By a summons filed on 27 June 2016 in the Protective List of the Equity Division of the Supreme Court of NSW, the plaintiff seeks protected estate management orders, under section 41 (1) of the NSW Trustee and Guardian Act 2009 NSW, to the effect that:
1. the defendant (her 17-year-old nephew) is incapable of managing his affairs; and
2. Ability One Financial Management Pty Ltd ACN 113 553 852 should be appointed manager of his estate.
The defendant has sworn an affidavit in support of his aunt's summons.
The plaintiff is the defendant's tutor in separate proceedings, pending in the District Court of NSW, instituted in the name of the defendant against his father.
In those District Court proceedings the defendant (as, for convenience, I here describe him although he is the plaintiff in those proceedings) claims damages as compensation for personal injuries suffered in a motor vehicle accident.
The District Court proceedings have yet to be determined, although liability is admitted and, it can be assumed, the defendant is likely to obtain an award of damages.
It can also be assumed, for present purposes, that, in due course, this Court will accept: (a) that the defendant is in need of protection beyond that presently afforded to him by the plaintiff acting as his tutor; and (b) that, at least for a time, he will require the assistance of a protected estate manager to manage his affairs notwithstanding his attainment of the age of majority. Cf, Re AAA; Report on a Protected Person's Attainment of the Age of Majority [2016] NSWSC 805.
The damages claimed by the defendant in the District Court proceedings include a claim for the prospective costs of management of his estate as a protected estate.
There is evidently a dispute in the District Court proceedings about quantification of an allowance, admittedly to be made, for the costs of funds management.
At the invitation of the trial judge charged with deciding that dispute, the parties in the present proceedings (with the evident cooperation of Ability One Financial Management Pty Ltd) have applied to this Court for the appointment of a protected estate manager in advance of the determination of the District Court proceedings.
The learned District Court judge evidently anticipates that, by such a means, the burden upon the parties to the compensation proceedings, in adducing evidence as to the costs of fund management, might be lessened, as might the District Court's burden of decision on that evidence.
There is nothing in the evidence before this Court or, I apprehend, in evidence before the District Court proceedings to suggest that the plaintiff is unable, as tutor for the defendant in the District Court proceedings, to perform the office of tutor in those proceedings. On the contrary, she is represented by counsel, and the parties are alive to the desirability of placing before the District Court evidence of competing managerial services, and different commercial rates, available to a person in need of a protected estate manager.
The District Court, exercising common law jurisdiction, is better placed than this Court, exercising protective jurisdiction, to make an assessment of the defendant's entitlement to compensation. The evidence before this Court does not permit such an assessment to be made, even if (contrary to the fact) these proceedings were appropriately constituted to enable such a determination to be made. The District Court has the benefit of a contradictor, in adversarial proceedings. The present proceedings are not adversarial, but managerial in character. There is no contradictor. The defendant in the District Court proceedings (or, more accurately, his insurer), whose interests are likely to be affected by an award of compensation, has not been, and cannot readily be, heard.
Were this Court to appoint a protected estate manager for the defendant now, it would operate to suspend his power to manage his own affairs (NSW Trustee and Guardian Act, 2009, section 71) and require the authority of the plaintiff as his tutor in the District Court proceedings to be reviewed. It could interfere with the conduct of the District Court proceedings, and inject into those proceedings a manager with a vested interest in their conduct.
Without a demonstrated need for the appointment of a protected estate manager to conduct the litigation, without information about the role proposed to be played by a protected estate manager in the conduct of the litigation, and without precise knowledge of fees proposed to be charged by a protected estate manager for the conduct of the litigation, this Court should be slow to involve in contested proceedings for personal injury compensation an entity such as Ability One Financial Management Pty Ltd (whose consent to appointment as a protected estate manager is contingent upon a grant of authority to charge fees) which has, or may have, a vested commercial interest (which may differ from that of the person in need of protection) in the outcome of those proceedings: Re W and L (Parameters of protected estate management orders) [2014] NSWSC 1106 at [48].
A summons for an appointment of a protected estate manager is not a convenient means by which to aid quantification of a claim for funds management costs in personal injury litigation.
Save in exceptional circumstances (not evident in the current proceedings), the appointment of a protected estate manager (essentially, to manage an award of compensation) should ordinarily await the determination of the compensation proceedings and, experience teaches, a payment of the proceeds of an award of compensation into court (pursuant to the Civil Procedure Act 2005 NSW, section 77).
The procedure for payment of money into, and out of, court is not a mere formality. It enables the administrative machinery for which the NSW Trustee and Guardian Act provides to be engaged in an orderly way. It facilitates the efficient approval by the NSW Trustee, under the direction of the Court, of a plan of management for management of an incapable person's protected estate.
If there is need of urgent relief for a person in need of protection, it can be accommodated within this regulatory framework.
Whether a person thought to be in need of protection is, in fact, a person incapable of managing his or her affairs so as to require the appointment of a protected estate manager is generally a question best addressed by this Court (exercising protective jurisdiction) when the nature and extent of his or her property is known. Furthermore, one of the factors that may bear upon the identity of a prospective manager of a protected estate is the amount of any compensation awarded to the incapable person.
Into this mix must also go the reality, in law and fact, that no protected estate manager has a vested interest, or a right to remain, in the office of manager: M v M [2013] NSWSC 1495 at 50. Not uncommonly, there is a change of manager or, against expectations, an acceptance that protected estate management orders can safely be revoked after a relatively short period of management.
As presently advised, I propose to defer further consideration of the plaintiff's summons until the conclusion of the District Court proceedings, reserving liberty to apply so as to permit earlier consideration of the summons if circumstances so require.
That decision having been made, I note that the summons is formally deficient in that it fails to include a prayer for relief that Ability One Financial Management Pty Ltd be permitted to charge for performance of the work of a protected estate manager.
As the company well knows, the office of a protected estate manager is prima facie a gratuitous one: Ability One Financial Management Pty Ltd and Another v JB by his tutor AB [2014] NSWSC 245; Re Managed Estates Remuneration Orders [2014] NSWSC 383. The practice of the Court, upon an exercise of protective jurisdiction, is not to appoint a "manager for reward" (other than a licensed trustee company, regulated by legislation) without a report of the type described in the Ability One judgment [2014] NSWSC 245 at 290.
With a correct appreciation of the case law and current practice on the subject, the NSW Trustee has presently declined to prepare such a report because to do so would be premature.
While the protective jurisdiction is not dependent for its existence, or exercise, upon property, the practical utility of the office of a protected estate manager does generally depend upon the existence of property required to be managed: Re W and L [2014] NSWSC 1106 at [6] and [16]. Without property (in this case, without a recovery of compensation) there is no fund for a protected estate manager "for reward" to draw remuneration from even if, in the abstract, remuneration be allowed.
Procedurally, the appropriate orders, for the present, are orders to the following effect:
1. ORDER that the summons be listed before the Protective List Judge, for directions or hearing as the nature of the case may require, on 10 October 2016 (a nominal date pending determination of the District Court proceedings).
2. NOTE that the related proceedings (numbered … in the… Registry of the District Court of New South Wales) are part heard, yet to be determined.
3. RESERVE liberty to apply to the Protective List Judge generally.
4. RESERVE all questions of costs.
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Decision last updated: 26 July 2016