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[2011] NSWSC 293
Supreme Court of NSW
2011-04-04
Original judgment source is linked above.
The Application 1HIS HONOUR: Having regard to the legal status of the Defendant as a protected person, at the outset, I make an order prohibiting the publication, or disclosure of the name of the parties (other than the Applicant), or any details from within the court file, or from the evidence in the proceedings, that either identifies, or tends to identify, him. I have assigned, to the protected person, who is the Defendant and second Respondent to the Application, the initials "RDO": s 72 of the Civil Procedure Act 2005. 2This is an application, by notice of motion, filed on 4 March 2011, by the NSW Trustee and Guardian ("the NSW Trustee"), seeking the removal of the first Respondent to the Application, as manager of the estate of RDO, and for the appointment of the NSW Trustee in his place. Other orders, relating to the filing of accounts, transferring assets to the NSW Trustee, delivery of documents and for costs are also sought. 3On 1 July 2009, the NSW Trustee and Guardian Act 2009 commenced. The Public Trustee Act 1913 (NSW) was repealed and the office of the NSW Trustee was created to carry out the functions of the Public Trustee. The Protected Estates Act 1983 (NSW) was also repealed, but was, substantially, re-enacted in the NSW Trustee and Guardian Act . 4The first Respondent did not appear on the hearing of the notice of motion. RDO appeared, by a solicitor, Mrs L White, at the hearing. I was informed by Mrs White that RDO did not object to the relief sought in the notice of motion. However, it may be that an application will be made, in the not too distant future, on his behalf, under s 86 of the Act.
Background 5The first Respondent is the brother of RDO. 6RDO was born in September 1954. In September 1993, he was admitted to Liverpool Hospital following a motorcycle accident, as a result of which he suffered severe traumatic brain injury and various fractures. He was unconscious for 17 days and had a period of post-traumatic amnesia lasting 5 months. 7On 2 October 1997, this Court made orders that RDO's estate be subject to management under the provisions of the Protected Estates Act . Subject to the giving of security to the satisfaction of the Protective Commissioner, the first Respondent was appointed as manager of the estate of RDO, to act in relation thereto under the order and direction of the Court. 8In 1998, the NSW Trustee (which was then the Protective Commissioner) received, for RDO, an amount of about $2.49 million, being the proceeds of a personal injury claim arising from the injuries sustained by RDO in the motorcycle accident. 9After payment of legal costs, settlement of a family law property settlement between RDO and his former wife, the purchase of a car, repayment of a loan to RDO's parents, and also repayment of the amount due under a mortgage to St George Bank, there remained $1,782,187. 10On 12 October 2008, the NSW Trustee approved and authorised an investment proposal by the first Respondent. That proposal involved investing $1.7 million in AMP investment funds. The balance (about $82,000) was retained for the use and benefit of RDO. It has been spent, since that time, on RDO's needs. 11As at 30 June 2007, RDO's estate was disclosed as consisting of: (a) A property at Bringelly, NSW ($750,000) (in which RDO and his wife currently reside); (b) A car ($35,000); (c) CBA Pensioner Security account ($5,766); (d) BT Super Wrap - Allocated Pension ($1,079,823); (e) RDO Superannuation Fund ($739,985). 12There were also disclosed some liabilities, in all, about $14,400. 13RDO's annual income was then estimated to be $71,093, whilst his annual expenditure was about $118,971. 14The first Respondent has not lodged accounts for the financial years ending 2007, 2008, 2009 and 2010. Various reminder letters have been forwarded to him to no avail. When contact was made, the first Respondent sought, and the NSW Trustee granted an extension to file the accounts by 28 February 2010. 15The accounts have still not been filed. 16On 22 December 2010, the NSW Trustee received certain information from RDO's sister, regarding the first Respondent. 17On 22 December 2010, a representative of the NSW Trustee sent an email to the first Respondent requesting information about the current balance of RDO's superannuation account. The first Respondent replied that the balance of the fund was $901,383.80. 18Further investigations, subsequently carried out by the NSW Trustee, have revealed that the balance of the BT Super Wrap - Allocated Pension account, as at 4 January 2011, was about $8,615. The investigations also reveal that that there have been a number of redemptions of funds, and withdrawals in cash, from that account. Payments have, apparently, been made to a company, JRCC Finance Pty Limited, of which the first Respondent is the sole director and secretary. 19No documents are currently available, which set out the amounts in the other accounts referred to above. 20Various attempts by the Applicant to contact the first Respondent, since December 2010, have proved fruitless, although Mrs Wright states that there has been some contact between the Respondents.
The Hearing 21As previously stated, the first Respondent did not appear at the hearing. I am satisfied that he was served, on 10 March 2011, with the notice of motion and the affidavit sworn 3 March 2011 of John Falconer (on behalf of the NSW Trustee). 22The first Respondent did not appear on the return date of the Notice of Motion (23 March 2011) and he has not responded to any requests made, since that time, to contact a representative of the NSW Trustee. 23The matter was called outside the Court today, but there was no appearance. 24When I enquired of the steps taken to inform the first Respondent of today's hearing, Ms Phang filed, and read, an Affidavit setting out the attempts made to inform him of the hearing today. 25Mrs White also informed me that RDO had instructed her that the first Respondent had told him that he had no intention of appearing at Court. 26In any event, I am satisfied that the matter should proceed today, even though there has been no appearance, by, or on behalf of, the first Respondent. 27In support of the application, Mrs White tendered a copy of a letter, dated 31 March 2011, from debt collectors, addressed to RDO, informing him that water rates ($1,296.83) on the Bringelly property are outstanding.
Consideration 28There can be no doubt that the court has the power to remove the first Respondent as manager of RDO's estate and to appoint the NSW Trustee in his place: s 41(2) and s 64 of the NSW Trustee and Guardian Act ; s 47(1)(b) of the Interpretation Act 1987 (NSW); MB v Protective Commissioner [2000] NSWSC 717; 50 NSWLR 24; Application of J & K, Re [2009] NSWSC 1453 at [4].) 29Although not regarded as rules, or even guidelines, the framework within which the court approaches a matter such as this are: (a) An application to remove the financial manager is one that invites the exercise of a judicial discretion. That discretion is conferred on the court in the exercise of a special jurisdiction. It derives from legislation. It must, therefore, be exercised keeping in mind the purposes of that legislation. The general principles, set out in s 39 of the NSW Trustee and Guardian Act should be remembered. Particularly relevant to this case are the matters in s 39(a), (d) and (e). (b) The abiding rule in the exercise of powers under the Act is the achievement of best interests of the managed person; the court's overriding duty is to see that the managed person's estate is so managed as to serve the protected person's best interests. (c) An application for the removal of a person validly appointed as a manager, will not invoke the same discretion as the initial appointment of such a person, or another, as manager. As in any application, it will normally be necessary, at least forensically, for the party seeking a change in the status quo to show some reason why the court should so order. (d) It is not necessary for the applicant to establish that the relevant respondent has misconducted herself, or himself, or that she, or he, has not acted competently in the management of the estate. However, where it is shown that a person appointed as manager is incompetent or has acted in a relevant way improperly, or unlawfully, the Court may terminate the appointment and appoint another manager. (e) A change of manager involves disruption, and, invariably, involves expense. This is a matter that also should be considered. 30I remind myself, also, that when exercising the discretion, the Court bears in mind that, ordinarily, members of the community consider that an outside manager is a measure of last resort: see Re M (1987) 2 VAR 213; Re R [2000] NSWSC 886 at [32]. 31In Re L [2000] NSWSC 721, at [7] and [12], Young J (as his Honour then was) recognised that a responsible family member will often be best placed to manage an incapable person's affairs provided there are minimal conflicts of interest or, if there are conflicts of interest, that they are properly dealt with. 32In Holt v The Protective Commissioner (1993) 31 NSWLR 227, Kirby P (as his Honour then was), with whom Sheller JA and Windeyer AJA agreed, identified the advantages to a protected person of having a family member appointed as manager of his estate as including: "(b) to the appointment of a family member, the following advantages: ... (ii) the capacity of the protected person, if disabled, to interact with his or her manager so that, so far as possible, within the disability which has led to the appointment, such person may remain in charge of, or at least able to influence, the broad directions of the management of the estate; (iii) the ingredient of love and affection and unquestioning devotion to the protected person which an appropriate family member can add to the task of management. Whilst the office of manager is, by its definition, concerned with proprietary and financial matters and involves the prudent control of the property and like interests of the protected person, in the nature of things the manager of the estate of a protected person is more likely than a general trustee or receiver to become involved in decisions which affect the protected person's quality of life. A lifetime knowledge of the person and a devotion to his or her interest may contribute to that quality. It may more readily be secured by the appointment as manager of a family member with the requisite knowledge and motivation." 33In Holt , the Court of Appeal rejected the principle that the person applying for a change of manager bears the onus of demonstrating a "clear and convincing" case that the form of management proposed would better advance the interests of the protected person than the existing arrangements. In relation to onus of proof, as stated above, the Court put it no higher than saying that, generally, a person who seeks the removal of a manager needs to show "some reason" why the Court should so order (at 241). 34Before making any orders, I must be satisfied that to make such orders are in the best interests of RDO. If I come to that view, I am "duty bound" to revoke the order previously made and make another order. 35The "reasons" advanced, in this case, by the Applicant, are the delinquency of the first Respondent in lodging the accounts, and, more importantly, what appears to be a significant loss of funds from RDO's superannuation account. 36The alleged breaches of the first Respondent's duties as financial manager, if proved, are relevant to the present application, as showing that the first Respondent is unfit to remain as the financial manager. 37Whilst it may not be necessary to make definitive findings on the alleged breaches, the first breach has been established, since the accounts have not been filed. Prima facie, at least, the second breach appears to have been established, and that breach, unless satisfactorily explained, would be sufficient to demonstrate that the first Respondent is unfit to continue as the financial manager of RDO's estate. 38In the present application, I have not had the benefit of hearing any explanation from the first Respondent. However, on the material currently before me, I am satisfied that there is an available basis for a change of the financial manager of RDO. I am also satisfied that I should make orders of the type sought by the Applicant. Finally, I am satisfied that to make such orders are in the best interests of RDO. 39In the circumstances, I make the following orders: (a) The first Respondent be discharged from the office of manager of the estate of RDO. (b) The management of the estate of RDO be committed to the NSW Trustee & Guardian. (c) The first Respondent shall, within 14 days of service of these orders upon him, hand over and transfer the estate of RDO to the NSW Trustee & Guardian. (d) The first Respondent shall, within 14 days of service of these orders upon him, hand over all documents relating to the administration of the estate of RDO to the NSW Trustee & Guardian. 40I reserve costs of today's application. I do so because the allegations against the first Respondent are serious. He should if he wishes, file evidence in response, at which time, consideration of the costs of the notice of motion can be determined. 41I stand the proceedings over to the Protective List on Monday, 18 July 2011.
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 16 April 2012
Holt
The Protective Commissioner