Solicitors:
Protected Person: NSW Trustee and Guardian
Trustees in Bankruptcy: Grace Lawyers
Liquidator of TR Pty Ltd and TW Pty Ltd: ERA Legal
K: Yates Beaggi
File Number(s): 2016/003029452017/00335655
[2]
Judgment
Before the Court is an application for approval of a settlement agreement dated 26 October 2018 between:
1. "R", a "protected person" within the meaning of s 38 of the NSW Trustee and Guardian Act 2009 NSW, whose estate is currently managed by the NSW Trustee as a receiver and manager appointed by the Court pending further consideration of the identity of her financial manager;
2. the trustees in bankruptcy of R's former husband, "J"; and
3. the liquidator of two companies ("TR Pty Limited (In liquidation)" and "TW Pty Limited (In liquidation)") formerly owned and controlled by J.
The settlement agreement (styled "Heads of Agreement reached subject to the approval of the Court") was executed on the date it bears at the conclusion of a mediation conducted that day.
The approval of the Court is necessary, if the agreement is to be enforceable, because R is a legally incapacitated person, unable to manage her own affairs, and clause 1 of the agreement expressly records that the agreement "is subject to approval by any necessary court or courts, including the Supreme Court of New South Wales and the Family Court of Australia (or the Supreme Court of New South Wales upon transfer of the relevant Family Court proceedings to that Court)".
Fisher v Marin [2018] NSWSC 1881 | Case summary | Zoe
Subject to approval of the Court, the settlement agreement provides for disposition of three sets of proceedings (two in this Court and one in the Family Court of Australia), together with consequential orders relating to associated proceedings in the Federal Court of Australia.
The settlement agreement provides for the sale of real estate, and the division of proceeds of sale, on terms designed to bring all litigation to an end.
As R's "protected estate receiver", it is the NSW Trustee which applies for the Court's approval.
That application is supported by the trustees and the liquidator.
The application is opposed by "K", one of R's two adult daughters, her only children.
K does not currently manage her mother's protected estate; but she has done so and she aspires to do so again. She disclaims any personal financial interest in the outcome of the approval application and the underlying settlement. She avows a concern for the welfare of her mother as her only concern.
As R's protected estate receiver, the NSW Trustee foreshadowed an objection to any claim on the part of K to represent R on the hearing of the approval application; but (in a manner consistent with s 72 of the NSW Trustee and Guardian Act 2009 and Holt v The Protective Commissioner (1993) 31 NSWLR 227 at 240-241) it consented to K, as a member of R's family, being heard in opposition to the application.
K attended the mediation on 26 October 2018.
Approval of the Court is sought under s 76 of the Civil Procedure Act 2005 NSW; section 61 of the NSW Trustee and Guardian Act 2009; and upon an exercise of the Court's inherent jurisdiction (Permanent Trustee Company Limited v Mills (2007) 71 NSWLR 1).
R's estate, being subject to management under the NSW Trustee and Guardian Act, s 61 of that Act empowers the Court to make orders relating to its management.
Because the settlement agreement includes a proposal for settlement of Family Court proceedings (albeit proceedings which are presently proposed to be the subject of an application for them to be cross vested from the Family Court to this Court), K raises a doubt about the jurisdiction of the Court to approve the agreement under s 76 of the Civil Procedure Act.
Nothing turns on this because:
1. there is no dispute that the Court's inherent jurisdiction is available, and that the NSW Trustee's performance of its duties as a receiver of R's protected estate is subject to the directions of the Court;
2. section 61 of the NSW Trustee and Guardian Act is expressed in terms broad enough to support a direction that the settlement agreement be given effect; and
3. whatever the jurisdiction invoked, all parties agree that the question whether the settlement agreement should be approved, or not, is governed by whether it is beneficial to R and in her interests that it be approved: cf, Fisher v Marin [2008] NSWSC 1357.
K does not contest the jurisdiction of the Court to approve the settlement agreement, but she does submit that, because the Family Court has appointed a "case manager" (tutor) for R in respect of the Family Court proceedings, this Court should refrain from giving consideration to the question of approval, leaving it to the case manager (rather than the NSW Trustee) to make a decision about whether the settlement agreement should be supported.
Having entered the settlement agreement on behalf of R, subject to the Court's approval, the NSW Trustee is probably bound to seek that approval. It does so unreservedly, supporting the settlement agreement as both beneficial to R and in her interests.
That the case manager has had notice of the NSW Trustee's application for approval is plain from the fact that he swore an affidavit (not, strictly, expressing a view about the approval application) that was read by K on the hearing of the application. That affidavit was sworn in anticipation of the mediation, but counsel who appeared for K on the approval application referred to a subsequent affidavit of the case manager which, on the approval application, was not read. The case manager had an opportunity to appear, separately, on the hearing of the approval application but he did not do so.
Although the conduct of proceedings in the Family Court, for or against a protected person or an incapable person, is governed by the rules and practice of that Court, this Court can make orders and give directions for the conduct of Family Court proceedings in the name, or on behalf, of a protected or incapable person: Re An Incapable Person D [1983] 2 NSWLR 590.
A broader point can be made in the context of these proceedings in that the essence of the settlement agreement is that there be coordinated sales of real estate, and a division of the proceeds, with consequential or preliminary orders of a Court so far as may be necessary.
The fact that a case manager has been appointed for R in the Family Court proceedings is not an impediment to this Court, upon an exercise of its protective jurisdiction in one form or another, deciding whether or not to approve the settlement agreement as an incident of management of R's protected estate. To hold otherwise would be to constrain management of the estate in a way not consistent with the protective jurisdiction.
If and when an application is made to the Family Court (eg for a cross-vesting order or other relief within the jurisdiction of that Court), the parties to proceedings in that Court will need, subject to any orders of that Court, to address practice requirements of that Court.
In the meantime, there is no impediment to the parties to the matrimonial cause (between R as the former wife and the trustees in bankruptcy of J, the former husband) coming to an agreement about their property relationships.
Albeit through the agency of the NSW Trustee and the trustees in bankruptcy, that is what has happened, subject to Court approval, with the parties entering into the settlement agreement.
The NSW Trustee's application for approval of the settlement agreement is supported by a detailed statement of facts, upon which is based an opinion, prepared by senior and junior counsel jointly, to the effect that the settlement agreement is beneficial to, and in the best interests of, R.
There is no dispute on the part of K that, vis à vis the liquidator at least, the settlement agreement (by clause 10(c)) confers a benefit on, and is in the interests of, R. It involves a moratorium, for a limited period, on the liquidator's enforcement of rights against R.
There is more room for debate about the competing entitlements of J's trustees in bankruptcy and R, as it involves competing claims to an adjustment of property entitlements as between husband and wife. However, by the settlement agreement, the trustees agree to accept less than that for which they would contend on a contested hearing of the Family Court proceedings - if and when those proceedings could be brought to a final hearing, expected to be at least a year away.
Counsel, experienced in the family law jurisdiction, recommend approval of the settlement. They do so after a detailed examination of potential outcomes, taking into account substantial taxation liabilities.
If the settlement agreement is approved, the practical outcome is that R will emerge from the litigation with unencumbered ownership of her residence and funds of the order of a million dollars.
By the settlement agreement being given effect, R is able to be extracted from protracted litigation which, before it could be resolved by a contested hearing, would involve substantial delay and further costs (including ongoing liability for penalties and interest on a taxation debt) as well as inherent risks as to outcome.
R was born in 1953 and is now aged 65 years. She is reported to experience severe anxiety and panic attacks, compounding problems with short term memory and organisation.
The settlement agreement, if approved, provides a means by which her residence and her financial security can be assured.
In my opinion, approval of the settlement agreement would serve the interests of, and be beneficial to, R.
Accordingly, I grant that approval, substantially in terms sought:
1. Order that settlement of various matters to which R is a party ("the settlement"), as set out in "heads of agreement reached subject to the approval of the Court" dated 26 October 2018 (a copy of which is part of exhibit A1), be approved.
2. Order, pursuant to section 61 of the NSW Trustee and Guardian Act 2009 NSW, that the NSW Trustee be directed to take the necessary steps to put the settlement into effect.
3. Order that all money recovered by R pursuant to the settlement be paid to the NSW Trustee, subject to such (if any) orders as may hereafter be made by the Court.
4. Order that the proceedings (including K's notice of motion filed 12 November 2018) be listed for directions before Lindsay J on 14 February 2019 at 9.30am.
5. Reserve to all interested persons liberty to apply to the Protective List Judge on two days' notice.
6. Reserve all questions of costs.
7. Order that these orders be entered forthwith.
[3]
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Decision last updated: 07 December 2018