Jgn and Cen [2006] WASAT 320 (2 November 2006)

Guardianship and Administration Act 1990 (WA), s 4, s 16,s 4(2)(c), s 64, s 64(1)(a), s 64(1)(b), s 68, s68(3), s68(5) s 70, s 76, s 76(2), s 85, s 85(1)(e), s 86, s 87, s 90, s 117(1), s117(3)(a), s117(3)(b), s 118(1)

Guardianship and Administration Act 1993 (SA), s 46

Guardianship and Administration Act 2000 (QLD), s 48

Public Trustee Act 1941(WA)

The Public Trustee remains the represented person's administrator

Application for Appointment of Administrator in Respect of Mr JKAA

Re E [1993] 12 SR (WA) 7246

1 The Tribunal was asked to review an order for administration for an 80 year old woman in which the Public Trustee had been appointed her administrator.

2 The woman was likely suffering from a dementing illness, could no longer live independently and was being cared for by her son and daughter-in-law in their home.

3 The son lodged the application for review with the Tribunal because he was not satisfied that the Public Trustee was doing an adequate job managing his mother's estate. He had proposed that an accountant take over the role of administrator.

4 The accountant was willing to take on the role of administrator but only on the basis that he be paid for the administration services he would provide.

5 The legislation relevant to the review of the order for administration was the Guardianship and Administration Act 1990 (WA). Under s 117 of that Act remuneration could only be allowed by the Tribunal if it was considered that because of the size or complexity (or both) of the woman's estate, remuneration should be paid to the administrator.

6 The Tribunal found that the woman's estate did not meet the requirements of size or complexity and therefore the accountant was effectively precluded from being appointed the woman's administrator.

7 The Tribunal confirmed the order made on 13 December 2005 which appointed the Public Trustee the woman's plenary administrator. The Public Trustee is entitled to charge fees for the administration under the Public Trustee Act 1941(WA) by virtue of the operation of s 117(3)(a) of the Guardianship and Administration Act 1990.

8 These reasons relate to an application for review of an administration order for JGN by her son CEN. The relevant legislation is the Guardianship and Administration Act 1990 (WA) (the GA Act).

9 JGN (the represented person) is an 80 year old woman who lives with CEN and his wife. She likely suffers from a dementing illness and requires full-time care. She has a daughter, NW who lives outside of Western Australia.

10 CEN and NW were appointed the represented person's plenary administrators by order of the Tribunal on 15 August 2005. The administrators were authorised to expend up to an amount of $350 per annum on gifts on behalf of the represented person.

11 In September 2005, NW sought review of the administration order. The matter was heard on 18 October 2005 and at that hearing CEN admitted he was an undischarged bankrupt, which was contrary to the information he had provided to the Tribunal on the application form for the original administration order.

12 Even had NW not lodged a review of the administration order, the fact that CEN was an undischarged bankrupt would have required the Tribunal to review the order under s 85(1)(e) of the GA Act.

13 The Tribunal revoked the order of 15 August 2005 and made a new order appointing the Public Trustee as the represented person's plenary administrator. The provision for gifting remained as in the original order.

14 In October 2005, NW lodged an application for guardianship for the represented person. In November 2005, the wife of CEN lodged an application for guardianship and an application for review of the administration order.

15 At the hearing on 13 December 2005, both applicants sought leave to withdraw the applications for guardianship and leave was granted by the Tribunal. In respect of the review of the administration, the order of 18 October 2005 was confirmed.

16 On 19 April 2006, CEN lodged an application for review of the administration order made on 13 December 2005.

17 The application was part heard on 11 May 2006 and adjourned to 12 June 2006, to enable KVL, accountant and proposed administrator, to lodge a submission with the Tribunal.

18 A directions hearing was held on 25 May 2006 to deal with the lack of agreement between CEN and the administrator about the insurance cover on the represented person's motor vehicle.

19 On 12 June 2006, leave was granted to hear the substantive review application (s 87 and s 86 of the GA Act). The hearing was attended by CEN, NW, KVL and GM, KA and SC, representatives of the Public Trustee. The decision was reserved.

20 On 22 June 2006, I made my decision to confirm the order of 13 December 2005 appointing the Public Trustee as the represented person's plenary administrator and allowing for gifting of $350 per annum. The order was made for 12 months.

The represented person's capacity and the need for an administrator

21 There is no dispute that the represented person remains a person for whom an administrator could be appointed. She suffers from a cognitive impairment as a consequence of a possible dementing illness diagnosed in early 2005. I find that she satisfies the provisions of s 64(1)(a) of the GA Act in that she is unable, by reason of a mental disability to make reasonable judgments in respect of matters relating to all of her estate.

22 I also find that the represented person is in need of an administrator and cannot have her needs met less restrictively than by the making of an order for administration (s 4(2)(c) and s 64(1)(b)). Her estate requires someone with formal authority to undertake such matters as collecting her income, operating bank accounts, managing property and investing surplus funds.

23 CEN as applicant seeks to have the Public Trustee removed as the represented person's administrator and to have KVL, a Certified Practising Accountant, appointed.

24 CEN raises a number of concerns about the conduct of the Public Trustee as administrator. They are:

Insurance for the represented person's motor vehicle

25 The represented person is the owner of a 1994 Ford Laser hatchback. CEN pays for the day to day running and repairs of the vehicle and the represented person pays for registration and major repairs. It is a requirement of the administrator that the vehicle is insured. To obtain that insurance, prospective drivers must complete a driver's declaration form.

26 In the case of the represented person, CEN and his wife have refused to complete the driver's declaration form as they consider it an unnecessary invasion of their privacy. They have been prepared to obtain insurance on the vehicle and pay the premium themselves. This was not initially acceptable to the administrator as it did not provide for his interest to be registered with the insurance company. This impasse almost resulted in the vehicle being removed from CEN by the administrator but at the hearing the Public Trustee stated that the insurance matter had been settled.

27 CEN points to what he sees as the unnecessary actions of the administrator which almost lead to the motor vehicle not being available for the represented person. CEN expected that the administrator would accept his proposal that he insure the vehicle and pay the premium.

28 CEN says that it is not reasonable that he should have to deal with different trust managers within the office of the administrator. Trust managers are the persons who case manage the estates of represented persons. CEN says that the trust manager has changed three or four times in a five month period of the administration. He cites an example where he says he had agreed an arrangement about the use of the motor vehicle with one trust manager only for that arrangement to be questioned by a subsequent trust manager.

29 CEN submits that the administrator has not adequately secured the represented person's property (her former home) which is vacant. The alarm system of the property is connected to the telephone line which CEN states the Public Trustee has allowed to lapse. The unit contains some of the represented person's furniture.

30 CEN submits that an accountant is able to provide better financial planning advice for the represented person's estate than is the Public Trustee. He says that the Public Trustee is bound by its policies and does not have the flexibility or expertise of an accountant.

31 CEN says that he has to wait too long to obtain approval for expenditure for the represented person. An example is he having had to wait nearly three months to purchase an air conditioner for the represented person's comfort. There is also little flexibility when, for example, clothes or footwear need to be purchased. The Public Trustee takes too long to make funds available and as a consequence special prices can not always be taken advantage of. CEN submits that the Public Trustee is too regulated and is not in tune with its customers.

32 The Public Trustee says that the matter of the insurance for the represented person's car has been finalised to everyone's satisfaction. There had been, however, significant concern that the vehicle was not insured for a period of time.

33 In regard to the represented person's property, the Public Trustee is in the process of arranging for a real estate agent to have it assessed for rental purposes, to bring income into the estate.

34 The Public Trustee has a policy in respect of expenditure for represented persons. For items under $500 a telephone call is sufficient to allow for the funds to be credited to a bank account in a few days. For expenditure between $500 and $1000 one written quote is required and for expenditure in excess of $1000, two written quotes. Ad hoc requests for expenditure are dealt with by the trust manager in the order in which they arrive.

35 The Public Trustee pays from the represented person's pension income $220 per fortnight to CEN for her board and lodging and $250 as an allowance to cover day to day expenses, including outings such as cafes and movies. It is not expected that CEN retain receipts for expenditure from the allowance.

36 In a report prepared by the administrator, the represented person's estate is shown as follows as at 3 May 2006.

37 The represented person is in receipt of the age pension. Her expenses currently exceed her income but this will be rectified, according to the administrator, when her property (unit) is tenanted and rental income is derived.

Submissions as to who should be appointed administrator

38 The Public Trustee is the represented person's current administrator and proposes that appointment be confirmed by the Tribunal.

39 CEN proposes the appointment of KVL, a Certified Practising Accountant. In a letter to the Tribunal dated 6 June 2006 and at the hearing, KVL states that he was approached by CEN to look after the administration of his mother's financial affairs. He states that he is aware of the duties and responsibilities of an administrator and after discussion with CEN would be prepared to act as administrator for the represented person for a fee of $132 per month including GST.

40 NW, the represented person's daughter, prefers that the Public Trustee continue as administrator. She says that she does not know KVL and favours a process where decisions are made according to a defined policy as occurs with the Public Trustee.

41 NW does not propose herself as administrator due to her current ill health.

42 Section 68 is the relevant provision in the GA Act in respect of who may be appointed the represented person's administrator. It reads:

43 "68. Who may be appointed administrator

(1) An administrator (including a joint administrator) shall be -

(a) an individual of or over the age of 18 years; or

who has consented to act and who, in the opinion of the State Administrative Tribunal -

(c) will act in the best interests of the person in respect of whom the application is made; and

(d) is otherwise suitable to act as the administrator of the estate of that person.

(2) The State Administrative Tribunal shall not appoint as administrator a corporate trustee that is a trustee company under the Trustee Companies Act 1987 unless it is satisfied that -

(a) there is an individual who would otherwise be appointed as administrator and that individual has in writing requested the appointment of that trustee company; or

(b) the person in respect of whom the application is made has made a will appointing the trustee company as executor and the will remains unrevoked at the time of the appointment.

(3) For the purposes of subsection (1), the State Administrative Tribunal shall take into account as far as is possible -

(a) the compatibility of the proposed appointee with the person in respect of whom the application is made and with the guardian (if any) of that person;

(c) whether the proposed appointee will be able to perform the functions proposed to be vested in the administrator.

(4) The fact that a person is the guardian of a person does not disqualify him from being appointed as the administrator of the estate of that person.

(5) Except where he is appointed to act jointly with another person or other persons, the State Administrative Tribunal shall not appoint the Public Advocate as an administrator unless there is no other individual or corporate trustee who is suitable and willing to act."

44 Remuneration for an administrator is provided for in s 117 of the GA Act:

45 "117. Remuneration

(1) The State Administrative Tribunal may fix remuneration or a rate of remuneration and order that the same be paid to an administrator out of the estate of the represented person if the Tribunal considers that, because of the size or complexity of the estate or both, remuneration should be paid to the administrator.

(2) A guardian, and except as provided in subsection (1) an administrator, shall not receive remuneration for services rendered to the represented person.

(a) prevents the Public Trustee from receiving remuneration under the Public Trustee Act 1941; or

(b) limits the operation of section 16 of this Act or section 39, 87 or 88 of the State Administrative Tribunal Act 2004.

(4) Subject to subsection (3)(a), a corporate trustee shall only be entitled to commission in respect of the capital of the estate of a represented person to the extent that the State Administrative Tribunal expressly allows."

46 Remuneration is not the same as expenses. Under s 118(1) of the GA Act, an administrator may re-imburse himself for, or pay out of the estate of the represented person, all expenses reasonably incurred in or about the performance of his function.

Appointment and remuneration of an administrator

47 On a reading of s 68 of the GA Act alone it is open for me to find that the proposed appointees, the Public Trustee and KVL, will act in the best interests of the represented person and be otherwise suitable to act as her administrator. The concerns raised by CEN of the Public Trustee's performance as the represented person's current administrator do not, in my view, sufficiently affect the suitability of the Public Trustee so as to rule out his ongoing appointment.

48 In the case of the represented person, however, the issue of the suitability of the administrator cannot be separated from the question of the remuneration of the proposed appointees.

49 The Public Trustee is the represented person's current administrator and is entitled to receive remuneration pursuant to the Public Trustee Act 1941(WA) (s 117(3)(a) of the GA Act).

50 KVL is proposed as administrator on the basis that he is entitled to receive remuneration for his administration work at the flat rate of $132 per month including GST. To receive remuneration (as against re-imbursement of expenses), he must rely upon the operation of s 117(1) of the GA Act which enables the Tribunal to fix remuneration if it is considered that because of the "size or complexity" (or both) of the represented person's estate, remuneration should be paid to KVL as administrator.

51 The represented person's estate is detailed in paragraph [36] of these reasons. As it stands, there are transactions relating to: the represented person's property (payment of rates & taxes, insurance and so on), her motor vehicle (payment of insurance, registration and the management of the use of the vehicle by CEN), payment of board and lodging, payment of the allowance and dealing with ad hoc requests for expenditure. When the property is leased there will be further transactions regarding the management of the tenancy perhaps including the contracting of a real estate agent to deal with the operation of the lease.

52 There is also the ongoing function of financial planning in respect of the represented person's estate inasmuch as the administrator must turn his mind to how the estate is invested from time to time (for example, sell the property or rent the property; how to invest the cash funds).

53 The question for the Tribunal is whether the represented person's estate is of a size or complexity (or both) that would warrant the payment of remuneration should KVL be appointed her administrator (as already mentioned, this issue arises because KVL is not willing to be appointed administrator unless he is remunerated).

54 Section 117 of the GA Act reflects the general equitable rule that precludes the payment of remuneration to a person in a trustee relationship with another except in certain circumstances, one of which, as s 117 allows, is when remuneration is provided for legislatively (The Laws of Australia, Volume 15.14 page 93: The Law Book Company Limited)

55 The starting position must therefore be that remuneration is not payable and that when, as in s 117, allowance is made for the size or complexity of an estate, that allowance is for estates which sit outside the typical or ordinary situation. The GA Act does not prescribe what "size or complexity" might mean in that context, and permits the Tribunal to decide the matter on the circumstances of each case. No doubt what defines the term will vary over time particularly, if as is likely, size refers to the value or quantum of an estate as well as its structure. Complexity is probably open to a more objective assessment but suffers from a relativity centred on the variable abilities of administrators. The issue is arguably further complicated by the fact that administrators are permitted to employ agents to transact any business or do any act required to be transacted or done in the management or administration of an estate (s 76 of the GA Act); and that employing agents appropriately has the potential to make the management of an otherwise complex estate, relatively easy. Whilst an administrator has the ultimate responsibility of what happens in an estate, he is not liable for any default on the part of an agent if the agent is employed in good faith and without negligence (s 76(2)).

56 The provisions of the GA Act that refer to the appointment of an administrator (s 68 and s 117) when read together work against the appointment of a professional person who would usually expect to receive remuneration for their role as administrator. The Public Trustee who can also be classed as a professional person in the sense of his independence, skills and available resources is not similarly affected, given the right to charge fees pursuant to the Public Trustee Act 1941 (WA). It appears there is a statutory preference for the Public Trustee to be appointed in those situations where a family member or other person close to the represented person is not willing to be appointed or is considered unsuitable. The GA Act provides for the appointment of the Public Advocate as the administrator of last resort (s 68(5)) but even in that circumstance she can only receive remuneration under s 117, thereby also being subject to the restriction imposed by the "size and complexity" of the estate.

57 In other state jurisdictions in Australia, the character of an estate is not a specific legislative consideration in the determination of remuneration, and provision is made for persons who carry on a business of or including administration to be entitled to remuneration (see for example, s 46 of the Guardianship and Administration Act 1993 (SA) and s 48 of the Guardianship and Administration Act 2000 (QLD)).

58 As already mentioned, entitlement to remuneration for an administrator in Western Australia, is limited to the Public Trustee, in all other cases administrators must rely upon the operation of s 117 of the GA Act.

59 The Full Board of the former Guardianship and Administration Board (the Board) considered the question of remuneration in the context of the requirements of s 117 in Re E [1993] 12 SR (WA) 7246 at 246-254 and in the unreported decision in Application for Appointment of Administrator in Respect of Mr JKAA delivered 7 September 1993 (Justice Nicholson, President, K Chapman, Member and K Hill, Member).

60 In the case of Re E at 247-248, the Board found it relevant in considering whether to fix remuneration or a rate of remuneration, to "have in mind the duties of an administrator" (s 70), the conditions under which an administrator may employ agents (s 76), the right of an administrator to reimburse himself for expenses incurred in the performance of his function (s 118(1)) and the right to recover costs pursuant to s 16 of the GA Act (recognised by s 117(3)(b)).

61 It is unclear how relevant these factors are to the assessment of the decision to allow remuneration, and to that extent Re E provides no particular guidance in the case before me. Section 70 of the GA Act poses the "duties" of an administrator in the form of a statement about best interests which applies to all administrators regardless of the size or complexity of the estate. The other matters raised by the Board would seem to impact on what rate of remuneration is fixed from time to time but it is difficult to determine their specific relevance to the primary question of whether remuneration should be allowed except perhaps the right of administrators to employ agents (s 76).

62 As to what the estates in Re E and JKAA comprised to give a sense of size and complexity, the Board stated as follows:

"It is apparent from information before the Board that her estate exceeds $300 000...The estate comprises four bank accounts (all at the same branch of one bank); shares in seven companies; trust units in two trusts; two real properties and a motor vehicle." (Re E at 253)

"The equities are held in eight companies, fixed interest is derived from two investments, cash investments are with Perpetual Trustees. There is one life assurance investment elsewhere." (JKAA at 3)

63 The then current market value of the estate in JKAA was $288 133.60. The Board goes on to state at page 3;

"In our opinion, size and complexity of his estate and all the other circumstances of the matter make it entirely appropriate that the Perpetual Trustees be remunerated..."

64 Both estates would have been valued in 1993 dollars. An exercise whereby the values of the estates were calculated in 2006 dollars might assist, but if only if one accepts that the Board in Re E and JKAA took the value (size) to be the determining factor in allowing remuneration and it is not at all clear from the decisions that this is the case. A simple exercise of compounding the $300 000 (1993 value) of an estate at 5% per annum would yield a value of nearly $600 000 in 2006.

65 There is much case law on the question of the remuneration of trustees and this is also dealt with by way of legislation (see for example, s 98 of the Trustees Act 1962 (WA).

66 The amount and rate of remuneration of a trustee has been decided on the basis of the nature of activities carried out, whether they are of the type of a typical administration and also whether the duties of the trustee are substantial and more onerous than most other estates (Re Sheppard [1972] NSWLR at 720-721, in which the executors of an estate completed a subdivision and sale of land).

67 The size and complexity of the estate have also been considered relevant factors (Re Moore (decd) [1956] VicLawRp 26; [1956] VLR 132 at 134, where the executor continued to carry on a retail business which had upwards of 700 employees).

68 A common theme in these cases which is helpful in the interpretation of s 117 of the GA Act, is one I have alluded to earlier in these reasons, specifically the notion of an out of the ordinary or uncommon situation which means that the usual standard should not apply. When directed to the concept of "size and complexity" in relation to the estates of represented persons, it requires a common sense approach to assess the estate in question against an estate that an ordinary person could be expected to manage with the usual difficulties that apply to managing funds and property and who, for specialised tasks, can rely on the employment of agents (s 76 of the GA Act). It is not unrelated to the idea that an estate to which "size and complexity" can be applied so that remuneration should be allowed, requires more work, effort and is more onerous to manage than would ordinarily be expected of administrators typically appointed under the GA Act. The typical or intended administrator is a person who is close to the represented person (s 68(3)).

69 In the case of the represented person she has, prior to the current appointment of the Public Trustee, been under the administration of her son (CEN) and daughter (NW) with her estate substantially the same as it is now. Remuneration was not sought in that instance.

70 The represented person is an 80 year old woman who can no longer live independently and is cared for by her son and daughter-in-law. She owns a home (unit) in which she used to live and has accumulated funds of about $100 000. She has a motor vehicle which CEN uses and controls. The current value of the estate according to the Public Trustee is about $362 000. The estate is not insubstantial but it could not be argued that it is atypical either in its size or complexity. Many people of the represented person's age would have accumulated a share in property (usually the family home) and likely some cash funds (or perhaps most of their estate is reflected in the value of the family home). Apart from renting her property, which is not an uncommon feature in our society and which could in my view be managed by an ordinary person (or be contracted to a real estate agent), the day to day transactions of the represented person are relatively small and consistent. There is the need to manage the cash funds and decide in what way they should be invested but that should not be an onerous task.

71 I therefore find that the represented person's estate is not of a size or complexity (or both) which would justify the fixing of remuneration pursuant to s 117 of the GA Act.

72 This finding effectively precludes the appointment of the accountant, KVL as the represented person's administrator and it is my decision that the Public Trustee remain as her administrator.

73 I confirm the order of the Tribunal made on 13 December 2005 which appointed the Public Trustee as the represented person's plenary administrator (s 90(1) of the GA Act). The administrator is authorised to expend up to a total amount of $350 per annum on gifts on behalf of the represented person.

74 The order will be reviewed by 22 June 2007.

I certify that this and the preceding [74] paragraphs comprise the reasons for decision of the State Administrative Tribunal.

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MR J MANSVELD, MEMBER