BMD and JDN and KWD
[2009] WASAT 132
•30 JUNE 2009
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
STREAM: HUMAN RIGHTS
ACT: GUARDIANSHIP AND ADMINISTRATION ACT 1990 (WA)
CITATION: BMD and JDN and KWD [2009] WASAT 132
MEMBER: MS J TOOHEY (SENIOR MEMBER)
HEARD: 8 JANUARY 2007 AND 12 JANUARY 2007
DELIVERED : 30 JUNE 2009
FILE NO/S: GAA 2105 of 2007
BETWEEN: BMD and JDN
Applicants
AND
KWD
Represented Person
Catchwords:
Guardianship and administration - Application for administration - Public Trustee appointed plenary administrator - Administrator directed to investigate whether application should be made to set aside a contract - Application for the legal costs of the applicants to be paid out of the estate of the represented person - Factors to be considered in determining costs applications - Whether the rule that parties bear their own costs should be set aside - Represented person ordered to pay a contribution to the applicants' legal costs
Legislation:
Guardianship and Administration Act 1990 (WA), s 3, s 4(2)(b), s 16(2), s 16(4), s 64(1), s 82, s 108
State Administrative Tribunal Act 2004 (WA), s 87(1), s 87(2), s 87(3)
Result:
The application for costs is partly allowed
Category: B
Representation:
Counsel:
Applicants: Self-represented
Represented Person : Self-represented
Solicitors:
Applicants: Self-represented
Represented Person : Self-represented
Case(s) referred to in decision(s):
'BMD
'LC
'M
REASONS FOR DECISION OF THE TRIBUNAL:
Summary of Tribunal's decision
The son and daughter of an elderly man applied for their legal costs to be paid from his estate following their successful application to have an administrator appointed for him.
The proceedings before the Tribunal were the subject of conflict and involved the serious issue of whether a contract by which the man had disposed of a major asset should be set aside.
The Tribunal found that the son and daughter had acted in their father's best interests in bringing the application for administration, but did not accept that all of their legal costs should be paid from his estate. It ordered costs of $5,000 be paid from his estate.
Background
This is an application by the son and daughter of an elderly man (KWD) and arises out of proceedings under the Guardianship and Administration Act 1990 (WA) (GA Act) that were heard and determined by the Tribunal on 8 January 2007 and 12 January 2007.
The applicants had submitted that KWD was not capable of entering into a contract in November 2006 to sell a property, and his business of wedding receptions and other functions conducted from that property, to his then de facto partner, JID, to whom he is now married, and members of her family. The applicants alleged that the transaction was contrary to KWD's best interests.
The applicants applied for orders appointing an administrator of KWD's estate and setting aside the contract.
On 12 January 2007 the Tribunal ordered that the Public Trustee be appointed KWD's plenary administrator. Two enduring powers of attorney, one in favour of the applicant daughter and her spouse and the other in favour of JID, were revoked by the Tribunal.
Relevantly for these proceedings, the Tribunal directed the Public Trustee to investigate whether an application should be made pursuant to s 82 of the GA Act in respect of the contract entered into by KWD and, if so, to make such application without undue delay.
Section 82 of the GA Act empowers the Tribunal, on the application of a represented person's administrator and if certain requirements are satisfied, to make orders setting aside certain types of transactions, including the disposition of property, entered into by the represented person within two months before he or she was declared under s 64(1) of the GA Act, to be in need of an administrator.
As administrator for KWD, the Public Trustee decided not to make an application under s 82 of the GA Act. However, by negotiation, the contract was varied as between the parties so that KWD received some of the cash proceeds of sale, and the interests of KWD and JID in a residential property were adjusted to give him a greater interest.
The applicant son challenged the Public Trustee's decision not to seek s 82 orders and upon his application, the order of 12 January 2007 was reviewed by the Tribunal on 13 and 14 December 2007.
On the review the Tribunal revoked the order of 12 January 2007 and ordered the Public Trustee to remain as administrator only in respect to certain monies still owing on the sale of the property and business; JID was appointed plenary administrator for the balance of KWD's estate (see BMD and KWD [2008] WASAT 127 which also gives a history of the events surrounding the initial application for administration).
The son and daughter now seek an order for costs under s 16(4) of the GA Act in relation to the proceedings of 8 and 12 January 2007.
Relevant legislation
Section 16(4) of the GA Act provides that, if the Tribunal is satisfied that a party to proceedings commenced under the GA Act has acted in the best interests of the represented person, it may order that such costs relative to those proceedings as it thinks fit be paid to that party out of the assets of the represented person.
The applicants' case
The applicants seek to recover part or all of their legal costs of $23,579.50 incurred for the period from 29 November 2006 to 30 January 2007.
The applicants submit that s 16(2) of the GA Act applies and that there are exceptional circumstances warranting a costs order. The 'exceptional circumstances' submitted are:
•the refusal by the buyers of the property and business to accept the applicants' invitation to resolve the matter prior to the Tribunal proceedings;
•the buyers' refusal to allow the applicants to obtain an independent valuation of the property and business (at the time there existed conflicting valuations);
•the burden of proof imposed on the applicants under s 4(2)(b) of the GA Act, (the presumption that a person is capable of making reasonable judgments in respect of matters relating to his or her estate);
•the opposition to the application by KWD and JID;
•the pressure placed on the applicants by JID to withdraw the application for administration in order to avoid claims for damages and costs;
•the recurring submission by JID that the medical evidence would clearly establish that KWD had the mental capacity to make reasonable judgments about the contract when it was self evident that he was confused and had no understanding of it; and
•the expectation of KWD's children that they would not obtain any financial advantage as a consequence of the application for administration on the basis of the expected marriage of KWD and JID, and that the application was made in the best interests of KWD and for the sole purpose of seeking protection of his estate.
In further submissions, the applicants say they acted in KWD's best interests because by their efforts, a valuation of the property and business came to light in the Tribunal showing a valuation far in excess of the contract sale price and putting in doubt the bona fides of the buyers.
The applicants also say that, in having the Public Trustee appointed as administrator, they at least ensured that KWD received some cash from the sale of the property and business and an additional share of the residential property. They say that, had the Public Trustee not been appointed, it would have been open to the buyers of the property and business to complete the transaction by payment only of the relevant stamp duty (and presumably not pay KWD in cash as was subsequently arranged) as KWD had not received any advice about the transaction.
The applicants submit that, despite a s 82 order not being made by the Tribunal, a consequence of their application for administration and appointment of the Public Trustee was that KWD benefited financially to a significant degree.
The applicants say that they have incurred costs well in excess of double the amount claimed and submit that the amount claimed is reasonable.
JID's submissions opposing the application for costs
JID submits that the rule in s 87(1) of the State Administrative Tribunal Act 2004 (WA) (SAT Act) that parties bear their own costs in a proceeding of the Tribunal should apply in this case and that to make an order for costs the Tribunal must be satisfied about the matters set out in s 87(3) of the SAT Act.
JID submits that:
•at the time the application was made there was no medical evidence that KWD was incapable of entering into the contract and it was not until 5 January 2007 that he was assessed as suffering from a mild cognitive impairment;
•it was in KWD's best interests for the contract to be completed because of the immediate financial benefits it would provide him;
•the applicants' contention that the property the subject of the contract was of much greater value due to its potential for subdivision was not supported by any evidence of possible rezoning;
•the evidence supported the contract sale price and the existence of a recent valuation which was substantially higher than previous valuations should be disregarded because its method was flawed and the business had become unprofitable;
•she had genuinely attempted to assist the Tribunal to make a decision on the merits and there was no evidence that she acted frivolously or vexatiously;
•once the application for administration was made, it was not possible for the applicants to negotiate the contract with the buyers if they maintained that KWD was not capable;
•in the course of the proceedings the applicants failed to understand their conflict of interest by proposing they be appointed the administrators for KWD; if an administrator were to be appointed, it should be the Public Trustee, a submission accepted by the Tribunal; and
•the contract was not ultimately set aside as demanded by the applicants.
JID further submits that it is impossible to reconcile the stated objective of the applicants to help KWD with the requirement that he pay their costs.
The Public Trustee's submissions
The Public Trustee submits that a represented person should only bear the costs of an application in exceptional circumstances because:
•Tribunal proceedings are user friendly and require no legal representation;
•it is contradictory for an applicant to purport to act in the best interests of a represented person but expect that person to bear the expenses of their action, whether the outcome is successful or unsuccessful;
•the proceedings are not inter partes (between the parties) and there is no winner or loser;
•there being no defined issues, there is no practical means of assessing costs where the application has succeeded in part; and
•there is no scale of costs against which the reasonableness of the amount of the claim can be judged.
In respect to the application by the applicants, the Public Trustee submits that, properly advised:
•they would have been aware that the intra-family dispute about the contract would leave the Tribunal no practical alternative but to appoint the Public Trustee administrator of KWD's estate; and
•they would have been aware that the Tribunal would not set the contract aside under s 82 of the GA Act on the application, but would direct the administrator to investigate the issue.
The Public Trustee further submits that, while the applicants may have acted in KWD's best interests in making the application for an administration order:
•they adduced no independent evidence as to the value of the property and business;
•KWD and JID, separately and together, consistently objected to the administration order as unnecessary and wanted the contract to proceed; and
•KWD and JID eventually married after a 22-year de facto relationship and the applicants would have been aware that JID had a strong claim to a 50% interest in the property and business.
The Tribunal's decision and reasons
The Tribunal has a wide discretion under s 16(4) of the GA Act to award costs. However, s 16(4) should not be read independently of the costs regime in the SAT Act and the starting position that parties bear their own costs. (see M [2008] WASAT 262 (S) at [66]).
Read in this way, more than merely acting in the best interests of the person will be required to succeed in a costs order under s 16(4) (see M at [66]).
In LC and JS [2007] WASAT 127, the Tribunal (at [34] to [57]) describes the sorts of circumstances which might attract an order under s 16(4). The circumstances described are not exhaustive.
The Tribunal is satisfied in this case that an order for costs should be made under s 16(4) of the GA Act.
When the matter was first brought to the Tribunal by the applicants, it was a distinct possibility that an application under s 82 of the GA Act would be made in respect of the contract. For that to occur, the Tribunal had to declare KWD to be in need of an administrator pursuant to s 64(1) within two months of him entering into the contract. The application for administration had therefore to proceed on a relatively urgent basis.
The contemplation of an application under s 82 of the GA Act is a very serious matter. It supposes the setting aside of a transaction which will affect the standing of the person and third parties.
In the case of KWD, the contract he entered into was for the disposal of the major asset of his estate. The Tribunal decided on 12 January 2007, when it appointed the Public Trustee as his administrator, that the Public Trustee should investigate whether a s 82 application should be made.
All of this occurred in a highly charged atmosphere in which KWD's ability to represent his own interests was compromised by his cognitive impairment. (In the course of the proceedings KWD and JID temporarily separated which further complicated the issue of his interests in the contract.)
In these circumstances the Tribunal finds that it was not unreasonable for the applicants to seek legal advice about how to proceed and that they did so in KWD's best interests.
The applicants' reference to s 16(2) of the GA Act and the requirement to demonstrate 'exceptional circumstances' is not relevant in this case. Section 16(2) deals with the situation where a person gives evidence or information at the instigation of the Tribunal or at the instigation of a party.
JID's submission that the Tribunal should have regard to s 87(3) of the SAT Act does not assist her case; it merely sets out the matters for which costs may be ordered under s 87(2).
The Tribunal accepts that there is some merit in the submission of the Public Trustee, that properly advised, the applicants may not have required the extensive legal assistance they ultimately obtained. This issue will be dealt with in deciding the quantum of costs.
The Tribunal does not accept the submissions of JID and the Public Trustee that there is an inherent contradiction in a party acting in the best interests of a person and subsequently claiming costs against that person's estate. To accept that submission would amount to saying s 16(4) has no application.
The costs order
In the legal representative's invoices for the claimed costs of $23,579.50, a number of statements are made in the 'Notes to Account'. They are that:
•the firm did not charge any additional fees to which it would have been entitled under Item 14 of the Legal Practitioner's (Solicitors Costs) Report 2005 (where the matter is complex or involves a high degree of skill or urgency);
•it was necessary to complete much of the pre-hearing preparation during the Christmas/New Year vacation in anticipation of an early hearing;
•the preparation and presentation of witness statements were made in order to substantially reduce the time of the Tribunal hearing;
•although much of the pre-trial preparation proved unnecessary, it was necessary due to the uncertainties as to how the hearing would proceed;
•the issues raised in the applications made and withdrawn prior to the hearing (a guardianship application and an incorrect application under s 108 of the GA Act) were still relevant to the proceedings;
•the account included an allowance of one hour for anticipated attendance on final hearing as to costs; and
•the time spent on several matters detailed in the account was well in excess of the nominated times stated in the account.
The Tribunal has accepted that it was reasonable for the applicants to seek legal advice in respect to the contract and the subsequent application for administration made to the Tribunal.
The invoice for $3,231 covering the period 29 November 2006 to 15 December 2006 represents, in the Tribunal's view, the period when advice was at its most necessary and should be paid.
The Tribunal accepts the Public Trustee's submission that legal advice should have alerted the applicants to the likelihood of the appointment of an independent administrator and that the Tribunal would not have immediately considered an application made under s 82 of the GA Act had one been made. The prospect of the Tribunal directing the administrator to investigate whether an application under s 82 should be made (which is what happened) was the more likely outcome.
Given these circumstances, it was not necessary for the applicant's solicitors to undertake the extensive pre-hearing preparation which subsequently occurred (including the preparation of witness statements), to advance the best interests of KWD. The costs claimed by the applicants also include an amount for responding to a costs application by JID (subsequently withdrawn) which should not be paid from the estate of KWD.
The Tribunal considers that a costs order of $5,000 is appropriate in the circumstances. This represents the invoice of $3,231 already mentioned and for further advice as the application proceeded.
Order
The administrator of the estate of KWD is to pay to the applicants the sum of $5,000 as a contribution to their legal costs incurred in respect of the application heard and determined by the Tribunal on 8 and 12 January 2007.
I certify that this and the preceding [45] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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MS J TOOHEY, SENIOR MEMBER
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