Solicitors:
Plaintiffs: Care Legal
Second Defendant: NSW Trustee
File Number(s): 2022/00203328
[2]
Judgment
On 19 April 2022 the NSW Civil and Administrative Tribunal (NCAT), in its Guardianship Division, made (under the Guardianship Act 1987 NSW) a guardianship order and a financial management order for the first defendant (given the pseudonym ZYM) in these proceedings.
The orders were made on the application of a delegate of the first plaintiff (the Secretary, NSW Department of Communities and Justice) who then bore parental responsibility for the first defendant.
The Tribunal appointed the public guardian as the first defendant's guardian and the NSW Trustee (the second defendant) as his financial manager.
At the hearing before the Guardianship Division the first plaintiff invited the Tribunal to appoint a private manager, rather than the NSW Trustee, as manager of the first defendant's protected estate. However, insufficient evidence was then available to justify the appointment of a private manager and (in a manner consistent with Ability One Financial Management and Anor v JB by his tutor AB [2014] NSWSC 245 at 290-(o)) the Tribunal took the view, not unreasonably, that the interests of the first defendant would be best served by committal of management of his estate to the NSW Trustee, anticipating that an application might be made at a later date for replacement of the NSW Trustee by a suitably qualified private manager.
Secretary, NSW Department of Communities and Justice and Anor v ZYM and Anor [2022] NSWSC 935 | Case summary | Zoe
The correctness of the Tribunal's approach, in this regard, is illustrated by the fact that the entity nominated as a private manager was not, as was mistakenly put to the Tribunal, a licensed trustee company but, rather, a financial adviser commonly retained by the second plaintiff (a licensed trustee company) in management of protected estates.
By a notice of appeal dated 31 May 2022 the first plaintiff appealed to NCAT's Appeal Panel against the Tribunal's decision of 19 April 2021, limited to a challenge to the identity of the financial manager appointed. The Tribunal's financial management order was subsequently stayed pending the determination of the appeal.
On the application of the first plaintiff, without objection by the second defendant and at the invitation of the Court, the Tribunal has today (12 July 2022) made an order under section 25L of the Guardianship Act 1987 to the effect that the proceedings before it be dismissed on the basis that proceedings relating to the first defendant's capability to manage his own affairs be referred to the Court.
Such a referral serves to facilitate an early settlement of the question of the identity of the first defendant's financial manager, so as to enable care arrangements for him to be confirmed without further delay, with an order for payment out of court of funds which represent the substance of his property.
The first defendant was born in 2004. He has, recently, attained the age of majority, 18 years.
Until he attained that age, he was under the care of the first plaintiff, to whom was allocated parental responsibility.
He is incapable of managing his own affairs by reason of injuries suffered by him in a motor vehicle accident that occurred when he was two years of age.
On 18 March 2022 a judge of the District Court of NSW approved a settlement of a claim for compensation made by a delegate of the first plaintiff acting as his tutor. He was awarded a judgment for $12 million, subject to adjustments.
The District Court's orders were amended on 15 June 2022 to make provision for the first defendant's compensation award to be paid into court for investment pending the appointment of a financial manager.
On 30 June 2022 the sum of $11,671,036.46 was paid into court, in the compensation proceedings, on the account of the first defendant.
At the time the first plaintiff applied for a financial management order in the Tribunal (on 9 February 2022) the first defendant was without any substantial assets (other than his as yet unresolved compensation claim) and his only financial resource was an entitlement to a disability pension.
The first plaintiff's application to the Tribunal was made with a sense of urgency because of a need to put in place arrangements for the first defendant's care before he attained the age of majority.
The sense of urgency attending the first plaintiff's application has not wholly dissipated. The first defendant having attained his majority, and having acquired an entitlement to a substantial sum of money, which cannot be accessed until firm arrangements are in place for a financial management regime, the first plaintiff is currently bearing the burden of the first defendant's maintenance on an interim basis.
At the time of the hearing before the Tribunal on 19 April 2022 the first plaintiff had not quite obtained the evidence (including evidence of the consent of the second plaintiff to act as a financial manager) necessary to ground the appointment of the second plaintiff.
That evidence is now available.
In those circumstances, it is appropriate that the preference of those who have been intimately involved in the first defendant's care (including his mother) for the appointment of a private manager (more particularly, a licensed trustee company) as the first defendant's financial manager be respected: Holt v Protective Commission (1993) 31 NSWLR 227; M v M [2013] NSWSC 1495 at [50]; Ability One [2014] NSWSC 245 at [35].
It would have been open to the Tribunal on 19 April 2022 to have appointed the second plaintiff as the first defendant's financial manager had evidence of its consent and its suitability been available. As a licensed trustee company, the second plaintiff can generally be regarded as suitable to manage a protected estate of significant value. An institutional manager was plainly required to manage such an estate.
Because the second plaintiff is a licensed trustee company with all the safeguards inherent in that status, it was not necessary for the Tribunal to have before it a report from the second defendant of the nature of that described in paragraph 290(m) of Ability One [2014] NSWSC 245. Such a report is generally required by the Court as a pre-condition to the appointment of a private manager for reward who is not a licensed trustee company.
The Tribunal's hesitancy about appointment of a manager for reward, not qualified as a licensed trustee company, was quite appropriate.
The plaintiffs have expressed concern that the second plaintiff's entitlement to remuneration for acting as the manager of a protected estate be confirmed, notwithstanding that, as explained in Ability One [2014] NSWSC 245 at [90]-[112], a licensed trustee company has a statutory "right to charge fees" under the Corporations Act 2001 Cth.
An advantage of the Court, rather than the Tribunal, making decisions about management of the first defendant's estate in the circumstances of the current case is that the Court can authorise remuneration of a manager whereas the Tribunal cannot, and the Court can order that funds in court be paid out to a manager: Ability One [2014] NSWSC 245 at [269]-[272]; Re Managed Estates Remuneration Orders [2014] NSWSC 363; Civil Procedure Act 2005 NSW, s 77(3).
I make the following orders in disposition of the plaintiffs' summons:
1. DECLARE, pursuant to s 41(1)(a) of the NSW Trustee and Guardian Act 2009 NSW, that the first defendant is incapable of managing his affairs.
2. ORDER, pursuant to ss 40 and 41(1)(a) of the NSW Trustee and Guardian Act 2009, that the estate of the first defendant (other than wages of the first defendant from employment) be subject to management under the Act.
3. ORDER, pursuant to s 41(1)(b) of the NSW Trustee and Guardian Act 2009, that Australian Executor Trustees Ltd be appointed manager of the protected estate of the first defendant subject to the orders and direction of the NSW Trustee.
4. ORDER that Australian Executor Trustees Ltd may not do anything in reliance on its appointment as manager of the protected estate of the first defendant until the NSW Trustee has authorised it to assume management of the first defendant's estate.
5. ORDER, pursuant to section 68 of the NSW Trustee and Guardian Act 2009, that Australian Executor Trustees Ltd give such, if any, security in respect of its management of the first defendant's protected estate as the NSW Trustee may determine to be appropriate.
6. ORDER that, subject to any further order of the Court or any order or direction of the NSW Trustee, all funds held in court on the account of the first defendant in proceedings numbered 2009/00339838 in the District Court of NSW, including accrued interest, be paid out to Australian Executor Trustees Ltd in its capacity as manager of the protected estate of the first defendant.
7. ORDER, subject to further order, that Australian Executor Trustees Ltd be allowed out of the protected estate of the first defendant such, if any, remuneration for the provision of services as manager of the protected estate of the first defendant (including any fees approved by the NSW Trustee from time to time) as may be just and reasonable, not exceeding the amounts or rates disclosed to the Court in these proceedings or such other amounts or rates as made from time to time be fixed by the NSW Trustee.
8. ORDER that the NSW Trustee take such steps as may be necessary or convenient to transfer management of the protected estate of the first defendant from itself to Australian Executor Trustees Ltd.
9. ORDER that the costs of these proceedings be paid out of the protected estate of the first defendant on the indemnity basis.
10. RESERVE to all interested person (including the plaintiffs and the defendants) liberty to apply as they may be advised.
11. ORDER that these orders be entered forthwith.
Orders (1)-(3) of these orders reflect the terms of the financial management order made by the Tribunal on 19 April 2022, save that the first defendant's manager is Australian Executor Trustees Ltd rather than the NSW Trustee.
The NSW Trustee did not oppose the making of such orders.
Orders (4)-(7) and (9)-(10) reflect the usual practice of the Court in the appointment of a licensed trustee company as a protected estate manager where the estate includes funds in court. Different forms of orders are made when a private manager other than a licensed trustee company is appointed: see Lindsay, "The Incapacitated Plaintiff and Personal Injury Compensation Proceedings" (11 March 2017), Supreme Court Website, "Speeches", Lindsay J.
[3]
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Decision last updated: 12 July 2022
Parties
Applicant/Plaintiff:
Secretary, NSW Department of Communities and Justice and Anor