KZT [2018] NSWCATGD 12

NCAT Guardianship|2018-03-05|Before: Geoff Lindsay J

Background to the Financial Management Application

The following background facts give context to the submissions made by the parties.
In October 2013, Mr KZT appointed Mr XYT as his attorney and Mr XYT's wife, Mrs LBT, as substitute attorney under an enduring power of attorney. In addition, under a separate instrument, Mr KZT appointed Mr XYT as his enduring guardian and Mrs LBT as substitute enduring guardian.
In late-July 2016, Mr KZT moved to the aged care facility. On 1 August 2016, acting as his father's attorney, Mr XYT signed an agreement issued by Service Provider XX, setting out the respective rights and obligations of the parties in respect of Mr KZT's accommodation and care (the Residential Agreement). The terms of the Residential Agreement were later to become the source of dispute between the parties. Some of the matters in contention remain unresolved and are now the subject of complaints made by Mr XYT to the Aged Care Complaints Commission (the ACCC).
Under the Residential Agreement, Mr KZT was required to pay fees for accommodation and care. The Agreement offered a number of payment options. With respect to accommodation, Mr XYT selected the option of an "accommodation payment" which required payment of a Refundable Accommodation Deposit (RAD) in the sum of $300,000 and a Daily Payment (DAP) in the sum of $49.40. (see Residential Agreement, cl 5 and Annexure B, cls B3 and B4.) The agreement permitted Service Provider XX to lodge a caveat over all or part of any real estate in which Mr KZT had an interest to "protect its interest": Annexure F, F5.
In December 2016, Service Provider XX lodged a caveat on a house owned by Mr KZT in Regional NSW (the RN property).
Sometime after the Residential Agreement was entered into, Mr XYT requested Service Provider XX to reduce the $300,000 RAD payable under the agreement. On 24 February 2017, Mr XYT sent an email to Ms MAH proposing a variation to the fee arrangement under the Residential Agreement, specifically the payment of a "100K Daily Accommodation Fee". He alleged that when he agreed to pay the $300,000 RAD he did not have an accurate understanding of his father's income and assets. In addition, he alleged that he was told by a representative of Service Provider XX that the $300,000 RAD could be renegotiated once he had a complete understanding of his father's financial position. He alleged that he signed the Residential Agreement under duress and on the basis of misleading comments made by Service Provider XX's representatives.

Can a financial management order be made?

Section 25G of the Act provides that the Tribunal may make a financial management order in respect of Mr KZT only if we have considered his capability to manage his own affairs and are satisfied, to the relevant civil standard, of three matters: 1. That Mr KZT is not capable of managing his affairs. 2. That there is a need for a person to manage those affairs on behalf of Mr KZT. 3. That it is in Mr KZT's best interests that the order be made.

Is Mr KZT not capable of managing his affairs?

In P v NSW Trustee and Guardian [2015] NSWSC 579, Lindsay J commented at [308]-[309] on the meaning of the phrase "capable of managing those [the subject person's] affairs" in s 25G(a) of the Act: [A] focus for attention is whether the person is able to deal with (making and implementing decisions about) his or her own affairs (person and property, capital and income) in a reasonable, rational and orderly way, with due regard to his or her present and prospective wants and needs, and those of family and friends, without undue risk of neglect, abuse or exploitation. In considering whether the person is "able" in this sense, attention may be given to: (a) past and present experience as a predictor of the future course of events; (b) support systems available to the person; and (c) the extent to which the person, placed as he or she is, can be relied upon to make sound judgments about his or her welfare and interests: CJ v AKJ [2015] NSWSC 498 at [38].
As a first step in determining whether Mr KZT is capable of managing his affairs, it is necessary to identify the nature of his "affairs". The available material indicates that the RN property is Mr KZT's sole asset and the Age Pension is his only source of income.
None of the parties dispute the opinion expressed by Dr Z in a report dated 29 May 2017 that Mr KZT now has moderate to significant cognitive impairment and, as a consequence, is incapable of managing his affairs. We find that notwithstanding their relatively simple nature, Mr KZT is no longer able to manage his affairs.

Is there a need for a person to manage his affairs on behalf of Mr KZT?

The question of whether there is a need for a person to manage Mr KZT's affairs requires consideration of Mr KZT's current circumstances, which include: 1. The lifting of the suspension of the enduring power of attorney and the reinstatement of Mr XYT as his father's attorney, as a consequence of the decision made by the Appeal Panel to set aside the original decision: see, s 50(3) of the Powers of Attorney Act 2003 (NSW). 2. The resolution of the dispute between Mr XYT and Service Provider XX about payment of accommodation and care fees, as a consequence of the consent orders entered by the Supreme Court in February 2018. 3. The possibility that in the foreseeable future Mr KZT will be moved to an alternative care facility. If that occurs, the substitute decision maker will be required to enter into an agreement with the accommodation provider for the payment of care and accommodation fees and make arrangements for the payment of those fees. 4. The circumstances surrounding the proposed transfer of the RN property from Mr KZT to Mr XYT.
Given Mr XYT's appointment as attorney, it could not be said that there is a need for a person to manage Mr KZT's affairs, unless we are satisfied that the operation of the enduring power of attorney is not sufficiently protective of Mr KZT's interests or for some reason is unworkable. This requires us to evaluate whether Mr XYT is discharging his duties as attorney in a manner consistent with his fiduciary obligations. That evaluation must be informed by the statement of principles contained in s 4 of the Act, which instructs that when exercising functions under that Act the Tribunal must observe a number of principles, which include that the welfare and interests of Mr KZT should be given paramount consideration and that he must be protected from neglect, abuse, and exploitation.
Before considering these issues, it is useful to consider the role of an attorney appointed under an enduring power of attorney and a manager appointed under a financial management order. While the method of appointment differs, the former is appointed by the subject person and the latter by the Tribunal or the Supreme Court - the nature of the role and the obligations owed to the principal (in the case of an enduring power of attorney) or the protected person (in the case of a financial management order) - are largely the same.
The powers conferred on a person appointed as manager or attorney are fiduciary powers in that they must be exercised only for the purpose for which they are conferred and not for any collateral purpose, particularly for the purpose of advancing the interests of the appointee (Justice Geoff Lindsay, Roles in Protective Management of Person and Property - Training Seminar, NSW Civil and Administrative Tribunal, 8 December 2017 at [4].)
In M v M [2013] NSWSC 1495 at [50], Lindsay J, after reviewing the authorities and the legislative developments that have taken place over the past two decades in relation to the management of protected estates, listed a series of non-exhaustive "guidelines" relevant to the appointment of a manager of a protected estate. They provide useful guidance about the issue we are required to determine, namely whether there is a need to appoint a manager notwithstanding that at this point in time Mr XYT holds an appointment as his father's attorney: (a) First, the jurisdiction the Court is called upon to exercise is not a "consent jurisdiction". An order for the appointment, removal or replacement of a particular manager is not to be made merely because a party, or some other person, seeks it, consents to it or acquiesces in it: JJK v APK (1986) Australian Torts Reports 80-042 at 67, 881 (first guideline); JMK v RDC and PTO v WDO [2013] NSWSC 1362 at [60]-[62]. The Court is bound to exercise an independent judgment because of the public interest element in the decision to be made and the possibility, if not the fact, that the protected person lacks the mental capacity requisite to informed decision-making. (b) Secondly, the governing purpose of the jurisdiction exercised by the Court is protection of the welfare and interests of the particular protected person concerned: Holt v Protective Commissioner (1993) 31 NSWLR 227 at 238B-C and 241A-B and F-G. (c) Thirdly, any decision made affecting the welfare or interests of a protected person must be made in a manner, and for a purpose, calculated to be in the best interests, and for the benefit, of the protected person: Holt v Protective Commissioner (1993) 31 NSWLR 227 at 238D-F and 241G-242A. (d) Fourthly, care needs to be taken in all decision-making affecting a protected person to focus on the facts of the particular case, preferably with due consultation with the protected person, his or her family and carers who may be well placed to inform the Court of the protected person's particular circumstances: Holt v Protective Commissioner (1993) 31 NSWLR 227 at 238C-239B, 240D, 241B-F and 243E-F; Re L [2000] NSWSC 721 at [10]. (e) Fifthly, in the choice of a manager consultation of the welfare and interests of a protected person may favour appointment of a member of his or her family over the appointment of an institutional manager: Holt v Protective Commissioner (1993) 31 NSWLR 227 at 238G-239B. (f) Sixthly, decisions need to be made in the context of a prudential management regime that can be administered, without strife in the simplest and least expensive way, in the interests of the protected person: HS Theobald, The Law Relating to Lunacy (Stevens and Sons, London, 1924), pp 380 and 382. (g) Seventhly, regard needs to be had to the value and nature of the property comprising a protected person's estate in deciding upon the identity of a manager or an appropriate management plan: Holt v Protective Commissioner (1993) 31 NSWLR 227 at 242E and 243D-F. (h) Eighthly, recognition needs to be given to the status and obligations of a manager of a protected estate as the holder of a fiduciary office. This means that the Court, managers and other affected persons need to be alive to the importance of avoiding, or at least minimising, exposure of a protected person to dangers associated with a manager having a conflict between a duty owed to the protected person and the manager's personal interests: Holt v Protective Commissioner (1993) 31 NSWLR 227 at 239B and 242B-C; Re L [2000] NSWSC 721 at [12]. Nevertheless, it must also be recognised that the liability of a manager of a protected estate to account may differ from that of a trustee of an ordinary trust to the extent necessary to accommodate the protective purpose of the manager's appointment: Countess of Bective v Federal Commissioner of Taxation [1932] HCA 22; (1932) 47 CLR 417 at 420-423. (i) Ninthly, in conformity with fiduciary law, the office of a manager of a protected estate must generally be regarded as a gratuitous one unless, by an order of the Court or by legislation, a special arrangement to the contrary is made: Gell v Gell [2005] NSWSC 566; (2005) 63 NSWLR 547 at 553-554 [21]- [23]; Macedonian Orthodox Community Church St Petka Incorporated v Bishop Petar [2008] HCA 42; (2008) 237 CLR 66 at 93 [69]. (j) Tenthly, in deciding whether, when and on what terms a manager of a protected estate is to be allowed remuneration out of the estate, care needs to be taken not to shift the focus of decision-making from what is in the best interests, and for the benefit, of the protected person to a perceived "right" on the part of any, or any prospective, manager to remuneration. If a manager is to be allowed remuneration, a decision to that effect must be driven by the perspective of the protected person, not the perspective of the manager: Fletcher, Ex parte (1801) 6 Ves Jun 427; 31 ER 1127; Re Walker (1848) 2 Phil 630; 41 ER 1087; Re Westbrooke (1848) 2 Phil 631; 41 ER 1087; G v B (Powell J, 27 May 1992) BC 9201855 at 13. (k) Eleventhly, the primacy given to the protective purpose of the Court's jurisdiction carries with it, as a correlative, the absence in any manager (public or private) of a legal entitlement to be, or to remain, manager of a particular protected estate: Holt v Protective Commissioner (1993) 31 NSWLR 227 at 237F-238F. (l) Twelfthly, a decision about whether a manager should be replaced may need to be approached differently from one made about the identity of an appointment as an initial manager because of a perceived need to identify an acceptable reason (ie, one governed by the purpose of the protective jurisdiction and consideration of the best interests of, and benefits available to, the protected person) for change. Depending on the facts of the particular case this may, but will not necessarily, involve recognition that an applicant for change bears, at least, a forensic onus to establish a case for change: Holt v Protective Commissioner (1993) 31 NSWLR 227 at 237F, 238B-F, 239C-G and 242A-B. (m) Thirteenthly, a manager, or prospective manager, of a protected estate needs to have given thoughtful attention (in the case of a private manager, in consultation with the NSW Trustee and, in the context of the Corporations Act, the Australian Securities and Investments Commission) to the development, and operation, of a plan for management of the protected person's estate: Re L [2000] NSWSC 721 at [11]-[12]; Re McL [2001] NSWSC 280 at [3]-[5]. (n) Fourteenthly, although disputes about the management of a protected estate may at times need to be determined in an adversarial setting, an exercise of protective jurisdiction is not inherently, or necessarily, adversarial in nature. That reality finds expression in the Court's approach to orders for costs in protective list proceedings. The Court ordinarily exercises its discretion, not by reference to a rule that costs follow the event, but having regard to what, in all the circumstances, seems proper: CCR v PS (No 2) (1986) 6 NSWLR 622 at 640. (o) Fifteenthly, part of the role of the Court in its exercise of protective jurisdiction is to give consideration to the manner and form of a decision-making process calculated to ensure that the protective purpose of the jurisdiction is duly served. (p) Sixteenthly, in the context of the current legislative and administrative regime for management of protected estates, the Court will ordinarily require that any substantial decision it may be called upon to make affecting a protected estate, beyond the routine, is made on notice to the NSW Trustee, allowing the NSW Trustee to be heard in an appropriate case and inviting its assistance where necessary.

History of the property transfer

The history to the proposed transfer of the RN property is critical to the assessment of whether Mr XYT is likely to discharge the role of attorney in a manner which is in the interests of, and for the benefit of, his father: Holt v Protective Commissioner (1993) 31 NSWLR 227 at 238 and 241G. That transfer did not proceed because of the caveat placed by Service Provider XX on the RN property. According to Mr XYT, the transfer did not go ahead after the caveat was removed following the consent orders made by the Supreme Court as he has decided to await the outcome of these proceedings.
As will be recalled, the stated reason for Ms MAH's decision to make the Financial Management Application was the concern of Service Provider XX's managers about the decision made by Mr XYT to purchase the RN property at "well below" market value. As recorded by the Appeal Panel in ZGA v ZFZ at [6], at the hearing before the Tribunal on 28 July 2017, the Chief Executive Officer of Service Provider XX said: ... we accept that however the reason why we are sitting here today is not because we are not being paid because with a caveat [on ZFY's house] at some stage we will be paid. We have a caveat over the property. It's because the methodology and the valuation applied to [ZFY's] property is about 60% of market value and if we release the caveat then our legal advice is that we are complicit in elder abuse with financial perspective. And that is our concern...we do not wish to be complicit in elder abuse and that's why we've said before we agree on this course of action we need you to hear why we've asked for the financial management order. (Words in brackets added.)
Tendered in these proceedings were three valuation reports, two prepared at the request of Mr XYT, one at the request of Service Provider XX. The estimates given ranged from $280,000 to "$400,000 to $500,000". In addition, a rates and charges notice issued by a Council in Regional NSW in July 2016, recorded the "rateable value of the property" as $218,000 (unimproved value).
In a valuation report dated 2 February 2017, certified valuer, Mr Y, estimated the value of the property to be $280,000. The report was prepared at the request of Sydney Legal Practice, the solicitors who acted for Mr XYT in the sale of the RN property. In his report, Mr Y described the RN property as being 721 sqm in dimension and a "basic two bedroom property in a deteriorated state". He wrote, the "value of the property lies mainly in the land". Under the heading "sales evidence", Mr Y referred to the sales data for three nearby properties that had recently been sold. The first, a vacant parcel of land, 695 sqm in dimension sold for $197,000 in August 2016. The second, a two-bedroom cottage described by Mr Y as "superior relative to the subject property" sold for $320,000 in April 2016. The third, another vacant parcel of land, 887 sqm in dimension and in an "elevated position", sold for $155,000 in February 2016.
In an undated certificate of valuation provided at the request of Service Provider XX, valuer Mr X, estimated the value of the property to be in the "range of $400,000 to $500,000". Mr X wrote that the assessment of the property was made on a "desktop basis", which we understand to mean on the basis of an internet search of the sales history of nearby properties. Under the heading, "comparable sales", Mr X listed three properties. The first, described as "a three bedroom, 2.5 bathrooms, 2 living areas, detached lock up garage with rear deck and a large back yard" sold for $460,000 in March 2017. The second, described as featuring "three bedrooms, one bathroom, huge double garage, modern bathroom and kitchen" also sold for $460,000 in March 2017. The third, described as "three bedrooms, one with ensuite and built in robes, beautifully appointed kitchen, lounge and dining room, reverse cycle air conditioning and gas heating", sold for $470,000 in November 2016.
Shortly after the original decision made by the Tribunal to make a financial management order, Mr XYT commissioned a further valuation of the property. In a report dated 1 August 2017 valuer, Mr W, estimated the market value of the property to be $410,000, the land value to be $290,000 and improvements to be $120,000. Under the heading "Fixtures and features" Mr W described the property as: "General: average quality fit out, recently renovated, recently painted, smoke alarms, raked ceilings with exposed beams".
Under the heading "General Comment", Mr W wrote: There are limited recent comparable sales available for comparison purposes and, as a consequence, some of the sales evidence relied upon may not conform with recommended guidelines, that is it may be more than six months old, or have a different number of bedrooms or be within neighbouring towns.
Mr W went on to write that he had been instructed to provide a "retrospective assessment as at 1 December 2016": The condition and appearance of the subject property and the sales evidence considered, as sighted at the date of inspection, August 2017, is assumed to be inconsistent with the inspected market condition as it had been renovated since the retrospective date. We have placed a retrospective value market range of $270,000 to $290,000".
Mr XYT argues that there is no basis for the allegation that he sought to transfer his father's property to himself at below market value. He argues that the Mr Y report provided a reliable estimate of the market value of the property at the time contracts were exchanged. He contends that the reason for the differing estimates is that Mr W prepared his report after significant repairs to the property were undertaken in the first half of 2017. In addition, he argues that the report commissioned by Service Provider XX was nothing more than a compilation of recent sales results in the local area and failed to have proper regard to the nature and features of the RN property and whether it was comparable to any of the examples listed in Mr X's report. He contends that the Mr Y report provides a reliable estimate of the value of the property, immediately prior to the exchange of contacts.
Further, he submits that if, as alleged by Service Provider XX, the agreed price was "well below market value", it would follow that his solicitors, his father's solicitors and Mr Y had disregarded their respective professional obligations.
In a statement dated 1 October 2017, Mr XYT wrote that in December 2016 he raised with his family the sale of his father's house and suggested that if he were to purchase the property it might be preferable that he resign from his role as attorney. He claimed that his family disagreed and insisted that the sale proceed and that he and his father engage different lawyers. In these proceedings he stated that the property had significant sentimental value and had been in the family for generations.

Consideration

The evidence demonstrates that Mr XYT has the technical ability to make substitute decisions about financial matters on behalf of his father. The real issue is whether he is likely to discharge his duties as attorney in a manner which gives effect to his fiduciary duty, in particular whether in exercising his function as attorney he is likely to subordinate his father's interests to his own.
No criticism can be levelled at the decision taken by Service Provider XX to lodge the Financial Management Application. We accept it was motivated by a genuine concern for the interests of Mr KZT. The transfer of property from a principal to their attorney inevitably gives rise to a conflict of interest and demands careful scrutiny. It is a matter of common knowledge that some adult children involved in the management of the affairs of a parent, either on an informal basis or acting under a formal appointment, sometimes abuse their position of trust.
While the concern of Service Provider XX was not without a proper basis, on the available material we are not satisfied that the allegation that Mr XYT preferred his interests over those of his father is established. In reaching that conclusion we have had regard to the quality of the respective valuations and accept the submission made by Mr XYT that the "desk top assessment" conducted by Mr X provides a less reliable guide to the value of the property than the considered and detailed assessment undertaken by Mr W and Mr Y.
In addition, the available material supports the claim made by Mr XYT that he undertook significant improvements to the property in the intervening period between the preparation of the Mr Y and Mr W reports. That claim is consistent with the following evidence. First, the disparate descriptions of the property contained in the two reports. Mr W noted that recent improvements had been undertaken to the property; Mr Y described the property as being in a deteriorated state. Second, the comparable estimates of land value given by Mr Y and Mr W. Mr X did not give an estimate of the land value of the property or set out the assumptions he made about the state and condition of the property.
For these reasons, we are not satisfied that the available evidence establishes that, as alleged, Mr XYT arranged for the RN property to be sold to him at below market value. In reaching that conclusion we note that the available evidence is probably not the best evidence. Among other things we have not been provided with the instructions given to Mr Y nor have we had the opportunity to test the opinions given by the three valuers whose reports are before us or hear from the solicitors involved in the transfer of the RN property.
There is always a risk that an attorney/manager will prefer their own interests over that of the principal/protected person, if their respective interests come into conflict. It is for this reason that a prudent attorney/manager would generally avoid putting themselves in a position where their interests and those of the principal/protected person, came into conflict. However, on the available evidence we are not satisfied that the risk posed by Mr XYT of preferring his interests over that of his father, is greater than that of any prudent, diligent attorney.
That, however, does not dispose of the issue of whether there is a need for a financial management order. The original Tribunal found that an impasse had been reached between Service Provider XX and Mr XYT over the payment of care and accommodation fees and concluded that it was not in Mr KZT's interests for that to continue. That finding was the basis of the Tribunal's decision to make a financial management order.
Had that impasse continued we would have reached the same conclusion. However, as a consequence of the orders entered by the Supreme Court, the impasse has been broken. Given the irrevocable payment guarantees given to Service Provider XX by Mr XYT as ordered by the Court, it is unlikely that a dispute in relation to the fees and charges levied by Service Provider XX will arise in the future.
This leaves the issue of whether Mr XYT is likely to also have difficulty dealing with future service providers in the management of his father's affairs. For the reasons discussed below, it is possible that Mr KZT might be moved to alternative residential care, an option favoured by Mr XYT. If this occurs, Mr XYT will be required to enter into an accommodation and care agreement with a new provider.
Relevant to that assessment is the concerning evidence about the manner in which Mr XYT has discharged his duties as his father's guardian since the original decision made by the Tribunal to make a financial management order in mid-2017. The evidence, which we detail below, reveals that Mr XYT has not visited his father since August 2017 despite living a few hundred metres away (until December 2017). In addition, over the past 10 months he has given conflicting instructions to Service Provider XX about his father's care and health, and, in our view, has not discharged his role as enduring guardian in a manner consistent with his fiduciary duties.
While a risk that Mr XYT might repeat this type of conduct in dealing with another service provider, the available evidence does not suggest that he has acted in this manner before. He claims that he has been managing his father's financial affairs for some time, even before his appointment as attorney, and throughout that period has done so in a diligent and prudent fashion. Mr KZT's cousin, Mr V, corroborates that claim. While it is possible that as a result of the dispute with Service Provider XX, Mr XYT has lost the ability to deal with his father's affairs in an objective and reasoned fashion, we think any such inability is likely to be limited to his dealings with Service Provider XX. We are satisfied that there is no real and material risk that the type of conduct which resulted in the impasse between Mr KZT and Service Provider XX will be repeated.
For these reasons, we are not satisfied that there is a need for a person to manage Mr KZT's affairs. It follows that the power to make a financial management order cannot be exercised.

Can a guardianship order be made?

The power to make a guardianship order can only be made if we are satisfied that Mr KZT is a "person in need of a guardian": s 14(1) of the Act. A person in need of a guardian is a "person who because of a disability is totally or partially incapable of managing his or her person": s 3(1) of the Act. A person with a disability is defined to include a person who is physically and/or psychologically disabled, and/or of advanced age, and by virtue of that fact, is restricted in one or more major life activities to such an extent that he or she requires supervision or social habilitation: s 3(2) of the Act.
The term "social habilitation" is not defined by the Act. In P v NSW Trustee and Guardian, Lindsay J considered its meaning in the context of s 3(2) of the Act, at [303]: The expression "social habilitation" (in the context of references to "disability", "restricted", "major life activities" and the word "requires") may be taken to refer to a need for services to help a person to be, or become, able to function normally in community with others.
The available medical evidence reveals that Mr KZT is a person with a disability, namely cognitive impairment, and by virtue of that fact is restricted in most of the activities of daily living to such an extent that he requires both supervision and social habilitation. In addition, the evidence reveals that because of his disabilities, Mr KZT is now probably totally incapable of managing his person. Mr XYT, Ms MAH, and guardian ad litem, Ms Linda Fisher, agree that Mr KZT is a "person in need of a guardian". We concur with that view.
It follows that the power to make a guardianship order can be exercised.

Should a guardianship order be made?

In considering whether or not to make a guardianship order, s 14(2) of the Act instructs that we shall have regard to: (a) the views (if any) of: (i) the person, and (ii) the person's spouse, if any, if the relationship between the person and the spouse is close and continuing, and (iii) the person, if any, who has care of the person, (b) the importance of preserving the person's existing family relationships, (c) the importance of preserving the person's particular cultural and linguistic environments, and (d) the practicability of services being provided to the person without the need for the making of such an order.
In addition, in exercising the power to make a guardianship order, we are obliged to observe the statement of general principles listed in s 4 of the Act: 4 General principles It is the duty of everyone exercising functions under this Act with respect to persons who have disabilities to observe the following principles: (a) the welfare and interests of such persons should be given paramount consideration, (b) the freedom of decision and freedom of action of such persons should be restricted as little as possible, (c) such persons should be encouraged, as far as possible, to live a normal life in the community, (d) the views of such persons in relation to the exercise of those functions should be taken into consideration, (e) the importance of preserving the family relationships and the cultural and linguistic environments of such persons should be recognised, (f) such persons should be encouraged, as far as possible, to be self-reliant in matters relating to their personal, domestic and financial affairs, (g) such persons should be protected from neglect, abuse and exploitation, (h) the community should be encouraged to apply and promote these principles.
As observed by Lindsay J in P v NSW Trustee and Guardian at [57]-[62], the requirement to have regard to the s 4 principles is reinforced by cl 5(1), Sch 6 to the NCAT Act, which imposes a duty on the Tribunal when exercising its Division functions for the purpose of the Act, to observe the principles referred to in s 4 of that Act.

The views of Mr KZT

Mr KZT did not participate in the hearing. In a report dated 1 November 2017 prepared for the purpose of the appeal, Ms Fisher advised that she met with Mr KZT for about 90 minutes in October 2017. In a summary of the discussion that took place at that meeting she recorded, among other things, that Mr KZT said he was happy at the aged care facility and did not wish to move. In addition, she recorded Mr KZT as saying he had not seen or spoken to his son Mr XYT for some time and "very much" missed his grandchildren (Mr XYT's children).
At the time of the meeting between Mr KZT and Ms Fisher, the guardianship application had not been made. To the extent that Mr KZT expressed a view at that meeting about whether a guardianship order should be made, it is to be found in Mr KZT's reported closing remarks. Ms Fisher wrote that Mr KZT concluded his discussions by saying "quite unexpectedly" that he would be very happy for the NSW Trustee and Guardian to manage his affairs as he felt unable to do so.
The original Tribunal, in its reasons for decision, recorded that Mr KZT told the Tribunal that he wanted his son, Mr XYT, to manage his affairs as he had done for the past 10 years.
It is not possible on the available material to determine whether the comment about the management of his affairs made by Mr KZT to the Tribunal in July 2017, or to Ms Fisher on 1 October 2017, was directed to his affairs at large (including accommodation, health care etc.), or only to financial matters.
Mr XYT and Mr V asserted that there were material errors in Ms Fisher's report. Each claimed that it is improbable that Mr KZT would have been able to provide such a lucid and reasoned response to the questions asked by Ms Fisher based on their own observations of Mr KZT and the medical evidence of significant cognitive impairment. Mr V stated he had visited Mr KZT the week before the hearing and it was evident that his memory was poor. He claimed, for example, that while Mr KZT told him he recalled meeting Ms Fisher, as he recalled they met at his home in the RN property.
On the available evidence it not possible to say with any certainty whether, as alleged by Mr XYT and Mr V, Mr KZT did not fully understand the issues raised by Ms Fisher. However, we reject the allegation made by Mr XYT, that Ms Fisher's account is unreliable, in the sense that it is not an accurate account of the meeting. In reaching that conclusion, we note among other things that Mr KZT's reported comment that he had not seen his son for some time and missed his grandchildren is consistent with the objective facts and reports from other sources.

The views of Mr XYT

Mr XYT is of the opinion that a guardianship order is unnecessary because he holds an appointment as his father's enduring guardian. He contends that this appointment should not be disturbed because it reflects the wishes of his father at a time when he was capable of making a decision about who should act as his substitute decision maker if he were to become a "person in need of guardian". In addition, he claims that he has fearlessly advocated on behalf of his father and is well suited to undertake the role.

The views of Mr V

Mr V supported Mr KZT's submission that a guardianship order was unnecessary. He stated that Mr XYT and his wife had been extremely supportive of Mr KZT, who had been living an isolated existence for many years. He stated that he was at a loss to know how Mr XYT persuaded his father to attend medical appointments or to agree to move to residential care. He stated Mr XYT's decision to move his father to Regional NSW to be close to him illustrated the close and caring nature of their relationship.

The importance of preserving Mr KZT's existing family relationships

The evidence reveals that until August 2017 the relationship between Mr XYT and his father was close and he visited his father at the aged care facility on a regular basis. His children often accompanied him on those visits. However, Mr XYT has not visited his father or had any contact with him since August 2017.
It is not possible to predict the outcome if a guardianship order is made, and the effect it might have on Mr KZT's existing family relationships. However, we accept that there is a risk that the making of a guardianship order and the resultant suspension of the enduring guardian appointment, might further damage the relationship between Mr XYT and his father.

Importance of preserving the person's particular cultural and linguistic environments

This factor would not appear to be relevant in this case.

Practicability of services being provided to the person without the need for the making of such an order

Given the extent of his cognitive impairment, a substitute decision maker is needed to determine whether Mr KZT needs any services in addition to those provided by the aged care facility and to arrange for those services to be provided.
Whether this factor weighs in favour of the making of a guardianship order turns on whether Mr XYT is likely to discharge the responsibilities of his role in a manner that is consistent with his fiduciary duty.

The views of the applicant

Ms MAH submits that Mr XYT's conduct over the past eight months demonstrates his unsuitability to continue to act as his father's enduring guardian. To put that submission in context, it is necessary to consider the relationship between Mr XYT, his father and Service Provider XX since the original decision made by the Tribunal in July 2017.
Over the past 14 months, there has been an exchange of emails between Mr XYT and staff of Service Provider XX about various issues relating to Mr KZT, including his care and medical needs. In our view they shed light on the issue of whether the power to make a guardianship order should be exercised.
On 31 July 2017, Mr XYT emailed Service Provider XX and advised that his father would no longer be seeing Dr Z, a Regional NSW 1-based GP who apparently treats other residents of the aged care facility, but would be returning to the care of Dr U, his former GP who is based in Regional NSW 2 (approximately 90 minutes' drive from Regional NSW 1). He advised that he will take his father to Regional NSW 2 as required. He wrote: I will take my father to medical appointments in [Regional NSW 2] as required. Staff from your facility are not to discuss medical related issues with my father without me being present unless it is required to provide his normal daily care requirements. Staff from your facility are not to discuss complex matters, including financial or administrative considerations, with my father without me being present - his emotional state does not permit it. See [Dr U]'s letter attached. [Dr Z] remains available in the case of an emergency. If my father does suffer a medical emergency you are to first call 000. Immediately after you are to call [Dr Z]. Immediately after [Dr Z] you are to call me. Do not wait 4 hours to call me if there is an incident - like you did recently.
On 22 August 2017, a member of Service Provider XX staff emailed Mr XYT and advised that his father was complaining of sore eyes and asked him to organise a medical review. Mr XYT replied: 1. A specialist appointment for his eye has already been organised. I'd appreciate you not contacting me about the same issue within a short timeframe, I have acknowledged this problem. If there is an emergency, of course call me immediately. I request you explain the context of my father's report this morning - for example, was the comment made in passing conversation or did he specifically ask you to inform me. 2. Over the weekend my father told me that he has been allowed to urinate into a bottle whilst sitting in his armchair located in his room. This is not to happen again unless his needs are urgent (which should not happen). I am disgusted and appalled to hear that he has been asked to do this in the same place he eats his meals and my young children often congregate. 3. Do not cc [a member of Service Provider XX's staff] when contacting me regarding my father's health. His personal medical considerations are private. You are permitted to discuss his health in general terms with her, but never specifics. If you want to discuss more you are to have this approved through me. 4. My father's dietary requirements have change as of today. From now on he will not be eating red meats or pork - only white meat being fish and chicken. You are to acknowledge that you understand each point in this email.
In an email sent to Mr XYT on 29 August 2017, Service Provider XX's CEO, Mr T, requested a meeting with Mr XYT to discuss a number of concerns in relation to directions he had given staff of the facility about his father's clinical care. The CEO wrote that Mr XYT's "communication" had restricted the staff from being able to provide the "quality of care required by [Mr KZT]". He cited as an example, the recent decision to change Mr KZT's GP, which he acknowledged "is your right to do so" but pointed out that the facility was no longer receiving feedback or information from either the new doctor or Mr XYT about "any changes in [Mr KZT's] care needs". He wrote that if the facility is not provided with updates following Mr KZT's visits to health practitioners, the care provided by the facility may be compromised and Mr KZT placed at risk.
In a follow-up email sent two days later, the CEO repeated his request for a meeting to discuss Mr KZT's care needs. In addition, he wrote that there were concerns about Mr XYT's instruction that his father not be given red meat and asked whether the reason for the change had been initiated by a dietician or made for a medical reason.
In an email in reply sent on 31 August 2017, Mr XYT advised the CEO that he would no longer be acting as his father's enduring guardian, stating that the CEO should take the email to NCAT "when you apply for guardianship order" and that the "stress, sadness I feel before, during and after visits" overrides his ability to visit his father. Mr XYT set out in the email a number of allegations about the care provided to his father: … For more than seven months you have refused to provide me a copy of my father's care documents; to date you still have not provided them despite being directed to do so by the Aged Care Complaints Commissioner. Your staff make my father urinate into a bottle in the chair located in his room because your staff would not take him to the toilet in his room. Your staff arranged for your facility doctor to treat my father against my directions. Your facility doctor did not consult with me when prescribing medications. You failed to report falls my father suffered, and those falls you did record were responded to extremely poorly and recorded inaccurately. Your managers met with my father to discuss complex issues against my directions. Your staff opened my fathers (sic) mail against my directions. My father was not taken from his room more than two occasions during the first seven months of his stay. Your managers did not provide proper explanation of the care contract, or accurate annexures, on signing. I believe you do not provide an adequate number of trained staff on every shift. I believe you serve atrocious quality meals. I believe you have actively sought to damage relationships within my family. I believe you put profit and growth before quality care. These are examples of my issues with you. 3. I regard the actions of you and your facility staff to be professionally negligent. Yes, you are the primary care giver, but only because you have engineered a situation where I cannot exercise my position as his Enduring Guardian and move my father to a well-run facility where his needs are met by competent and trustworthy people. 4. Yes, my father has recently attended various medical appointments. However, there is no current change to his medications. If you needed to know something I would let you know in accordance with doctor's advice. 5. My direction that my father no longer eats red meat is a simple one. If there was more for you to know, you would be told. Most of these issues have been reported to the Aged Care Complaints Commissioner. However I now have the opinion that this department is powerless. I do hope that legislation is one day changed to hold service providers like [Service Provider XX] to account. The actions of you and your staff have taken a great toll on my family and I. [Service Provider XX], under your leadership, has torn my family apart. My father's health has severely deteriorated due to the actions of you and your staff. The stress you have created for me personally has now forced me to make the decision to focus on my own health and the responsibility I have to care for my wife and four young children. My doctor has recommended that I take stress leave due to the situation you have created. I commenced this period of leave approximately one month ago and at this stage will remain on stress leave for the remainder of the year. …
Despite announcing in August 2017 that he would no longer be acting as his father's guardian, over the ensuing months he continued to correspond with Service Provider XX about various issues relating to Mr KZT. For example on 15 November 2017, in an email to the CEO, Mr XYT wrote: Again [Mr T], for the record. Who has been making decisions regarding my father's care? Who has been approving and administering his medications? You have not been contacting me regarding my father's care since you were unsuccessful with you (sic) guardianship application. Since then your staff have been actively seeking to undermine my decision making regarding my father's care. If someone other than me has been making decisions regarding my father's care they have broken the law. I am the decision maker. You have not provided a response. You are to respond by the end of the day. You are to send a copy of my father's care documents by registered post today.
A further example is an exchange of emails sent in February 2018, following Mr XYT being notified by a member of Service Provider XX staff his father had voided "dark and offensive urine". In an email in reply Mr XYT wrote: If [Service Provider XX] recommend my father should see a doctor they are to arrange a visit to [Dr U] in [Regional NSW 2] at [Service Provider XX] expense. IF [Service Provider XX] refuse to arrange a consultation with [Dr U] as directed, the next option is [a public hospital in Regional NSW] by [Service Provider XX] funded transport or public ambulance.
On 30 August 2017, solicitors acting for Mr XYT wrote to the CEO alleging that staff of Service Provider XX had made defamatory statements about their client. The solicitors demanded among other things a written apology and compensation in the sum of $100,000. Solicitors acting for Service Provider XX rejected the allegation that a member of the staff of Service Provider XX had defamed Mr XYT and requested further particulars.
Mr XYT rejects the submission that his dealings with Service Provider XX demonstrate that he has failed to properly discharge the role of guardian. In detailed written and oral submissions he stated that Service Provider XX decided to make a guardianship application, in retaliation for him lodging complaints with the ACCC. He argued that the actions of Service Provider XX and NCAT have led to his father being alienated from his family. He accused Service Provider XX staff of attempting to "brainwash" his father and wrote "he now thinks his carers are his friends because they feed him and buy him clothes".
Mr XYT stated that he would not be able to act as guardian whilever his father remained under the care of Service Provider XX. He conceded he was "extremely angry" with Service Provider XX and claimed it had caused him to suffer great distress and the breakdown of his family unit. He stated that he had decided to "take a stand against [Service Provider XX]" by not seeing his father.

Findings and conclusions

In deciding whether to make, or not to make, a guardianship order we must take into account the factors listed in s 14(2) of the Act. These factors, together with the statement of principles contained in s 4 of the Act, require us to balance a number of competing considerations. On the one hand, we must observe the principle that Mr KZT must be protected from neglect, abuse, and exploitation. On the other hand, we must restrict his freedom of decision-making and action as little as possible and encourage him, as far as possible, to live a normal life in the community. At all times, the paramount consideration is Mr KZT's welfare and interests.
The starting point in deciding whether the discretion to make a guardianship order should, or should not be exercised, is the wishes of Mr KZT. At a time when he had decision-making capacity, he appointed his son, Mr XYT, to act as his guardian. This is a powerful factor which weighs against the exercise of the power to make a guardianship order.
However, these considerations must be balanced against the conduct of Mr XYT over the past eight months in relation to decisions made about his father. As the history set out above reveals, throughout this period he has repeatedly given apparently irrational directions to Service Provider XX about the care of his father. For example, the email sent on 23 February 2018 instructing staff that if they had concerns about his father's health, they should arrange for him to visit a doctor located 90 minutes away by car and, in the alternative, take his father to hospital.
As Mr XYT sees it, he is championing the interests of his father. He stated in these proceedings that he made the decision not to see his father because he was "taking a stand against" Service Provider XX. He seems unable or unwilling to recognise that his conduct over the past seven months has fallen short of the standard expected of a diligent and prudent guardian. He apparently acknowledges that his father is deeply upset by the fact that he has had no contact with him or his grandchildren for the past six months. However, he attributes fault to Service Provider XX for his father's alienation. Leaving aside the hurt and distress this has caused his father, it has meant that he has failed to consult with his father about any of the decisions he has made about him over that period.
Over the past 12 months Mr XYT has made a number of complaints about Service Provider XX to the ACCC. We understand the ACCC has upheld a complaint about the decision to impose a caveat on the property. Whether there is any substance to the other complaints made about the care provided to Mr KZT is a matter for the ACCC. However, even if it is accepted that there have been shortcomings in the care provided by Service Provider XX, this does not excuse the erratic and poor decision-making demonstrated by Mr XYT over the past seven months. A guardian is required at all times to make decisions that are in their principal's best interests. This obligation continues even where there is a conflict with a service provider or some other person or institution.
Mr XYT has at times been rude and threatening towards staff of Service Provider XX. Of itself, this does not mean that he is not discharging his functions as enduring guardian in a manner consistent with his fiduciary duties. However, it appears that since about August 2017 he has become so entangled with his grievances with Service Provider XX, that it has affected his ability to exercise objective judgment about decisions that need to be made on behalf of his father. The recent instruction issued to Service Provider XX, after being notified of concerns about his father's urine, to arrange for his father to be taken to a Regional NSW 2-based GP or in the alternative to be taken to a public hospital in NSW, in our opinion demonstrates a lack of judgment and his obligations as an enduring guardian.
In the immediate future a decision will need to be made about whether the accommodation arrangements for Mr KZT should be changed. As Mr XYT sees it, there is no question that his father should move to a residential care facility in Regional NSW 2 close to where he now lives (Mr XYT moved from Regional NSW 1 to Regional NSW 2 in December 2017.) In his opinion, this would not only give his father a better standard of care but enable him to be reunited with his family. Weighing against those considerations is the statement made by Mr KZT to Ms Fisher that he is happy and settled living in Regional NSW 1 and the opinion expressed by Dr U in an undated report apparently written in September 2017 which cautioned against any changes being made to Mr KZT's circumstances.
Mr XYT may well be correct and it may be in his father's best interests that he moves to Regional NSW 2. That is not a matter for this Tribunal to determine. However, in our opinion, at this point in time Mr XYT is unlikely to be able to consult his father, give real consideration to opinions that differ from his own, weigh up the pros and cons of a move and make a reasoned and objective decision about what is in his father' best interests. Mr XYT acknowledged in these proceedings, that if his father were to remain in Regional NSW 1, he would be unable to act as guardian.
It may be that the cause of the apparently uncharacteristic behaviour demonstrated by Mr XYT is the fact that he is suffering from significant anxiety on account of the dispute with Service Provider XX. He has been off work since July 2017. Whatever the cause, on the available material, in our view, in the immediate future there is a real risk that Mr XYT will not discharge his fiduciary duties in a prudent and reasoned fashion.
For these reasons, we have decided that the balance of factors favour exercising the power to make a guardianship order. As a consequence of this decision, the enduring guardianship appointment is suspended.

What functions should the guardian(s) be given?

In the foreseeable future, it is possible, if not probable, that decisions in relation to accommodation, services, health care, and consents to medical and dental treatment will need to be made on behalf of Mr KZT, and for that reason, we have decided to confer these functions on the appointed guardian.

Who should be appointed as Mr KZT's guardian?

Section 17 of the Act states: 17 Guardians (1) A person shall not be appointed as the guardian of a person under guardianship unless the Tribunal is satisfied that: (a) the personality of the proposed guardian is generally compatible with that of the person under guardianship, (b) there is no undue conflict between the interests (particularly, the financial interests) of the proposed guardian and those of the person under guardianship, and (c) the proposed guardian is both willing and able to exercise the functions conferred or imposed by the proposed guardianship order.
Section 15(3) of the Act states: (3) A continuing guardianship order appointing the Public Guardian as the guardian of a person under guardianship shall not be made in circumstances in which such an order can be made appointing some other person as the guardian of the person.
For the reasons given, our view is that at this point in time Mr XYT is unlikely to be able to exercise the functions of a guardian in a manner consistent with the fiduciary obligations of a guardian and with the s 4 principles. In addition, he has indicated that he would not be willing to act as his father's guardian, while his father remained residing at Regional NSW 1.
Mr V has declined to act as guardian, being of the opinion the enduring guardian appointment should not be disturbed.
There being no other person willing to act as Mr KZT's guardian, the Public Guardian must be appointed.

Should the order be reviewed?

We consider it appropriate that the order be reviewed in nine months. It may be that when a decision has been made about Mr KZT's accommodation, matters will settle and there will be no need for the guardianship order to continue.

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar 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: 05 July 2018

REASONS FOR DECISION

In May 2017, Ms MAH made an application to NCAT for a financial management order to be made under the Guardianship Act 1987 (NSW) (the Act) in respect of Mr KZT (the Financial Management Application). At the time the Application was made, Mr KZT was living in an aged care facility in Regional NSW 1. Mr KZT moved to the facility in July 2016 and remains there to this day. Ms MAH is a manager employed by the owner of that facility, Service Provider XX. In the Application, Ms MAH wrote that she was seeking the appointment of a financial manager because Mr KZT's son, Mr XYT: (i) refused to pay to the care facility a $300,000 accommodation bond, required to be paid under a contract entered into between Service Provider XX and Mr XYT acting as his father's attorney; (ii) "intercepted [his father's] pension" and stopped the payment of accommodation fees to the care facility; and (iii) attempted to transfer the title of his father's home to his own name at below market value.
In a decision made on 28 July 2017, the Tribunal (differently constituted) decided to make a financial management order in respect of Mr KZT, committing the management of Mr KZT's estate to the NSW Trustee and Guardian (the original decision). The Tribunal reasoned that a financial management order was needed because in its view, Mr XYT was not a suitable person to act as his father's attorney: unreported, Reasons for Decision, NCAT, R Bailey, S McSwiggan, M Watson, 28 July 2017 at [45].
An Appeal Panel of NCAT upheld an appeal brought by Mr XYT against the original decision, set aside that decision and remitted the financial management application for determination with further relevant evidence: ZGA v ZFZ [2017] NSWCATAP 231.
On 27 February 2018, the week before the hearing of the remitted financial management application, Ms MAH made a further application to NCAT seeking a guardianship order in respect of Mr KZT (the Guardianship Application). In that application Ms MAH wrote that the relationship between Service Provider XX and Mr XYT had "irretrievably broken" down. She alleged that Mr XYT may not be acting in his father's best interests.
We decided to consider the Guardianship Application at the 5 March 2018 hearing, being satisfied that neither the interests of Mr KZT nor any other party would be prejudiced if the application were to be heard at short notice. In reaching that decision we had regard to the fact that the Financial Management Application has been on foot for close to 10 months, there is some overlap in the issues that arise for consideration in that application and the application for a guardianship order, together with the statutory instruction that effect be given to the "guiding principle", namely the facilitation of the just, quick and cheap resolution of the real issues in the proceedings: s 36(1) of the Civil and Administrative Tribunal Act 2013 (NSW) (the NCAT Act). In addition, we took into account that the parties consented to the Guardianship Application being determined at the hearing on 5 March 2018.
For the reasons that follow, we declined to exercise the power to make a financial management order. However, we decided to make a guardianship order appointing the Public Guardian as Mr KZT's guardian.
All references in these reasons to "[Mr KZT]" are to Mr KZT, the person who is the subject of the Guardianship and the Financial Management Applications.

At a glance

Court

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Before

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Judgment (20 paragraphs)

Legislation Cited (3)

Cases Cited (15)