seventhly, other advantages to G from the involvement of his family as managers of his estate.
25 As to the first matter, in Holt v the Protective Commissioner, Kirby P (as his Honour then was), with whom Sheller JA and Windeyer AJA agreed, identified the advantages to a protected person of having a family member appointed as manager of his estate as including:
" (b) to the appointment of a family member, the following advantages:
...
(ii) the capacity of the protected person, if disabled, to interact with his or her manager so that, so far as possible, within the disability which has led to the appointment, such person may remain in charge of, or at least able to influence, the broad directions of the management of the estate;
(iii) the ingredient of love and affection and unquestioning devotion to the protected person which an appropriate family member can add to the task of management. Whilst the office of manager is, by its definition, concerned with proprietary and financial matters and involves the prudent control of the property and like interests of the protected person, in the nature of things the manager of the estate of a protected person is more likely than a general trustee or receiver to become involved in decisions which affect the protected person's quality of life. A lifetime knowledge of the person and a devotion to his or her interest may contribute to that quality. It may more readily be secured by the appointment as manager of a family member with the requisite knowledge and motivation. "
26 His Honour also said (at 239) that it was in the normal and natural order of things where a family member is found incapable of managing his or her own affairs that other members of the family step in.
27 It is relevant in this case that members of the family did not seek to manage G's estate at the time he was to receive the compensation for his accident. Rather K and G's oldest brother and sister at that time requested that the Office of the Protective Commissioner be appointed as manager. At that time K was emotionally upset by the injuries to his wife and son. He was in the process of selling his business in India and did not feel able to cope with managing G's money. With the passage of time he is now confident of his ability to do so.
28 As to the second matter, there are testimonials to the integrity, prudence and frugality of both applicants. Whilst neither deposes to expertise in managing the substantial sums involved, I accept that with appropriate advice, and having regard to their education and to K's business experience, they are competent for the task.
29 K is 75. Despite his injuries, G has the normal life expectancy of a 50-year-old man. Assuming nothing untoward happens to G, it is likely that K will die or become incapacitated before G dies. In that event it is likely that another person should be appointed jointly with J as manager. But those eventualities are no reason for refusing K's appointment at this time.
30 As to the third matter, apart from the natural advantages arising from the appointment of a family member, I think there is an additional reason for such an appointment in this case. There have been conflicts between the NSW Trustee, (or the Office of the Protective Commissioner as it was), and G's family in relation to the construction of the Denham Court home. It is unnecessary to go too far into the details, and it is not possible to say where the rights and wrongs of the dispute lie. I will mention some of the details because they are relevant to a later matter.
31 G's family alleged that an adviser to the Protective Commissioner allowed the builder to charge an excessive price by letting it be known how much money the court had authorised be spent on the construction of the Denham Court property. They also alleged that the adviser encouraged the builder to quote a higher price and held out to the family that that price was needed for the necessary insurance to be obtained. The family says, and there is some objective support for this, that they were told to negotiate with the builder, and did negotiate with the builder, for a refund of part of the purchase price. They say that they were repaid $32,000 by the builder, who had agreed to repay a further $68,000, but has not done so.
32 The disputes over the cost of construction have been a lingering sore. I think the fact of the dispute is a matter in favour of terminating the existing management, irrespective of whether the Protective Commissioner or its adviser was at fault in any way. The dispute, not only in relation to that matter, but in relation to the choice of builders, also tends to corroborate other evidence of the applicants' care over expenditure.
33 As to the fourth matter, three potential conflicts of interest are identified. The most obvious is the claim by members of G's family to be entitled beneficially to up to two-thirds of the ownership of the Glenfield property. The merits of that claim cannot presently be determined. There is no doubt that the claim is genuinely raised. Whilst the Glenfield property remains unsold, there is no crystallised dispute. The applicants depose that all the family members are content that the property be let and that all of the net rentals be credited to G. The applicants are willing to consent to a direction to that effect until further order. G and his family wish to keep the house in the family. Unless the house should be sold, the conflict of interest is managed, so long as all of the net income from the property is applied for G's benefit.
34 On 13 June 2006 the court adopted the report of the proposal of the Protective Commissioner that up to $1.3 million could be used for the construction of the residence at Denham Court on the basis that the Glenfield property be sold. The applicants seek a discharge of the order directing or authorising the sale of that property. No reasons were given for that order and I infer that it was based on the matters raised in the report of officers of the Protective Commissioner.
35 As noted earlier, the reasons of a financial planner from that office for proposing the sale of that property included a projected low income yield from the property of a mere $3,308 per annum, or a yield of 1.28 percent per annum based on the property's then estimated value of $258,000. That estimate appears excessively low. It was based upon projected expenditure of $5,000 per annum on maintenance of the property; and this for a projected gross rental of $15,600. The projection also included as an expense for land tax an amount of $5,200 per annum, although in 2006 the land tax threshold was land value of $352,000. No reasons were given for these apparent anomalies. By contrast, Mr Nonnemacher projects an initial net rental income of $17,680 per annum.
36 The report of the financial planner from the Office of the Protective Commissioner dated 29 March 2006 opined that there was a, "reduced likelihood of strong capital growth in the short-term". As I have said, the Protective Commissioner then estimated the value of the property at $258,000. It is now estimated to be worth $320,000. No reason is advanced for thinking that the value of the Glenfield property would not vary in accordance with market conditions in the area.
37 If the Glenfield property were sold there is the potential that the dispute as to ownership would be triggered. That is not in G's interests. He accepts that he is not the full beneficial owner of the property, but his evidence if the matter came to litigation, might carry little weight. Nonetheless, there is at least a serious prospect that it might be found that payments made by other family members towards the purchase of the property were not gifts and that the property was held by G on a resulting trust as to part for other family members. Such a result would mean that G would not receive all of the proceeds of sale as the report of the Protective Commissioner assumed. No doubt substantial moneys would be spent on legal costs if a negotiated settlement could not be arrived at.
38 These considerations seriously diminish the perceived advantage of sale, namely, that all of the proceeds could be applied to diversify G's investment exposure. If the management of the estate is changed there will in any event be a reallocation of assets, with a higher proportion of G's assets being invested in cash and fixed interest securities. I do not consider that the interests of diversification of the portfolio outweigh the risk that a sale would precipitate claims by other family members to the property, that such claims might succeed, and that in any event the proceeds of sale would be substantially eroded by the costs of such a dispute. It is preferable that G receive the net income of the property.
39 It follows that this undoubted conflict of interest arising from the claims of the applicants and other family members to a beneficial interest in the Glenfield property can be managed by the applicants' undertaking, or being directed, to credit all of the net rental income to G.
40 Another suggested potential source of conflict was the receipt I earlier noted of $32,000 from the builder. However, it appears that these moneys have been duly credited to G's bank account. I do not consider that there is any conflict in relation to these moneys.
41 The final identified potential conflict concerns debts claimed against G. Mr Keogh, a Client Service Officer with the NSW Trustee, referred to a letter written by K in February 1997 setting out debts claimed against G's estate. Some related to moneys claimed to have been paid for the purchase of the Glenfield property and the construction of the house on it. Others related to various miscellaneous expenses including medical reports. Mr Keogh deposes that none of the claimed debts has been paid. This does not suggest any conflict.
42 Leaving aside the claims in respect of moneys spent on the Glenfield property, which I have already dealt with, it appears that the claims for other expenditure have not been pressed. There is nothing to suggest that those claims were not genuine. The claims would be long since statute-barred.
43 More recently, in September this year, G wrote to the NSW Trustee stating that he needed to pay his sister for various expenditure in connection with the Denham Court property and needed to pay his father for tiles, garden lights and other expenditure in relation to that property. Provided that there are receipts for those expenditures, there appears to be no reason why the money should not be reimbursed. I do not regard these matters as giving rise to conflict, provided K and J acknowledge that moneys of the estate would only be applied in reimbursement of such expenses on production of receipts.
44 As to the fifth matter, it is not possible to say that the investment strategy propounded by the NSW Trustee's financial planners involving a higher concentration of growth assets, and concomitant higher risk of loss, is to be preferred to Mr Nonnenmacher's more conservative strategy. G's income tax returns for 2008 show there is ample income to meet his current needs and to provide capital appreciation by investment in superannuation. A more conservative investment philosophy with a lower risk of capital loss does not appear to me to be contrary to G's interests.
45 As to the sixth matter, although the applicants will not charge for their services, they propose to use the services of Mr Nonnenmacher. After taking into account the charges that would in any event be due to the NSW Trustee under clause 38(1)(c) of the NSW Trustee and Guardian Regulation, it was common ground that the recurrent additional cost of using Mr Nonnenmacher's (or his firm's) services, over the charges of the NSW Trustee, was approximately $12,000 per annum. I do not consider this to be an excessive charge for the additional services that would be provided.
46 Finally, and importantly, it is G's wish that the management of his estate be transferred to his father and sister. The medical evidence is clear that he is incapable of making the necessary decisions to manage his estate for himself. His intellectual capacity remains severely impaired. But that is not to say that he has no understanding of, and no interest in, the management of his own estate. To the contrary, he reads the financial and other press and has an interest in his own affairs. He will have a greater opportunity to be involved in the management of his affairs than he does presently, if his father and sister are the managers of his estate. That will be of benefit to him. I do not think that his father and sister will allow their own judgment to be compromised because G will have greater scope to have an input to the management of his affairs.
47 Finally, there is a question as to whether G might be exploited if there is a change of management. The evidence is that K and J have devoted and continue to devote considerable time and care towards G. They have done so without reward. I do not think that there is any risk of such exploitation.
48 For these reasons I consider it in G's best interests that his father and sister be entrusted with the management of his estate. I will also discharge the order of 13 June 2006 insofar as it might require the sale of the Glenfield property.
49 In coming to these conclusions, I have regard to the undertakings proffered by K and J that the net income of the Glenfield property will be applied solely for the benefit of G until further order, that they will provide annual accounts to the NSW Trustee, and that, except in order to reallocate assets in accordance with the advice of Mr Nonnenmacher, they will not enter into any transaction involving the disposition of an asset worth more than $50,000 without notice to the NSW Trustee.
50 There should also be a direction that if either applicant dies or becomes incapacitated, the other applicant is to apply to the court for directions with respect to the management of G's estate on notice to the NSW Trustee.
51 Once an order is made for the appointment of private managers, the NSW Trustee has power under ss 65 and 66 of the NSW Trustee and Guardian Act to make orders and to give directions which it thinks desirable for the care and management of G's estate. Counsel invited me to stand the matter down, if I thought that the orders sought in the notice of motion should be made, in order for the parties to consider what further orders, directions or undertakings should be made or provided.
52 I will do that. This will give the NSW Trustee the opportunity of putting before me what orders or directions it would, in any event, propose under ss 65 and 66 of the Act. That will be relevant to what additional orders need be made.
53 I will, therefore, stand the matter over to a convenient time to allow short minutes to be brought in. For the reasons I have given, I propose to make orders to the effect of those sought in the amended notice of motion. The costs of the application of both parties will be paid out of G's estate.
54 I stand the matter over to 9.30am on 11 December 2009.