Holt v The Protective Commissioner

The Application 1HIS HONOUR: This is an application, by notice of motion, filed on 7 October 2010, by the NSW Trustee and Guardian ("the NSW Trustee"), seeking the removal of the first Respondent as manager of the estate of the second Respondent, a managed person (whom I shall call "A"), and for the appointment of the NSW Trustee in her place. Other orders, relating to the filing of accounts, transferring assets to the NSW Trustee, and for costs are also sought. 2On 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 The Public Trustee Act 1913 (NSW), was repealed and the office of the NSW Trustee was created to carry out the functions of the Public Trustee. The Protected Estates Act 1983 (NSW) was also repealed, but was substantially re-enacted in the NSW Trustee and Guardian Act . 3The first Respondent does not appear but has informed the Court, by letter, that she opposes the application and, for her part, seeks an opportunity to lodge the outstanding accounts. I shall return to the first Respondent's precise application later. There is no appearance for A at the hearing today. Background 4The first Respondent is the natural mother of A. A was born in November 1978. At the age of about 8 months, A had an adverse reaction to triple antigen, which resulted in her convulsing. At that stage, she had uncontrolled epilepsy with ongoing seizures. The consequence of her epilepsy and presumed underlying brain damage has been marked developmental impairment. 5On 19 October 2000, this Court made orders that A'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 A, to act in relation thereto under the order and direction of the Court. 6A remains incapable of managing her estate. 7A has been in the care of the first Respondent since her birth. She has had sporadic contact with the man believed to be her father. 8Prior to her appointment as the manager of A's estate, the first Respondent gave a written undertaking to the court, on 26 July 2000, that in the event of being appointed Private Manager, she would "duly carry out the terms of the order appointing her and would duly comply with any future order, direction or authority, given by the court". 9On 1 December 2000, the NSW Trustee (which was then the Protective Commissioner) received for A, an amount of about $329,688, which was a pecuniary legacy paid out of the estate of A's grandmother. 10A's estate now consists of cash in bank, or amounts held on term deposit. The total amount held is in the order of $259,161. 11There is no dispute that the first Respondent has not lodged accounts for the financial years ending 2007, 2008, 2009 and 2010. 12(I mention in passing, that the Applicant made a similar application in March 2007, but that application did not proceed as the first Respondent complied with the Protective Commissioner's requirements to submit the accounts that had not been filed. Those accounts were perused and were appropriate for passing. The application was then withdrawn.) 13In an affidavit sworn on 2 November 2010, by the first Respondent, she states: "2 I live with my children A ... and my aunt ... at Lennox Head, NSW. 3 A is autistic and epileptic. [My aunt] is aged 83, has recently broken her hip and suffers dementia and respiratory infections and is in the palliative stage of care. 4 In the last few weeks I have been forced to vacate my former home of 26 years at Blue Seas Parade as a consequence of Equititrust, as mortgagee, exercising a writ of possession related to a loan in default. 5 The court proceedings which culminated in the exercise of the writ of possession were protracted and particularly stressful and I had the additional responsibility of caring for my daughter and aunt and the burden of ensuring they would be appropriately accommodated. 6 Several stays of the writ were granted but when the court handed down its decision on 18 October 2010 and the writ became effective, I was given controlled access over just a few days from 20 October to 22 October to relocate my invalid aunt ... and daughter as well as remove all of our possessions from Blue Seas Parade. 7 During the rushed move I misplaced various documents including the court documents relating to these proceedings. ... 10 I acknowledge that I have not lodged accounts for the period 1 July 2006 to 30 June 2010. I sincerely regret that this situation has arisen. 11 I have cared for A as an unpaid carer for the first 32 of her 33 years. I have recently applied and been granted a carer's pension. ... 14 I undertake to provide the Office of the NSW Trustee and Guardian with the outstanding accounts. 15 It will be apparent to all involved that the sum of the funds available to A is modest and insufficient to meet her actual expenses for food, shelter and clothing let alone entertainment and outings. 16 Notwithstanding my failure to provide periodic accounts for the last four periods, I believe the most cost effective way of managing A's estate is for me to remain as manager. 17 The moneys in my control as manager are secure as the affidavit of Timothy Noel Morris sworn 21 September 2010 indicates. 18 I would be most grateful and appreciative for both A and myself if the Court could give me time to complete the outstanding returns. 19 Both A and myself would have been present for this hearing but the legal costs associated with the Equititrust matter and the costs of relocating have exhausted all my available funds." 14At the date of hearing today, just over 3 months since this affidavit was sworn, no accounts have been provided. The Hearing 15As previously stated, the first Respondent did not appear at the hearing of the application. On 7 February 2011, there was sent to the court, a letter addressed to me, which stated: "I refer to the above matter and sincerely regret that it will not ber [sic] possible for me to attend the Directions Hearing listed for tomorrow at 9.30am. Infortunately [sic] I can not afford legal representation for this matter at this time. I am 56 years old and sole carer for my daughter A, now 32 years old. This is a demanding role 24 hours a day, seven days a week. There is no scheduled respite and in the last 11 years there has been only the occasional night off - usually for court appearances or business meetings. For the past few years I have also been a carer for my aunt since she was diagnosed with dementia. Since December 2009 this became a full time caring role. My contributions became also full time helping her realize her desire to pass away at home. She died on the 2 nd December 2010 and now I find that I am responsible for going through all of her possessions and paperwork to aid in the application for probate. Given that ... shifted to my house and then we all had to relocate to her house the paperwork has been moved with all of mine - A's included. Complicating time, effort and also finances has been a Supreme Court Case which has been running since October 2009 and recently resulting in an Mortgage property Possession. This was an extensive task involving the very hasty relocation of a 30 year rural residence, numerous possessions and pets. This also involved an ambulance for the relocation of my aunt. There were too many tasks for me to perfprm [sic] all personally and unfortunately my office and all of my documents were packed into boxes and then moved by others. I have not been able to successfully reconstruct my files since then. They are stored in a shed in Ballina (15kms) amongst 300 other tubs and cartons. I will be able to complete the requirements of the NSW Trustee and Guardianship Tribunal given time. I have had a very harrowing and emotionally exhausting year. My zest and energy levels are quite depleted and I still must give my all to the care of A and my other child ... who is 17y.o. I would, along with A, be very appreciative if a further 3 months could be given for the completion of the required accounts. I have already sent most materials to the accountant and I am now awaiting further details for their completion and subsequent submission to the NSW Trustee and Guardianship Board for approval. My apologies again for not being able to complete the required tasks and also for not being in a position to represent myself or have legal representation." 16Finally, I note that there was evidence that when the first Respondent was appointed, it was A's wish that her estate be managed by the first Respondent. 17At the hearing of the application, Ms C Phang, on behalf of the Applicant, agreed that the matter ought to proceed upon the basis that I treat the contents of the letter as setting out the factual basis for the first Respondent's application to extend the time for filing the accounts. The first Respondent's letter was marked as an exhibit. 18There can be no issue that the court has the power to remove the first Respondent as manager of A's estate and to appoint the NSW Trustee in her 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 [2009] NSWSC 1453 at [4].) 19Although not regarded as rules, or even guidelines, the framework within which the court is to approach a matter such as this is: (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) Ordinarily, a person who would face a conflict of interest and duty would not be appointed a manager of a managed person's estate. However, such a conflict does not, necessarily, present an absolute bar to appointment as a manager, for otherwise, this would exclude from consideration a range of family members in every other way appropriate. 20The value of A's estate is small. 21I accept that there are inherent advantages in A's estate being continued to be managed by a family member, with appropriate advice or expertise, rather than by a statutory body, particularly if the estate is of modest size, if there is no conflict of interest and duty, and where a relationship of love and affection between the respondent and the managed person is established. 22I 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 (1988) 2 VAR 213; Re R [2000] NSWSC 886 at [32]. 23In 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. 24In 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." 25In 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). 26The "reason" advanced in this case by the Applicant, is the delinquency of the first Respondent in lodging the accounts. There is nothing else to suggest that she is not fit, proper and competent to remain as the manager of A's estate or that she has any conflicts of interest which preclude, or militate against, her continued appointment. 27It is relevant to remember, also, in this case, that it is in the interest of the managed person for the court's later supervision of her estate to be minimized. It is important to ensure that the financial manager is able to provide for the managed person the service that she needs. 28Before making any orders, I must be satisfied that to make such orders are in the best interests of A. If I come to that view, I am "duty bound" to revoke the order previously made and make another order. 29I am satisfied, in this case, that there is an available basis for a change of the financial manager of A. The Request by the first Respondent 30I turn, then, to consider the first Respondent's request to allow her a further opportunity to lodge the outstanding accounts. Such an application requires her to give a proper, and candid, explanation for the failure to have lodged the accounts. 31Whilst the evidence of the first Respondent may explain the delay in lodging the 2010 accounts, there is no, or at least no adequate, explanation for the failure to lodge the accounts for the earlier three years. 32Importantly, when one considers that the first Respondent lodged the earlier accounts at, or about, the time, the 2007 accounts were due, the failure to do so seems to be even more significant. In this regard, the undertaking given by the first Respondent to the court is important. 33In coming to my conclusion, I have also considered the question of prejudice in acceding to the request of the first Respondent and extending the time for lodging the accounts. As far as I am aware, the Applicant knows the nature and value of A's estate, and how it is held. Indeed, as is acknowledged, the Applicant holds a letter of undertaking from the Manager of the only financial institution in which A's funds are lodged on deposit that it will not release the capital invested on term deposit in the name of A without prior written approval. It has not been suggested that there is anything apparent in the banking records, which have been inspected, to suggest that the accounts are out of order. There is nothing to which I have been referred that shows that A's estate is in jeopardy. 34Very fairly, if I may say, it has been accepted by Ms Phang, that there will be no prejudice if I accede to the first Respondent's request to allow a period of time to prepare the accounts. Nor has it been submitted that to allow the first Respondent a further opportunity would be futile. Conclusion 35Despite having the misgiving that the first Respondent is only prepared to lodge the accounts when she feels like doing so, rather than when she is required to do so, I am of the view that I should allow her one final opportunity to comply with her obligations, and lodge all of the accounts that she is required to lodge. I shall allow her 7 weeks from today, that is until 29 March 2011, to lodge those accounts. (I am not prepared to allow 3 months, since 3 months have already passed from when her affidavit was filed.) 36I order that the first Respondent lodge accounts for each of the financial years ending 2007 to 2010 inclusive in respect of A's estate on or before 29 March 2011. 37I stand the proceedings over to the Protective List on 4 April 2011. 38A copy of the orders should be served on the first Respondent together with a copy of this Judgment. 39I make it clear to the first Respondent that the court will not permit her to continue to breach her obligations and duties as the financial manager. She should remember her responsibilities, including those associated with the undertaking given at the time of her appointment.