M v Protective Commissioner

• 1 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION PROTECTIVE LIST

Facts: 1 This is an application brought by the mother M of the protected person P for orders removing the Protective Commissioner as manager of P's estate and appointing National Australia Trustees Limited (NAT) as manager in his place. 2 P sustained a severe head injury in 1996 when 18 years old. His residual deficits include right hemi paresis and significant cognitive and behavioural deficits. He has reduced ability to learn and retain new information, reduced speed of information processing and an impaired memory. These injuries have left him, at least at this time, dependant on others for care and assistance in certain activities of daily living. 3 In October 1999, this court approved a settlement in the sum of $2 million for damages sustained as a result of the accident. Pursuant to s1165 of the Social Security Act 1991 a preclusion period has been set so that P is precluded from eligibility to receive social security payments until 3 February 2042. In view of the medical evidence available it was ordered that the judgement monies be paid into court pending the appointment of a Manager. In November 1999, P's estate was committed to the Protective Commissioner pursuant to s13 of the Protected Estates Act 1983 (the Act). The affairs of the Protective Commissioner are conducted through his office, generally known as the Office of the Protective Commissioner, which I will refer to in this judgment as OPC, but it is the person, not the office, who has the powers, duties and responsibilities under the Act. The Protective Commissioner, in the administration of his office, allocates various members of his staff to be responsible for the management of the estates of particular protected persons. These people are known as estate managers. 4 At the time the order was made, P was living alone in a flat in his home town of Orange. M was the primary carer and assisted P in his daily needs with minimal assistance from the Mid-Western Brain Injury Unit and community resources. In March 2000, a 2 bedroom property in Orange was purchased from the settlement moneys for $154,000. Later that year the Mid-Western Brain Injury Unit advised they could no longer provide P with the services he required. At the same time P was displaying a number of challenging behaviours relating to his brain injury and the abuse of marijuana and guarana found in energy drinks. This led to P being charged with a number of offences and caused him to be alienated from in his local community. As a condition of judgement at the local court, P was required to submit to management by a specialist carer. The Mid Western Brain Injury Unit and the court referred P to another organisation called Wareemba Community Living (WCL) which could offer further assistance with behavioural management, and continuing rehabilitation and could assist P in efforts to obtain work. WCL reported that they would only be able to provide 4 hours of care per week for P while he is living in Orange whereas, if P was in Sydney, they could provide 20 hours per week. In September 2000, P with the assistance of WCL, moved to a rented house in Sydney. 5 In the following six months WCL provided home-care to P for considerable periods. There were concerns raised by M at this time that P's carers who were provided by WCL were untrained, did not undertake any behaviour modification therapy and rarely took P out of his house, but whether these concerns were founded on fact is not established. 6 A number of incidents occurred during the months of February and March 2001. In February, a fire at P's rented home caused damage to a number of items P relied upon including his mattress, television, and other personal effects. Because of the damage P required emergency accommodation. The alternative accommodation plans were not discussed with M at the time. P was relocated to a Motel nearby where, two days later, he overdosed on medication and was taken to Concord Hospital and later to Banks House for psychiatric assessment then discharged. He continued to be suicidal throughout February and into early March when he suffered from a major epileptic seizure (resulting from his brain injury) while being monitored 24 hours/day at the Motel by WCL staff on the advice of P's treating specialist. He was again admitted to Concord Hospital where his medication was adjusted. On discharge he returned to the Motel where he proceeded to shout everybody at the Motel's nightclub drinks and charged the cost to his room. As a result of this he was then moved from this Motel to another while WCL assisted P to find more permanent accommodation. 7 It was six weeks from the date of the fire before suitable accommodation was found. When the time came for P to move to the new flat he still did not have basic provisions including a mattress, fridge, microwave, bed linen, pillows, toaster, kettle, stereo or video. At this time there was a change of manager for P. The new manager was unfamiliar with the file and stated that, as there was no contents insurance, no claim was made. Later, his estate manager stated that while contents insurance had been arranged, "it just wasn't documented in the file" so she did not know about it. An insurance claim was eventually lodged by the OPC. M, however, was never advised as to how much if anything was recovered under the insurance policy in relation to the damage caused by the fire. It took three weeks after the accommodation was secured for the OPC to approve the purchase of the replacement items. This meant that when a house was found for P he did not have the items he required for independent living including, a mattress, fridge, and microwave. 8 Private health insurance was arranged for P by M in February 2000. Although the details of this insurance were forwarded to the OPC, M is unaware if any claim for medical expenses has ever been paid from the fund. The private health insurer has refused to meet expenses arising directly from the accident - but it is not clear whether the insurer has met, and or has been asked to meet, any medical expenses not relating to the accident. The medical expenses which appear not to have been claimed include ambulance trips and treatment relating to a stabbing incident that occurred in June 2001. Court Visitor's Report - November 2001 9 The Protective Commissioner, pursuant to section 79 of the Act, directed a court visitor to report on the services provided to P by WCL. The court visitor reported on 6 December 2001 that, at that time, P was benefiting from the support he was receiving from WCL and that it was in his best interests not to decrease the support hours any more than had already been done until P had demonstrated a consistent ability to manage aspects of his life such as housework, shopping, accessing the community and so on, without incident. P had at that time been able to manage public transport independently to and from Liverpool to attend the Head2Work program.

At the time of the visit P was receiving the following hours of support from WCL -

Monday 2 hours Tuesday 4 hours Wednesday Phone support and attending his work assessment programme Thursday 4 hours of support and attendance at Liverpool brain injury café programme - Head2Work occupational rehabilitation support Friday 2 hours Saturday 6 hours Sunday No support Case management 4 hours 10 The Court Visitor considered it to be highly likely that P would continue to have crises that would place him at risk. He would therefore require access to a support worker for up to 24 hours at a time to deal with these crises - if and when they occurred. The report recommended that the support arrangements should be reviewed at 3 monthly intervals and if continuing progress was being made then consideration could be given to further reducing the support hours. The Court Visitor recommended that the Estate Manager would be assisted by one of the Specialist Disability Advisors at the OPC when considering the future support needs of P. Current management by OPC of P's Estate 11 Up to November 2001, an amount of $1.4 million was invested in the Protective Commissioner's Common Fund at a return of 6.5% p.a. The balance of the estate apart from the Orange property and a small number of Telstra shares was held in the ordinary account earning 5.5% p.a. The interest earned on the estate for the twelve months ending 30 June 2001 was $94,917.00 nett after deduction of the Protective Commissioner's management fees in respect of income. Transaction statements are sent to P once every six months. 12 The funds are now held in the ordinary account earning the lower rate of interest. This is a temporary measure required by the coming into operation on 9 November 2001 of the Protected Estates Amendment (Investment) Act 2000. Under that Act the investment powers of the Protective Commissioner are widened. As a result new investment management plans are being prepared for separate estates under management - at least where substantial funds are involved. 13 One of the concerns raised by M is OPC's failure to plan a reduction in the expenditure and thus increase the period during which funds are likely to be available for the support of P. M became concerned when P told her, probably early in 2001, that his home gym equipment was not approved by the OPC because his money was going to run out in ten years at which time P would be aged only 32 and that the preclusion period would still be in force. It was this advice that caused M to consult her solicitor who referred her to the National Australia Bank for advice.

The following table outlines income, expenditure, and the cost of WCL's services over the period of time since the Protective Commissioner commenced management. In an effort to curb expenditure the OPC intends to monitor and review M's support levels every three months.

Period Income Expenditure including WCL WCL 01/01/00 - 30/06/00 48,790.03 47,390.68 Nil 01/07/01 - 31/12/01 $46,516.40 $45,844.13 $7,946.17 01/01/01 - 30/06/01 $55,414.86 $101,717.78 (includes a one off payment to settle legal expenses from accident being $15,110.26) $31,679.95 (Note includes fire insurance payout of $7,014.70) 01/07/01 - 31/12/01 $38,640.54 $41,544.16 $13,052.66

Mr Funnell, the Estate Manager for P from August 2001 until February 2002, stated that it is not unusual for an estate to incur a high level of expenditure in the first few years of its management. 14 The OPC provided P with an open grocery account at Franklins and a spending allowance for entertainment and personal expenses. Between 14 December 1999 and 9 June 2000, P's spending allowance was a twice weekly payment of $175.00. This allowance increased to $200.00 twice a week between 9 June 2000 and 8 August 2000 and was then reduced to $170.00 twice a week until 6 October 2000. During the months of October and November 2000, a number of sporadic allowances of differing amounts were paid to P. From December 2000, his allowance was changed to a twice-weekly payment of $50.00 on Tuesday and Thursdays, and a further $100.00 on the weekend. In October 2001 the grocery account at Franklins was closed. From that time onwards a food allowance of $150.00 was paid in addition to P's weekly spending allowance. 15 Mr Funnell said in oral evidence that he did not know if any tax returns had been lodged for P. It is apparent from the transaction statements of the OPC that a fee was charged for a tax return in January 2001 and two tax payments made in February and June 2001 respectively. Therefore it is likely that tax has been paid for the year ended 30 June 2000. There was neither consideration of why the tax apparently paid in an earlier year was significantly less than that projected nor a review of prior tax returns. It is not clear whether all returns have been submitted and tax liabilities paid. 16 M complained that the Protective Commissioner failed to obtain the first home buyers grant (worth $7,000) when P purchased his Orange property in December 1999. This complaint is unfounded as this grant was not available until July 2000. 17 In the past 2 years, more than 7 employees of the Protective office have managed P's file as his estate manager. M says she has been increasingly frustrated with the continual changes and claimed lack of communication with her about the spending and administration of P's estate. Further, M also complains she has never received a statement of account from the OPC. When P gave her a statement he had received, she was alarmed at the expenditure over the short period the OPC had managed P's estate. M complained that the Protective Commissioner paid fees charged by WCL without checking the level of care provided. 18 By the end of 2001, P's management had become less difficult. The hours of care given by WCL were considerably reduced. The estate manager was then receiving about 4 phone calls a month from P, whereas earlier in the year there could be up to 12 calls per month. These phone calls would be usually to request additional funds or to find out the balance of the fund. M's reasons for requesting a change of manager 19 M says she has lost confidence in the Protective Commissioner because:- · P's estate manager is always changing and therefore unfamiliar with P's file which has caused a lack of continuity in the management of P's estate. · The OPC is reactive and then slow to react to management problems and investment issues. M complains particularly about the accommodation provided to P after the house fire, and the time taken to replace P's personal effects after that fire. · The OPC failed to pursue medical benefits claimed to be owing to the estate. · There has been a failure to take appropriate investment action necessary to make the fund last as long as possible so as to minimise the time during which Social Security benefits will not be available. 20 Further M seeks that NAT be appointed as manager because she considers:-

· It will accept the burdens and duties owed by trustee companies under the Trustee Companies Act (which M considers - incorrectly as to investments - are 'higher' duties than those owed by the Protective Commissioner); · It will provide individualised financial case management and planning with more effective interplay in addressing expenditure and budgeting. · It has a reputation of being a specialist in the field of financial planning and capital preservation with the wide resources of the affiliated companies National Australia Bank and MLC Investment group. 21 Because financial management is an important issue in this matter it is necessary to compare the investment plans of the Protective Commissioner and NAT. Investment powers and procedures of the Protective Commissioner and investment plan 22 The Protected Estates Amendment (Investment) Act 2000 commenced on 9 November 2001. The date of assent was 29 May 2000, allowing the Protective Commissioner substantial time to prepare new investment schemes for large estates under his management. Section 28(1)(g)(i) of the Act now gives power to the Protective Commissioner to invest the estate of a protected person in any form of investment, but such power is to be exercised in accordance with the Trustee Act 1925 (s28(1A)). It is the s28(1)(g)(i) power which enables the Commissioner to tailor individual investment plans to the needs of particular protected persons. 23 Until and unless this s28 power is exercised, s27 requires the Protective Commissioner to pay all moneys coming into his hands to the Special Deposit account in Treasury to the credit of the trust fund, separate current accounts being maintained in the books of the Protective Commissioner in respect of each estate. These moneys paid to Treasury in accordance with s27 are all current accounts. Trust funds are a common fund (s27(1); s52(1)) which can be invested "in accordance with the Trustee Act 1925, in any investment" (s53(a)). 24 Section 54 provides that for the purpose of investing under s53(a) the Commissioner may establish one or more investment funds and a reserve fund. Under s55 investment fund moneys can be applied for the purposes of: (1) making investments authorised by s53; (2) payments to the reserve fund of amounts the Protective Commissioner determines; (3) payments of amounts to satisfy the costs of the Protective Commissioner in the exercise of his functions or in the exercise of his functions as Public Guardian which amounts must not exceed those approved by the Director General of the Attorney General's Department; (4) making payments to the current accounts to be apportioned among the managed estates in proportion to their investment. Moneys in the reserve fund are to be applied to make up losses on realisation of investments in the reserve fund and the cost of protecting investments made from an investment fund. 25 Section 8 provides for the prescription by regulation of fees chargeable by the Protective Commissioner in exercise of his functions under the Act, which are charged against the estate of a protected person. Such fees are set out in Clause 4 of the Protected Estates Regulation 1995. In short there is a once-only fee on capital of 4% on the first $100,000; 3% on the second $100,000; 2% on the third $100,000 and 1% thereafter. In addition there is a fee of 2.5% on rents collected and 5.25% on other income. Separate fees may be charged for tax returns and other separate services. The s55(1)(c) fees present some difficulty. They replace the discretion which existed in the Commissioner under s57 prior to the year 2000 amendments. Pursuant to his authority under s57 the Commissioner for the year ended 30 June 2001 applied an amount of 1.06% of the value of the common fund towards what are now s55(1)(c) expenses. 26 Section 5(a) of the Act gives power to delegate investment responsibilities. According to the evidence of Mr Farrell, the manager of the financial planning unit of the Protective Commissioner, it is intended that investments of cash and fixed interest will be managed as part of the OPC common fund but investments such as Australian shares, International shares, listed property trusts and international fixed interest will be outsourced through the New South Wales Treasury Corporation. If so, then that is quite contrary to the second reading speech of the Attorney General on the Amendment Bill: See Hansard LC 6 April 2000, p4254 where he said: The bill also provides the Protective Commissioner with the capacity to delegate powers of investment and management. I acknowledge that there has been some concern that this could result in the out-sourcing of the Protective Commissioner's investment functions. This is not the intention. I recognise the overwhelming views of community interest groups that investment management be retained within the Office of the Protective Commissioner. The power to delegate some investment management is included primarily to address the very limited circumstance where a specialist expertise may be required for components of an investment fund. This would relate only to the collective investments and would not relate in any way to decisions concerning the investment of an individual estate.

He repeated this in stronger terms during the debate on the Bill: See Hansard LC 12 April 2000, p4524: I shall address two particular issues in reply to the debate. The first issue is the delegation of powers of investment. The bill provides the Protective Commissioner with the capacity to delegate powers of investment and management. I acknowledge that there is some concern that this could result in the outsourcing of the Protective Commissioner's investment functions. That is not the intention. I recognise the overwhelming view of community interest groups that investment management be retained within the Office of the Protective Commissioner. The power to delegate some investment management is included primarily to address the very limited circumstance in which a specialist expertise may be required for components of an investment fund. For example, I am informed that international bonds and international equities are likely to require external management. Any delegation would relate only to the collective investments and would not relate in any way to decisions concerning the investment of an individual estate. I hope that those words placate concerns about the delegation of investment powers. 27 The financial planning unit of the OPC under the conduct of Mr Farrell produced a draft financial plan for P in August 2001 and an amended plan in December 2001. It is unclear whether the financial plans were discussed with the estate manager for P. Mr Farrell said that the plan had been discussed with the estate manager Mr Funnell and that the level of expenditure assumed by the financial planning unit came from discussion with the estate manager. Mr Funnell denied speaking with the financial planning unit about P's current and future expenditure needs, although he was aware of the requirement to reduce P's expenditure to maintain the estate's duration. It is not necessary to decide this. The relevance is that the conflicting evidence does not inspire confidence in OPC procedures. The draft plans have not been discussed with P, apparently because communication with P concerning such a matter is not easy. The plans have not been discussed with M. This has also contributed to M's lack of confidence in the future management of P's estate by the Protective Commissioner as M considers she should have been consulted. 28 It is not necessary to go into details of the OPC financial plan. It is estimated to bring a return of 7.167% p.a. compared to 4.657%. The plan envisages investment in indexed funds. Generally speaking, investments are intended to be in a series of managed funds referred to in evidence as OPC funds, but how this fits in with outsourcing is not clear. 29 If P's current spending levels continued and the funds remained invested as before, they will be expended in 14 years. The recommended 'new' investment strategy, if successful, would extend P's estate for another 5 years. P will then be 42 years of age and, in theory, would have no income and no pension entitlement for the next 23 years, although this can be subject to review. The Protective Commissioner has noted that it is necessary for P to reduce his current spending/expenditure if his estate is to be preserved. If annual expenditure is greater than $81,350 the fund will be exhausted prior to age 42. To provide for P's expenditure needs the OPC plan makes provision for more cash and fixed interest investments than does the plan put forward by NAT. This is to enable ready access to funds if greater expenditure is required. 30 The Protective Commissioner recognises the need to protect P's income & capital from the risk of inflation and to have regard to taxation liabilities. To avoid a reduction in the real value of investment, P's money needs to be earning an after tax rate of return greater than inflation. The OPC plan provides for an income tax liability of $16,983 p.a. 31 P's counsel argued, "There has been tacit acceptance of an absence of capital growth to date, and no steps taken to reduce the apparent impact of income tax. The inefficiencies of communication between members of different departments of the OPC and also between the OPC officers and M are unfortunate. It highlights the caseloads of officers and the improbabilities of such persons being effective conduits in a financial planning process for some time yet if ever. The plan put forward by the financial planning unit will only extend the longevity of P's estate for a further 5 years beyond the 14 years currently predicted." This is true. However, the Protective Commissioner is not to be blamed for the size of the fund nor for the outgoings if these are required nor for the preclusion period. It is the task of the manager to manage the funds as efficiently as possible. It is not the task of the manager to create something out of nothing. Protective Commissioner's management fees 32 In an affidavit of Mr Farrell sworn 24 September 2001, he set out the fees payable to the Protective Commissioner for managing P's estate. The fees for the first year of management under the new powers would be $31,092, calculated as follows:-

Plan preparation fee $ 450 Management fee (maximum 2% on capital) $30,108 Rental income fee (2.5% pm rent received) $ 234 Tax return preparation and lodgement fee $ 300 Total 1st year $31,092

For subsequent years the plan preparation fee would be eliminated and an annual fee of $375 would be substituted. The evidence was that the management fees somehow incorporated any MER (Management Expense Ratio) fee charged by the funds manager of a fund in which any part of the estate was invested. It was stated there could be additional estate management fees and it was expected a new fee regulation would be proclaimed in 2002. I have the greatest difficulty with this, as it is quite unrelated to fees allowed by regulation. For instance, if one assumed an income of $100,000, on an estate of about $1.5 million, an ordinary member of the public relying on the regulation might expect a fee - apart from the capital fee - of no more than $5,250 plus some other relatively minor amounts. Such a person would hardly expect a s55(1) fee of over $24,000 even including the MER fee on whatever was invested in managed funds in addition to the charge on the capital. Regardless of whether a fee on capital or a fee on capital and income the fact is 30% of income received before tax goes in management fees. NAT investment plan and fees 33 The plan put forward by NAT, if it produced results up to expectations, would result in the fund lasting until 2053 and perhaps longer. This plan was based on budgeted expenditure of $81,350 a year, adjusted for inflation and so required actual expenditure to be reduced to that figure. With expenditure of $90,000 adjusted for inflation, the fund is projected to last until 2040. These expenditure levels would require P to reduce his discretionary spending (such as cab-charge, telephone, and lawn mowing expenses). This plan recognises the importance of preserving the capital in P's estate for the future and predicts the performance of the portfolio to be 5%p.a. in income, and 4%p.a. in capital growth based on the performance achieved over the past 3 years by the managed funds included in the plan. However, these predictions as to possible outcomes can only be used as a guide. Past performance of funds is no certain indication of future performance. 34 It is proposed the performance of the investments be reviewed at 6 monthly intervals. This review would include consideration of the following -

· P's needs · Economic outlook · Valuation of the portfolio · Asset allocation against benchmarks · Income earned · Capital gains and losses, and · The requirements of s14C of the Trustee Act.

35 The purpose of this review is to monitor the rates of income, capital growth, inflation, CPI increases, expenditure and taxation and also to make changes to the investment mix of the portfolio if required. This six monthly review would involve a meeting with M to discuss any required changes. There would be a meeting with both P and M to discuss matters once a year. 36 It is intended that funds be made available to P through an account with keycard access in which his weekly allowance will be deposited. Where larger, additional amounts are required, a cheque would be drawn payable directly to the third party.

The fees which would be charged by NAT on the management of P's estate in the first year (based on an investment of $1.5m) are as follows -

Annual Management fee $14,925 (being 0.975% of the capital value of the portfolio calculated annually and charged on a monthly basis plus a $300p.a tax return preparation fee).

Fund managers fees $12,000 (based on average Wholesale Management Expense Ratio of 0.80%)

The fees a trustee company can charge are fixed by the Trustee Companies Act 1964 s18(1)(c) as to commission and 19(B(2) as to trust fees. The fees set out appear to be within the fixed percentages. The .975% annual management fee was, it seems, reduced from a higher fee to make the NAT plan competitive with the OPC plan. The evidence was that NAT would be prepared to do what might be described as non-investment work involved in the special demands of P without extra charge. Nevertheless its ability to select and review fund managers is the justification for its fee of .975% on capital. General discussion 37 It is, I think, important to realize that while it should be accepted that NAT is a proficient fund manager, it has no great experience in undertaking management of the estates of protected persons with the particular requirements imposed by such management. For instance, it is by no means clear that NAT would cope as well as the Protective Commissioner with a demand for moneys to pay a prostitute. Neither would NAT expect to be called upon to inspect accommodation proposed or to make arrangements for temporary accommodation. Ordinary management of trust funds is more simple than management of estates of protected persons. 38 Many of the complaints of M really arise out of expectations that the Protective Commissioner as manager should fulfil the role of guardian as well. It is not necessarily the role of the Protective Commissioner to search out accommodation as opposed to approving it and paying for it, but M considers that it is. There is an obligation to make timely decisions on such matters and I think the Protective Commissioner should be quick to make decision on expenditure requests and not to be too technical about quotations. Life should proceed as easily as possible. 39 It is also necessary to appreciate that both plans make assumptions about expected returns which may or may not be made out in the future. Past good performance of fund managers is not really a guide to future performance although past poor performance may be. I do not think it can be found that one of the two plans is certain to be a more successful plan than the other. Even though predictions favour the NAT plan the court would need more expert evidence than it currently has before being able to come to a properly reasoned decision. The affidavit evidence of Mr Lolas from the NAT was in some aspects quite misleading, although not intentionally so and certainly some of the periods selected to show returns seemed to be selected to show acceptable returns rather than for up to date relevance.

The principles 40 The court is concerned to act in the best interests of the protected person. Such interests can include feelings of comfort as well as financial interests. A change of manager involves disruption and invariably involves expense. For instance in this case the Protective Commissioner has charged or is entitled to charge a fee on corpus and an additional establishment fee of NAT of $4,950 would be payable on change. 41 I do not consider that any breach of duty on the part of the Protective Commissioner has been established, even if there has been some basis for some complaints. More consultation with M would have been desirable, but against that M expected the Protective Commissioner to operate without much assistance from her. 42 In MB v Protective Commissioner (2000) 50 NSWLR 24, Hodgson CJ in Eq held it was proper to make an order for the removal of the Protective Commissioner under the Protected Estates Act where, though there was no material breach of duty establishing that he was an unfit manager, the breakdown in the relationship between the protected person's primary carer and the Protective Commissioner was such that it was in the interests of the protected person to remove the Commissioner so that the advantage in a removal outweighed the disadvantage of the appointment of a new manager. 43 There are three matters which I think are significant to the decision here. The first is that lack of continuity of managers can cause distress. The Protective Commissioner is of course entitled to organize his office as he decides, but nevertheless problems which arise as a result are relevant to the proper consideration of this matter. The estate manager who gave evidence before me felt that he had after about eight months established a reasonably close relationship with P. But shortly before the hearing a new manager was appointed to P's estate. This is less likely to occur with NAT, but against this is to be balanced the fact that NAT is far less experienced in dealing with protected persons and perhaps less able to handle the particular demands of P. The second matter is that it appears to be undecided when the investment plan of the Protective Commissioner might be implemented so far as P's estate is concerned. Certainly, some part of the hold-up has occurred as a result of these proceedings but the proposals for delegation and investment are uncertain and no final plan has been established. A third matter which I consider of relevance is the uncertainty of the fees to be charged by the Protective Commissioner. The entitlement under s55(1)(c)(ii) of the Act to apply part of the investment fund towards costs incurred by the Protective Commissioner in exercise of his function as Public Guardian, which entitlement may or may not be exercised, must be a relevant matter not because the Court is questioning the legislative power but because it is relevant to the interests of the protected person. A protected person not under guardianship may well ask why any part of his or her funds should be directed to that purpose. In addition to that, the amount which can be charged under s55(1)(c)(i) is not quite but almost at large. No one would have any idea of the amount involved having regard to the limitation that it "must not exceed such amount as is approved by the Director-General having regard to the Protective Commissioner's current budget". In saying this I acknowledge that the supervision of the Director General places a safeguard which did not exist before the year 2000 amendments of s57. The evidence was that the management fee would not be more than 2% of the capital fund each year, but there is a possibility of some other fees being charged. I do not understand any guarantee could be given as to the 2%. I do consider that the NAT fee of .975% could be controlled on the passing of accounts. The MER charge is beyond control of either manager as it is a consequence of investment in managed funds. 44 This is not the time to delve further into the practice of charging annual percentage fees on capital value. Such fees are, of course, an incentive for good management, but their percentage of actual income earned should not necessarily be disregarded. The NAT fees including MER in year 1 take up over 40% of income before tax. Those fees plus tax take up 54.6% of income before tax. 45 I have delayed this judgment for a long time. That is because I have been weighing up the important matters of financial management and more general estate management, bearing in mind the difficulties with any protected person and with this particular protected person. It is not my intention to decide that an order for a change of managers is justified by annoyance or minor complaint or even a justified complaint. Such matters are often able to be dealt with by the court giving directions under s12 of the Act. I have hesitated because I do not think M has understood the responsibilities of a financial manager as opposed to a guardian. 46 I also consider that for general management of the estate of a sometimes difficult person, the long experience of the Protective Commissioner is valuable. On the other hand on the evidence before me the financial plan of NAT if successful is likely to be more beneficial to P than the plan of the Protective Commissioner if successful. I also bear in mind that on the evidence communication between investment planners at the OPC and the estate manager is at least uncertain and probably not adequate. I also have borne in mind that the Protective Office plan is uncertain as to time of implementation. Were it not for the importance of the preclusion period I would have not considered a change in management justified or in the interests of P. I consider it of such significance that having regard to the competing investment proposals, and keeping in mind always that the returns are not guaranteed but are not just speculative, I consider an order should be made for the appointment of NAT as manager. 47 The costs will have to be met by the estate under management. The court is concerned to protect the estate. I intend to order that any costs agreed be approved by the Deputy Registrar. **********

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