Guardian and Administration Tribunal v The Public Trustee of Queensland & Ors

McLaughlin Ivey Lawyers for the second and third respondents

[1] On 27 June 1969, when he was 16 years old, Gregory McKennariey ('the plaintiff') was struck by a car when walking on a marked pedestrian crossing on Elizabeth Street, Brisbane. He suffered severe brain damage as a result of which he has the intellectual capacity of a six year old child. He has been cared for in various institutions since his injury.

[2] On 17 May 1971 an order was made pursuant to section 46 of the Mental Health Act 1962 (Qld) making the Public Curator responsible for the conduct of his property and affairs on the basis that the plaintiff was incapable of managing them. The section provided:

46 '(a) The provisions of the Third Schedule to this Act shall apply in relation to the management and administration of the property and affairs of patients as therein defined.

(b) The responsible medical practitioner, in the case of a person liable to be detained by virtue of an application, order, or direction under this Act, shall, forthwith upon his forming the opinion that the person is mentally ill and incapable of managing and administering his property and affairs, notify the Public Curator in writing ...'

The Third Schedule defined a 'patient' to be, inter alia, a person:

'(b) who is notified to the Public Curator pursuant to ... this Act, by the responsible medical practitioner, as being, in the medical practitioner's opinion, mentally ill and incapable of managing his estate; ...'

Section 2 of the Third Schedule provided that the Public Curator should, without any other authority, manage the estate 'of every person who is a patient ...'

[3] At the time the plaintiff was an in-patient at Woolston Park Hospital, the medical superintendent of which provided the notification mentioned in section 46(b).

[4] The Mental Health Act 1962 was repealed and replaced by the Mental Health Act 1974 (Qld), schedule 5 of which is relevantly identical to the provisions of schedule 3 of the repealed Act. Section 4 of the Mental Health Act 1974 provided:

'(d) the care, protection, administration, and management of the estate ... of any person which immediately prior to the commencement of this Act was exercised by the Public Curator, ... may continue to be exercised by the Public Curator ... so far as practicable under and subject to the provisions of this Act ...'

[5] Section 14 in schedule 3 to the Mental Health Act 1962 and schedule 5 of the Mental Health Act 1974 both provided that when the Public Curator was authorised to manage the estate of a patient the property did not thereby become vested in the Public Curator who had power only to take possession of the assets and manage them for the patient's benefit. The Public Curator did not therefore become a trustee for the plaintiff of the money which the Public Curator was to manage for his benefit.

[6] Following the enactment of the Guardianship and Administration Act 2000 (Qld) (the 'GA Act') section 81 of the Mental Health Act 1974 was amended to read:

81 '(1) This section applies if, immediately before the repeal of schedule 5, the public trustee managed a person's estate under the schedule, section 2, 4 or 7.

(2) On the repeal of the schedule, the public trustee is taken to be appointed under the Guardianship and Administration Act 2000 by the ... tribunal as the person's administrator for all financial matters.'

[7] The combined effects of these provisions of the Mental Health Acts and the Public Trustee Act 1978 (Qld) was that the Public Trustee succeeded the Public Curator as manager of the plaintiff's property the subject of the 1971 order and the Public Trustee was deemed to be an administrator for the purposes of the GA Act.

[8] The plaintiff, by his next friend, commenced an action claiming damages for his injuries against the driver of the car which struck him. The trial took place over two days, 9 and 10 December 1976. The action was successful and judgment was given by the Honourable Mr Justice Lucas for the plaintiff against the first defendant for $150,627.60. An order was made:

'... that the amount of damages awarded ... be paid by the first defendant to the Public Curator of Queensland whose receipt for such moneys shall be sufficient discharge and it is ... further ordered that the Public Curator ... pay out of such moneys to the solicitors for the next friend of the Plaintiff the difference between the amount of costs received from the First Defendant and the amount of costs taxed as between solicitor and own client with liberty to the next friend to apply in case of non recovery of ... costs ... to be paid out of the trust fund representing the damages awarded ... and it is ... further ordered that the Public Curator ... hold the balance of moneys paid to him as a separate trust fund for the Plaintiff and that he apply such fund or the income thereof in terms of this Order and further in such manner as the Public Curator ... thinks fit for the maintenance, education, advancement or benefit of the Plaintiff ...'

[9] The second and third respondents are the plaintiff's brother and sister. They are people of good sense and impeccable reputation. On 16 December 2003 they applied to the Guardianship and Administration Tribunal ('the Tribunal') for an order that they be appointed administrators of the funds being managed for the benefit of the plaintiff on the ground that the Public Trustee, who had replaced the Public Curator in that capacity, had charged excessive fees and had delayed inexcusably in making decisions on matters concerning the plaintiff's health. On 11 June 2004 the Tribunal revoked the Public Trustee's appointment as administrator of the plaintiff's financial affairs and appointed the second and third respondents instead.

[10] The Tribunal entertained a doubt about its power to make orders with respect to the monies representing the damages awarded in 1976. Pursuant to section 105A of the GA Act it referred to this court two questions for its determination. They are:

1. whether the order made by Lucas J was made under section 51 of the Public Curator Act 1915 (Qld) or some other statutory authority;

2. whether the Tribunal has jurisdiction to review that part of the order made by Lucas J which ordered that the Public Curator hold the balance of the awarded damages in a separate trust fund for the plaintiff to be applied for his maintenance, education and advancement.

[11] The point which the Tribunal sought to have the court determine is whether the damages paid to the Public Curator were held by it (and later by the Public Trustee) on trust for the plaintiff. If they were and if, consequently, the Public Curator (and the Public Trustee) were trustees of the damages the trust continues and will terminate only upon the plaintiff's death or by an order of the Supreme Court. The Tribunal has power to appoint and remove administrators who may manage the financial affairs of persons lacking legal capacity, but it cannot remove trustees or alter the legal and equitable interests in property held on trust. If the Public Trustee, as successor to the Public Curator, holds the trust estate represented by the damages on trust for the plaintiff, the Tribunal has no power over the trust property or the trustee.

[12] The Tribunal thought that with respect to the property the subject of the order made in 1971 pursuant to section 46 of the Mental Health Act 1962, the Public Curator was manager or administrator and not trustee. Accordingly the Tribunal was empowered to remove the Public Trustee as administrator with respect to those funds and it made an order to that effect. No-one challenges the correctness of this view, which appears plainly right. A different question arises with respect to the asset represented by the damages. The applicant and the second and third respondents support the Tribunal's view that the damages were not the subject of a trust but of an order authorising the Public Curator to manage the monies, which made it an administrator and thus amenable to the Tribunal's jurisdiction. The first respondent expresses some doubt about this but does not energetically oppose the view.

[13] Before dealing with this critical question it is appropriate to describe briefly some further legislative provisions relevant to the conclusion that the Public Trustee was administrator of the funds the subject of the order made in 1971.

[14] By virtue of the order made pursuant to section 46 of the Mental Health Act 1962 the Public Curator became responsible for managing and administering the plaintiff's affairs. The authority continued after the repeal of the 1962 Act and the enactment of the Mental Health Act 1974. By the enactment of the Public Trustee Act on 1 January 1979 the Public Curator Act 1915 was repealed but by section 5(7)(a) of the Public Trustee Act the order made by Lucas J continued to have effect as if it had been made under the corresponding provision of that Act. By section 5(7)(b) any office, function or power held by the Public Curator under the earlier Act continued as an office, function or power of the Public Trustee. It follows that the Public Trustee was, when the Tribunal made its orders on 11 June 2004, the manager and administrator of the plaintiff's funds, which had been the subject of the 1971 order. The Tribunal's powers under sections 12, 29 and 31 of the GA Act allowed it to remove the Public Trustee as administrator of those funds and to appoint the second and third respondents in its place.

[15] Whether the Tribunal has a similar power with respect to the damages depends, as I said, upon whether the monies are held by the Public Trustee on trust for the plaintiff or whether he simply manages those monies on the plaintiff's behalf. In terms of function the distinction may be subtle. The critical question is whether the monies paid in satisfaction of the judgment are legally the property of the Public Trustee to be held on trust for the plaintiff's maintenance, education and advancement.

[16] The question falls to be answered by reference to the effect of section 51 of the Public Curator Act, if that were the section pursuant to which Mr Justice Lucas made the order of 10 December 1976. It is this qualification which gave rise to the first question submitted to the court by the Tribunal.

[17] There can be no doubt that Mr Justice Lucas' order was made pursuant to section 51 of the Public Curator Act. That section provided:

'(1) In any cause or matter in the court in which money or damages is or are claimed by or on behalf of an infant or a person of unsound mind not so found by inquisition ... no money or damages recovered or awarded ... in respect of the claims of any such ... person ... shall be paid to the next friend of the plaintiff or to the plaintiff's solicitor ...

(2) All money or damages so recovered or awarded shall, unless the court otherwise directs, be paid to the public curator, and shall, subject to any general or special directions of the Supreme Court ... be held and applied by him in such manner as he thinks fit for the maintenance and education or otherwise for the benefit of such infant or person of unsound mind.

(8) The public curator in any case in which he is trustee under this section may at any time and from time to time request the court to give him directions as to the trust or its administration, or to vary directions which have already been given in regard thereto, or to determine any question arising therein; and such directions or determination may be given accordingly.'

[18] It is clear from an exchange which occurred between counsel for the plaintiff and the trial judge during the hearing that counsel asked for an order pursuant to section 51. The plaintiff was a person of unsound mind not so found by inquisition. The judge indicated assent to the submission. Correspondence between the plaintiff's then solicitors and the Public Curator has been produced. On 25 January 1972 the official solicitor to the Public Curator wrote to the plaintiff's solicitors requesting advice 'as to the present position in respect of a claim for damages on the deceased's (sic) behalf arising out of a motor vehicle accident which occurred on the 27th June 1969. I should be grateful to receive your early advice as to the position ...'

The plaintiff's solicitors replied on 2 February 1972 to ask if the Public Curator was 'prepared to allow us to continue with the case.' On 24 February 1972 the Public Curator replied giving consent to the prosecution of the action for damages on terms that the Public Curator was not to be named as plaintiff and was not to be responsible for any costs incurred in connection with the proceedings. The letter went on to say:

'(c) ... if agreement is reached out of Court on damages any such proposed settlement shall be subject to the sanction of the Court or the Public Curator pursuant to ... section 51 ...

(d) ... the provisions of section 51 ... regarding payment of any damages recovered for the patient shall be observed.'

[19] The only other provision of the Public Curator Act which might have justified the order made by Lucas J was section 85B(2) which empowered the court to make protection orders in respect of persons who by reason of age, disease, illness or infirmity were unable to manage their own affairs. The court's jurisdiction was to be invoked by an application which had to be served 'upon the person whose property is sought to be protected, unless the court in any special case otherwise directs.'

There is here no evidence of any such application having been made to the court or served upon the plaintiff.

[20] The parties have advanced elaborate submissions to the court to the effect that the Public Curator did not become a trustee of the damages. The submissions make no reference to section 51(8) of the Public Curator Act which, in my opinion, puts the matter beyond doubt. The subsection is a clear expression of legislative intention that monies paid to the Public Curator in accordance with the requirements of the section constituted a trust fund to be held by the Public Curator for the benefit of those who would have been entitled to the damages but for their infancy or incapacity. I would have been inclined to reach the same conclusion from the wording of subsection (2). The payment of money to one person to be held by him and applied for the advancement of another is suggestive of a trust of a well known kind. Subsection (8) removes all doubt. It recognises that the Public Curator upon receipt of the monies pursuant to subsection (1) and the obligation contained in subsection (2) becomes a trustee of the money and is allowed to approach the Supreme Court for directions concerning the administration of the trust.

[21] It is difficult to see how monies paid to the Public Curator to be invested by him and applied in accordance with the statutory directions would not be trust monies. Legal title to the money clearly passed to the Public Curator who then acquired title in any property or securities in which the damages were invested.

[22] Mr Justice Lucas clearly had this in mind when his Honour ordered that costs be paid 'out of the trust fund representing the damages awarded' and that the monies paid to the Public Curator be held 'as a separate trust fund for the Plaintiff'.

[23] In Phillips v Munro [1957] QSR 427 Philp J said (at 430-1):

'... generally speaking it is preferable that the Public Curator ... should act as trustee for the infant and with that in view I asked counsel to make inquiries as to the terms upon which such a trusteeship could be arranged.

'Under s.51 of the Public Curator Act ... the moneys will go to the Public Curator and become part of his common fund from which the infant's estate would receive as income only the prescribed three per cent.

'The system of payment to the common fund is of course designed to secure that the cestui que trust shall run no risk of capital loss ... since the moneys can be invested in public loans ...

'However, the Public Curator has intimated that he is willing to accept the moneys with directions that they be held as a separate trust fund to be invested in trustee investments and to be applied in such manner as he think fit for the maintenance and education or otherwise for the benefit of the infant ...'

The judge noted that he had power to make the order by virtue of 'recent' amendments to the Public Curator Act which permitted the Public Curator upon authorisation by the court to invest an infant's money in trustee investments 'whereas previously it had to go into the common fund.'

[24] In Griffiths v Doolan [1959] Qd R 304 Wanstall J (at 314) also referred to section 51 as having the effect that 'unless the court orders otherwise and gives special directions, the moneys will go into the Public Curator's common fund where they would earn a lesser rate of income than if invested by authority of the court under s. 3 of The Public Curator Acts Amendment Act of 1956.'

[25] The common fund was the subject of section 18 of the Public Curator Act. It provided that:

'(1) Subject to this Act, all moneys, however arising, vested in the public curator, ... shall become one common fund ... and shall be invested by him.

(2) The public curator may make investments from the common fund in any of the investments in which ... trustees are authorised to invest trust funds...'

[26] It is obvious from this that monies paid into the Public Curator's common fund were trust monies. It is also clear that the judges who made orders pursuant to section 51 did so on the express understanding that the Public Curator would become a trustee of damages awarded by them in favour of incapacitated plaintiffs. It would appear that the direction that such damages be held 'as a separate trust fund' was to function as an authority to the Public Curator to invest the monies in authorised trustee investments separate from the common fund to obtain a better return to the beneficiary.

[27] Accordingly the questions submitted by the Tribunal should be answered:

[28] The applicant does not ask for any order for costs. The respondents seek an order that they have an indemnity certificate pursuant to section 15 of the Appeal Costs Fund Act 1973 (Qld). It is, I think, appropriate to grant such a certificate given the novelty of the point and the difficulty to which it gave rise in the Tribunal and in the submissions to the court.