AG v AP-G

[2013] NSWSC 272

Supreme Court

New South Wales

Medium Neutral Citation:	AG v AP-G [2013] NSWSC 272
Hearing dates:	In chambers
Decision date:	28 March 2013
Jurisdiction:	Equity Division - Protective List
Before:	White J
Decision:	Plaintiff to notify Associate of how plaintiff wishes to proceed.
Catchwords:	GUARDIANSHIP - application for appointment of financial manager - incapacity to manage own affairs by reason of youth pursuant to s 41(1) of the NSW Trustee and Guardian Act 2009 - whether to make order under s 41 until person subject of the order reaches majority - ability of court to make order pursuant to s 64(1) that person subject to s 41 order be advised of right to apply to court to revoke order prior to reaching majority - appointment of trustee of settlement for benefit of minor under s 16 of the Infants' Custody and Settlements Act 1899 - whether to restrict trustee's powers of investment
Legislation Cited:	NSW Trustee and Guardian Act 2009 Minors (Property and Contracts) Act 1970 Trustee Act 1925 Infants' Custody and Settlements Act 1899 Civil Procedure Act 2005
Cases Cited:	Re Liang (by her tutor Yuen) [2012] NSWSC 365
Category:	Principal judgment
Parties:	AG (Plaintiff) AP-G (Defendant)
Representation:	Counsel: Solicitors: Maurice Blackburn Solicitors (Plaintiff)
File Number(s):	2012/385218

Judgment

1. HIS HONOUR: This is an application for the appointment of a financial manager to the defendant's estate. The plaintiff is the defendant's mother and acted as her tutor in a claim for damages for medical negligence. The defendant is seven years old. The defendant has cerebral palsy with left-sided spasticity. Her gross motor skills are significantly impaired, but the medical evidence is that she is intellectually normal. She is entitled to the proceeds of a settlement of an amount of in excess of $1 million.

1. The plaintiff seeks a declaration that the defendant is incapable of managing her affairs to age 18 and an order that her estate be subject to management under the NSW Trustee and Guardian Act 2009. She seeks an order that Australian Executor Trustees Limited ("AET") be appointed as manager of her estate to act subject to the order and direction of the NSW Trustee and Guardian.

1. Section 41(1) of the NSW Trustee and Guardian Act provides:

"41 Orders by Supreme Court for management of affairs

(cf PE Act, s 13)

(1) If the Supreme Court is satisfied that a person is incapable of managing his or her affairs, the Court may:

(a) declare that the person is incapable of managing his or her affairs and order that the estate of the person be subject to management under this Act, and

(b) by order appoint a suitable person as manager of the estate of the person or commit the management of the estate of the person to the NSW Trustee."

1. I accept that a declaration can be made under s 41(1) on the ground that the person is incapable of managing his or her affairs by reason of his or her youth. It does not follow that the Court can make a declaration that the defendant is incapable of managing her affairs until she attains the age of 18 years. It is not possible to say on the materials for how long the defendant is likely to be incapable of managing her affairs.

1. If no order were made under the NSW Trustee and Guardian Act, then the defendant's capacity to participate in a civil act, such as making a contract or disposing of property, would be governed by the Minors (Property and Contracts) Act 1970. Such a civil act would not be binding if, by reason of youth, the defendant lacked the understanding necessary for her participation in the civil act (s 18). If the defendant did not lack the understanding necessary to participate in the civil act by reason of youth, then such acts in which the defendant participated before she was 18 would not necessarily be unenforceable by reason of her being a minor.

1. The effect of an order under s 41 appointing a manager to the defendant's estate would be to suspend the defendant's power to deal with her property unless authorised to do so by the financial manager with the approval of the NSW Trustee and Guardian (NSW Trustee and Guardian Act, s 71). Pursuant to s 86 of the NSW Trustee and Guardian Act, the Court can revoke a declaration and order made under s 41 if the Court is satisfied that the defendant is capable of managing his or her affairs.

1. In my view it would not be a proper exercise of the power under s 41 to make a declaration and order expressed to continue until the defendant obtains the age of 18 years, but is then to cease to have effect. Such an order could only be made if the Court were satisfied that the protected person would be incapable of managing his or her affairs up to the age of 18 years, but would become capable of doing so thereafter. That would be unusual. The capacity to manage one's affairs for the purposes of the NSW Trustee and Guardian Act does not coincide with a minor's civil disability or incapacity due to infancy.

1. A declaration as to incapacity under s 41(1)(a) speaks of incapacity at the time the declaration is made. If that position changes at any time so that the person acquires capacity, then the declaration and orders can be revoked pursuant to s 86.

1. I decline to make the declaration in the form sought in the summons. If sought, I will make a declaration pursuant to s 41(1)(a) that the defendant is incapable of managing her affairs and I will make an order under s 41(1)(b) appointing AET as the manager of her estate. That declaration and order would not be limited as to time, but I would make a further order pursuant to s 64(1) that prior to the defendant's attaining the age of 18 years, she be advised in writing of her right to apply to the Court for an order revoking the declaration and order that her estate be subject to management under the Act. I would also order the manager to provide a report to the Court containing a medical assessment as to the defendant's then capacity to manage her affairs.

1. In its advice to the plaintiff, AET expressed the opinion that the Court was more likely to make an order under the Trustee Act 1925 to vest the settlement moneys in AET as trustee for the defendant until she turned 18 than to make a financial management order under the NSW Trustee and Guardian Act. The declaration and order under s 41 of the NSW Trustee and Guardian Act is the only relief sought by the plaintiff. I do not think that the Trustee Act would provide the source of power to create such a trust. However, judgment was given by consent in favour of the present defendant and the Court has power under s 16 of the Infants' Custody and Settlements Act 1899 to order a settlement of the damages in the action for the benefit of the defendant and to appoint a trustee of the settlement. If AET were appointed as trustee of the settlement, it would not be subject to the supervision of the NSW Trustee and Guardian and fees would not be payable to the NSW Trustee and Guardian pursuant to the NSW Trustee and Guardian Act. The Court would have to fix the terms of the settlement pursuant to s 16(2) of the Infants' Custody and Settlements Act. In Re Liang (by her tutor Yuen) [2012] NSWSC 365, Davies J conferred only limited powers of investment on trustees of a settlement established in favour of the plaintiff in that case, but there the trustees were private individuals and not a trustee company.

1. If I were asked to make an order under s 16 of the Infants' Custody and Settlements Act and to direct payment under s 77(4) of the Civil Procedure Act 2005 to the trustee of the settlement, I would not be minded to limit the powers of investment of the trustee unless asked to do so. Such a settlement would be until the defendant attained the age of 18.

1. The plaintiff's solicitor should advise my Associate as to whether the plaintiff seeks orders pursuant to the NSW Trustee and Guardian Act that I have indicated that I would be prepared to make as outlined above, or whether she seeks an order under s 16 of the Infants' Custody and Settlements Act to establish a trust in favour of the defendant of which AET would be the trustee, and if the latter, whether any specific restrictions on the powers of investment would be sought.

1. The terms of the settlement directed by Davies J in Re Liang (by her tutor Yuen) included that on the termination day of the trust (being a month after the beneficiary turned 18) the trustee was to pay the trust funds into court or as the court might direct. The better course in this case might be to require the trustee to seek directions from the court prior to the defendant's turning 18 as to how the trust funds should be dealt with, including directions as to whether at that time an application should be made for the appointment of a financial manager. The trustee could be directed to provide the court with a medical assessment of the defendant's capacity.

1. The plaintiff's solicitor should let my Associate know how the plaintiff wishes to proceed.

Decision last updated: 28 March 2013