BP
[2010] QCAT 472
•27 August 2010
| CITATION: | BP [2010] QCAT 472 |
| PARTIES: | BP |
| APPLICATION NUMBER: | GAA10438, GAA1235-10, GAA1344-10 |
| MATTER TYPE: | Guardianship and administration matters for adults |
| HEARING DATE: | 9 August 2010 |
| HEARD AT: | Brisbane |
| DECISION OF: | J Allen – Presiding Member S Brooks – Member |
| DELIVERED ON: | 27 August 2010 |
| DELIVERED AT: | Brisbane |
ORDERS MADE: | ADMINISTRATION 1. The appointment of Perpetual Trustee of Queensland Limited as administrator for BP for all financial matters is continued. 2. The administrator is to provide an updated financial management plan to the Tribunal within four (4) months. 3. Unless the Tribunal orders otherwise, this appointment remains current for two (2) years. 4. The Tribunal directs the administrator to provide accounts to the Tribunal’s approved examiners, Vincent Chartered Accountants, eight (8) weeks prior to the review date of this appointment. NOTICE OF INTEREST IN LAND 5. That the administrator shall within three (3) months: a) Identify, by way of a search of the records held by the Registrar of Titles or other means, any interest in real property registered in the name of BP (“the adult”). b) Lodge with the Registrar of Titles a copy of this order and a notice notifying the Registrar of any interest in land held by the adult which is subject to this administration order. c) Provide to the Tribunal: (i) a copy of the search of records held by the Registrar of Titles referred to above and; (ii) a copy of the lodgement summary with the dealing number showing lodgement of the order in respect of any interests in land held by the adult which is subject to this administration order. 6. That if any change is made in an interest in land held by the adult which is the subject of this administration order or if there are any further dealings in land on behalf of the adult by the administrator, the administrator shall lodge with the Registrar of Titles within 14 days of the finalisation of such interest a copy of this order and a notice (in a form prescribed by the Registrar of Titles), concerning such changes or dealings. 7. That the administrator pay, from the adult’s funds, any fee associated with the above notices. RECOMMENDATIONS 8. The Tribunal recommends that the administrator provide funds from BP to the daughters of BP upon receipt of a written proposal signed by all daughters to facilitate mediation between the daughters in regard to resolving their issues around communication. |
| CATCHWORDS : | Capacity of Adult; review of appointment of Administrator; appropriateness and competence of appointee; sections 12, 14, 15 and 31 of the Guardianship and Administration Act 2000 |
APPEARANCES and REPRESENTATION (if any):
| The active parties attending the hearing were as follows: WK of counsel represented BJ and FS |
REASONS FOR DECISION
History of application
BP is 84 years old and now resides at St Paul de Chartres, Nursing Home.
BP has five (5) daughters namely BM, ER, FS, DP and BJ. BP had appointed her daughters to act as her attorneys in 2004 for both person/health and financial matters with decisions to be made by majority. Following a break down in that arrangement, applications were made to the former Guardianship and Administration Tribunal. As a result, the Adult Guardian was appointed as Guardian for accommodation, health care and provision of service decisions and Perpetual Trustees Queensland Limited was appointed as Administrator for BP on 28 November 2008.
The current application is a requested review of the appointment of the Administrator made by BJ and FS. There has been a further application for BJ to be declared a dependent of BP and an application for mediation. Originally it was to be heard on 12 May 2010 with a related guardianship, but was not heard as the administrator had not, at that time, had its accounts examined by the Tribunal’s approved examiner, Vincents Chartered Accountants.
The application for dependency has been withdrawn at the request of BJ.
The Tribunal notes that Perpetual Trustees Queensland Limited was granted leave to be represented at the hearing by OJ on the understanding that Perpetual would bear the costs of its representation.
The issues and legislation
The Tribunal reviews the appointment of decision makers in accordance with section 31 of the Guardianship and Administration Act 2000 (GAA Act), in particular the Tribunal must revoke its order making the appointment unless it is satisfied it would make an appointment if a new application for an appointment were to be made in accordance with section 31(2) of the GAA Act. If the Tribunal is satisfied that there are appropriate grounds for an appointment to continue, it may change the terms of appointment, remove an appointee or make a new appointment in accordance with section 31(3) of the GAA Act. If an appointee is to be removed, the grounds for removal are set out in section 31(4) of the Act and the Tribunal can remove the appointee only if the Tribunal considers –
a)The appointee is no longer competent; or
b)Another person is more appropriate for appointment
There are examples given of why an appointee may no longer be competent in section 31(5) of the GAA Act and they include that the appointee has neglected the appointee’s duties or abused their powers or otherwise contravened the Act.
The requirement that the Tribunal must revoke its order unless it would make a new order means that the requirements of section 12 of the GAA Act must be satisfied as follows –
a)The adult has impaired capacity for the matter; and
b)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, or is likely to involve, unreasonable risk to the adults health, welfare or property; and
c)Without an appointment –
i) The adults needs will not be adequately met; or
ii) The adults interests will not be adequately protected
The Tribunal may only appoint a person as administrator if the person satisfies the requirements set out in sections 14 and 15 of the GAA Act. This requires that the person be at least 18 years and not a paid carer or health provider of the Adult or that the person be the Public Trustee or a trustee company. The Tribunal must also consider that the person is appropriate for appointment having regard to the matters mentioned in section 15(1) of the GAA Act.
10. The Tribunal’s power to make an order in regard to mediation is contained in sub-section 81(1)(d) of the GAA Act, which gives the Tribunal power to make declarations, orders or recommendations or giving directions or advice in relation to the following guardians and administrators, attorneys, enduring documents and related matters.
11. The issues for the Tribunal then are:
(1)Does BP have impaired capacity for decisions about financial matters?;
(2)Is there a need for the appointment of an administrator and if so, who should be appointed?; and
(3)Should the Tribunal make any order in regard to mediation?
Capacity
12. BP has had a progressive decline in cognitive ability. A report from the Memory Clinic of the Princess Alexandra Hospital dated 8 June 2001 disclosed that BP had experienced memory loss over a number of years. The report referred to a MMSE score of 24/30 and neuropsychological testing which revealed a number of deficits despite her high level of functioning. Associate Professor BG, a consultant psychiatrist, in a letter to BP’s daughters dated 31 May 2007 stated as follows:
She suffers from dementia of mild severity which is probably due to a combination of cerebrovascular disease and Alzheimer’s disease… her memory is very poor and her judgement increasingly so.
In a further letter to the family dated 26 August 2008, Associate Professor BG stated:
One thing is clear, however, her dementia is deteriorating and with it her behaviour is becoming more problematic.
13. BP has also been assessed by Dr B, Consultant Geriatrician and in a report of 2 September 2009 Dr B stated as follows:
Moderate to severe Alzheimer’s disease with some behavioural issues… she mostly sits quietly and is not agitated. Her MSQ was 2/10 today and there was no point in more comprehensive testing at this stage.
14. The parties present at the hearing confirmed BP’s diagnosis and that she would not be able to make decisions in regard to personal/health matters.
Conclusion
15. All Adults are presumed to have capacity in accordance with the general principles of the GAA Act. To have capacity an Adult is required to understand the nature and affect of decisions; to be able to freely and voluntarily make decisions and communicate them in some way. BP has a medical condition, Alzheimer’s disease, which adversely affects her ability to retain information and her judgement in understanding the nature and affect of decisions. The Tribunal is satisfied that BP has impaired capacity for financial matters as a result of her Alzheimer’s disease.
Is there a need for an Administrator and if so who should be appointed?
16. In accordance with the report of Vincents Chartered Accountants dated 8 July 2010, BP has substantial personal assets valued at $5,165,819 which include 4 separate land holdings valued at $2,535,000, cash assets of $1,898,671, listed property trusts of $53,676 and Australian listed shares of $678,478. BP is the sole shareholder in Holdings which company owns 2 pieces of real property valued at $1,670,000. BP is also the sole shareholder of x which acts as trustee of y of which BP is a beneficiary. The trust has assets of $5,563,980 comprising 2 pieces of real estate valued at $675,000, Australian listed property trusts of $465,778, cash of $81,205 and Australian listed shares of $4,341,997. At the time of Perpetual Trustee Queensland Limited (Perpetual) appointment as administrator, BP was still the sole director of the two companies. Since the appointment a WJ, BP’s accountant and HG, an independent appointee, have been appointed to act as directors of the companies. The former Guardianship and Administration Tribunal made an order on 16 December 2008 authorising Perpetual Trustee Queensland Limited to procure the execution of agreements between the companies and Perpetual Trustee Company Limited to provide certain services to the companies. The effect of this being that the management of all of BP’s assets and those of her related entities would be carried out by the Perpetual group.
17. Perpetual provided a financial management plan to the former Tribunal on 27 May 2009 in accordance with the order of that Tribunal. The plan set out specific recommendations in regard to the real properties which are either owned by BP or a controlled entity as follows, with some further information as a result of a Tribunal request for information in regard to intentions for the rental or disposal of the properties contained in a letter to the Tribunal dated 11 August 2009:
a)Property A owned by BP
A market appraisal was obtained and the vacant land valued at $500,000. Public liability insurance has been arranged and the land currently remains vacant. On 18 March 2009 Perpetual Trustees Queensland Limited was recognised as manager under s48B of the NSW Guardianship Act 1987. The Tribunal notes that this order was continued by the NSW Guardianship Tribunal on 27 April 2010 for 12 months.
The block of land will remain vacant for the foreseeable future. The likely income from agistment would not be significant and BP has sufficient income for her needs. Also, the presence of animals on the property could have a degenerative effect on the land. Given this, Perpetual has elected not to seek an agistment agreement at this time. There is currently no intention to sell the property.b)Property B owned by BP
A valuation has been obtained and the property valued at $570,000. Perpetual has been noted on the title, and the property insured. A building inspection was arranged by family members in October 2008 and the following repairs were recommended: repairs to verandah and ramp balustrade, handrails, eastern side door openings to be repaired due to fungal decay, floor joists to eastern side of bedroom 1 to be investigated further for potential water damage, replacement and insertion of additional flashing and verandah flooring timbers re-nailed to ensure timbers are sitting flush. Active termites were present at the time of inspection. Visible evidence of termite working were present at the time of inspection. Visible evidence of termite working was found and the overall assessment was that the risk of further attack is extremely high. Quotations were requested and work has been approved for commencement.
This property has been, and continues to be, a family holiday home. It is in regular use by family members and will continue on that basis. There is currently no intention to rent out or sell the property.
c)Property C by BP
The property is shown as being valued at $630,000 and has been adequately insured. As a result of the building inspection, it has been revealed that the property has a number of serious maintenance issues including:
§ 8mm crack to rear wall - recommend a structural engineer to inspect.
§ Exposed plumbing is poor and visible evidence that water cannot drain away from house/yard.
§ Rear deck is not safe to walk on and needs urgent demolition.
§ Rear stairs unsafe and repairs required as well as installation of a handrail.
§ Pool does not comply with council requirements
§ Pool green shell is not visible
§ Broken glass to at least five windows which require repair.
§ Wood rot and corrosion to bottom of timber posts and brackets.
§ Kitchen height is not legal for habitable rooms in kitchen/living area.
BDA management Pty Ltd has been consulted to provide cost estimates on the above repairs and bringing the property to the point where it may be rented out.
The result of the pest inspection are as follows:§ Evidence of termite damage and wood decay.
§ Risk of termite infestation was considered high.
§ Property overgrown.
§ Termite damage to ceiling area in rear bedroom, damage moderate to extensive.
§ Recommend installing a chemical zone to perimeter of property.
§ A destructive invasive inspection recommended.
§ Moisture was found in the wall of the front left bedroom.
§ Recommends a monthly inspection.
§ Moderate fungal decay fascias, rear deck area.
§ Replace affected timber on verandah posts at front.
Quotations have been requested and termite treatment has been approved for commencement.
This property is some way from being habitable. The first concern is to make the property safe, which will take time and cost. This process is being handled by BDA Management. Once completed, a tenant will be sought if possible. There is currently no intention to sell the property.
d)Property D owned by BP
The property is shown as being valued at $835,000. Perpetual has been noted on the title and the property is insured. BP and her daughter BJ have moved to this residence. We were informed by the Adult Guardian on 28 April 2009 that BP is comfortable in her new surroundings and that she is now extremely unlikely to ever move back to her old home. Minor modifications were made to the property and some items of furniture and whitegoods were purchased as necessary. This property is BP’s principal place of residence.
e)Property E & F owned by the Trust
These properties have been valued at $675,000 combined and have been adequately insured. The properties are on separate certificates of title. Building inspections have been undertaken and the properties require maintenance work. One property is being rented at a rate that appears to be well below market.
In respect of Property E, the property has been cleaned and an agent appointed. There is still work outstanding but once completed, the property will be let. There is currently no intention to sell the property.
In respect of Property F, an agent has been appointed and the existing tenant is now on a lease with an increase in rent. There is currently no intention to sell the property.
f)Property G owned by y
The property is shown as being valued at $820,000 and has been adequately insured. There are a number of significant repairs that need to be carried out such as:
§ Roof-lead flashing split to chimney and rear cable-significant.
§ No gutters to most areas.
§ Moisture damage to eaves at right side front.
§ Overgrown with foliage to rear
§ Pool/spa does not comply with council regulations and repairs needed.
§ Structural engineer required to report.
§ Water leaking on electrical equipment in pump room.
§ Interior-minor cracking to plaster
§ Additional smoke alarms required.
§ Moisture damage to ceiling in kitchen.
§ General property comments.
§ Monitor brickwork in hallway at rear for moisture
§ Ovens not working
§ Corrosion to external metal posts.
No maintenance was undertaken prior to determination of BP’s living arrangements. The property has been in the process of cleaning and clearing since BP’s departure. There is work required on the property before it could be let. This is being handled by BDA management and it is anticipated that this property will be let when all necessary work has been completed. There is not intention to sell the property.
g)Property H owned by y
The property has been adequately insured and has had building and pest inspections conducted. A number of structural and maintenance repairs have been recommended and active termites have been found on the property. The current tenants will remain in the property and the lease has been re-written and signed by these tenants. There is currently no intention to sell the property.
18. The financial management plan noted that one of the administrator’s goals was to conduct a reconciliation of the bank account into which income from all entities has been placed in the past. A request had been made to WJ to provide a reconciliation of cash held by BP to determine whether funds held by her were owned by x as trustee for the Y. Perpetual stated that WJ had advised on 5 March 2009 that the Trust is owed an amount of $571,250 from the cash currently held in the name of BP. Perpetual requested that an audit certificate be provided for that amount and they were advised that an auditor had been engaged and expected a certificate in due course. Upon repayment of the liability to the trust, Perpetual said that they will need to consider whether BP should seek a distribution from the trust noting that it may be that BP will then require additional income in order to prevent the sale of assets to provide for her lifestyle expenses.
19. The financial management plan also notes that a number of the Trust beneficiaries had requested the prepayment of their beneficiary loan accounts and that there was insufficient cash to do this. It is stated that, “We advised the Trustee about its options to raise sufficient funds to pay the amounts demanded and pointed out that the family had requested that the investments be kept intact.”
20. In regard to BP’s share portfolio, the financial management plan states that it is recommended that the portfolio be maintained in its current form for the time being. Whilst Perpetual would not normally recommend the investment of funds into an asset allocation so heavily dominated by Australian shares, we recognise that BP receives sufficient income from the portfolio to provide for her needs and the portfolio has been maintained on a “no sell” basis for many years. We believe BP would not have made major changes to the portfolio.
21. The financial management plan had as objectives, the appointment of independent directors to X and Y and notes that those appointments have been made as mentioned above. WJ was also to continue to be appointed as BP’s accountant and the plan notes that he accepted that appointment.
22. In regard to BP’s income and expenses, the financial management plan notes that BP’s source of income is her investments and that she has not received any distributions from the Trust for many years. Her estimated income was $148,218 per annum and there was currently no rental income being received. A formal budget was not prepared on the basis that the income from the portfolio was sufficient to allow for BP’s needs and that there was an option/expectancy of a trust distribution if additional income was required. It was noted that an amount of $801.80 per week was being paid to provide for day-to-day household expenses and that the majority of outgoings were paid by Perpetual.
23. The former Tribunal approved the financial management plan on 26 August 2009. The Tribunal notes that a letter was received from FS on 11 August complaining about a lack of consultation by Perpetual in regard to the financial management plan and raising issues about the various properties and alleging that, since the appointment, the properties had been allowed to deteriorate. FS then made an application to the Tribunal for a review of the appointment of administrator and guardian for BP, which was received on 16 December 2009. In that application FS stated that the properties were being neglected and, as most are vacant, are susceptible to vandalism and provided photos of the properties showing that many had overgrown vegetation and were not well maintained, these photos were date stamped 24 November 2009. She also stated that the current administrators are not applying the general principles by not meeting with all daughters (former administrators). FS, in a letter to the Tribunal dated 5 March 2010, in respect to the property at Property C, stated that there had been a complete lack of any external ground maintenance since the tribunal hearing in November 2008, at which time the grounds were on a regular maintenance schedule. This neglect by Perpetual has made the property an extreme fire risk to surrounding properties as well as placing the house itself in danger and serious neglect with a photo to illustrate date stamped 1 March 2010.
24. Perpetual, in a letter of 14 April 2010 in response to the application, stated that the allegation in regard to not applying the general principles by not meeting with the daughters (former administrators) are untrue. The letter stated, “We have numerous files containing hundreds of communications since November 2008, the majority from FS and DP” and requested particulars of the facts on which the allegations were based. Perpetual prepared submissions for the original hearing of this application on 12 May 2010 which relevantly stated in regard to the real properties:
a)Property D
Perpetual pays for maintenance of the property as required, it is in good condition.
b)Property B
A contractor mows the lawn. We authorised repairs of a garage door. Action is to be taken in relation to trees overhanging the property from a neighbour’s yard. The property is no more susceptible to vandalism than it has ever been.
c)Property C
At the time the administration commenced, the house on the property was un-tenantable. Nothing we have done or failed to do has caused BP any material loss. We propose to ascertain the cost of putting it into tenantable condition, the potential income if we did so, and the market value in that condition compared to its unrenovated value. We will then seek the family’s views on what course is appropriate. We will then make a decision consistent with the proper care and protection of BP’s financial matters taking all those factors into account. That will not necessarily accord with the views of all family members. We have arranged to have the garden and pool restored and maintained in any event.
d)Property A
When PTQ was appointed administrator it continued the existing arrangements with a local slashing contractor to slash the property as required to prevent the issue of any notices from the local authority. We became aware that the property required slashing and sought estimates from other contractors. As a result of those enquiries we engaged a new contractor in March 2010. It appears that after some additional expenditure to restore the land to a properly maintained condition, it will be necessary to budget $15,000 per year to properly maintain the land.
e)Property G
This was the former family home which had deteriorated significantly prior to Perpetual’s appointment. In March 2009 Perpetual instructed contractors to provide regular garden maintenance at both Property C & G. The existing pool maintenance contractor was retained to maintain the pool and to report any pool maintenance issues in a timely manner. The garden was not properly maintained. In November 2009 we sought estimates to restore and maintain it to an acceptable standard. A great deal of clean up work was done by 9 December 2009, as appears from the attached photographs taken on that date. That contractor’s work proved unsatisfactory and in February 2010 Perpetual terminated that contract and has since engaged another contractor. We have budgeted $70,000 for maintenance during the 2010/2011 financial year. The property is to be retained for use by BP or rented. There were many chattels left in the house when BP left, some of which are claimed by her daughters. The process for emptying the house has been contentious and is continuing. We are now finalising an inventory with a large number of photographs. When the contents are removed we expect to put the property into tenantable condition and rent it out.
f)Property H.
When Perpetual was appointed this property was occupied by tenants at a nominal rental. The tenants maintain the property and pay all outgoings and care, at their own expense, for a number of old horses owned by BP. Perpetual has re-let the property to the tenant at $100 per month on similar terms. As far as we are aware there is no dissension among the family about this property, there is some plumbing maintenance being completed.
g)Property E
Mr B formerly used this as his office. It is able to be let out for either residential or office use when minor work is completed. The directors are dealing directly with the letting agents in relation to this.
h)Property F
When we were appointed the property was tenanted. We were advised by a reputable letting agent that the rent was considerably less than market rent. We informed the tenant that the rent would increase incrementally to market rent. He has now given notice he is terminating the tenancy. We expect the trustee will then assess in consultation with the beneficiaries whether the cost of putting the property into more tenantable condition is justified, and will make a decision what to do with it. We will inform the trustee of Perpetual’s view as administrator for BP when we receive reports on the cost of renovation and the renovated and un-renovated rental and market value.
25. In regard to the allegations about perpetual not applying the general principles by not meeting with all daughters, Perpetual stated in its submissions of 11 May 2010 that:
“Perpetual has communicated with all daughters extensively. Correspondence relevant to all of them is sent to all of them. If one has a particular request or comment, we do not include the others in our response unless it is appropriate. On one occasion or more one of the daughters has sought a meeting, For example we met with ER and BM on 17 November 2001. We do not consider that it is necessary to inform the others unless we require information or input as a result, or unless we make a decision which it is relevant to communicate to all. Meetings with all of them together are impractical. We have offered to meet with any of them, and remain willing to do so; we had some communication with DP and FS late in 2009 about a possible meeting, although it did not occur. We will not necessarily accept conditions they want to place on meetings. DP and FS continually describe our meeting with BM and DP (sic) as a ‘secret meeting’. Our communication with DP and FS were equally secret, respecting the family’s right to individually communicate with Perpetual. The applicant has not provided any facts that might lead to a conclusion that a particular decision by Perpetual was tainted by bias.”
26. In summary Perpetual submitted that, “Generally it is a concern if the relationship between the administrator and the family, particularly the primary carer, breaks down.
a)We have had relatively little direct communication from BJ. What there has been has not involved significant conflict.
b)ER and BM have not always agreed with our decisions or the way we have administered the financial affairs, but our relationship with them continues to be professional and cordial.
c)The relationship with FS and DP have always been at best distant. Perpetual prefers to communicate by email or letter so that there is no dispute about content of communications. On 1 December 2009 DP approved a suggestion that our proposed meeting with her be recorded.
d)In view of the fact that all the problems resulting in PTQs appointment as administrator arose form severe conflict between members of the family. It is unrealistic to expect that any administrator willing and able to act independently of pressure from any of them will enjoy a better relationship.”
27. Although the administration application was not heard on the 12 May 2010, a directions order was made requiring the administrator to submit accounts of its administration to Vincents Chartered Accountants for the period 28 November 2008 to 30 April 2010. The administrator was to provide a copy of its accounts and the report of Vincents to all active parties with each party having an opportunity to make submissions. As mentioned above, Vincents Chartered Accountants are the approved examiners for the Tribunal in respect of large estates managed by trustee companies. Vincents provided its report, authored by DJ, dated 8 July 2010 to the Tribunal. The report concluded that the accounts indicate that it is probable that the administrator, Perpetual Trustees Queensland Limited, is managing the estate in the best interests of the adult, BP, and in accordance with the Guardianship and Administration Act 2000. Vincents noted the following relevant matters in its report:
a)The examination included a review of the transactions of the estate provided by the Administrator for the approximate 12 month period from 12 May 2009 to 12 May 2010;
b)BP’s total portfolio comprises of assets held in the following capacities/entities:
i) BP's name personally;
ii) X as trustee for the Y;
iii) Y
Portfolio review set out for each of the capacities/entities
BP
c)Only provided with asset balance for BP as at 31 December 2009 $5,092,268 and 31 March 2010 $5,165,819.
d)In regard to the financial management plan (fmp) assets of $4,972,267 whereas assets as at 31 March 2010 $5,165,819.
e)Assets included in fmp include loan to DP $300,245, which appears to have been repaid on 22 June 2009.
f)The whole of life (encashment value) insurance policy is not included in the portfolio statement as at 31 March 2010.
g)Cash additions to BP’s fund totalling $355,000 were received and unable to determine source of funds
h)The fmp includes a liability of $571,250 from BP to the Y and that on 29 June 2009 an amount of $250,000 was paid from BP to the Y for the repayment of the loan but there are no liabilities disclosed in BP’s portfolio statement dated 31 March 2010.
X as trustee for the Y
The portfolio under review increased from $4,33,884.60 as at 12 May 2009 to $5,563,979.81 as at 12 May 2010.
j)There is a $332,500 difference between value of assets in fmp and Perpetual portfolio statement as at 12 May 2009.
Y
k)Value of assets fell from $1,667,882 as at 1 October 2009 to $1,664,806 as at 31 March 2010.
BP’s income and expenses
l)No budget was prepared fro the period under review. Though there is a budget for the period 5 May 2010 to 4 May 2011 relating to income and expenditure for BP, with budgeted expenditure of $426,044 including $190,000 in carers fees on an income of $114,604.81. The following issues are raised in regard to the budget:
i) Increase of approximately $90,000 in the budgeted expense for employed carer’s fees.
ii) During 12 months to May 2010, BP incurred an income tax liability of $188,510. The income tax liability budgeted for the period from 5 May 2010 to 4 May 2011 is $70,000.
iii) The budget includes the following one-off expenses:
(1)Maintenance on Property H $ 5,000
(2)Maintenance on Property G $ 70,000
(3)Maintenance on Property C $100,000
(4)Maintenance on Property B $ 5,000
Total $180,000
iv) The report then has regard to the letter from Perpetual to the former Tribunal dated 11 August 2009 in regard to the properties to ascertain the requirements for the expenditure.
v) Although the expenses incurred during the period under review and budgeted for the period 5 May 2010 to 4 May 2011 result in an income deficit, BP maintains a significant asset base which can be drawn upon to meet expenditure as required.
vi) The expenses incurred during the period of 12 May 2009 to 12 May 2010 would appear not to include insurance premiums paid in respect of the following properties:
(1)Property H
(2)Property G
(3)Property C
(4)Property E
(5)Property F
m)Two schedules were prepared in respect of Perpetuals fees, one without taking the property administration service fee into account. Vincent stated that they were satisfied that the portfolio management fees and property administration service fees charged with respect to BP’s estate are reasonable and in accordance with the original fees detailed in the plan. The report notes that the fees charged to BP and the trust and company have been done on a combined asset base of the three accounts and then charged proportionately across each account and that due to the “diminishing sliding scale” structure of the fees charged by Perpetual, this results in a lower total cost than applying the fees to each account individually.
28. WK in her submissions to the Tribunal, on behalf of FS and Ms BJ, raised the following issues in response to the Vincents report:
a)According to the report completed by DJ of Vincents Chartered Accountants on 8 July 2010 (audit) the property of the adult that is subject to administration by Perpetual comprise three categories. These are assets formerly owned by BP personally, assets held on trust for the beneficiaries of the family trust and assets of y. There is no dispute that Perpetual have been appointed for the assets that BP held personally however, as companies are separate legal entities, members do not have a proprietary interest in the property of the company. It is submitted that the authorisation of a conflict transaction was therefore unnecessary. It is not disputed by the Applicants that BP no longer had capacity to be director of both companies and that new appointments were required. It is disputed that it was necessary for the Tribunal to authorise the conflict transaction binding the directors to enter a fee agreement with Perpetual. As the authorisation of conflict transactions by the Tribunal at the second hearing was unnecessary, it is submitted that the Tribunal must declare that the financial matters under administration order do not include the assets of the 2 companies (X ATF the Y and Y). Perpetual ought to have known that they only had authority to administer the shares and not the company or trust property. The lack of knowledge that is required to mange a complex estate, as demonstrated by perpetual at the second hearing, goes to Perpetual’s competence as an administrator.
b)The Tribunal wrote to Perpetual to gain further update on the management of real estate owned by BP. On 11 August, Perpetual advised that three of the properties were not currently being let, but were being prepared for rental by BDA Management. To date it appears that rental of these properties is still outstanding, although significant monies have been outlaid in preparation for rental, see audit report. Given that property management was a significant factor in the initial appointment of Perpetual (and indeed real estate comprises the bulk of the assets of BP) and that the Tribunal has sought updates on property management since the appointment of Perpetual, it is concerning that still so many properties remain vacant.
c)Also it appears there is a serious undervaluation of the properties by Perpetual, citing examples of Property H and the properties C and G.
d)There has been a duplication of services to manage Property H.
e)Portfolio management fee is “materially significantly different” with no explanation regarding the difference.
f)The audit report fails to find reference to insurance payments for the properties within the transaction records. This is significant given the previous reference to this concern by the Tribunal at the first hearing.
g)Perpetual sold two parcels of shares on the 9 June 2009, Bank of Queensland Limited (2990 shares $25,778.15) and Lend lease Corporation Limited (2170 shares $15,998.68). This sale occurred when the share market was low and without any apparent need to sell.
h)Perpetual have not kept accurate records, particularly in relationship to the liability of $571,250 owing to the Trust by BP. This is despite communication from WJ on 5 March 2009 and repayment of $250,000 toward this loan on 29 June 2009.
As a result of the above issues it is submitted that Perpetual is no longer competent to administer the finances of BP. They have not protected her interests in relation to management of the real estate and they have “over-reached” their administration in relation to the company and trust property, technically, an abuse of their power in relation to their appointment.
j)Orders were sought that the appointment in relation to the company and trust property is revoked and authorisation for the “linked” conflict transaction is withdrawn and that Perpetual terminate the contract with the 2 company directors regarding administration of company and trust property. That for the personal property formerly held by the adult, FS is appointed as administrator. It was submitted that FS is very familiar with the management of the real estate assets, and is quite able to make decisions and work collaboratively with the company directors. FS would seek a mediated agreement regarding frequency and method of communication with the other attorneys.
29. OJ, on behalf of Perpetual, provided written submissions to the Tribunal in response to the Vincents report and in reply to the submissions of WK as follows:
a)Perpetual have not received any evidence from WJ to verify the Whole of Life (encashment value) insurance policy and therefore has been unable to verify the asset and has not recorded it in BP’s account.
b)Cash additions to BP’s account represent part proceeds of a CBA account and US Merryl Lynch bank account.
c)In regard to the liability of $571,250 owing to the y, Perpetual reiterated what it has previously said about WJ’s reconciliation and his being unable to provide an audit certificate upon request. Perpetual noted that HG, in his capacity as director of X, stated that BP has a credit balance in her loan account of $1,500,000. Perpetual has therefore not recorded the liability of $571,250 in BP’s account. In regard to the payment of $250,000 on 29 June 2009 from BP to the Y Trust, Perpetual states that it was not a repayment of a loan but a loan to the trust to enable payment of distributions to BP’s daughters. Perpetual provided a copy of a loan agreement in respect of this transaction to the Tribunal.
d)In regard to discrepancies in valuations in the financial management plan, dated 27 May 2009 and the portfolio valuation, dated 12 May 2010 for the Y trust, these relate to change in values of the assets.
e)Perpetual confirms that the insurance premiums for all properties were paid and provided copies of the various certificates of currency to the Tribunal.
30. In regard to the submissions of WK, Perpetual’s reply was as follows:
a)Perpetual have never sought to administer anything more than BP’s personal assets, which include the shares in both companies. The Applicants submissions confuse this with controlling the assets owned by Y and by the Y trust, of which X is the Trustee. The assets of those entities are in fact controlled by the companies via their independent directors. The directors have entered into a contract with Perpetual Trustee Company Limited for the provisions of advice and fiduciary services. Perpetual considered such a contract might be a conflict transaction and appropriately sought and obtained authorisation from the former Tribunal on 16 December 2008.
b)In regard to the claims that significant monies have been expended on three properties referred to in Perpetual’s letter to the Tribunal of 11 August 2009, Perpetual notes that this relates to budgeted expenditure as set out in the audit report and not outlays in relation to the properties mentioned in the report. The position in relation to the properties is:
i) The rural land at Property H is tenanted.
ii) Property G still contains belongings of BP’s daughters and cannot be tenanted until those belongings have been removed and BJ’s needs clarified. The budgeted expenditure of $70,000 is still budget expenditure and works have not been carried out because of the ongoing difficulties of having the belongings removed. The directors of Y will then decide how to deal with the property.
iii) The budgeted expenditure of $100,000 for work to the property at Property C also has not been expended. Perpetual have instructed work quoted at $9,000 to make the property safe, remove rubbish and prevent further illegal rubbish dumping. Perpetual does not intend to instruct any further work on this property until the applications currently before the Tribunal have been dealt with.
iv) Property B has been, and remains a family holiday home, with BP’s daughters continuing to use the property for that purpose. In those circumstances and given the continuing wishes of the family to use the property as a holiday home, Perpetual has not entered into any rental agreements in respect of it.
v) All of the properties except for Property D were valued by Herron Todd White, who are independent property valuers in March 2009, (copies of the valuation were provided to the tribunal by Perpetual). It is Perpetual’s policy to value real estate every two yeas and if it continues to be administrator of BP’s affairs, further valuations will be obtained in March 2011, this will include Property D.
vi) The submission in regard to Perpetual’s fees is inconsistent with the audit report.
vii) In relation to the sale of shares, this was based on advice from Perpetual Trustee Company Limited. Having received the advice, Perpetual considered that to retain the shareholdings in Bank of Queensland and Lend lease Corporation Limited was not in BP’s interests.
viii) Perpetual submitted that the level of conflict between BP’s daughters has not diminished since the matter was before the Tribunal in November 2008. The degree of distrust and antagonism between them is demonstrated by their inability to meet to facilitate the removal of chattels from Property G. This makes the Applicants wholly unsuitable and inappropriate to act as administrator for BP, either alone or together, with WJ. The only way that BP’s interests can be protected is through the appointment of an independent administrator and Perpetual remains an appropriate person to act as her administrator.
31. ER also made written submissions to the Tribunal as follows:
a)Perpetuals difficulties in managing the estate provides a valuable insight into the conflict and complexity of the family dynamic and how it impacts on administration of my mothers affairs. I too hold concerns about Perpetual’s management of my mother’s estate but they are, in the main, very different from the ones raised in the August 3 submissions of FS and BJ. At the meetings BM and I were offered with Perpetual, we asked for various matters to be dealt with and the following were not achieved:
i) the prompt refurbishment of Property G, which was requested to ensure that the property would be available if BJ were not able to continue caring for BP so that it would be available for her to return there to live with live in carers. This was as a result of failure of the daughters to remove our belongings from the house. ER mentions correspondence she received form FS illustrating the kind of problem Perpetual has had and noting that, in seeking to be sole administrator, FS claims to be able to “work collaboratively” and “(communicate) with the other attorneys”, but I regard this as unlikely.
ii) No inventory of the possessions moved from my mothers old home at Property C to the newly purchased house at Property D without my or BM’s knowledge. She notes that the contents of Property G were insured for $200,000 in the 1990s and that an up-to-date inventory has not been obtained because Perpetual have been excluded from the house by BJ, with support from DP and FS.
iii) Perpetual is intimidated by aggressive behaviour. She cites an example of jewellery being removed from the house at Property G by DP. At the hearing DP stated that there was no aggressive behaviour and that the jewellery was hers, which she had left for safekeeping by her mother in the 1990s.
iv) Development of a reasonable program of support for BJ. ER notes that her parents ensured that BJ was cared for by family, but that with the divisive nature of the family conflict, BM and her are sadly no longer part of BJ’s support circle. Financial support for BJ needs to be transparent. There are issues in regard to the claim made against the trust, the considerable personal wealth BJ has as a result of trust distributions. Since BP’s move from Property D the question of BJ’s situation has been raised with Perpetual and this includes, should she still be receiving the $800 weekly “allowance” for my mothers care? Which of BJ’s bills should now be paid by BP? Should she continue to live at Property D, or should it be sold and a smaller residence sought?
b)I am strongly opposed to FS being appointed as administrator. Perpetual was appointed following a long period of unsuccessful administration by the family. Since their appointment, conflict has, if anything worsened. To return to family administration, particularly given the behaviour described above (in regard to the removal of chattels), would be a step backwards. In any case, FS currently has a claim against my mother’s companies which would make her appointment a conflict of interest; I am also strongly opposed to the Public Trustee being appointed to this complex estate. If for some reason Perpetual was declared incompetent then another independent administrator would need to be appointed.
32. WK, in her oral submissions at the hearing, raised the following additional matters:
a)As a result of Perpetual managing the assets of BP and the companies, there was a blurring of the decision making role. Perpetual speaks as if solely responsible for management without reference to the directors.
b)That Perpetual have not entered any discussion with BJ in regard to her accommodation since BP entered the nursing home.
c)There was concern about the real estate valuation because there may be a sale of some of the real estate assets including the Property A and C.
d)The relationship between Perpetual and the daughters seemed to favour ER and BM in particular, as a result of the recent issues with the clearing of Property G and changes to arrangements with the re-imbursement of expenses and that there were no standards in regard to meeting between Perpetual and the daughters.
33. OJ made the following submissions:
a)There was no blurring of the three entities, there was separate accounts for each produced for Vincents. No confusion about which entities own which assets, the directors make decisions.
b)There would be consideration of where BJ was to reside if Perpetual was re-appointed.
c)In regard to the reimbursements, Perpetual started receiving requests for reimbursement of expenses from BM and ER for taking BP to morning tea, understood this was because of difficulty they felt in contact at Property D. At same time, a claim for a largish amount from FS for money she had spent for mileage and educational toys. Perpetual decided generally children don’t expect compensation but if incurred expense, which it might be reasonable for a parent to pay, then an amount up to $250 per month would be available.
d)As to the major issues, Perpetual saw these as:
i) The realty needs to be resolved
ii) A communication strategy
iii) The loan accounts in the trust
34. DP made the following relevant oral submissions at the hearing:
a)She supported the application of FS as her parents, by their actions, had made it clear they wanted family members.
b)Perpetual was unsuitable.
c)WJ’s expertise or access to his expertise was important
d)There had been Brisbane City Council eradication notices issued on both Property G and C.
e)Workers have removed gardens and replaced them with wood chip which has clogged the drains.
f)The clean up at Property C occurred only in the last couple of months.
g)There had been two sets of slashing done at Property A property.
h)The valuation on the properties are undervalued. There was an offer on Property A of $1,000,000 in 2001 and that trustee companies had a history of selling real estate and investing the funds as this produced a better return for them. OJ submitted that Perpetual has done what any trustee company would do and engaged an independent valuer and that the claims in regard to sale of the property were unsubstantiated. Further, that if any of the properties were to be sold they would be revalued and sold at auction.
BP had not wanted any of the properties sold.
j)She had an expectation of being treated fairly and that communication and consultation with all family members should occur equally.
k)LD, the General Manager of Perpetual, met with BM and ER late last year and not the rest of us.
l)When I contacted him he said he would only meet with me in the presence of lawyers and the meeting would be recorded.
m)When I was asked for my opinion in regard to reimbursement of the morning tea money I said no, which was not mentioned in the letter.
n)Perpetual said they would grab the bull by the horns, this has not been done.
o)WJ should be administrator if not FS. He should be given an opportunity to put in a financial management plan. Only one property renovated and rented, Property E, this was undertaken by WJ.
35. ER made the following relevant oral submissions at the hearing:
a)She did not agree with the vast log of claims made by FS. Under family administration Property C and G were overgrown, the old garden was radically overgrown and she had stocked the pool with fish to prevent insect infestations. The properties were already in a state of neglect. Her mother had asked her to sell Property C and she was unaware of any offer of $1,000,000 on Property A.
36. Ms BM agreed with the submissions of ER and said that FS could not be appointed as she would not consult her and that WJ could not stand up to FS. She stated that Perpetual should be given another chance to pull their socks up.
37. WJ was asked if he wished to be considered for the role as administrator and stated that he would only be interested if he could have the support of all of the daughters and from what he had seen at the hearing that would not be possible.
38. FS stated that a number of family members are prepared to negotiate and mediate and wished to explore the options for mediation. While Perpetual did not see it as their role, they agreed that if it would assist in solving the communication issues between the daughters it could be in the best interests of BP. FS requested a direction to Perpetual that they release funds for mediation.
39. WK summed up by saying that the future plans of Perpetual had been around since their appointment, there was no clear maintenance schedule, there were continuing difficulties in communication, there needed to be a clear and transparent process needed to robust and clear and that the delays goes to issues of competence.
CONCLUSION
40. BP has extensive assets both individually and through related entities. The administration of all of her financial interests is very complicated and there is no doubt that an administrator is required to ensure that her interests are protected. The former Tribunal appointed Perpetual as administrator on 28 November 2008. That Tribunal highlighted, in its reasons for appointing Perpetual, issues around communication and consultation between the daughters as a stumbling block for proper decision-making, the fact that BP continued to be a director of the companies and the daughters role as attorneys in regard to the companies, that at least four of the properties remained vacant and were not therefore being managed for her benefit and various conflicting transactions. Since its appointment, Perpetual has ensured that independent directors have been appointed to the companies and an arrangement has been entered between a Perpetual entity and the companies so that the management of BP assets and income can be handled together. WK has raised issues about Perpetual overstepping its authority as administrator and there being a blurring of the decision making process by having Perpetual controlling BP’s assets as well as those of the companies. This blurring may be seen in the fact that perpetual presented the accounts for BP and the companies to Vincents for examination. Perpetual’s answer to this was that unless all three sets of accounts were reviewed together the examiner would not have got a true picture. This is readily apparent in respect of Y, a company which owns substantial real estate but currently has only a small income and is dependent on BP for funds and the need for X as trustee for the Y to borrow $250,000 to make distributions to her daughters.
41. The authority of Perpetual in regard to its different capacities is clear, it is the administrator for BP by an order of the former Tribunal and the Perpetual entity acts as a manager of the assets of X and Y by agreement with the directors of those companies. This Tribunal has no authority in regard to Perpetual’s management of the assets of the companies; it is the shares of BP in the companies for which Perpetual acts as administrator for BP. As administrator, Perpetual is able to exercise the rights of BP at general meetings of the companies to do such things as appoint and remove the directors of the company. It is the directors who are charged with the day to day management of the assets of the companies. The directors then have, in exercising their powers, appointed Perpetual as manager of the company assets. It is clear from the submission of OJ that Perpetual understands its various roles and the submissions of WK in that regard are not sustained. In regard to the blurring of the decision making role, WK presented no evidence to the Tribunal in support of that contention. It is for the directors of the companies to assert their independence and to ensure that Perpetual is giving them advice and that perpetual is acting on their instructions. This is not a matter for the Tribunal.
42. The continuing conflict among BP’s daughters is clear from the incidence around the removal of chattels from Property G and the issue of whether the daughters should be reimbursed for expenses they incur in maintaining their relationship with their mother and providing support for her. The Tribunal does not consider it is part of Perpetual’s role to try to solve the family dynamic. What it does have though, is a duty to maintain existing supportive relationships of BP in accordance with the general principles. That is the relationships that BP has with her support group which would have included the morning tea’s with BM and ER and the assistance that FS provides to her mother by taking her to appointments. These arrangements should be transparent and not subject to arbitrary change not only to ensure that BP’s needs are met but also to ensure that the relationship Perpetual has with BP’s daughters is not unnecessarily conflictual. The Tribunal notes that as BP is now in aged care, a new set of arrangements for support of BP by her family will need to be considered.
43. In regard to the properties, it is clear that Perpetual had plans for them which have not progressed, particularly in regard to Property C and G. While Property G is a company asset it is a major part of the value of Y and Perpetual must ensure that the value of BP’s shareholding in the company is not eroded. There appears to have been issues with contractors not providing competent services but Perpetual should have been aware of these problems in a timely fashion as required under section 35 of the GAA Act. Perpetual have provided evidence that the properties are now secure and grounds maintenance has occurred to ensure that there is no further build of overgrowth and no further illegal dumping of material. The Tribunal notes that funds have been set aside in BP’s budget for the next year for work in respect of the properties to bring them to habitable condition. The Tribunal appreciates that BP’s daughters are concerned that Perpetual has not been able to fulfil one of the duties for which it was appointed and that the fact that they were perceived by the former Tribunal as not being able to properly carry out those duties was one of the reasons it was not considered appropriate for them to continue. The fact that some of these properties were in poor condition when Perpetual was appointed does not mean that it is sufficient for Perpetual to maintain the status quo. That is why they were appointed, to ensure that BP’s properties were protected and that their benefit to her was maximised. They have insured the properties and paid for the rates but there have been clear issues in regard to maintenance and repair. There have been no allegations of any loss suffered by BP as a result of these issues, clearly though there have been many delays and, as noted by WK, Perpetual have been around since their appointment, or at least since the fmp of 27 May 2009 and the letter of 11 August 2009.
44. In regard to conflict transactions the Tribunal notes that these continue, for example the loan made by Perpetual as administrator for BP to enable a distribution of $50,000 each to be made to BP’s daughters. There is the continuing claim by some of BP’s daughters for repayment of their loan account balance in the y trust, the conflict there is the fact that BP’s loan account has still not been finalised and whoever is her administrator will be able to appoint the directors of the trustee company and this could result in conflicts of interest. There is also the continuing issue of BJ and the provision of accommodation and support to her. If a family member was appointed, applications could be made for the approval of conflict transactions, in this case it is clear that conflict transactions are of an ongoing nature.
45. WK raised some other issues which she submitted went to Perpetual’s competence as administrator. In regard to the valuation of the properties, Perpetual appointed an independent valuer, Herron Todd White, to value the properties when they were appointed and stated that their practice is to review the valuations every two years. The Tribunal considers that this is an appropriate course of action and that the valuations have been prepared by professionals. There were allegations of undervaluation based on current listings and some historical offers made. The Tribunal is satisfied that the valuations were prepared by professional valuers. A concern was expressed that Perpetual may sell some of the properties based on these outdated valuations. OJ was able to reassure the Tribunal that any property to be sold would be sold after a revaluation occurred and would be sold at auction. A further issue was raised in regard to Perpetual’s fees based on some remarks in the report of Vincents. The Vincents report makes it clear though that there is no issue with Perpetual’s fees when the entire section is read. The sale of two parcels of shares was also raised on the basis that they were sold unnecessarily when the market was low. Perpetual advised that they acted on advice that the shares should be sold. The Tribunal agrees that an administrator is required to act in accordance with the prudent person rule and that requires them to act on professional advice. While it was made clear that Perpetual would maintain BP’s portfolio, if any particular shareholding became doubtful then perpetual should rightly on advice, sell that holding. An issue was raised that Perpetual had not kept accurate records as it had not recognised the liability to the Y. As the question of the balance of BP’s loan with the trust has not been finalised, then the Tribunal accepts that Perpetual was not in a position to put a figure on this.
46. From the above there are clearly issues in regard to Perpetual’s communication with BP’s daughters and the need for these to be transparent, even-handed and procedurally fair. There are also issues in regard to the delay in attending to the maintenance and repair of BP’s real estate. Vincents Chartered Accountants found that it was probable that Perpetual were in accordance with the GAA Act and in BP’s best interests. The Tribunal is satisfied that Perpetual remains competent to continue as administrator for BP but, if it is to continue in the role, the issues which have been highlighted must be dealt with.
47. The Tribunal may remove an administrator if there is another person more appropriate. FS has asked that she be considered for that role. While FS is supported by DP and BJ, she is not supported by ER or BM. One of the reasons why family members were removed from decision-making for BP was the level of conflict within the family. It is clear that the level of conflict has not decreased and it would be inappropriate to appoint one family member as decision maker for BP, this would only result in heightened conflict and possible litigation in regard to such things as the family trust. There is also the issue of the claim that has been made for repayment of beneficiary loan accounts and distributions form the trust which put FS in an inherent position of conflict. FS also made mention of the maintenance schedule in respect of the properties but did not provide any details to the Tribunal of how she would propose to deal with the properties. The Tribunal is not satisfied that FS is more appropriate for appointment as administrator for BP. The Tribunal recognises that she wishes to assist in the management of BP’s real estate properties and that she provides much personal assistance to BP and asks that Perpetual listen to her and all of BP’s daughters in its decision-making.
48. WJ was asked if he wished to be considered for appointment as administrator and he declined acknowledging that he couldn’t act without support of all other daughters and that with the level of conflict that existed this would not be possible.
49. The Tribunal is satisfied that there is no other person more appropriate to be BP administrator and will continue the appointment of Perpetual as her administrator for all financial matters.
50. The Tribunal was also asked to consider a request for mediation. BP has five daughters who all have something to contribute to her care and protection. The conflict which exists between them though means that they are not able to work together for her and that the resources of her administrator are being distracted from the task of working for BP’s benefit because they have to deal with this conflict. This can be seen in the recent issues around the chattels at Property G. The Tribunal is satisfied that it is in BP’s best interests that there be a resolution of the conflict among her daughters' and will recommend that if all of the daughters sign a proposal for mediation then Perpetual release funds from BP for that purpose.
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