults suffering from a range of cognitive disorders, that he has been involved in various research projects and has presented findings from his research at national and international conferences. He is a Master of Clinical Neuropsychology and a doctor of philosophy (Psychology). Dr Z is a registered psychologist and has specialist endorsement as a Clinical Neuropsychologist. He is a Senior Clinical Neuropsychologist at public hospital C and Lead Clinical Neuropsychologist at an Institute of neurological disorders. He is also an Adjunct Fellow at a university in Sydney.
Dr Z saw Mrs BFE for assessment on 3 March 2017; that is approximately six months after she had been seen by Professor Y and about six weeks prior to this hearing.
Dr Z saw Mrs BFE at the request of her solicitor Mr Lalic. Mr Lalic provided a copy of his letter of instruction, which I note is also dated 3 March 2017. The letter seeks Dr Z's expert opinion as to whether Mrs BFE is able to manage her own financial and legal affairs. The letter of instruction is notable in the following particular respects: 1. It does not specify the legal tests of capability of managing one's affairs in the way in which Professor Y addressed those tests, as referred to in [44] above or indeed in any way by reference to recent authorities. Dr Z is merely asked the general question as to whether Mrs BFE "is able to manage her own financial and legal affairs in a responsible and rational way." It is true that the letter apparently attached a copy of the Tribunal's Reasons for Decision for the orders made on 28 September 2016, but those Reasons, understandably, did not include the specific tests of capability which have emerged from recent authorities. 2. The letter of instruction is not directed entirely to the issue of Mrs BFE's capability to manage her affairs. It places substantial emphasis on other issues. They are: 1. whether Mrs BFE has capacity to express an opinion as to who should manage her affairs; and 2. whether she has the capacity to instruct lawyers in the current proceedings. The letter contains substantial citation of authorities on the latter issue; but, as I say, none on the critical issue of capability to manage one's affairs. 1. The letter of instruction did not attach a copy of the expert opinion of Professor Y and there is no reference to it in Dr Z's report, so I infer that he was not made aware of it or provided with a copy of it.
Dr Z states that he selected certain tests in order to target the cognitive abilities most pertinent to the main issues identified in Mr Lalic's letter of instruction rather than what he described as "a comprehensive battery covering all cognitive abilities". The tests applied to Mrs BFE were the orientation-qualitative test, the Wechsler Adult Intelligence Scale 4th edition-selected subtests, the Hopkins Verbal Learning Test-Revised, the Colour-Form Sorting Test, a clock-drawing test and a semi-structured clinical interview for financial capacity (Marson et al, 2009).
Dr Z also conducted what appears to have been a substantial interview with Mrs BFE.
As a result of his neuropsychological testing Dr Z reached the following conclusions relevant to my consideration of the issues of capability. 1. Mrs BFE's verbal comprehension was in the Low Average range for her age. Dr Z commented: "Qualitatively, [Mrs BFE]'s word finding difficulty interfered with her performance on the general knowledge and verbal abstract reasoning tests when she was not able to retrieve the precise words to gain credit. Consequently, her true Verbal Comprehension is potentially higher than Low Average." 1. Qualitatively, Mrs BFE appeared slower than expected for her age to answer a number of questions, although Dr Z notes that her questionable eyesight "rendered quantified assessment of her processing speed invalid". 2. Mrs BFE's immediate auditory attention span was in the Borderline to Extremely Low range. Working memory (the ability to mentally hold and manipulate information) was in the Low Average to Borderline range. 3. In relation to her executive functioning, Mrs BFE's judgement and understanding of social convention was in the Average range. However her abstract reasoning on a task requiring her to discern the conceptual link between pairs of words was in the Low Average range. (Dr Z asserts that this score was reduced by Mrs BFE's word-finding difficulties). 4. In relation specifically to her financial capacity, on the Semi-Structured Clinical Interview for Financial Capacity Mrs BFE demonstrated "mostly intact" basic monetary skills, but had some difficulty distinguishing between five and 10 cent coins and between one and two dollar coins. She was however able to read a mock bank statement and to identify the key elements such as balance, deposits, and credits.
As a result of the neuropsychological testing and his interview with Mrs BFE, Dr Z responded to the question of whether Mrs BFE is "able to manage her own financial and legal affairs in a reasonable and rational way" with findings that: 1. she performed well on the Semi--Structured Clinical Interview and that "her intact functioning in these cognitive domains is reflected in her answers on interview"; 2. She demonstrated "an excellent and detail understanding of her personal financial affairs and a well-considered plan for ensuring she has sufficient finances for the future"; and 3. she "utilises informal support from her daughter [Ms TED] (who reportedly has power of attorney) in some areas of financial management and plans to continue to use her support. For example, she is leaving the organisation of leasing one of her houses to [Ms TED]."
Dr Z did raise with Mrs BFE the loss of substantial money due to her deposit of a substantial part of her life savings into a solicitor's trust account which Dr Z notes was done "with the intention of keeping this money out of the reach of NSW Public Trustee". Significantly, Dr Z acknowledges that this was an "ill-fated decision" but adds that: "… it seems that they were defrauded by an elaborate scam". Notwithstanding these matters and Dr Z's express acknowledgment that "cognitive capacity must be proportional to the risk that an individual faces", he concludes as follows: "It seems to me that [Mrs BFE]'s trust in her daughter reflects their close family relationship and that [Mrs BFE]'s risk of financial exploitation is very low."
He states as a general conclusion (which I read as one based his psychological testing, the interview and the account of the solicitor's alleged fraud and the conclusion that the risk of financial exploitation is very low): "For those reasons, it is my opinion that [Mrs BFE] does have the cognitive capacity to manage her own financial affairs."
For completeness, I should add that: 1. Dr Z appears to have reached those conclusions partially on the basis of putting some hypothetical situations concerning fraud to Mrs BFE. They appeared to have revolved around people knocking on her door and asking for her details or neighbours requesting to borrow money. He says that she "demonstrated solid financial judgement" when presented with these hypothetical situations. 2. Dr Z also concludes that Mrs BFE does have the capacity to express an opinion as to who should be responsible for managing her financial and legal affairs. He observes that: "she would probably have [Ms TED] manage her affairs in the event she became incapable of managing these herself."

[16]

Submissions by Mr Lalic on behalf of Mrs BFE on these expert reports

Mr Lalic submitted that I should "adopt Dr Z's report in its entirety" and in particular I should prefer Dr Z's expressed conclusions in every important respect to those of Professor Y. As I understood it, he asked me to do this for the following reasons. 1. Dr Z's report represents the most recent expert assessment of Mrs BFE's capability. It is the report of an assessment some six weeks before this hearing, whereas Professor Y's report reflects her assessment made nearly eight months ago. 2. The views and conclusions of Dr Z are to be preferred to those of Professor Y because Dr Z is a clinical neuropsychologist and has therefore undergone special training and has substantial experience in applying and interpreting psychological testing, in a way in which only a registered clinical neuropsychologist can. Professor Y, on the other hand is a forensic psychologist and Mr Lalic put to me that she was qualified to provide an assessment and opinion in relation to general psychological matters but could not and did not apply the appropriate neuropsychological tests in assessing Mrs BFE's capability. 3. In particular, the application by Professor Y of the Kaufman Brief Intelligence Test, 2nd edition (or "KBIT-2") and the conclusions drawn from it were in Mr Lalic's view questionable because the test relies on one-word answers. In Mr Lalic's contention that this was "fundamentally unfair" to Mrs BFE because of her established word-finding difficulties. 4. Mr Lalic asserted that, when read as a whole, Professor Y's report discloses a breakdown of relations between Professor Y and Mrs BFE's daughter, Ms TED during Professor Y's consultation. Mr Lalic contended that this must have impacted on the overall environment in which the testing and interview was conducted and may well have made things uncomfortable for Mrs BFE, so that her performance might have been affected. Mr Lalic was careful to put his position no higher than that. 5. In his contention, Mrs BFE's overall condition and in particular her memory and her cognitive performance had improved substantially since her stroke in November 2015.
Mr Lalic contended that I should rely on Dr Z's conclusions to the exclusion of Professor Y's conclusions. These include relevantly of course his conclusion that Mrs BFE has the cognitive capacity to manage her own financial affairs, that she "demonstrates an excellent and detail understanding of her personal financial affairs", that "she utilises informal support from her daughter, Ms TED in some areas of financial management and plans to continue to use her support" and that "Mrs BFE's risk of financial exploitation is very low."

[20]

The losses to Mrs BFE's estate by way of transfer of funds to a solicitor

My understanding of the circumstances relating to these losses is as follows. The essential background is of course that the Tribunal had made a financial management order on 18 December 2015 under which management of the whole of Mrs BFE's estate was committed to NSW Trustee and Guardian.
In mid to late-January 2016, Ms TED sought from her finance broker a recommendation of a suitable lawyer to advise her in relation to her mother's estate and, it appears, particularly as to the position of NSW Trustee and Guardian. The finance broker recommended a solicitor who, because of the current investigations, claims and proceedings concerning him should not be named, but who I shall refer to as "Mr QRB".
In a written statement, Ms TED confirms that she first spoke to Mr QRB by telephone from the office of her finance broker on 23 January 2016. Her written statement of 2 March 2016 (apparently originally prepared for the appointed receiver of Mr QRB's practice) indicates that Ms TED was impressed with Mr QRB and understood that he was in her words "well-connected to Parliamentary officials who would get a Bill passed in Parliament" relating to the supposed misuse by NSW Trustee and Guardian of its power generally.
It is plain from Ms TED's statement and also the evidence of Ms Bochin of the NSW Trustee and Guardian that on 29 January 2016 there was a substantial discussion between them, during which Ms Bochin attempted to explain the workings of the financial management order and the role of the NSW Trustee and Guardian as financial manager of Mrs BFE's estate. Significantly, on Ms TED's own account of it, immediately following that discussion she telephoned Mr QRB to report on that conversation and to obtain his advice on how best to deal with the NSW Trustee and Guardian.
According to Ms TED, on 8 February 2016 her finance broker (presumably at the instigation of Mr QRB) told Ms TED to arrange the immediate withdrawal of a substantial sum from the account in Mrs BFE's name in a credit union and to deposit it into Mr QRB's trust account. I understand the amount to be $273,000. Although I am not sure of the date on which the transfer occurred, it appears clear from Ms TED's written statement that it was either on 8 February 2016 or shortly thereafter because, commencing on 14 February, Ms TED and her finance broker made a series of unsuccessful attempts to contact Mr QRB concerning the funds.
In the proceedings in this Division before Senior Member Boxall on 28 September 2016, he found that the $273,000 represented the "quasi-totality" of Mrs BFE's cash resources.
It is alleged that Mr QRB misappropriated those monies. A receiver has been appointed to Mr QRB's practice. The NSW Trustee and Guardian has been successful in negotiating a transfer from the appointed receiver into Mrs BFE's trust account with the NSW Trustee and Guardian of $98,959.85 but that leaves a deficit of over $174,000.
The NSW Trustee and Guardian has also lodged, on behalf of Mrs BFE, a claim against the Law Society's Fidelity Fund. In its report dated 1 February 2017, the NSW Trustee and Guardian confirmed that depending on the outcome of the fidelity fund claim, further recovery action would be considered against the credit union who held the account for Mrs BFE (presumably on the basis that the credit union was on notice of the NSW Trustee and Guardian's appointment as financial manager at the time of the withdrawal) and, significantly, against Ms TED.

[21]

The Separate Representative's submissions in relation to Mrs BFE's capability

Mr Massey submission was to be effect that the scale and the circumstances of this apparent loss to Mrs BFE's estate (effectively all her cash assets less the amount recovered from the receiver) and the fact that this occurred with her apparent consent are most important in my assessment of whether, currently and for the foreseeable future, Mrs BFE remains incapable of managing her own affairs.
Mr Massey emphasised that the proper analysis is not that Mrs BFE is to be considered reckless or incapable of managing her affairs simply because she wished to transfer the funds to a solicitor's trust account. Rather, the focus should be the fact that Mrs BFE (and of course Ms TED) were prepared to transfer those funds on the basis of the incredible and fanciful representations by Mr QRB, which included assertions that: 1. because of his personal influence on the Liberal Party of NSW and the State Government, he could arrange to have an Act of Parliament passed to prevent the NSW Trustee and Guardian (and apparently the Tribunal) from continuing their alleged misappropriation of the money and assets of protected persons (Ms TED's statement to the Receiver, page 7); 2. because Mr QRB's cousin was the "right-hand person" to the Premier of New South Wales, Mr QRB had been able to make appointments to meet Parliamentary officials to have the appointment of the financial manager for Mrs BFE quashed. (Statutory declaration of the finance broker, 4 March 2016, page 3); and 3. if the funds were transferred to Mr QRB's account as proposed the money "would be safe…: not even the Supreme Court could touch it." (Statutory declaration of the finance broker, 4 March 2016, page 3).
It appears that no verification of the matters represented by Mr QRB was sought by Mrs BFE, by Ms TED or by the finance broker. Mr QRB's fanciful story appears to have been "swallowed whole". The direct result of that was a devastating loss to Mrs BFE's cash assets.
In relation to the specific issue of Mrs BFE's capability to manage her affairs, Mr Massey urged me to find that she remained incapable of doing so. He based that submission on the following factors. 1. The matters set out above in relation to the transfer of funds to Mr QRB's account; 2. Mrs BFE's apparent lack of understanding as to the role of the NSW Trustee and Guardian and her refusal to cooperate with the NSW Trustee and Guardian notwithstanding the circumstances of her substantial loss by reason of the transfer to Mr QRB's account. 3. Her apparent delay in administering the estate of her late husband who died in 2013, which, I note was prior to Mrs BFE's stroke in late 2015. In relation to that matter, Mr Massey had obtained searches indicating that the Notice of Intended Application for Probate had not been published until 7 July 2015. 4. Mrs BFE's intention to make a gift of $120,000; that is, approximately half of her cash savings to her daughter Ms TED for no stated reason. (As revealed in Ms TED's statement dated 7 April 2017, [6]).

[23]

Dr Z's report

I accept that Dr Z's report represents the most recent available expert evidence of Mrs BFE's capability to manage her affairs. It must of course be given substantial weight for that reason. I also accept that as a registered neuropsychologist Dr Z is qualified to administer and draw conclusions from particular psychological tests which may be valuable in reaching a conclusion as to a person's capability of managing their own affairs and that those were not the particular tests administered by Professor Y.
However, it does not necessarily follow that the tests administered by Professor Y or her conclusions on the issue should be discounted. Nor does it follow that I should accept Dr Z's report in its entirety, as I was invited by Mr Lalic to do. Nor would my acceptance and reliance on parts of Dr Z's report or some of his conclusions preclude my acceptance of and reliance upon of some parts of Professor Y's report or my acceptance of Professor Y's ultimate conclusion as to Mrs BFE's capability.
In my view, Dr Z's observations and conclusions are subject to the following important limitations. 1. As noted at [49(1)] above, Dr Z was not provided with and did not apply the relevant legal tests of capability of managing one's affairs as summarised at [32] to [39] above. I accept that Dr Z may have been independently aware of those legal tests, but he does not cite them in his report and does not appear to rely upon them in order to reach his ultimate conclusion that Mrs BFE is capable of managing her affairs. Professor Y on the other hand provided an accurate summary of the principles governing this critical issue in [2] of her report and made specific reference to the tests as enunciated by Justice Lindsay in the leading case of CJ v AKJ in reaching her ultimate conclusion that Mrs BFE lacks the capability to manage her affairs. 2. I do not accept that Dr Z fully explored Mrs BFE's vulnerability to exploitation or drew accurate conclusions about it. As noted above, he did not refer to that as an element of the legal concept of capability. He put hypothetical examples to Mrs BFE as noted at [5.5] on page 8 of his report, but these were quite simplistic, and bore no resemblance to the very real losses recently experienced by Mrs BFE from Mr QRB's trust account. Dr Z reports, in the concluding paragraph of section 7.8, that Mrs BFE's "knowledge of her personal assets expenses and debts was excellent", but I could find no further detail of her account of these matters or any verification that it was accurate. He did apply the "Semi-Structured Clinical Interview for Financial Capacity" but again the elements of that assessment described in section 7.8 of his reports seem quite simplistic and do not relate to exploitation of the nature or degree actually experienced by Mrs BFE. 3. Dr Z's characterisation of Mrs BFE's decision to transfer $273,000 to a solicitor as merely "questionable" and "ill-fated" and ascribing the loss to the fraud of the solicitor misses the point. ([8(i)] on page 12 of his report) That was the point raised by Mr Massey: it was not the fact of the transfer of the $273,000 itself which demonstrates Mrs BFE's naivety and vulnerability to exploitation, but rather her reliance on the solicitor's purported reputation and her unquestioning acceptance of his fanciful claims about his connections with the New South Wales government and what he could achieve. Seen in that light Dr Z's conclusion that "[Mrs BFE]'s risk of financial exploitation is very low" seems to me unfounded and I cannot accept it. In reaching that conclusion I of course mean no discourtesy to Dr Z himself and I take into account the fact that he was excused at the Tribunal's instigation from giving evidence at the hearing. It may well be the case that he was not fully briefed as to the circumstances or as to the representations made by Mr QRB. 4. Dr Z based his conclusions as to Mrs BFE's cognitive capacity and her capability to manage her own affairs partly on the support she can expect to receive from her daughter Ms TED. As Justice Lindsay explained in CJ v AKJ, a court or tribunal in assessing a person's capability may have regard to support systems available to the person. For the reasons I have provided below in [90] and [91] and in the section headed: "Can [Mrs BFE]'s affairs be managed by her daughter [Ms TED]?", I find that any support which can be offered by Ms TED will not be sufficient to protect Mrs BFE from undue risk of future exploitation. 5. I do not accept the comments made by Dr Z in the second paragraph of section 7.2 of his report as nullifying or making less valid Mrs BFE's score in the WAIS-IV test of intellectual functioning. While it was of course proper and understandable for Dr Z to have raised Mrs BFE's word-finding difficulties, the purpose of applying the WAIS-IV was to determine the level of her intellectual functioning, including Verbal Comprehension. Mrs BFE's word-finding difficulties may be an important element in the Tribunal's assessment of her overall capability of managing her affairs.
I note the specific findings of Dr Z which are adverse to a conclusion that Mrs BFE is capable of managing her affairs, as summarised in [52] above.
Those matters, taken in conjunction with my findings as to Mrs BFE's undue vulnerability to exploitation, lead me to conclude that Dr Z's report does not persuade me that Mrs BFE is capable of dealing with her affairs in a reasonable, rational and orderly way without undue risk of exploitation.

[24]

Professor Y's report

I accept that proper account must be taken of the fact that Professor Y's report was at the time of the hearing some eight months old. I also accept that Professor Y is not a clinical neuropsychologist and therefore is not authorised to conduct the specific types of psychological testing undertaken by Dr Z.
But, even taking those matters into account, I do give particular weight to some of Professor Y's findings. 1. Firstly, in the circumstances of the case I regard Professor Y's application of the Kaufmann Brief Intelligence Test, 2nd edition and the Vineland Adaptive Behaviour Scales-II as appropriate. Even though they are not the same as psychological tests usually carried out only by a neuropsychologist and particularly those applied by Dr Z, those tests in the circumstances appear to have been appropriate and reliable in measuring the present and likely future capability of Mrs BFE to manage her own affairs. That applies particularly insofar as the non-verbal aspects of the Kaufman intelligence test are specifically designed to measure a person's ability to solve new problems by perceiving relationships. Significantly, Mrs BFE scored only 85 in that test, less than 84% of the average score of her age peers. That result must provide some guide to Mrs BFE's vulnerability to exploitation. 2. Secondly, I accept that Professor Y's findings which I have summarised above, and particularly Mrs BFE's performance in the tests when measured against the mean scores of aged peers, provides reasonable justification for the Professor's conclusions which I summarised at sub-paragraphs (4) to (7) of [46]. 3. Most significantly, the tests which Professor Y applied and her detailed interview with Mrs BFE, as reported, provide a reasonable basis for the Professor's conclusions as to Mrs BFE's vulnerability. Professor Y concluded relevantly: "In my opinion, [Mrs BFE] lacks a sound understanding of the complications, pitfalls and risks of what she and [Ms TED] propose to do with her assets and money. She has already been defrauded of a substantial amount of her assets… In my opinion, there is a substantial risk that [Mrs BFE]'s assets and money may be dissipated or lost, unless an independent financial manager continues (to be appointed for her)… [Mrs BFE] does not have the ability to identify possible situations of unfair dealing, as indicated by the allegations of fraud against a lawyer…"

[28]

"Support mechanisms" for Mrs BFE

It was put to me by Mr Lalic and Mr Kelly and it was also indicated by Dr Z in his report that Ms TED could provide appropriate support for her mother Mrs BFE in managing her financial affairs. I do not doubt that Ms TED has very considerable affection and concern for her mother. That has been obvious to me on each of the occasions in which Ms TED has appeared before me. However, a "support mechanism" for the purposes of Justice Lindsay's tests clearly needs to be one which will, realistically, mitigate any likelihood that the managed assets will be at undue risk of exploitation.
Ms TED's actions were a significant element in the loss of Mrs BFE's money to Mr QRB. She appears to have readily accepted both her finance broker's recommendation of Mr QRB and Mr QRB's fabrications and misrepresentations as to how such a transfer could assist Mrs BFE. She either misunderstood or deliberately tried to subvert the proper operation of the financial management order for Mrs BFE in arranging the transfer of funds to Mr QRB's account. (In that regard I note the concern expressed by the Separate Representative as to the evidence, including in Ms TED's own statement, that shortly before transferring the funds Ms TED had a meeting with Ms Bochin of the NSW Trustee and Guardian and, on Ms Bochin's account the workings of the financial management order were explained to Ms TED at that time.) So I cannot accept that Ms TED would provide an adequate or acceptable "support mechanism" for the purposes of the test laid down by Justice Lindsay.
I have also considered whether other family members may be able to perform the "support mechanism" function. A letter was submitted to the Tribunal on 20 September 2016 from Mr FEN and his wife Mrs HEP. Mr FEN is the brother of Mrs BFE. The letter outlines briefly the items of financial assistance which Mr FEN and Mrs HEP have provided to Mrs BFE but also confirms that Mr FEN and Mrs HEP have had only limited contact with Mrs BFE since she was discharged from public hospital B at western Sydney in February 2016.
Ms MED, daughter of Mrs BFE, participated by telephone in the hearing on 2 February 2017 from Ireland. Shortly before the present hearing, the Registry received two letters from Mrs MED. These express her support and her natural affection for her mother. They also express her wish to be part of her mother's life and "to assist in decisions that will make her life happy and fulfilled". However, the remainder of the letter dated 11 April 2017 makes it clear that her relationship with her sister, Ms TED, has been a difficult one over a substantial period. The additional factor is a geographical one in that Ms MED is a permanent resident of Ireland. I find as practical matter Ms MED cannot this considered as a sufficient "support mechanism" the purposes of assessing Mrs BFE's capability. (Of course, in making this finding I do not in any way doubt the genuine concern and affection which Ms MED has for her mother)
I have considered as a separate matter below whether Mrs DAQ, Mrs BFE's granddaughter, is suitable for appointment as financial manager. However, it was clear to me, particularly from Mrs BFE's prevarication as to whether she wished her granddaughter to have a role in managing her affairs and Mrs DAQ's own evidence that she cannot be regarded as part of a current "support mechanism" for the purposes of assessing Mrs BFE's capability.
No other family members were identified to me as being available to take on the role of managing Mrs BFE's affairs. Even if one or more family members were available, the unacceptable barrier to treating any one or more of them as an adequate "support mechanism" is that Mrs BFE has appointed Ms TED as her attorney under an enduring Power of Attorney. So if I were to revoke the financial management order on any ground, including that Mrs BFE has regained her capability to manage, Ms TED herself would retain full legal authority to manage her mother's affairs. Both Ms TED and Mrs BFE have expressed a preference for the Power of Attorney to remain effective.
In the circumstances, particularly in light of the mutually-reliant relationship between Mrs BFE and Ms TED, I find that in reality the existence of the Power of Attorney is most likely to be a disincentive to the involvement of other family members. It has certainly not been demonstrated to me how in those circumstances the level of support from other family members would be sufficient to protect Mrs BFE from the undue risk of exploitation.

[36]

Can Mrs BFE's affairs be managed by her daughter Ms TED?

In [92] above I concluded that Ms TED's actions were a significant element in the loss of Mrs BFE's savings to Mr QRB on the basis that she appears to have readily accepted both her finance broker's recommendation of Mr QRB and Mr QRB's representations as to how such a transfer could assist Mrs BFE. I share the concerns expressed by Mr Massey, as summarised in paragraph 107 above.
In assessing the suitability of Ms TED to manage her mother's estate, either in the absence of a financial management order (in which case she would have the authority of the Power of Attorney available to her) or as the appointed financial manager, my appraisal of the facts must be a realistic one. In doing so I must give appropriate weight to each of the following factors: 1. the close relationship of mutual reliance which clearly exists between Ms TED and her mother Mrs BFE; 2. the existence of the Power of Attorney in favour of Ms TED. 3. the fact that there is no persuasive evidence of other family members becoming involved in the management of Mrs BFE's affairs, as I found and recorded at [96] above; 4. the concerns expressed by Mr Massey as Separate Representative as outlined in [105] and [106] above; and 5. the size and complexity of the estate. In that regard I note that the estate is a reasonably large one. On the basis of the NSW Trustee and Guardian's report dated 1 February 2017 the estate consisted of three substantial residential properties in north-western Sydney, 1995 Ford Falcon Fairmont sedan, small balances in account with two banks and the balance in the NSW Trustee and Guardian's trust account (which largely represents the portion of the money is lost to Mr QRB which have been recovered so far and which on one February 2017 were approximately $77,600. At the hearing Ms Bochin also indicated that a financial institution had frozen some $10,000 of funds previously held in two separate accounts. I understood from Ms Bochin's evidence that there had been no substantial change to the assets since one February 2017.
However, the most substantial factor in my opinion is Ms TED's direct involvement in the events surrounding the loss of nearly all Mrs BFE's savings to Mr QRB, including in particular: 1. The fact that she either completely misunderstood or deliberately tried to subvert the proper operation of the financial management order for Mrs BFE in arranging the transfer of funds to Mr QRB's account; and 2. her naivety the in accepting the representations made by Mr QRB, as discussed in detail above.
I give substantial weight to each of those factors.
I also rely on the findings and observations as to Ms TED made by Senior Member Boxall in his Reasons for his decision on 28 September 2016. They merit citation in full. He said, commencing at [15(3)] of the Reasons: "(The statement submitted by Ms TED to the receiver to Mr QRB's practice) suggests that questions may arise if any such proposal involves the appointment of [Ms TED] to manage [Mrs BFE]'s finances and property. These could include (but are not necessarily limited to) the following: (a) …[Ms TED] appears to suggest that she was instrumental in making the decision to place the quasi-totality of [Mrs BFE]'s cash resources -some $273,000, of which about $175,000 remains missing -with the solicitor, in orchestrating the arrangements for the money's withdrawal from [Mrs BFE]'s bank account, and in arranging its payment to the solicitor. She their outlines the reasons for adopting this course of action and to choosing this particular solicitor and the investigations which she undertook in relation to him. These disclosures may well raise questions for the Tribunal as to: (i) [Ms TED]'s judgement generally; (ii) in particular, her commercial and financial acumen; and (iii) whether by her actions [Ms TED] deliberately sought to subvert both this Tribunal's order and the authorities conferred on it by the NSW Trustee and Guardian, and in consequence whether [Ms TED] can properly be considered as a suitable financial manager for her mother. (b) If [Mrs BFE]'s bank had been put on notice at or before the time the relevant withdrawals were made of the appointment of the NSW Trustee and Guardian as [Mrs BFE]'s financial manager, one possible source of compensation for [Mrs BFE] may be her bank. The Tribunal notes this purely as a logical possibility, without expressing any view as to its substantive merits. If in fact this is a possible course of action, any proposal as to [Mrs BFE]'s future financial management might usefully address how such a claim could reasonably be made on [Mrs BFE]'s behalf by a financial manager who, in his or her personal capacity, had been instrumental in procuring performance by the bank of the very act for which compensation is sought."
In my view there is nothing before the Tribunal currently which undermines or reduces the significance of the observations made by Senior Member Boxall.
I should add that I was not persuaded by my discussion with Ms TED at the hearing that she yet has a complete understanding of the effect of the financial management order or the role of a financial manager. I commenced by asking Ms TED what she understood to be the effect of the financial management order. She did not answer that question. I then asked her whether she now accepted that the making of the financial management order for her mother meant that her mother's money was under the sole control of the NSW Trustee and Guardian . Ms TED replied to the effect that she did but that she "was advised by the solicitor to place it in the account and my mother wanted to keep it safe." I regarded that answer is either equivocal or as indicating ongoing uncertainty about the role and authority of a financial manager.
I asked Ms TED to consider a hypothetical situation under the present financial management order, in which she located a previously unknown account in her mother's name which had a credit balance of $20,000. I asked what she would do in those circumstances and she replied: "Disclose it". I asked whether she meant that she would disclose it to the NSW Trustee and Guardian and she said: "If they were overseeing it".
I was not persuaded by this exchange (in which to a substantial extent I felt I needed to assist her with prompts) or by anything else which Ms TED said or produced, that she yet has a substantial understanding of the role of a financial manager or the effect of a financial management order.
In addition, I find that if the financial management order is revoked: 1. the Power of Attorney in favour of Ms TED will again have effect. Ms TED is the sole appointee under the instrument. Ms TED will thereby have unfettered legal authority to manage Mrs BFE's affairs. I note that clause 3 of the Power of Attorney is printed in block capitals and expressly provides that as attorney Ms TED will have "UNLIMITED POWER WITH NO CONDITIONS OR LIMITS". 2. It seems quite unlikely that other family members are available or will be given the opportunity to assist in the management of Mrs BFE's affairs. 3. It follows that many decisions in relation to Mrs BFE's estate will be taken by her daughter Ms TED;
On the basis of those findings and conclusions I am satisfied that it would not be consistent with the welfare and interests of Mrs BFE to allow Ms TED to have the right to manage her affairs, either under the Power of Attorney, or as financial manager under any variation of the financial management order.
It must follow that I should not make an order which allows Ms TED to have that right: that is, an order revoking the financial management order or an order which has the effect of appointing Ms TED as financial manager.

At a glance

Court

Decision date

Before

Source

Judgment (45 paragraphs)

Parties

Legislation Cited (2)

Cases Cited (8)