Before me, as duty judge, is an application pursuant to s 75(2) of the Civil Procedure Act 2005 (NSW) for the court's approval of a compromise or settlement of a claim which is made on behalf of two persons - the plaintiff and the defendant - who are both under a legal incapacity before proceedings are commenced in respect of that claim.
The need for the approval arises because the parties have now reached an agreement for the settlement of the plaintiff's claim against the defendant contained in an agreement dated 18 September 2023 (Agreement), and both the plaintiff, Mavis Pearl Thomas (Mavis), and the defendant, Wayne Milton Thomas (Wayne), are persons under legal incapacity.
The evidence before me in support of the application is:
1. an affidavit of Farah-Bano Zaidi affirmed 18 September 2023; and
2. an affidavit of Tiffany Pamela Lau affirmed 19 September 2023.
Mavis' claim concerns circumstances surrounding the July 2019 sale of a property in her name at Strathfield South (Strathfield South Property) by Wayne using an Enduring Power of Attorney from Mavis and the subsequent purchase of a property at Enfield (Enfield Property) in the name of Wayne using the proceeds of sale which Mavis claims Wayne holds on constructive trust for her.
By way of background, Mavis is currently 91 years of age, widowed and resides at The Willows Nursing Home at Ashfield (Willows). Mavis is in fair physical health but suffers from moderately severe dementia. On 9 January 2020, the NSW Civil and Administrative Tribunal (NCAT) determined that Mavis was not able to manage her financial affairs due to her significant cognitive impairment and physical frailty and committed the management of her financial estate to the NSW Trustee and Guardian (NSWTG).
Wayne is the only child of Mavis. Wayne is currently 67 years of age, unemployed since 1996 and resides in the Enfield Property alone. Wayne receives a disability support pension and is wheelchair bound due to the amputation of his left leg in November 2022. On 9 January 2020, NCAT appointed NSWTG to manage his financial estate.
Mavis Pearl Thomas bht NSW Trustee and Guardian v Wayne Milton Thomas bht... [2023] NSWSC 1154 | Case summary | Zoe
Wayne has been diagnosed with an intellectual disability, major depression and anxiety, and has been reliant on Mavis for financial support and management for the majority of his life. Until Mavis moved into the Willows in 2017, she managed Wayne's financial affairs. Wayne is currently a National Disability Insurance Scheme (NDIS) participant and receives a significant amount of funded support under his NDIS plan.
Wayne is the sole beneficiary under the latest will of Mavis. It appears that Mavis is unlikely to have had testamentary capacity to make a subsequent will.
The evidence before me is that the Enfield Property is no longer suitable for Wayne's living needs and Wayne is required to move into an assisted living community to receive adequate day-to-day support.
Based on the fact that Mavis is the mother of Wayne, that Mavis has cared for Wayne throughout his adult life and that she managed his financial affairs until she moved into the Willows, a strong inference arises that Mavis would wish for Wayne to be appropriately housed and cared for with assistance from her own resources.
Until 2017, Mavis and Wayne resided at the Strathfield South Property, which was registered in Mavis' sole name. By Enduring Power of Attorney date 18 April 2017 (EPOA), Mavis appointed Wayne as her attorney.
On 5 July 2019, the Strathfield South Property was sold for approximately $981,000 at the direction of Wayne acting in reliance on his powers pursuant to the EPOA.
On 29 August 2019, Wayne proceeded to purchase the Enfield property in his own name for $649,998 using the proceeds of sale of the Strathfield South Property. On 18 July 2020, the balance of the proceeds of sale of the Strathfield South Property ($269,272.05) were paid into Mavis' account held by the NSWTG, which were applied as a refundable accommodation deposit for Mavis at the Willows.
Wayne undertook these transactions after receiving legal advice.
In May 2022, NSWTG, acting on behalf of Mavis, claimed against Wayne that he had acted in breach of the fiduciary duty that he owed to Mavis and that he held the title to the Enfield Property on constructive trust for Mavis.
Zucker Legal, on instructions from NSWTG, act for Mavis. Coleman Greig, on instructions from NSWTG, act for Wayne. NSWTG has authority to maintain proceedings in one capacity, acting against itself in another capacity, pursuant to s 21 of the Trustee and Guardian Act 2009 (NSW).
Mavis currently has assets totalling $66,000, comprising a deposit held in her account at the NSWTG. Mavis receives a veteran's affairs pension of $1,082 per fortnight, totalling approximately $28,132 per year. Mavis has ongoing liabilities to the Willows in the amount of $890 per fortnight, totalling approximately $23,140 per year, in addition to ongoing pharmaceutical, comforts and NSWTG expenses totalling approximately $9,000 per year. This results in an annual income to expenses deficit for Mavis of about $4,000. Mavis only has limited funds available for any major expense.
As I have stated, Wayne is unemployed and has not been in paid employment since 1996. Wayne currently has a net asset position of $19,828.55, not including the Enfield Property, comprising $17,080.05 held in his account at NSWTG, $2,760.59 held in an account with St George Bank, less an outstanding liability of $12.09 for a fee. Wayne receives a Centrelink Disability Support Pension and NDIS travel allowance in the amount of $1,132 per fortnight, totalling $29,432 per year. Wayne has ongoing liabilities totalling $1,290 per fortnight, totalling $33,520 per year. This results in an annual income to expenses deficit for Wayne of approximately $4,082.
The Agreement is broadly in the following terms:
1. Wayne will sell the Enfield Property as soon as practicable but by not later than six months after obtaining court approval of the Agreement;
2. Wayne will commence immediately to locate and arrange for possession of suitable accommodation in a retirement village or some form of supported care and vacate the Enfield Property;
3. from the proceeds of sale of the Enfield Property:
1. $339,000 is to be transferred to Wayne; and
2. the balance is to be paid to Mavis' account held by NSWTG.
1. Mavis releases Wayne from all claims and entitlements of any nature that Mavis has or might have against Wayne in and arising out of the sale of the Strathfield South Property, the purchase of the Enfield Property, and the conduct by Wayne of the financial affairs of Mavis pursuant to the EPOA.
2. Each party will bear their own costs of the Agreement and this approval application.
The sale of the Enfield Property is expected to generate sale proceeds (less repair costs, agent's commission, conveyancing costs and other outgoings) of $600,000, leaving approximately $261,000 available for distribution to Mavis and $339,000 available for distribution to Wayne.
Short of the parties settling the dispute between them, Mavis will likely commence legal proceedings against Wayne seeking a declaration that Wayne holds the title to the Enfield Property on constructive trust for Mavis.
For Mavis to pursue claims against Wayne through legal proceedings, rather than resolving them in the Agreement, will likely result in significant legal costs being incurred for Mavis and Wayne. Due to the limited financial resources available to both parties, this may result in the Enfield Property having to be sold and the sale proceeds to be diminished. There is also significant uncertainty and risk for both parties in the ultimate outcome of any such proceedings.
Indeed, Wayne has no available resources to meet any such legal costs and doing so would further extend the shortfall in Wayne's current budget and continue to dimmish the limited assets available to him.
The evidence before me is that Wayne will apply his share of $339,000 from the sale proceeds of the Enfield Property towards his ongoing care and needs, including:
1. up to $250,000 securing suitable new accommodation;
2. up to $50,000 for funding any outgoings associated with moving into new accommodation; and
3. $39,000 for his personal care at a rate of $150 per week for 5 years (which supplements his current income to extinguish the shortfall in his current annual budget).
The effect of the settlement for Wayne will resolve the claim against him by Mavis and will provide him with greater security for whatever vicissitudes of life may present for him in the future.
The effect of the settlement for Mavis will resolve her claim against Wayne, avoiding the need to incur significant legal expenses in pursuing her claim through legal proceedings and most likely allow her to continue to satisfy her outgoings from her share of $261,000 from the sale proceeds for the rest of her life.
I note that NSWTG, in its capacity as the financial manager of each of Mavis and Wayne, is of the view that the Agreement is in the interests of Mavis and Wayne respectively.
Accordingly, in the exercise of the Court's protective function under s 75(2) of the Civil Procedure Act 2005 (NSW), I consider that the proposed settlement is beneficial to each of Mavis and Wayne in the sense described in Fairhurst (bht NSW Trustee and Guardian) v Fairhurst [2012] NSWSC 388 at [30]-[39], Permanent Trustee Company Ltd v Mills (2007) 71 NSWLR 1; [2007] NSWSC 336 at [29], Fisher v Marin [2008] NSWSC 1357 at [29], Stojic v Stojic [2019] NSWSC 23 at [32] and Budini v Sunnyfield (No 3) [2021] FCA 1540 at [10]-[12].
For these reasons, I approve the agreement contained in the document titled Agreement dated 18 September 2023 which has been signed on behalf of Mavis and on behalf of Wayne by NSWTG as their respective financial managers. I therefore make the following orders:
1. An order pursuant to s 75(2) of the Civil Procedure Act 2005 (NSW) that the Court approves the agreement for the settlement of the plaintiff's claim in the form of the document which is Annexure "A" to the Affidavit of Farah-Bano Zaidi affirmed on 18 September 2023 in these proceedings.
2. An order pursuant to s 77(3)(b) of the Civil Procedure Act 2005 (NSW) for the money recovered pursuant to the settlement to be paid to NSW Trustee and Guardian as manager of the plaintiff's estate.
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Decision last updated: 22 September 2023