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[2008] QSC 49
General information, not legal advice.
Supreme Court of Queensland
2008-03-14
Mullins J
Original judgment source is linked above.
PROCEDURE - JUDGMENTS AND ORDERS - construction of court order - use of extrinsic material - need for certainty - where ambiguity in court order - where order made express appointment as administrator under s 12 and s 245 Guardianship and Administration Act 2000 (Q) - whether administrator also appointed as a trustee
MENTAL HEALTH - LEGAL PROCEEDINGS BY AND AGAINST MENTALLY ILL AND OTHER PROTECTED PERSONS - compromise - power of court to approve payment of settlement sum to a person other than the Public Trustee - s 59 Public Trustee Act 1978 (Q) - where settlement sum ordered to be paid to a trustee company - whether order made under s 59 Public Trustee Act 1978 (Q) had the effect of appointing the trustee company as trustee of the settlement sum
MENTAL HEALTH - MANAGEMENT AND ADMINISTRATION OF PROPERTY - GENERAL MATTERS - jurisdiction of Guardianship and Administration Tribunal (Q) - where trustee company appointed administrator under Guardianship and Administration Act 2000 (Q) - where commission and remuneration of trustee company regulated under Trustee Companies Act 1968 (Q) - whether s 48 Guardianship and Administration Act 2000 (Q) applies to remuneration of trustee company when acting as administrator
MENTAL HEALTH - GUARDIANS, COMMITTEES, ADMINISTRATORS, MANAGERS AND RECEIVERS - OTHER MATTERS - power of litigation guardian - whether litigation guardian can enter into contract on behalf of litigant where contract is to take effect after completion of litigation
MENTAL HEALTH - MANAGEMENT AND ADMINISTRATION OF PROPERTY - GENERAL MATTERS - jurisdiction of Guardianship and Administration Tribunal (Q) - whether tribunal has power to authorise retrospectively conflict transaction - s 37 Guardianship and Administration Act 2000 (Q)
Trustee Companies Act 1968, s 41, s 45
Athens v Randwick City Council [2005] NSWCA 317; (2005) 64 NSWLR 58, followed
Australian Energy Limited v Lennard Oil NL (No 2) [1988] 2 Qd R 230, followed
Clay v Clay (2001) 202 CLR 410, considered
David Grant & Co Pty Ltd v Westpac Banking Corporation [1995] HCA 43; (1995) 184 CLR 265, considered
Fowler v Gray [1982] Qd R 334, considered
Guardianship and Administration Tribunal v The Public Trustee of Queensland [2005] QSC 126, considered
Hills v State of Queensland [2006] QSC 296, considered
Willett v Futcher [2004] QCA 30, considered
Willett v Futcher [2005] HCA 47; (2005) 221 CLR 627, considered
Official Solicitor to the Public Trustee of Queensland for the third respondent
[1] MULLINS J: The Guardianship and Administration Tribunal (the Tribunal) was conducting a review of the appointment of the first respondent as the administrator for the second respondent, Ms Thompson, in respect of the balance of the damages paid to Ms Thompson under the settlement of her claim in proceeding number 1753 of 2001 (personal injuries proceeding). The settlement was sanctioned in this Court pursuant to s 59 of the Public Trustee Act 1978 (PTA) on 5 December 2001. As a result of issues that arose in the course of that review the Tribunal made an order on 17 July 2007 referring questions of law relevant to that review to this Court for opinion pursuant to s 105A of the Guardianship and Administration Act 2000 (GAA).
[2] The questions taken from the originating application filed by the Tribunal on
2. Whether the Tribunal can authorise under subsections (1) and (2) of s 48 of the GAA that Perpetual be remunerated in excess of the commission contemplated by s 41(1) of the Trustee Companies Act 1968 (TCA).
3. Whether a litigation guardian appointed for an incapacitated adult pursuant to rule 95 of the UCPR can enter into a binding agreement under s 41(7)(b) of the TCA on behalf of an incapacitated adult with a trustee company about the amount of remuneration payable to that trustee company in its role as administrator for the adult.
4. Whether the Tribunal has power to authorise retrospectively remuneration already paid to Perpetual when making an order under s 48(1) of the GAA.
5. Whether the Tribunal has power to authorise retrospectively conflict transactions and if so, whether that power is found in s 37, s 83(2) or some other section of the GAA.
[3] There was, appropriately, no appearance on behalf of the Tribunal at the hearing of this reference on 30 August 2007. On the review before the Tribunal the Public Advocate had been given leave to intervene in the proceedings. The Public Advocate was therefore joined as the fourth respondent to this application and appeared by Ms Brasch of counsel. On the review before the Tribunal Ms Williams of counsel and the firm of Quinn & Scattini were jointly appointed as the representatives of Ms Thompson. They appeared for Ms Thompson on the hearing of this reference. No objection was taken by Perpetual to the appearance of them on Ms Thompson's behalf.
[4] After the decision was reserved Perpetual delivered affidavits of Ms Pezet sworn on 19 September 2007, Mr Damien Gallagher sworn on 25 September 2007 and Mr Nigel Munt sworn on 26 September 2007.
[5] Supplementary submissions of the Public Trustee were provided on 25 September 2007. Further submissions on behalf of Ms Thompson were received on 4 October 2007. Supplementary submissions of Perpetual were received on 1 November 2007.
[6] Generally, submissions made on behalf of Ms Thompson and the Public Advocate supported the submissions made by the Public Trustee. I will refer separately to the submissions on behalf of Ms Thompson and the Public Advocate only when any additional points are made.
[7] Ms Thompson at the age of 42 years sustained severe injuries, including a severe head injury, in August 1999 when she was struck by a motor vehicle whilst standing on a footpath. Her brother, Mr Michael McDonald, acted as her litigation guardian in commencing the personal injuries proceeding. That proceeding was settled at a settlement conference held on 18 October 2001. An application for sanction of the settlement pursuant to s 59 of the PTA was heard in the applications jurisdiction of the Supreme Court on 5 December 2001. Counsel instructed by Trilby Misso & Company appeared for Ms Thompson. A solicitor who was acting for the defendants also appeared.
[8] Prior to filing the application Ms Thompson, together with Mr McDonald, met with Mr Gallagher of Perpetual to discuss Perpetual's services as a potential administrator for Ms Thompson. Mr Gallagher was employed by Perpetual as a senior financial consultant. Ms Thompson and Mr McDonald wished to proceed on the basis proposed by Perpetual that it be appointed as administrator for Ms Thompson. Ms Gallagher therefore prepared a financial management plan which was exhibit A to his affidavit that was filed on 21 November 2001 in support of the application for sanction of the settlement. Mr Gallagher stated in his affidavit that he was authorised by Perpetual to swear the affidavit and noted that it was intended that Perpetual "be appointed co-administrator with Michael McDonald and be appointed to act jointly". Mr Gallagher stated in that affidavit that Perpetual consented to that appointment.
[9] It is clear from the transcript of the hearing of the application that the recording of the hearing did not commence at the start of the hearing. The transcript of the hearing that is available commences when an issue was raised in relation to payment from the damages of an amount on account of past care. In the course of submissions, counsel for Ms Thompson observed "... there is one order of some novelty under the new Act and that is the appointment of joint trustees, one of which is Perpetual Trustee Company". There was an adjournment to address the issue of payment for past care. When the hearing resumed, counsel for Ms Thompson referred to Perpetual as the "trustee" and then while continuing with submissions on the same topic of past care referred to Perpetual as the "administrator". Ultimately an order was made in terms of the draft order that had been prepared by the solicitors acting for Ms Thompson.
[10] Mr Gallagher was present in court when the application for the sanction was heard. His affidavit sworn on 25 September 2007 deals with his involvement in the matter resulting in the appointment of Perpetual under the order. This affidavit was obtained as a result of a matter that I raised during the hearing before me. I inquired whether Perpetual had propounded or approved the terms of the draft order that resulted in its appointment. Although Mr Gallagher states that he may have seen the draft order during the adjournment of the hearing, he says that it was not for the purpose of making suggestions to the wording of the order, that it was not the practice of Perpetual to have input into draft orders and that he believes did not do so in respect of this order. Mr Gallagher states in paragraph 10 of that affidavit.
"At no time before the order was made did it occur to me that the order might appointment (sic) Perpetual trustee and administrator. I simply never gave any consideration to that issue. My discussions with the client and her legal counsel were always in relation to Perpetual being appointed administrator."
[11] The GAA came into operation on 1 July 2000. It was therefore relatively new legislation when the application for sanction of Ms Thompson's settlement was heard. Practitioners and judges (for that matter) were endeavouring to adapt to changes in practices that had been entrenched for decades. The terms of the application that was filed to obtain the order sanctioning the settlement and associated orders illustrate this process of attempting to adapt to the requirements of the GAA. The application, as filed, sought the sanction, that a protection order be made in relation to the proceeds of the settlement and that Perpetual and Mr McDonald "be appointed as (and remain, until further order of this Court or of the Guardianship and Administration Tribunal under sections 12 and 245 Guardianship and Administration Act 2000), the joint trustees for the Plaintiff to manage the monies to which the Plaintiff is entitled under this compromise".
[12] One anomaly was that the application was seeking a protection order which was not available in respect of persons 18 years and over after the commencement of the GAA. Another anomaly was that reference was made to the exercise by the court of the powers conferred on the Tribunal under s 12 of the GAA to appoint a guardian or an administrator, yet the application sought the appointment of "trustees". The form of the application therefore suggests that it was based on a precedent that was appropriate prior to 1 July 2000 when the application was made for the sanction of a settlement with payment of the damages to the Public Trustee under s 59 of the PTA, coupled with a protection order under s 67 of the PTA.
[13] The mistakes that are evident on the face of the application that was before the court on 5 December 2001 also affected the preparation of Mr McDonald's affidavit for that application. Mr McDonald stated in his affidavit that was filed on 20 November 2001 that, as a result of the injuries sustained by Ms Thompson, he had taken over management of her financial affairs and was therefore seeking an appointment as "co-trustee" in respect of her affairs. Although Perpetual had prepared the financial management plan on the basis that it was to act as administrator with Mr McDonald for Ms Thompson, Mr McDonald stated that he was seeking the appointment of Perpetual and himself as "co-trustees" of Ms Thompson's affairs pursuant to the GAA.
[14] The solicitors acting for Ms Thompson were alerted to these errors by the Public Trustee's letter of 29 November 2001 that pointed out that a protection order under s 65 of the PTA only applied to persons who were under the age of 18 years and that the GAA applied to the appointment of administrators, not trustees. That letter was tendered as exhibit 1 on the hearing of the application on 5 December 2001. Ms Thompson's solicitors must have taken some notice of this letter. That is apparent by comparing the orders sought in the application (as filed) with the terms of the draft order that was tendered on the hearing.
[15] Mr Munt who was the solicitor for Ms Thompson in the personal injuries proceeding makes a statement in his affidavit sworn on 26 September 2007 to the effect that his recollection was that Perpetual was being appointed as administrator and trustee for Ms Thompson, as Perpetual was being appointed instead of the Public Trustee. This affidavit is unhelpful. It is in the nature of a rationalisation by Mr Munt of what occurred, rather than dealing with his instructions at the time. It is unable to be reconciled with Mr Gallagher's affidavit that was filed in support of the application that was heard on 5 December 2001 and Mr Gallagher's affidavit sworn in this matter on 25 September 2007. It is also superficial or lacks context in that there is no attempt by Mr Munt to explain his knowledge or understanding of the operation of the GAA at the time that he prepared the application and the supporting affidavit of Mr McDonald.
[16] The three further affidavits provided by Perpetual after I reserved my decision in this matter satisfy me that Perpetual was not responsible for the terms of the order that was made by the court on 5 December 2001. Despite Mr Munt's affidavit and despite the mistakes in Mr McDonald's affidavit filed for the purpose of the application heard on 5 December 2001, it is patent from the affidavit of Mr Gallagher that was filed on 21 November 2001 in the personal injuries proceeding that Perpetual was seeking to be appointed as administrator for Ms Thompson jointly with Mr McDonald.
[17] Paragraphs 2 to 7 of the order that was made on the application provide:
"2. There be sanctioned, pursuant to Section 59 of the Public Trustee Act 1978 ("the Act"), a compromise of the Plaintiff's claim against the Defendants upon terms that the Defendants pay to the Plaintiff:-
(a) ONE MILLION EIGHT HUNDRED THOUSAND DOLLARS ($1,800,000) in respect of the Plaintiff's claim and interest (clear of the rehabilitation expenses paid by the Second Defendant which does not require a refund of any such rehabilitation expenses paid);
(c) The Plaintiff's costs of the action and of this application, on a standard basis, to be assessed if not agreed.
(a) all statutory refunds be paid to the appropriate governmental bodies;
(b) the costs of the action and of this application, on a standard basis, be paid to the solicitors for the Plaintiff and the receipt by the solicitors for the Plaintiff of the same shall be sufficient discharge to the Defendants, the Plaintiff and the Plaintiff's Litigation Guardian therefore;
Review of the appointment of administrators by the Tribunal
[18] In May 2004 Perpetual lodged an application with the Tribunal seeking a review of the appointment of the administrators as Mr McDonald wanted to withdraw as administrator. The hearing of the application for the review of the appointment of the administrators commenced on 20 September 2004 and proceeded under s 31 of the GAA. There were delays in the review that are not relevant to this application. In April 2005 the Tribunal gave leave to Mr McDonald to withdraw as administrator.
[19] Perpetual's position before the Tribunal was that the orders made on 5 December 2001 appointed Perpetual trustee as well as administrator for Ms Thompson. The Tribunal noted that it has the statutory power to review the appointment of Perpetual as administrator, but no power to review the appointment of a trustee: cf Guardianship and Administration Tribunal v The Public Trustee of Queensland [2005] QSC 126 at [11].
[20] Because of the nature of the legal questions that arose on the review before the Tribunal, the Tribunal concluded that the questions of law relevant to the jurisdiction of the Tribunal on the review and other questions of law central to the issues raised in the review should be referred to the Supreme Court under s 105A of the GAA.
[21] According to the Explanatory Notes for the Guardianship and Administration Bill 1999, the objective of the Bill was "to establish a comprehensive regime for the appointment of guardians and administrators to manage the personal and financial affairs of adults with impaired capacity in Queensland". The Explanatory Notes also refer to the fact that the Bill was intended to implement those aspects of the Queensland Law Reform Commission Report Number 49 Assisted and Substituted Decisions: Decision-Making by and for people with a decision making disability released in June 1996 (QLRC Report 49) that were not implemented in the Powers of Attorney Act 1998. That Report found that Queensland legislation failed to provide a simple and inexpensive way of meeting the decision-making needs of adults with impaired capacity. There are a number of acknowledgements set out in s 5 of the GAA about the rights and capacity of an adult with impaired capacity that establish the framework for the scheme under the GAA.
[22] There is an express statement in s 6 of the GAA that the GAA seeks to strike an appropriate balance between:
"(a) the right of an adult with impaired capacity to the greatest possible degree of autonomy in decision making; and
(b) the adult's right to adequate and appropriate support for decision making."
[23] Under s 11 of the GAA any person or other entity who performs a function or exercises a power under the GAA for a matter in relation to an adult with impaired capacity for the matter must apply the general principles set out in schedule 1 of the GAA.
[24] Although the concepts, principles and many of the provisions in the GAA can be traced to the QLRC Report which included draft legislation, the drafting of the GAA departed significantly from the draft legislation that accompanied the QLRC Report. The Report, the Explanatory Notes for the Bill and the GAA itself make it clear the Legislature intended to achieve substantial reform in the regime for dealings affecting adults with impaired capacity. The scheme under the GAA for administrators is different and distinct to the regulation of a trustee under the Trusts Act 1973, even though many aspects of the obligations of an administrator are fiduciary in nature.
[25] One area in which the legal profession has had a significant involvement with adults with impaired capacities is the pursuit by an adult with impaired capacity for damages for personal injuries. The GAA presented a challenge to the profession to embrace the new concepts, principles and procedures implemented by the GAA. That is illustrated by decisions such as Welland v Payne [2000] QSC 431; Foran v Jalbao Pty Limited [2001] QSC 42; Morris v Clair [2004] QSC 127; Gregory v Nominal Defendant [2005] QSC 308; [2006] 1 Qd R 509; and Brown v Stewart [2007] 1 Qd R 205.
[26] Although Perpetual consented to being appointed as an administrator only, it contends that the true construction of the order made on 5 December 2001 is that Perpetual was appointed both as an administrator and as trustee in respect of the balance of the settlement sum.
[27] It is common ground that Ms Thompson was a "person under a legal disability", as that expression is defined in s 59(1A) of the PTA. That is why the settlement of her personal injuries proceeding had to be sanctioned. It also enlivened the jurisdiction of the court pursuant to s 245 of the GAA that confers on the court all the powers of the Tribunal under chapter 3 of the GAA when the court sanctions a settlement for an adult and the court considers the adult is a person with impaired capacity for a matter. That gave the court the jurisdiction to appoint an administrator for a financial matter for Ms Thompson pursuant to s 12 of the GAA.
[28] Under paragraph 3 of the order Perpetual and Mr McDonald were appointed joint administrators "in relation to all financial matters relating to the trust sum only". Reference was made in that paragraph of the order to s 14(1)(c) of the GAA. The power to appoint an administrator for a financial matter is conferred by s 12 of the GAA. Section 14(1)(c) of the GAA is concerned with the appropriateness of the person for appointment as an administrator. Although, the expression "trust sum" is not expressly defined in the order, the directions for payment in paragraph 4 of the order indicate that the expression "trust sum" is used to refer to the balance of the settlement sum due to be paid to the administrators under paragraph 4 of the order. This shorthand expression is a convenient way of referring consistently to the amount to be paid to the administrators and cannot point to the creation of a trust, unless one was otherwise created.
[29] Paragraph 5 of the order was a direction to the administrators to pay to Ms Thompson's solicitors the difference between her costs of the personal injuries proceeding on a standard basis and her costs assessed on an indemnity basis of assessment.
[30] Under paragraph 6 of the order, the administrators were appointed "managers" to take possession of and control and manage all financial matters of Ms Thompson relating to the trust sum. Paragraph 6 of the order then provides for the administrators to hold the trust sum "in trust" for Ms Thompson absolutely and apply the capital or income in such manner as the administrators think fit for the maintenance and benefit of the plaintiff. It is paragraph 6 of the order that, arguably, creates the uncertainty as to the nature of the appointment of the administrators that is now relied upon by Perpetual to submit that it was appointed as a trustee, in addition to the appointment as administrator.
[31] Paragraph 7 of the order related to the appointment of Perpetual as an administrator. It conferred on the administrators the power to invest pursuant to s 51 of the GAA which applies if an administrator for an adult has power to invest.
[32] There were no separate reasons for judgment given by the Court for the making of the order (in terms of the draft order) on 5 December 2001. This is consistent with the practice that applies to the sanction of a settlement: Fowler v Gray [1982] Qd R 334, 354.
[33] The question arises as to the matters that can be considered in construing the order made on 5 December 2001: whether the Court is confined now to the terms of the order itself or whether the court can have regard to other materials, such as the nature of the application that resulted in the order, the affidavits that were before the court on the application, and the transcript of the hearing of the application.
[34] In Australian Energy Limited v Lennard Oil NL (No 2) [1988] 2 Qd R 230 the Full Court was concerned with an appeal from a decision that had required the interpretation of a declaration made by McPherson J concerning an agreement between the parties. Andrews CJ (with whom Kelly SPJ agreed) held that it was necessary in order fully to understand the effect of the declaration to examine the reasons expressed by McPherson J in coming to his decision and the extrinsic evidence and surrounding circumstances relied upon by him. Andrews CJ stated at 232:
"This is not so much to construe the words of the declaration as to understand it in its place in the context of the matter and thus give it its true construction."
[35] The approach to construing orders of a court was considered by the New South Wales Court of Appeal in Athens v Randwick City Council [2005] NSWCA 317; (2005) 64 NSWLR 58. Santow JA (with whose observations Tobias JA agreed) followed the trend of authority of which Australian Energy Limited v Lennard Oil NL (No 2) is an example that the meaning of words in an order should in an appropriate case be considered by reference to the reasons for judgment, themselves finding their context in the overall proceedings. Santow JA summarized his observations at 80 [140], including that:
"(a) Orders must confirm to the judgment which gave rise to them, within the latitude conferred by that judgment. That originating judgment is not just an aid to construction. Rather it is the primary reference point. In that respect construing orders is not like resorting to extrinsic circumstances or external context to resolve ambiguity in a clause in a contract.
(b) Where orders are ambiguous, that ambiguity must be resolved first by reference to the originating judgment, unless the language of the orders proves intractable.
(c) Orders may also need explication by reference to the proceedings in which the judgment is given, particularly the pleadings. This recognises that a range of orders and their possible meanings may confirm to the judgment.
(d) While orders should ideally be self-explanatory, language is inherently ambiguous so permitting that resort to resolve ambiguity."
[36] Although there is not an originating judgment against which to construe the orders made on 5 December 2001, the nature of the application that resulted in the orders, the affidavits filed in support of the application and the submissions made at the hearing of the application (as recorded in the transcript) provide the context for construing the orders.
[37] The application that was disposed of by the orders made on 5 December 2001 was for a sanction pursuant to s 59 of the PTA of Ms Thompson's claim against the defendants in the personal injuries proceeding and for consequential orders, in reliance on s 245 of the GAA.
[38] Perpetual's arguments can be summarised as follows:
(a) even where the court was intending to act under the regime established by the GAA to appoint an administrator at the time of sanctioning the settlement, the court could still exercise its inherent jurisdiction to make an appointment as trustee of the settlement sum, in addition to the appointment as administrator;
(b) there are dicta in Willett v Futcher (Willett), both in the Court of Appeal [2004] QCA 30 and in the High Court [2005] HCA 47; (2005) 221 CLR 627, that suggest the appointment of a trustee company as an administrator of a settlement sum under the GAA also has the effect of making that trustee company a trustee of the settlement sum;
(c) the obligations imposed on an administrator and a trustee are similar, but not identical, so that effect can be given to a dual appointment as administrator and trustee; and
(d) the fact that Perpetual consented to act as administrator only, and not as trustee, should not determine the construction of the order.
[39] The Public Trustee's arguments can be summarised as follows:
(a) although paragraph 6 of the order is internally inconsistent, the intention of the application that resulted in the order was to engage the regime under the GAA and make an appointment as administrator only;
(b) there was no announced (or even implicit) intention by the lawyers for Ms Thompson to rely on the exercise of the inherent jurisdiction of the court for an appointment as trustee;
(c) the use of the word "trust" in paragraph 6 of the order should be taken to be in the non-technical or informal sense referred to in Clay v Clay (2001) 202 CLR 410, 428-430.
[40] The Public Advocate emphasises that the appointment of administrators under the order made on 5 December 2001 was specifically pursuant to the GAA. The Public Advocate argues that the provision in paragraph 6 of the order that the trust sum is directed to be held on trust for Ms Thompson absolutely is only for the purpose of giving effect to the specific appointment in paragraph 3 of the order of Perpetual and Mr McDonald as administrators. The Public Advocate advances the construction that each of paragraphs 4, 5, 6 and 7 of the order relate to the administration created in paragraph 3 of the order and do no more than give directions, permissions or authorisations with respect to that administration.
[41] Even though the appointment of the administrators for Ms Thompson was made by the court on 5 December 2001 in reliance on s 245 of the GAA, Perpetual is correct when it submits that the court was still able to exercise its inherent jurisdiction, including its parens patriae jurisdiction: s 240 GAA. Perpetual relies on the power of the court when making an order under s 59 of the PTA for the payment of the settlement sum to a person on behalf of the plaintiff (other than the Public Trustee) to appoint that person as trustee of the settlement sum in the exercise of the court's inherent jurisdiction. This issue of whether an appointment of a trustee other than the Public Trustee could be made under s 59 of the PTA arose in Hills v State of Queensland [2006] QSC 296, where the court had assessed the infant plaintiff's damages. Perpetual was appointed the trustee of the infant plaintiff under s 59 of the PTA, in reliance on the court's parens patriae jurisdiction, as was done in Phillips v Munro [1957] St R Qd 427, 430. This supports Perpetual's argument that the court could appoint Perpetual as trustee of the balance settlement sum when sanctioning the settlement of Ms Thompson's claim. The existence of the power, however, does not necessarily mean it was exercised.
[42] The dicta in Willett must be considered in the context of what was in issue in the case. The plaintiff in Willett was severely injured in a motor vehicle accident as a baby. Her proceeding was sanctioned on the basis that the defendant pay a particular sum "together with the sum by way of damages in respect of reasonable management fees" in respect of the balance of the settlement sum. The court ordered that Perpetual be appointed administrator in relation to all financial matters concerning the amount of the compromise pursuant to ss 12 and 245 of the GAA. The issue was whether the cost to the plaintiff of obtaining suitable investment advice and other ancillary charges in respect of that part of the trust fund available for investment ought to be borne by the defendant as an aspect of the damages ordered to be paid "in respect of reasonable management fees". At first instance in Willett [2003] QSC 36, it was determined that the amount of $180,000 should be allowed as damages for the reasonable management fees of administering and managing the compromise sum to be paid to the administrator. That sum allowed for two categories of charge, namely an establishment fee and a discretionary portfolio management fee. Four other categories that concerned investment advice and making investments for the purpose of maximising the return on the amount of the compensation were excluded:
[43] The Court of Appeal in Willett dismissed the appeal. Reference was made by the Court of Appeal at [18] to the effect of the order that appointed Perpetual as administrator:
"However it was common ground in this case that, because of the defendant's negligence it was necessary to appoint an administrator in relation to all financial matters concerning the amount of the compromise pursuant to s 12 and s 245 of the Guardianship and Administration Act 2000 and appropriate, as Byrne J did, to appoint Perpetual as such administrator. And it necessarily followed that Perpetual was thenceforth the trustee of that amount subject to the obligations of a trustee under the Trusts Act 1973 and the general law."
[44] The High Court in Willett at 631[8] described the issue in the appeal as "what kinds of costs of managing the damages award to a person incapable of managing his or her own affairs, whose incapacity was caused by the defendant's negligence, are to be allowed in assessing the damages to be allowed to that person." The High Court allowed the appeal from the decision in the Court of Appeal and remitted the matter to the Court of Appeal for the assessment of the damages to be allowed for management fees. Perpetual argues that the observations made by the Court of Appeal at [18] that described Perpetual as a trustee upon its appointment as an administrator under the GAA was not disapproved by the High Court.
[45] The observation that was made by the Court of Appeal at [18] was truly a passing reference and was not in any way addressing any issue in Willett that was before the Court of Appeal about the nature of Perpetual's appointment. In fact, the judgment of the High Court in Willett at 641[46] expressly corrected one reference that was made by the Court of Appeal in Willett to Perpetual being a trustee and noted in respect of the "trustee" reference that Perpetual was "more accurately an administrator under the Guardianship Act". Notwithstanding that correction, the judgment in the High Court in Willett also made references in passing (at 632 [12]-[13]) that suggested that Perpetual was holding the settlement sum as a trustee for the plaintiff. Those references equally were not addressing any issue about the nature of Perpetual's appointment. It is therefore not appropriate to treat these dicta as resolving the issue of the nature of Perpetual's appointment in this matter.
[46] The argument in favour of Perpetual's contention that it was appointed a trustee, as well as administrator, is that part of paragraph 6 of the order that orders that the administrators hold the balance of the settlement sum in trust for Ms Thompson absolutely. That part of the order, however, has to be construed in the context of the whole order. There are compelling indications that the only appointment of Perpetual under the order was as an administrator in respect of the balance of the settlement sum for Ms Thompson. This is primarily because the application for the appointment as administrator was made in reliance on s 245 of the GAA, and therefore s 12 of the GAA, and there was no necessity for Perpetual to seek appointment as a trustee, if it were appointed as an administrator. In addition, Perpetual consented only to appointment as an administrator. That is not determinative, but it is part of the context of the proceeding. Although the court had the power to make the appointment of Perpetual both as an administrator and a trustee in respect of the balance of the settlement sum, the court was not asked to exercise its inherent jurisdiction to appoint Perpetual as a trustee and there did not appear to be any matter raised in the course of the hearing of the application that suggested that there was any contemplation by those acting on behalf of the plaintiff or by the court that appointment of Perpetual as anything other than an administrator for a financial matter for Ms Thompson was required by the order.
[47] The critical appointment made in paragraph 3 of the order was of Perpetual and Mr McDonald as joint administrators pursuant to the GAA. Paragraph 4 of the order reflects the exercise of the court's power under s 59 of the PTA to direct payment of the settlement sum otherwise than to the Public Trustee. Paragraph 4(c) of the order expressly ordered the balance of the settlement sum to be paid to the administrators who under the preceding paragraph of the order have been appointed under the GAA. The direction in paragraph 5 of the order was not strictly necessary as the administrators had the power to make the stipulated payment without an express court direction. The direction was consistent, however, with an appointment as administrators.
[48] The first part of paragraph 6 of the order appointed Perpetual and Mr McDonald as managers to take possession of and control and manage all financial matters of Ms Thompson relating to the settlement sum. Strictly speaking, such an appointment was unnecessary, because of the effect of s 33(2) of the GAA. In any case appointment as a manager to take possession of and control and manage money on behalf of another person does not itself create a trust: Clay v Clay (2001) 202 CLR 410, 428-429. Although paragraph 6 of the order went on to direct the administrators to "hold the same in trust for the Plaintiff absolutely", that needs to be considered in respect of the appointments made by the order. Paragraphs 3 and 4 of the order had already provided for the payment of the balance of the settlement sum to the administrators, as appointed under the GAA. The other appointment of the administrators as managers made in paragraph 6 of the order did not alter that appointment. In the circumstances, there was looseness of language in the use of the word "trust" in the second part of paragraph 6 of the order. In context, however, it does not amount to the creation of a trust or the vesting of the balance of the settlement sum in the administrators as trustees. All that paragraph 6 of the order emphasised was that the administrators must possess and use the balance of the settlement sum for Ms Thompson. Paragraph 7 of the order is consistent only with the appointment of Perpetual and Mr McDonald as administrators.
[49] The proper construction of the order made on 5 December 2001 in the context in which it was made and on analysis of the language of the order is that Perpetual was appointed as an administrator under the GAA of the balance of the settlement sum. The answer to question 1 is that the fund held by Perpetual pursuant to the order made on 5 December 2001 is held by Perpetual as an administrator and not as a trustee.
The Tribunal's power in relation to Perpetual's remuneration
[50] This requires the relationship between s 48 of the GAA and s 41 of the TCA to be considered. Section 48 of the GAA provides:
"48 Remuneration of professional administrators
(1) If an administrator for an adult carries on a business of or including administrations under this Act, the administrator is entitled to remuneration from the adult if the tribunal so orders.
(2) The remuneration may not be more than the commission payable to a trustee company under the Trustee Companies Act 1968 if the trustee company were administrator for the adult.
(3) Nothing in this section affects the right of the public trustee or a trustee company to remuneration or commission under another Act."
[51] The commission chargeable by a trustee company is set out in s 41(1) of the TCA:
"(1) In respect of every estate which is, after the commencement of this Act, committed to the administrator or management of a trustee company as executor, administrator, trustee, receiver, committee, guardian, liquidator of official liquidator or in any other capacity, the trustee company shall be entitled to receive, in addition to all moneys properly expended by the trustee company and chargeable against the estate, a commission at a rate to be fixed from time to time by the board of directors of the trustee company but not in any case exceeding, after discounting for any GST payable on any supply the commission relates to -
(a) $5 for every $100 of the capital value of the estate; and
(b) $6 for every $100 of the income received by the trustee company on account of the estate."
It is also relevant to consider s 41(7) of the TCA:
(a) the payment of any commission which a testator in his or her will or a settlor has directed to be paid;
(b) the payment of any commission or fee which has been agreed upon between the trustee company and the parties interested therein;
either in addition to or in lieu of the commission provided for by this section."
[52] A trustee company is also entitled to charge and receive fees for work and services, in addition to the commission and other moneys specified that it is entitled to receive under s 41 of the TCA. Work and services that are specified in s 45 of the TCA include arrangement of insurances, acting as real estate agent in the sale of any property, preparation of income and land taxation returns and inspection and report upon real and personal estate.
[53] The High Court in Willett made a number of observations on the operation of s 48 of the GAA. The court stated at 634-635 [25]:
"It will be noted that s 48(1) provides that an administrator carrying on a business of or including administrations under the Guardianship Act is entitled to remuneration if the Tribunal so orders. Although s 48(1) is cast in the language of entitlement, two related negative implications must be drawn from the language. First, an administrator appointed under the Guardianship Act is entitled to remuneration only if an order is made that authorises the administrator to charge for the services provided. Secondly, the amount of the charges that are levied must be determined in the manner prescribed by the order authorising the administrator to charge for services or by some subsequent order varying that authority. That is, an administrator may make no charge for remuneration (as distinct from a claim for reimbursement of reasonable expenses actually incurred (s 47)) without an order that authorises both making the charge and its amount. And the Act makes plain, by s 48(2), that the amount of remuneration that may be allowed is limited to the amount of commission payable to a trustee company under the Trustee Companies Act. It will be necessary, therefore, to examine the provisions of the Trustee Companies Act that limit the amount of commission that a trustee company may charge. Before doing that, however, it is necessary to deal with two other aspects of the Guardianship Act: some provisions of Pt 2 of Ch 4 which deal with particular functions and powers of administrators, and provisions which deal with what the heading to Pt 2 of Ch 11 calls the "Relationship with Court Jurisdiction".
[54] The High Court observed (at 636[29]) that the order appointing Perpetual as administrator in Willett did not provide that Perpetual might charge remuneration for its services as administrator. The court then observed at 637[31]:
"The amount of remuneration to be allowed to Perpetual not having been fixed in the compromise order, the assessment of the damages to be allowed on account of 'reasonable management fees' required consideration of the legislation governing that subject. As noted earlier, s 48(2) of the Guardianship Act directed attention to the amount of commission payable to a trustee company under the Trustee Companies Act. As it happens, Perpetual is a company identified as a trustee company in the Trustee Companies Act and its power to charge remuneration is therefore regulated by that Act. It should be noted, however, that s 48 of the Guardianship Act applies to any administrator who carries on a business of or including administrations under that Act, not just trustee companies."
[55] That the High Court had formed the view in Willett that s 48 of the GAA governed Perpetual's remuneration was confirmed by the reference at 644[54] to "the relevant statutory limitations on the remuneration that might be charged".
[56] Perpetual submits that there are a number of aspects of the question of Perpetual's remuneration which are not addressed by the terms of the second question. The example is given that the question posed by the Tribunal can be answered without necessarily answering the distinct, but related question, as to whether the making of an order by the Tribunal pursuant to s 48 of the GAA is a prerequisite for an administrator to charge any remuneration whatsoever on any basis. Putting that issue aside, the submission is made by Perpetual that s 48(2) should not be construed, as limiting a trustee company that acts as an administrator under the GAA to commission under s 41(1) of the TCA and as prohibiting the trustee company to claim additional remuneration under other provisions of the TCA, such as s 41(7)(b) and s 45 of the TCA.
[57] Perpetual's submissions acknowledge that there are obiter dicta in the judgment of the High Court in Willett that indicate that no administrator appointed pursuant to the GAA has any entitlement to remuneration whatsoever unless an order is made pursuant to s 48 of the GAA authorising both the charging of remuneration and the quantum of the remuneration. Perpetual submits that these observations of the High Court were not essential to the decision of the High Court in Willett and did not extend to an analysis of the effect of s 48(3) of the GAA. Perpetual submits that, when effect is given to s 48(3) of the GAA, question 2 should be answered "Yes".
[58] The Public Trustee submits that the proper construction of s 48 of the GAA is that an administrator that carries on a business of or including administrations under the GAA (which includes a trustee company) is entitled to remuneration, if the Tribunal so orders, but that remuneration is limited to the commission payable to a trustee company under the TCA. The Public Trustee submits that the observations of the High Court in Willett at 634-635[25] provide the correct statement as to the operation of s 48 of the GAA, subject to the rights expressly reserved by s 48(3). The Public Trustee therefore submits that the answer that should be given to question 2 is "No".
[59] There are two aspects to the second question posed by the Tribunal. The first aspect is whether the Tribunal has power under ss 48(1) and (2) of the GAA to deal with the issue of Perpetual's remuneration as administrator. If there is power, the second aspect is the extent of that power.
[60] It was contemplated in the QLRC Report 49 that the Public Trustee or a trustee company under the TCA would be eligible for appointment as an administrator for a financial matter for an adult with impaired capacity for that matter. There was nothing in the QLRC Report 49, however, about the remuneration of administrators. Section 14 of the GAA implemented the recommendation that the Public Trustee or a trustee company be eligible for appointment as an administrator. The GAA places both the Public Trustee and a trustee company in a different position to other administrators in that under s 28 of the Act other administrators are subject to periodic review of appointment. The appointment of any administrator (including the Public Trustee or a trustee company) is reviewable by the Tribunal under s 29 of the GAA, but there is no review by the Tribunal under s 28 of the GAA of the appointment of the Public Trustee or a trustee company. The only other provision of the GAA in which a reference is made to a trustee company is s 48 of the GAA.
[61] The charges that could be made by a trustee company were already regulated under Part 4 of the TCA at the commencement of the GAA. Although s 48(1) of the GAA does not expressly exclude trustee companies (or the Public Trustee for that matter) from its operation, s 48(2) puts a ceiling on the remuneration that can be approved by the Tribunal for an administrator that carries on a business of or including administrations under the GAA (such as a lawyer or an accountant) equivalent to the commission payable to a trustee company under the TCA, if the trustee company were administrator for the adult. Section 48(2) of the GAA in its terms is not directed at a trustee company that acts as administrator for an adult under the GAA. It is the commission payable to a trustee company which is the benchmark for the remuneration of professional administrators under s 48 of the GAA.
[62] The position is then sought to be clarified by the reservation in s 48(3) that nothing in s 48 of the GAA affects the right of the Public Trustee or a trustee company to remuneration or commission under another Act. Section 48(3) of the GAA expressly recognises that the remuneration of a trustee company that acts as an administrator under the GAA is regulated by another Act (which must be taken to be a reference to the TCA). The construction issue relating to s 48 of the GAA that needs resolution is whether the effect of s 48(3) is to leave the remuneration of a trustee company that is acting as an administrator under the GAA to be regulated by the TCA, and thereby excludes the operation of ss 48(1) and (2) of the GAA when a trustee company is an administrator under the GAA.
[63] The High Court in Willett treated (at 643 [52]) the existence of provisions such as s 48 of the GAA and Part 4 of the TCA as relevant to the assessment of damages that was the issue in the appeal:
"Assessing what remuneration and expenses are properly charged or incurred by an administrator requires consideration of the relevant statutory limitations on those charges. It does not depend only upon identifying whether Perpetual's proposed fees and charges are less than those that the Public Trustee would be entitled to charge. As noted earlier, however, no reference was made to the relevant statutory provisions either at first instance or on appeal to the Court of Appeal and there is no evidence that would reveal how the relevant statutory limitations would apply."
[64] The analysis that the High Court made of s 48 of the GAA was not complete without reference to s 48(3) of the GAA. The issue that is raised by question 2 in this proceeding was not the focus of the appeal to the High Court in Willett. The issues raised by question 2, however, require all subsections of s 48 of the GAA to be considered in determining the construction to be given to s 48 of the GAA.
[65] In taking into account the clear statement made in s 48(3) of the GAA, I have concluded that the reservation in s 48(3) excludes the operation of ss 48(1) and (2) of the GAA, when a trustee company (or the Public Trustee) has been appointed an administrator under the GAA. The proper construction of s 48 of the GAA is that it does not apply to the remuneration of the Public Trustee or a trustee company where such an entity is acting as an administrator of an adult under the GAA. The first aspect of question 2 as to whether the Tribunal has power under s 48(1) of the GAA to deal with the issue of Perpetual's remuneration as administrator should therefore be answered in the negative. On that basis it is unnecessary to consider the second aspect of the question. It also results in question 2 being answered "The remuneration of Perpetual as an administrator for an adult under the GAA is not regulated by s 48 of the GAA".
[66] The issue is whether a person who is the litigation guardian of another person who was under a legal incapacity pursuant to r 95 of the UCPR has authority by virtue of the role of litigation guardian to enter into a binding agreement under s 41(7)(b) of the TCA on behalf of an incapacitated adult with a trustee company about the amount of remuneration payable to the trustee company in its role as administrator for the adult.
[67] Perpetual submits that agreement as to an administrator's fees is so closely connected with the disposition of an incapacitated plaintiff's damages from the litigation that it is within the scope of the authority of the litigation guardian to enter into that agreement on behalf of the plaintiff.
[68] The extent of the authority of a litigation guardian is found in r 93(2) of the UCPR. Subject to what else is provided for in the rules, the litigation guardian is able to do "anything in a proceeding (including a related enforcement proceeding) required or permitted by these rules to be done by a party." Fees payable to an administrator are expended from the settlement sum after the proceeding has concluded. Even if the litigation guardian enters into the agreement for services with the proposed administrator before the sanction of the settlement, the agreement relates to services to be provided after the settlement has been sanctioned and the proceeding concluded. The answer to question 3 is therefore "No".
Can remuneration be authorised retrospectively?
[69] Question 4 implicitly assumes that the Tribunal has power to authorise the remuneration paid to Perpetual as administrator for Ms Thompson under s 48 of the GAA. In view of my conclusion on the construction of s 48 of the GAA set out in dealing with question 2, it is unnecessary to answer question 4.
Can conflict transactions be authorised retrospectively?
"An administrator for an adult may enter into a conflict transaction only if the tribunal authorises the transaction, conflict transactions of that type or conflict transactions generally."
The meaning of "conflict transaction" is defined in s 37(2) of the GAA.
[71] Perpetual argues that although s 37 is silent on the question of retrospective authorisation, to limit its operation to prospective authorisation would be to impose a fetter which is not found in the words of the provision. Perpetual submits that, unlike the interpretation given to the word "only" where it occurred in s 459G(2) of the Corporations Law in David Grant & Co Pty Ltd v Westpac Banking Corporation [1995] HCA 43; (1995) 184 CLR 265, 276-277 (David Grant), the word "only" in s 37 of the GAA indicates that the authorisation of the Tribunal is mandatory and not that the authorisation must precede the conflict transaction.
[72] The Public Trustee argues that the nature of s 37 of the GAA is not procedural, but is a matter of substantive law. The Public Trustee refers to ss 58, 59 and 60 of the GAA and submits that if s 37 of the GAA could be applied retrospectively in the manner contended for by Perpetual that would remove the rights of the adult to compensation for breach of Perpetual's obligations, in the absence of the prior authorisation by the Tribunal of the conflict transaction.
[73] The provision that was considered in David Grant was included in the Corporations Law in a package of amendments that was designed to reform the law relating to corporate insolvency (David Grant at 270). Section 459G(2) of the Law was construed in the context of this legislative scheme. It was held (at 276-277) that the temporal requirement in ss 459G(2) and (3) defined the jurisdiction of the court in respect of an application to set aside a statutory demand and that the time limit of 21 days for making the application to set aside the statutory demand was integral to the operation of other provisions that depended on that time period, such as the statutory presumption of insolvency. The High Court in David Grant unanimously construed the requirement in s 459G(2) that "An application may only be made within 21 days after the demand is so served" as imposing a time requirement that was an essential condition to the right to apply to set aside a statutory demand that was not able to be supplemented by recourse to the general provision in the Law that conferred on the court the power to extend the time for doing any act or taking any proceeding under the Law.
[74] There is no doubt that best practice requires an administrator to apply for authorisation under s 37(1) of the GAA before entering into a conflict transaction. That is different, however, from finding that there is no power in the Tribunal to give authorisation retrospectively for entry into a conflict transaction, if the administrator applies for authorisation after entering into the transaction. It is a matter of construction of s 37 in the context of the GAA.
[75] The language of s 37(1) suggests that the authorisation of the Tribunal to a conflict transaction should be obtained before entry into the transaction. It does not expressly exclude the authorisation being given after the entry into the transaction, unless that is the effect of the use of the word "only". What is important about s 37 in the scheme under the GAA is that the conflict transaction is authorised by the Tribunal. Note the discussion in QLRC Report 49 at pp 295-297. In contrast to the legislative scheme that was under consideration in David Grant, s 37 of the GAA does not incorporate any detailed provisions for the making and timing of the application for the authorisation of the conflict transaction or attempt to address the situation where the proposed conflict transaction itself is affected by time constraints that preclude obtaining the authorisation of the Tribunal before the opportunity to enter into the conflict transaction passes.
[76] Sections 58, 59 and 60 of the GAA are found in the same chapter of the GAA as s 37. This chapter deals with functions and powers of guardians and administrators. Sections 58, 59 and 60 can apply to matters other than conflict transactions. If s 37 is construed so as not to preclude retrospective authorisation by the Tribunal, the right of an adult to compensation under s 59 of the GAA for the administrator's failure to comply with the GAA is not complete in respect of the failure of an administrator to obtain the authorisation of the Tribunal to a conflict transaction, until the possibility of retrospective authorisation has been exhausted.
[77] The proper construction of s 37(1) of the GAA is that the word "only" applies to the requirement to obtain the authorisation of the Tribunal to a conflict transaction, but does not make it mandatory for that authorisation to be obtained prior to entry by the administrator into the conflict transaction. That does not mean that it will not be a relevant consideration to the Tribunal in considering whether or not to give the authorisation that the administrator failed to seek the authorisation prior to entering into the conflict transaction.
[78] The answer to question 5 is therefore "Yes" and the power to authorise retrospectively conflict transactions is found in s 37 of the GAA.
[79] The questions of law are answered as follows:
[80] I will also direct that the Registrar of this court inform the Registrar of the Tribunal of the answers to the questions set out in originating application in this proceeding and provide the Registrar of the Tribunal with a copy of these reasons.
[81] At the hearing of the application, the parties requested an opportunity to make submissions on costs after the reasons were published. It is appropriate that the parties be given that opportunity.
Guardianship and Administration Tribunal
Perpetual Trustees Qld Ltd
(2005) 64 NSWLR 58
(2001) 202 CLR 410
(1995) 184 CLR 265
(2005) 221 CLR 627