Welland v Payne [2000] QSC 431

[2] The applicant filed this application on 1 September 2000 seeking orders in relation to the payment of the settlement sum. This course was adopted, because of an opinion expressed by psychiatrist Dr Peter Mulholland in his medical report dated 30 September 1998 given in connection with the action as follows:

"I would have a concern regarding his having control over a large sum of money if he was to receive same as a result of this Court case. He does have a frontal lobe syndrome and he is prone to mood swings and I would be concerned about his being reckless or impulsive and with his being easily led by others. Therefore I would have a concern that if he had control over and access to a large sum of money then he would not be able to handle it responsibly in the long run, hence my advice that it would be preferable if a Protection Order was taken out and his moneys managed by the Public Trustee. I do not have any concern about his handling normal small sums of day by day moneys but that is an entirely different thing to handling a large lump sum which is meant to last him for the rest of his life."

[3] The primary relief sought in the application is that Mr Lawrence James Cooper, the applicant's father-in-law who was also served with the application, be appointed trustee of the settlement sum after payment of the applicant's legal costs and outlays arising from the action (that balance of the settlement sum being referred to in these reasons as the "trust fund") and take possession and control and manage the trust fund in such a manner as he thinks fit for the benefit of the applicant with the powers and duties defined and conferred in the Trusts Act 1973.

[4] As an alternative to constituting Mr Cooper as the trustee of the trust fund, the following orders are sought:

(a) a declaration that the applicant is under an "impaired capacity" as that term is defined in Schedule 4 of the Guardianship and Administration Act 2000 ("GAA");

(b) that the application be transferred to the registry of the Guardianship and Administration Tribunal ("Tribunal") pursuant to section 241 of the GAA

[5] Prior to the commencement of the GAA on 1 July 2000, it was submitted that the applicant would have sought a protection order under section 67 of the Public Trustee Act 1978 ("PTA"). Section 67(1) of the PTA provides:

"67.(1) Where in any action in the court (whether commenced before or after the commencement of this Act) by a person for damages for personal injury sustained by the person it appears to the court that that person (the "plaintiff") is a person in respect of whom a protection order might be made under section 65, Section 65 (Power of court to make protection order) the court may, subject to subsection (2), make such a protection order."

Prior to 1 July 2000 section 65(1) of the PTA provided:

"65.(1) Where, upon the application of the public trustee, the court is satisfied that a person-

(a) by reason of age, disease, illness, or physical or mental infirmity or of the person's taking or using in excess alcoholic liquors, or any intoxicating, stimulating, narcotic, sedative or other drug is, either continuously or intermittently-

(i) unable, wholly or partially, to manage the person's affairs; or

(ii) subject to, or liable to be subjected to, undue influence in respect of the person's estate, or any part thereof, or the disposition thereof; or

(b) is otherwise in a position which in the opinion of the court renders it necessary in the interest of that person or of those dependent upon the person that the person's property should be protected;

the court may make a protection order appointing the public trustee manager to take possession of and to control and manage all or such part or parts as the court directs of the estate of that person."

[6] The GAA sets up a new and comprehensive regime for the appointment of guardians and administrators to manage the personal and financial affairs of adults with impaired capacity. The GAA implemented those aspects of the Queensland Law Reform Commission Report Number 49 Assisted and Substituted Decisions: Decision-making by and for people with a decision making disability released in June 1996 (QLRC Report 49) that were not implemented in the Powers of Attorney Act 1998. That Report found that Queensland legislation failed to provide a simple and inexpensive way of meeting the decision-making needs of adults with impaired capacity. The principles which underlie the GAA are set out in section 5. There is an express statement in section 6 of the GAA that the GAA seeks to strike an appropriate balance between:

"(a) the right of an adult with an impaired capacity to the greatest possible degree of autonomy and decision making; and

(b) the adult's right to adequate and appropriate support for decision making."

[7] Section 65(1) of the PTA was amended by the GAA by the substitution of the words "person who is under 18 years" for the word "person" where it first occurred in section 65(1). A protection order made pursuant to Division 2 of Part 6 of the PTA is now no longer available to a person 18 years or older. That reflects the object of the GAA to provide for the management of the financial affairs of adults with impaired capacity for financial matters.

[8] Chapter 3 of the GAA deals with the appointment of guardians and administrators where an adult has impaired capacity. The Tribunal may appoint a guardian for a personal matter or an administrator for a financial matter for an adult, if the Tribunal is satisfied that the adult has impaired capacity for the matter, there is a need for a decision in relation to the matter or the adult is likely to do something in relation to the matter that involves unreasonable risk to the adult's health, welfare or property and, without an appointment, the adult's needs will not be adequately met or the adult's interests will not be adequately protected: section 12 GAA. That appointment must then be reviewed by the Tribunal in accordance with an order of the Tribunal or at least every 5 years or at any time on the initiative of the Tribunal or on the application of an interested person for the adult: sections 28 and 29 GAA.

[9] The definition of "financial matter" is set out in section 1 of Schedule 2 to the GAA. It is an extensive definition. A financial matter is a matter relating to the adult's financial or property matters including, for example, a matter relating to one or more of the matters which are set out in section 1 of Schedule 2 to the GAA. Relevantly those matters include:

* receiving and recovering money payable to the adult;

* investing for the adult in authorised investments;

* undertaking an authorised real estate transaction for the adult;

* with the Tribunal's approval, undertaking a real estate transaction for the adult that is not an authorised real estate transaction;

* undertaking an authorised security transaction for the adult;

* with the Tribunal's approval, undertaking a security transaction for the adult that is not an authorised security transaction;

* a legal matter relating to the adult's financial or property matters.

[10] The definition of "legal matter" is set out in section 18 of Schedule 2 to the GAA:

"18. A 'legal matter', for an adult, includes a matter relating to-

(a) use of legal services to obtain information about the adult's legal rights; and

(b) use of legal services to undertake a transaction; and

(c) use of legal services to bring or defend a proceeding before a court, tribunal or other entity, including an application under the Succession Act 1981, part 4 (footnote omitted) or an application for compensation arising from a compulsory acquisition; and

(d) bringing or defending a proceeding, including settling a claim whether before or after the start of a proceeding."

[11] The definition of "impaired capacity" is found in Schedule 4 to the GAA:

"'impaired capacity', for a person for a matter, means the person does not have capacity for the matter."

The definition of "capacity" is also found in Schedule 4 to the GAA:

"'capacity', for a person for a matter, means the person is capable of-

(a) understanding the nature and effect of decisions about the matter; and

(b) freely and voluntarily making decisions about the matter; and

[12] Prior to 1 July 2000 section 59 of the PTA provided that the settlement of a claim made by or on behalf of a person under a legal disability was not valid unless it was sanctioned by the Public Trustee or by a judge or magistrate of the court having jurisdiction to hear the claim. Section 59(1) provided:

"59.(1) In any cause or matter in any court in which money or damages is or are claimed by or on behalf of a person under a legal disability suing either alone or in conjunction with other parties, no settlement or compromise or acceptance of money paid into court, whether before, at or after the trial, shall, as regards the claim of such person under a legal disability, be valid without the sanction of a court or the public trustee, and no money or damages recovered or awarded in any such cause or matter in respect of the claims of any such person under a legal disability, whether by verdict, settlement, compromise, payment into court or otherwise, before or at or after the trial, shall be paid to the next friend of the plaintiff or to the plaintiff's solicitor or to any person other than the public trustee unless the court otherwise directs."

The definition of "under a legal disability" was found in section 6 of the PTA and meant "not of full age or not of full mental capacity or having the status of an incapacitated person". The reference to "incapacitated person" was to that defined in section 64 of the PTA and meant "a patient of whose estate the public trustee is committee or manager pursuant to the provisions of the Mental Health Act 1974 or a protected person, or a person whose estate the public trustee is authorised to manage pursuant to division 4 or pursuant to the Intellectually Disabled Citizens Act 1985".

[13] Section 59 of the PTA was amended by the GAA. Although section 59(1) of the PTA remains in the same terms, the definition of "person under a legal disability" for the purpose of section 59 of the PTA is now found in section 59 (1A) of the PTA as follows:

(b) a person with impaired capacity for a matter within the meaning of the Guardianship and Administration Act 2000."

[14] The submissions made on behalf of the applicant proceeded on the basis that prior to 1 July 2000 the applicant's settlement of his action would not have required a sanction under section 59 of the PTA on the basis that he was of full age and of full mental capacity and not an incapacitated person within the meaning of section 64 of the PTA. It was submitted on behalf of the applicant that there was a widely held opinion in the profession flowing from Cocchi v Cocchi [1989] 1QdR 226 and the wording of section 65 of the PTA that circumstances might arise whereby a person might be cognitively intact but, as a result of other influences, vulnerable in which case a sanction may not be required but, nevertheless, the person would benefit from a protection order.

[15] The argument proceeded on the basis that the enactment of the GAA and corresponding amendment to the provisions of the PTA had resulted in an hiatus in respect of a person of full age who did not require a sanction of the settlement of the person's claim for money or damages, but fell within section 65 of the PTA, so that a protection order in respect of any award for damages for personal injuries could be made pursuant to section 67 of the PTA. It was submitted that this hiatus resulted from the definition of a person under a legal disability being a person with impaired capacity for a matter within the meaning of the GAA. The primary relief claimed in the application was therefore sought under the parens patriae jurisdiction of the court to overcome this perceived hiatus. It is expressly stated in section 240 of the GAA that the GAA does not affect the court's inherent jurisdiction, including its parens patriae jurisdiction.

[16] The starting point for this application is a consideration of what has been described as the widely held opinion in the profession that, prior to 1 July 2000, there could be circumstances where a sanction under section 59 of the PTA were unnecessary, but it was appropriate to make an order under section 67 of the PTA.

[17] Cocchi arose out of an application seeking sanction of the settlement of the plaintiff's claim for damages for personal injuries, because the plaintiff had suffered some intellectual impairment as a result of her injuries. Reference was made in that case to a practice that where a plaintiff had suffered some intellectual impairment that an application was brought pursuant to section 59 of the PTA. Ambrose J stated at 268-269:

"The rationale for the suggested rule of practice apparently is that the term 'legal disability' in s.59(1) of the Public Trustee Act goes far beyond the sort of 'legal disability' needed to justify the making of a protection order under ss65 and 67 of the Act."

[18] Ambrose J did not accept that it followed that a person was not of full mental capacity and therefore under a legal disability, because of having suffered some intellectual impairment. He stated at 269:

"However I am not persuaded that it necessarily follows that because a plaintiff has suffered 'some intellectual impairment', therefore that person is 'not of full mental capacity' and therefore under a legal disability of the sort with which s.59(1) of the Public Trustee Act deals.

It is abundantly clear to my mind that the mental capacity of a person will vary at different stages of his life. To consider that a person is not of 'full mental capacity' at a particular stage in his development because he was previously of greater mental capacity or might at some time in the future be of a greater mental capacity seems to me to be an approach which the legislature could not have had in mind when it enacted s.59 of the Act."

[19] Although the application before Ambrose J was for a sanction which he found not necessary to make, he made the following statement at 269 on the relationship between sections 59 and 65 of the PTA:

"To my mind although s.65 of the Act is in a different part of the Act from that in which s.59 is to be found, it does indicate the appropriate test for determining whether a person is 'not of full mental capacity' within the meaning of s.59. Section 65 relates to the inability of such a person 'wholly or partially to manage his affairs' or 'liable to be subjected to undue influence in respect of' settling his action."

The reference to section 65 in that statement is to criteria set out in section 65(1)(a) of the PTA.

[20] Mr Farrell of Counsel who appeared for the applicant referred me to H v Nominal Defendant [1997] QSC 233 in which the solicitors for the plaintiff, after the plaintiff's personal injuries action had been settled, applied for a protection order to be made in respect of the settlement moneys held in their trust account on behalf of the plaintiff. Reliance had been placed by those solicitors on comments made in Cocchi to advance the proposition that notwithstanding that a person could not manage his affairs or was liable to be subjected to undue influence due to mental infirmity, so that he was relevantly not of full mental capacity and so under a legal disability for the purposes of section 59 of the PTA, there still exists an apparent capacity to give a full and informed consent to the conduct of the action and any settlement and so eliminate the need for a sanction. Lee J rejected the submission that Cocchi was authority for that proposition and stated at 12:

"I do not think, when the judgment is considered as a whole, that His Honour intended to say any such thing. His Honour was saying that the tests were the same under each provision (ss.59, 65) so that if one condition was established, so was the other in the case of relevant mental incapacity. If His Honour intended what appeared to have been the approach in this case, and I do not for a moment consider that it was, I must respectfully disagree with it. If a person is unable 'wholly or partially to manage his affairs' by reason of a relevant mental incapacity, either on its own or in combination with other factors mentioned in s.65(1)(a), or if, by reason of those factors, he is 'subjected to or liable to be subjected to undue influence', it comprises the test which His Honour at p.269 1.49-54 said provided the meaning of whether or not a person was 'not of full mental capacity' within the meaning of s.59. Accordingly, by virtue of the definition 'under a legal disability' in s.6 of the Act, such a person would be a person under a legal disability within the meaning of s.59 such that a sanction of any compromise would be necessary before it could be held valid. The situation might be different in the case where a person is of normal mental capacity (within that range, not being sub-normal) but, due only to severe physical infirmity, he is unable to manager his affairs: Re D (OS 99/1975, Hanger J, 19 March 1975); O'Dell v. Barwick pp 122-3. Cocchi was not dealing with any such case."

[21] In H v Nominal Defendant Lee J proceeded to sanction the settlement and then made a protection order on the application of the Public Trustee pursuant to section 65 of the PTA. Lee J expressly stated in H v Nominal Defendant that no reliance was placed on section 65(1)(b) of the PTA. At page 25 Lee J made the following comment in relation to section 65(1)(b) of the PTA:

"That section has generally been regarded as a catchall requiring similar considerations to the policy represented in s.65(1) generally, having regard to its overall place in Part 6 of the Act."

[22] Helman J in Morris v Mills (unreported, 20 August 1999) agreed with the statements of both Ambrose J in Cocchi and Lee J in H v Nominal Defendant to the effect that although section 65 of the PTA is in a different part of the PTA from that in which section 59 is to be found, section 65 indicates the appropriate test for determining whether a person is not of full mental capacity, when that is a relevant consideration under section 59. In that case the plaintiff was of the view that he was capable of looking after his own affairs, but the defendant with whom he had settled required as a term of settlement that the matter be placed before the court to determine the necessity for sanction and the making of a protection order. Neither were found to be required.

[23] These authorities make it clear that prior to 1 July 2000, if an adult who was seeking to settle a personal injuries action fell within section 65(1)(a) of the PTA, then a protection order could not be made under section 67 of the PTA without the settlement being sanctioned under section 59 of the PTA. That does not produce any hiatus, as a result of the enactment of the GAA.

[24] Theoretically speaking, there may not have been the need for a sanction, if the protection order was made under section 67 of the PTA, because section 65(1)(b) applied. The scope for the operation of section 65(1)(b) seems to have been in respect of a person who may not have strictly fallen within section 65(1)(a), but where similar considerations supported the making of a protection order. To the extent that section 65(1)(b) is ancillary to section 65(1)(a) of the PTA, there is no hiatus. To the extent that section 65(1)(b) may have covered a person who was not covered by section 65(1)(a), there may not even be a hiatus, if that person since 1 July 2000 would fall within the definition of a person with impaired capacity for a matter under the GAA.

[25] The gist of the submissions made on behalf of the applicant is that if he were a person for whose benefit an order would have been made under section 67 of the PTA (presumably relying on section 65(1)(b) of the PTA) prior to 1 July 2000, but were not an adult with impaired capacity for a financial matter pursuant to the GAA, the court should invoke its inherent jurisdiction to make the order which it would have made, before the amendments effected by the GAA. This ignores the legislative intent to reform the law relating to the management of the financial affairs of adults with impaired capacity that is reflected by the GAA. It is not a basis for invoking the parens patriae jurisdiction of this Court that the legislative framework for the management of the affairs of an adult with impaired capacity has changed. Express reference was made in QLRC Report 49 at 451 to the parens patriae jurisdiction as also "providing a safety-net for situations or issues not covered or foreseen by the proposed legislation". The submissions made on behalf of the applicant do not reveal any deficiency in the GAA.

[26] As this application proceeded on the basis of a perceived practice that had existed prior to 1 July 2000 in relation to plaintiffs in personal injuries actions where a psychiatrist expressed caution about the ability of the plaintiff to handle large sums of money, the material filed in support of the application has not been directed towards the critical issue for determination in these types of matters since the enactment of the GAA which is whether the plaintiff has impaired capacity for a relevant financial matter.

[27] The applicant in his affidavit sworn on 11 September 2000 in support of this application deposed to receiving advice from his solicitors that it was necessary to apply for an order that the trust fund be managed on his behalf by a trustee, due to Dr Mulholland's concerns. He stated:

"6. I am informed by my solicitors that Dr Mulholland confirms that I do have the capacity to give instructions. I have received advice from my solicitors throughout the course of my claim. I have always understood that advice. Where I haven't understood something I have sought clarification. I have, as a result, felt comfortable and able to give instructions to my solicitors regarding the conduct of the claim.

7. I have no difficulty administering my daily affairs but I accept that the advice given by Dr Mulholland is sensible and in my best interests.

8. I am happy to accept assistance in managing the sum of money, but would also like to have some input myself into this process.

9. I feel comfortable with the situation that I will have to seek approval for any large purchases."

The applicant therefore does not descend into factual matters relevant to determining whether he has impaired capacity for receiving, investing and managing the trust fund.

[28] If the applicant does not have impaired capacity for a financial matter relevant to receiving, investing and managing the trust fund within the meaning of the GAA, there is no room for the operation of the GAA. That does not preclude the applicant from making arrangements with Mr Cooper or any other person capable of advising him about investment on how to manage the trust fund.

[29] If the applicant does have impaired capacity for a financial matter within the meaning of the GAA, it does not necessarily follow that the settlement of his action needs to be sanctioned under section 59 of the PTA. That is because the impaired capacity relevant to section 59 of the PTA is in respect of a particular financial matter, namely the legal matter of settling a claim. Dr Mulholland expressed the opinion in his report dated 30 September 1998 that the applicant was capable of giving instructions. In the light of that opinion, no contrary opinion having been expressed in the extensive medical reports provided in connection with this application and the applicant's own view expressed in paragraph 6 of his affidavit, there is no basis for concluding that the applicant has impaired capacity for the legal matter of settling his claim.

[30] If the applicant does have impaired capacity for a financial matter relevant to receiving, investing and managing the trust fund, it would be necessary to transfer the application to the Tribunal pursuant to section 241(1) of the GAA or, alternatively, the applicant could make application to the Tribunal for appointment of Mr Cooper as his administrator for the financial matters relevant to receiving, investing and managing the trust fund.

[31] I will therefore adjourn the application to a date to be fixed to enable the applicant to determine what course he wishes to take.