PY v RJS

The Hearing 6Four preliminary matters were addressed. 7The first was that the Senior Member (Legal) disclosed that he and Ms TBB had been both students in university in the early 1970s, and were acquainted at that time through attending the same tutorials and classes. Since they had had no contact from, at the latest, late 1974 until today's hearing, he indicated that he did not consider this acquaintance at all relevant to the hearing, other than as a matter of fullness of disclosure. 8The second was a request by solicitor B to represent the Applicant and Ms TBB in the hearing. Solicitor B indicated that his clients feared that they might be at some disadvantage in relation to the hearing since their brother, Mr HCB, was a solicitor while they had no legal training. Although the Tribunal considered that its procedures were such that any relative disadvantage would be addressed, it noted their concerns and, in the interests of promoting confidence in the administration of justice, gave leave to solicitor B to appear on behalf of the Applicant and her sister. 9The third was that the Tribunal noted Mr HCB had left a message with the Tribunal that, because of a health-related matter, he was unable to attend the hearing but that he might be available to speak to the Tribunal by phone. The Tribunal attempted to reach him on the number he left, but without success and accordingly left a message inviting him to join the hearing by telephone. Mr HCB, unfortunately, was unable to accept the invitation, but left a subsequent message with the Tribunal staff, which is referred to below. 10Finally, the Tribunal considered whether the Applicant had a genuine concern for Mrs PGB's welfare, as required of a private third-party applicant under s 25I(1)(b) of the Guardianship Act 1987 (NSW). The Tribunal was so satisfied.

What did the Tribunal have to decide? 11The issues for the Tribunal were:

• Is Mrs PGB incapable of managing her affairs?
• Is there a need for another person to manage Mrs PGB's affairs and is it in her best interests for a financial management order to be made?
• If so, who should be appointed financial manager?
• Is Mrs PGB incapable of managing her affairs? 12A person's capability to manage his or her affairs was considered by Campbell J in the NSW Supreme Court in Re GHI (a protected person) [2005] NSWSC 581. Campbell J affirmed the approach enunciated in PY v RJS [1982] 2 NSWLR 700 by Powell J, at paragraph 7: "It is my view that a person is not shown to be incapable of managing his or her own affairs unless, at the least, it appears: (a) that he or she is incapable of dealing, in a reasonably competent fashion with the ordinary routine affairs of man; and (b) that by reason of that lack of competence there is shown to be a real risk that either (i) he or she may be disadvantaged in the conduct of such affairs; or (ii) that such moneys or property that he or she may possess may be dissipated or lost ... it is not sufficient in my view merely to demonstrate that the person lacks the high level of ability needed to deal with complicated transactions or that he or she does not deal with even simple or routine transactions in the most efficient manner..." 13Young J in H v H (unreported) NSW Supreme Court 20 March 2000, in dealing with the capacity test as it has been enunciated in NSW, said that dealing with the "ordinary affairs of man" does not simply mean being able to go to the bank and draw out housekeeping money. Most people's affairs, his Honour said, "are more complicated than that, and the ordinary affairs of mankind involve at least planning for the future, working out how one will feed oneself and one's family and how one is going to generate income and look after capital. Accordingly, whilst one does not have to be a person who is capable of managing complex financial affairs, one has to go beyond just managing household bills." 14It should be noted that the relevant time for considering whether a person is incapable of managing his or her affairs is not merely the day of the hearing but the reasonably foreseeable future (McD v McD (1983) 3 NSWLR 81 at 86). 15Accompanying the application was a report dated 18 May 2012 concerning Mrs PGB, prepared by Dr Z, the Director of Rehabilitation and Aged Care Services at a public hospital. Dr Z's diagnosis was clear: 'Mrs PGB...has dementia of the Alzheimer's type which is moderately severe'. This report was supplemented by a variety of other reports, including her ACAT assessment dated 10 December 2013 and the results of a psychogeriatric assessment test conducted on Mrs PGB on 10 September 2014, both of which were consistent with Mrs PGB's having significant cognitive impairment. The Tribunal also spoke to Mrs PGB by telephone during the hearing; that interview demonstrated to the Tribunal's satisfaction Mrs PGB's cognitive impairment. 16The Tribunal was satisfied on the basis of this evidence that Mrs PGB is incapable of managing her financial affairs.

Is there a need for another person to manage Mrs PGB's affairs and is it in her best interests for a financial management order to be made? 17Since Mrs PGB has appointed Mr HCB under an enduring power of attorney, the issues to be considered in answering these questions are different from those which would have been relevant had no enduring attorney been appointed. They require, in essence, consideration of the attorney's willingness to manage Mrs PGB's financial affairs and the adequacy of his management of them. They require, too, in the light of that consideration, a decision as to whether it is appropriate that a financial manager be appointed, with the consequence that the attorney's authority is automatically suspended pursuant to s 50(2) of the Powers of Attorney Act 2003 (NSW). 18It is regrettable that Mr HCB was unable to participate in the hearing, either physically or by telephone, as the Tribunal would have found it most useful to discuss directly with him various aspects of his mother's affairs and his stewardship of them. Nonetheless, he did helpfully provide some views by telephone to the Tribunal's officers, to which these reasons will refer as appropriate. 19The Tribunal was assisted, too, by telephone evidence provided by Mr KET, who for an extended period until 2007 had acted as accountant and tax adviser for Mrs PGB, her late husband and the Mrs PGB's family company (the Family Company). In that year Mr KET ceased to advise the family of Mrs PGB, since Mr HCB preferred the services of other accounting and tax advisers. He was also, until 2009, one of Mrs PGB's attorneys, along with Mr HCB; in that year Mrs PGB executed a new power of attorney, in favour of Mr HCB alone. Mr KET provided the Tribunal with a brief summary of Mrs PGB's financial position in 2007, when last he advised her. At that time she:

• was the registered proprietor of the family home at Northern Sydney; this is the property transferred in March 2014, and which according to the Memorandum of Transfer had a sale price of $1,800,000; Mr KET's evidence was that the property was unencumbered in 2007;
• had a 100% interest in the Family Company, which had net assets of $1.5m, comprising shares, cash and loans to family members; these loans were a loan or loans of between $300,000 and $400,000 to Mr HCB, and a loan of c$50,000 to the Applicant; and
• had an annual taxable income from investments of $75,000; this did not include any distributions from the Family Company. 20In 2007, therefore, Mrs PGB's financial position could be described as comfortable, even if one discounts to nil value the loans by the Family Company to the Applicant and her brother, so that she could look forward to a financially secure old age. 21Jumping forward seven years to September 2014 Mrs PGB's financial position is radically different:
• she no longer owns the property in Northern Sydney, of which she is now merely a tenant;
• according to information provided by Mr HCB to the Tribunal's officer, the net proceeds of sale (after sale costs) of the property were used to repay a mortgage over the property with the balance being invested in a company of which Mrs PGB is a shareholder - which may well be the Family Company, but then again may not - whose assets include a claim as plaintiff in a class action relating to a share transaction;
• according to solicitor B's submissions and the Applicant's evidence, the property's new owner, Mr LDT, had indicated that a substantial amount of rent is owing by Mrs PGB, and that he intended to commence ejectment proceedings in order to obtain vacant possession of the property;
• Mrs PGB owes $12,200 to an aged cared service provider, who have elected to withdraw care services from her as a consequence of the delinquency in payment of their invoices; and
• Mrs PGB's only identifiable income is a government pension of approximately $800 per fortnight, which is managed for her by Ms TBB. 22On the face of matters, this represents a pronounced degradation in the order of $1.8m in Mrs PGB's financial position, even if one assumes that the Family Company and its investments remain intact, along with the sources of Mrs PGB's 2007 investment income. There was no evidence as to either of these matters, although Mr HCB did tell the Tribunal's officer that he proposed to provide financial statements relating to a company in which Mrs PGB is the sole shareholder - which may or may not be the Family Company - on or about 26 September 2014. 23All of this raises rather more questions than it answers. Most fundamentally, why was Mrs PGB's home sold? Why did Mr HCB wait for over three years before formally accepting his appointment as attorney, and then proceed immediately to register the power of attorney, thus enabling it to be used in relation to registrable dealings with Mrs PGB's real property? Why, one might ask, does a nonagenarian lady of limited cognitive capacity grant a mortgage over her residence? Are the two things - acceptance and registration of the power of attorney in 2012, and the mortgaging of the property, linked? The Applicant reports Mr HCB's former wife as stating that Mr HCB had mortgaged the property in Northern Sydney; is this true, and if so is this the mortgage which was discharged on sale of the property? Why are the proceeds of sale of Mrs PGB's house invested in a company which is engaged in litigation, rather than invested prudently in safe income producing investments of which the income can be used to fund Mrs PGB's rent payments? Mr KET told the Tribunal that he had become aware recently of a company associated with Mrs PGB's family being deregistered. Is this the Family Company? If so, what has become of its assets? 24The Tribunal has insufficient information to form any view as to the validity or otherwise of these assumptions or the answers to any of these questions. There may well be perfectly reasonable explanations and responses, and had Mr HCB been available to attend the hearing, either physically or by telephone, the Tribunal would have welcomed his clarifying matters. Things, however, are what they are, and the Tribunal finds itself faced with the circumstances which objectively indicate that Mrs PGB's financial position has worsened dramatically during Mr HCB's stewardship of her affairs, with no explanation from Mr HCB as to why this has happened. The Tribunal's preliminary conclusion, on the basis of a simple comparison as between Mrs PGB's financial position in 2007 and her circumstances in September 2014, is that her best interests are served by the appointment of a financial manager and the consequential suspension of Mr HCB's authority as his mother's attorney. 25That preliminary conclusion should, in the Tribunal's view, be tested against the views of the people most intimately involved.

The views of Mrs PGB 26Mrs PGB spoke to the Tribunal by telephone, but because of her disabilities she was unable to appreciate the nature of the proceedings or give her views to the Tribunal.

The views of Mrs PGB's daughters 27Both of Mrs PGB's daughters were strongly supportive of the appointment of a financial manager. Because their mother had appointed Mr HCB as her attorney, and because of his legal training and commercial experience, they had generally been content to allow him to manage their mother's finances. They had over the years become aware of instances of late payment of bills, but had been willing to accept his explanations and assurances. The incident with aged care service provider, coupled in particular with their discovery of the sale of the property in Northern Sydney and Mr KET's discovery that a family company owned by Mrs PGB had recently been deregistered, had given them very grave concerns as to their mother's financial welfare, which were exacerbated by the very limited information which they had as to her finances. Both strongly urged the Tribunal to appoint a financial manager.

The views of Mr HCB 28The Tribunal was unable to speak directly with Mr HCB. However:

• On 12 September 2014, he told the Tribunal's officer that he would not oppose the appointment of a financial manager, as he found it time consuming to manage Mrs PGB's finances;
• Early on 19 September 2014, he informed the Tribunal that he "consented" - which suggests some misconception as to the Tribunal's role - to the appointment of Mr KET as financial manager, and that he would not be opposed to the appointment of "any other manager of the Tribunal's choosing"; and
• Later on 19 September 2014, in response to the Tribunal's telephone invitation to him to dial in to the hearing, he reiterated to the Tribunal's staff his earlier comments. 29Accordingly, there appears to be no opposition in principle from any family member to the appointment of a financial manager. 30The Tribunal was satisfied that there is a need to appoint someone to manage Mrs PGB's affairs and it is in her best interests that an order be made.

Who should be appointed financial manager? 31In appointing a financial manager, as in making all other orders under the Guardianship Act, the Tribunal must act with the interests of the person concerned as the paramount consideration and in accordance with the other principles set out in section 4 of the Guardianship Act. 32Section 25M of the Guardianship Act provides that, if the Tribunal makes a financial management order, it may appoint a suitable person to manage the person's estate or may commit the management of the estate to the NSW Trustee and Guardian. 33In Holt & Anor v Protective Commissioner (1993) 31 NSWLR 227, the Court said that the dominant consideration in making orders about financial managers was the welfare of the person. The President of the Court of Appeal emphasised the Court's broad discretion in deciding who should be financial manager but also set out possible considerations as to the competing advantages of the Protective Commissioner and a family member as the manager of an estate. 34The NSW Trustee and Guardian now exercises the role of the Protective Commissioner. 35On the side of the Protective Commissioner was seen to be the manifest independence of the statutory office, the advantages of a dispassionate and neutral approach in situations of family conflict and divided views as to the best interests of the person, expertise and experience in managing estates, an impeccable reputation and the security provided to an estate against loss or damage. 36The advantages of the appointment of a family member were more economic management of smaller estates (that is, freedom from fees) and a greater familiarity with assets and liabilities in smaller estates, a greater capacity of a person with a disability to interact with the manager so as to exercise a greater influence over the broad directions of the management of the estate, love and affection for and knowledge of the protected person and concern for his or her quality of life, and particular qualities or qualifications enabling family members to act as managers. 37The Court considered that interrelated property interests in a family situation, where a conflict of interest and duty may be "more apparent than real," should not necessarily present an absolute bar to appointment of a family member who is otherwise appropriate. However, when appointing a family member, a decision maker must be satisfied that the estate, income and capital assets, will be utilised to advance the interests and quality of life of a protected person rather than to eventually increase the assets of the family. 38There are, in the Tribunal's assessment, three broad candidates for appointment: first, the NSW Trustee and Guardian; secondly, Mr KET, either alone or in combination with one or both of Mrs PGB's daughters; and thirdly, one or both of Mrs PGB's daughters. 39Let us start with Mr KET. He confirmed to the Tribunal his willingness to act if appointed, and indicated that he would be inclined to do so gratuitously. Mr KET has the great advantage of close familiarity with Mrs PGB's affairs, at least as they were in 2007, but since he has generously indicated a willingness to place that knowledge at the disposal of any financial manager who is appointed, the eventual financial manager will have the benefit of Mr KET's knowledge. The financial manager is in a fiduciary relationship with the person whose estate he manages, and the Tribunal's inclination is, if possible, to avoid adding a further layer of complexity to that relationship by appointing as financial manager a professional with relevant skills who may find himself caught uncomfortably between, on the one hand, the often onerous, but essentially gratuitous, duties imposed on him as financial manager and, on the other, the perfectly legitimate interests of his professional practice. On balance, therefore, the Tribunal's preference would be for Mr KET to be available as a resource for the financial manager, but not as the financial manager. 40Let us turn now to the NSW Trustee and Guardian. The relative advantages of appointing the NSW Trustee and Guardian are set out in Holt & Anor v Protective Commissioner. In the present case, however, the Applicant and her legal adviser have expressed concerns as to whether the NSW Trustee and Guardian will be able to act with sufficient urgency, given the relatively sparse information which is available as to Mrs PGB's financial position and the urgency with which protective measures may, in their judgment, need to be taken. The corollary is that Mrs PGB's daughters have expressed confidence that they, with the assistance of Mr KET and solicitor B, will be able to move speedily in order to take control of their mother's affairs. They have also expressed concern that, since they have only limited detail as to Mrs PGB's financial position, they are not comfortable at this stage in exposing her estate to the management costs charged by the NSW Trustee and Guardian. Moreover, since Ms TBB currently manages Mrs PGB's day-to-day living expenses, which are met from Mrs PGB's DVA pension, there was a concern that the introduction of the NSW Trustee and Guardian would add an unnecessary additional layer of complexity. 41Turning to Mrs PGB's daughters, the Tribunal was satisfied from their evidence, their demeanour and their interaction with Mrs PGB on the telephone as to the strength of their concern for (and their commitment to) her welfare, and their determination to promote her welfare. It is a small indicator of this commitment, in the Tribunal's view, that they both accepted their appointment as enduring guardians on the day in 2003 on which the appointment was made by their mother. The Tribunal was also satisfied as to their ability to identify and pursue measures directed at promoting Mrs PGB's financial welfare, and in doing so to seek and obtain relevant advice from appropriate professional advisers. The Tribunal in particular noted the speed with which they had prepared and lodged the application, and brought it to hearing, and their preparedness to prepare and lodge promptly a financial plan in relation to Mrs PGB's affairs. The Tribunal also noted that Ms TBB was currently managing Mrs PGB's DVA pension and day-to-day living expenses, and that in consequence for her to be appointed as financial manager would be a logical extension of those current arrangements. The Tribunal also noted that although s 25M(2) of the Guardianship Act prevented them from exercising functions in relation to Mrs PGB's estate until they had received the NSW Trustee and Guardian's imprimatur, the immediate concern was one of identifying Mrs PGB's current financial position and taking steps to preserve it, neither of which were dependent on the NSW Trustee and Guardian's approval: Guardianship Act, s 25M(3). Hence they would be in a position, if appointed, to act immediately in order to preserve Mrs PGB's estate. Both of them confirmed to the Tribunal that they were not and never had been bankrupt, and that neither of them had been convicted or accused of an offence involving fraud. Ms TBB confirmed that there was no conflict of interest for her in acting as her mother's financial manager, while Ms IAB disclosed the loan of c$50,000 made to her in 2006 by her mother, or perhaps by the Family Company, in order to partially fund certain home renovations. 42The circumstances of this loan are a little unclear. Mr KET believes that it was made by the Family Company; Ms IAB was unsure as to the identity of the lender, but thinks of it as a loan from her mother; Mr HCB referred to it in his conversation with the Tribunal staff, but did not indicate who he believed the lender was. The terms of the loan are equally unclear. Ms IAB indicated that so far as she was aware it was formally described as a loan, but was never intended to be repaid, was interest free and had been accepted by Mr HCB some years ago as a loan which would not be required to be repaid. Mr HCB, on the other hand, in his conversation with the Tribunal staff, indicated that he wanted an assurance from any financial manager that he or she would pursue the repayment of the loan. 43The Tribunal considered that in all the circumstances, taking into account the various matters canvassed above, it would be in the best interests of Mrs PGB that her daughters Ms TBB and Ms IAB be appointed as her financial managers. So far as the loan to Ms IAB is concerned, there is clearly uncertainty not merely as to its terms but as to the identity of its lender. This uncertainty, however, is but one amongst many concerning Mrs PGB's financial and business affairs. This Tribunal is not the forum in which that uncertainty can be resolved, but the Tribunal is concerned to ensure that the loan is preserved intact for ultimate determination by the appropriate forum at an appropriate time. 44Accordingly, the Tribunal is satisfied that Ms TBB and Ms IAB are suitable persons to be appointed jointly as financial manager for Mrs PGB subject to:

• the authorities and directions of the NSW Trustee and Guardian, and
• a specific order that they neither cause nor permit any steps to be taken for the release or forgiveness of the loan of c$50,000 alleged to be owed by Ms IAB.

Order with a Specified Review Period 45The Tribunal is conscious that this application has been made as a matter of urgency, in circumstances where there is:

• compelling circumstantial evidence of less than adequate management - and here the Tribunal quite consciously refrains from expressing any view as to what may have caused that inadequacy - of certain aspects at least of Mrs PGB's affairs by her attorney over an extended period, but
• considerable opacity as to the Mrs PGB's overall current financial position. 46Accordingly, the Tribunal proposes that the financial management order be reviewed in three months, by which stage it would expect the financial managers to have obtained a more complete and detailed picture both of Mrs PGB's current financial position and of its evolution since 2007, which will assist in determining whether continuing financial management is necessary, and if so on what terms. In particular, once the terms of the loan to Ms IAB are established it may well be necessary to vary the financial management orders so as to establish a regime consistent with the recovery of that loan (if, in fact, it is repayable). 47In order to assist the financial managers both in taking steps to preserve Mrs PGB's financial position and in clarifying the history over recent years of Mrs PGB's finances, the Tribunal proposes to make additional orders to the following effect:
• that Mr HCB deliver up to the financial managers by 26 September 2014 all documents of title to, and means of control (such as electronic tokens and passwords) of, Mrs PGB's assets;
• that Mr HCB provide to the financial managers (and the Tribunal) by 26 September 2014 details of the amount and disposal of the sale proceeds of the property in Northern Sydney;
• that Mr HCB provide to the financial managers (and the Tribunal) by 26 September 2014 a list of all assets of Mrs PGB (excluding personal and household effects) and details sufficient to allow the financial managers to identify and take control of them; and
• that Mr HCB provide to the financial managers (and the Tribunal) by 15 October 2014 a full accounting of all payments made, amounts received, liabilities incurred and assets acquired or disposed of by him as Mrs PGB's attorney. 48In making these orders, the Tribunal notes the ill-health which, according to Mr HCB's communications with the Tribunal's officers, has prevented his attendance at the hearing, and is alert to the desirability of not imposing too great a burden on him at what may be a difficult time. The Tribunal's primary concern must be, however, the best interests of Mrs PGB, and in making these orders the Tribunal has attempted to balance Mrs PGB's interests - namely, the early identification of her assets and the prompt transfer of control of them to her financial managers - against adding unduly to the strain on Mr HCB's health. From Mr HCB's conversation with the Tribunal's officer concerning the sale of the property in Northern Sydney, it would appear that provision of a full accounting in relation to the sale proceeds should not present him with any great difficulty, so that the imposition of 26 September 2014 as the due date for provision of that information does not appear onerous. Similarly, since Mr HCB is (and since 2009 has been) his mother's attorney, he presumably has readily to hand the documents and information necessary to control her financial assets, and provision of this material to the financial managers by 26 September 2014 should not unduly tax his energies. Equally, and for the same reason, one would expect him to have readily to hand particulars of her present financial assets, so that provision of this material to the financial managers by 26 September 2014 is not an unreasonable imposition on him. The Tribunal accepts that it is a larger task to provide a detailed accounting of his stewardship of his mother's affairs since 2009, and in recognition of this difference has decided to allow Mr HCB a month in which to produce this information.

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

Amendments 03 November 2014 - Added 'directions to appointed financial manager about loan' and 'directions to attorney to provide information to appointed financial managers' to catchwords Amended paragraphs: Coversheet 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: 03 November 2014