Diver v Diver
[2007] VSC 146
•22 May 2007
The
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
No. 4291 of 2005
IN THE MATTER of Part IV of the Administration and Probate Act 1958
IN THE MATTER of the Will and Estate of William Edwin Diver (deceased)
BETWEEN:
| LEE KAMKE DIVER (also known as LEIH KAMKE DIVER) by her Administrator ANZ Executors & Trustee Company Limited | Plaintiff |
| V | |
| BEVERLEY ANNE DIVER and OTHERS (who are sued as the executors of the will of William Edwin Diver deceased) | Defendants |
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JUDGE: | HARGRAVE J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 4 April 2007 | |
DATE OF JUDGMENT: | 22 May 2007 | |
CASE MAY BE CITED AS: | Diver v Diver | |
MEDIUM NEUTRAL CITATION: | [2007] VSC 146 | First amendment 24 May 2007 Second amendment 30 May 2007 |
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Guardianship and Administration – Plaintiff with a disability – Proceeding brought by administrator of plaintiff's estate – Compromise of proceeding – Settlement sum payable to plaintiff with a disability – Whether administrator or Senior Master should manage the settlement sum - Guardianship and Administration Act 1986 (Vic) s. 66(3), Administration and Probate Act 1958 (Vic) Part IV, Supreme Court Act 1986 (Vic) ss. 113(1), 113B(1), 113B(2), Supreme Court (General Civil Procedure) Rules 2005 (Vic), Rules 77.01(b), 79.06
Testator's Family Maintenance - Plaintiff with a disability – Proceeding brought by administrator of plaintiff's estate – Compromise of proceeding – Settlement sum payable to plaintiff with a disability – Whether administrator or Senior Master should manage the settlement sum - Guardianship and Administration Act 1986 (Vic) s. 66(3), Administration and Probate Act 1958 (Vic) Part IV, Supreme Court Act 1986 (Vic) ss. 113(1), 113B(1), 113B(2), Supreme Court (General Civil Procedure) Rules 2005 (Vic), Rules 77.01(b), 79.06.
Practice and Procedure – Jurisdiction and powers of Masters – Plaintiff with a disability – Proceeding brought by administrator of plaintiff's estate – Compromise of proceeding – Settlement sum payable to plaintiff with a disability – Whether administrator or Senior Master should manage the settlement sum - Guardianship and Administration Act 1986 (Vic) s. 66(3), Administration and Probate Act 1958 (Vic) Part IV, Supreme Court Act 1986 (Vic) ss. 113(1), 113B(1), 113B(2), Supreme Court (General Civil Procedure) Rules 2005 (Vic), Rules 77.01(b), 79.06.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Ms K McMillan QC | Bruce M Cook & Associates |
| For the Defendants | Mr R H Miller | Deacons |
| For the Senior Master’s (Funds In Court) Office | Mr S. Wharton, by leave, as amicus curiae |
HIS HONOUR:
I Facts
William Edwin Diver (“the deceased”) died on 7 July 2003. He left a large estate, comprising assets at that time of approximately $50 million. Since then, the value of the estate has grown to over $65 million.
The deceased is survived by his de facto common law wife Patricia Diver, six natural children (one of whom is the plaintiff), two step children, the half-sister of the plaintiff and his second wife Beverley Anne Diver.
The deceased left a will dated 29 June 2001. On 28 July 2004, probate of the will was granted to the deceased’s second wife Beverley Diver, the deceased’s accountant, one of the deceased’s sons and one of the deceased’s step daughters. The executors are the defendants in this proceeding.
The plaintiff, Lee (also known as Leih) Diver, is one of the deceased’s natural children. She is the daughter of the deceased and his de facto common law wife Patricia Diver.
The deceased made no provision for the plaintiff in his will.
The plaintiff is currently 28 years old. She is profoundly handicapped, both physically and intellectually, has no ability to care for herself and is dependent upon 24 hour care each day. She will never recover from her injuries and is only sustained in life by the meticulous care of her mother. It is estimated that the plaintiff will continue to live indefinitely.
The day-to-day care of the plaintiff is currently provided by her mother Patricia Diver. However, without assistance, that care is not sufficient. In order to continue caring for the plaintiff, there are substantial needs in respect of equipment, personnel and accommodation for the balance of her expected life. These needs include planned building works for the renovation and upgrade of the house where the plaintiff resides with her mother.
Following the death of the deceased, Patricia Diver consulted her solicitor and sought advice as to whether any claim could be made against the deceased’s estate to gain proper provision for herself and her children, including the plaintiff. As a result, the solicitor obtained a copy of the deceased’s will and discovered that no provision had been made for Patricia Diver or her children, including the plaintiff.
Next, the solicitor advised Patricia Diver that she could not act for her and her children, due to a possible conflict of interest. Further, the solicitor advised Patricia Diver that, due to this conflict of interest, she ought not act as litigation guardian for the plaintiff in any claim to obtain proper provision from the deceased’s estate. After considering a range of relatives who might be able to act as litigation guardian of the plaintiff, it was decided that there was no suitable relative who could undertake this task. Accordingly, the solicitor advised Patricia Diver that she could apply to the Court to have a guardian appointed for the purposes of litigation, or she could apply to the Victorian Civil and Administrative Tribunal to appoint an administrator of the affairs of the plaintiff.
After discussing the matter with Patricia Diver, the solicitor contacted ANZ Executors & Trustee Company Limited ("ANZ Trustees") to ascertain whether it would accept an appointment as administrator of the plaintiff. The solicitor approached ANZ Trustees because she knew the chief legal counsel of ANZ Trustees, Mercia Chapman. To the knowledge of the solicitor, Ms Chapman had previously been a member of the Victorian Bar and had practised in the area of claims under Part IV of the Administration and Probate Act 1958 (Vic).
Prior to approaching Ms Chapman, the solicitor advised Patricia Diver as to the fees and commissions which ANZ Trustees was entitled to charge for their services, and also advised her that she could apply to the Tribunal if she was at any time concerned about the conduct of ANZ Trustees as administrator of her daughter's affairs.
Following discussions between the solicitor and Ms Chapman, ANZ Trustees agreed to accept appointment as administrator of the plaintiff. Patricia Diver then applied to the Tribunal to have ANZ Trustees appointed as administrator of the plaintiff. On 16 December 2004, ANZ Trustees was appointed as administrator of the affairs of the plaintiff.
ANZ Trustees is a professional trustee company with over 125 years' experience. It has over $1 billion in funds under administration for approximately 1,000 private clients and beneficiaries of a variety of trusts. ANZ Trustees has the staff to provide personalised service to the plaintiff, her mother and other carers and employs a team of investment professionals to invest the funds under its management. The personalised service includes the provision of a client relationship manager who maintains regular contact with the client, in this case the plaintiff's mother, for the purpose of consultation about and making decisions concerning the health and affairs of the beneficiary. Ms Chapman described the investment process undertaken by ANZ Trustees as one "designed to deliver long-term tax efficient yield focused portfolios that are created to produce capital growth and income streams that grow over time in excess of inflation."
The order appointing ANZ Trustees as the administrator of the plaintiff was made under s. 43 of the Guardianship and Administration Act 1986 (Vic) (“the Act”). The order gave ANZ Trustees all of the powers contained in Divisions 3 and 3A of Part 5 of the Act.
Further, the orders of the Tribunal appointing ANZ Trustees as administrator of the plaintiff’s affairs imposed reporting obligations on it as administrator, limited the amount of remuneration chargeable by it as administrator and ordered that the administration order be reassessed no later than 16 December 2007.
The formal orders made by the Tribunal were as follows:
The Tribunal orders that:
1.ANZ Trustees … be appointed administrator of the estate with all the powers and duties conferred by Part 5 Divisions 3 and 3A of the Guardianship and Administration Act 1986.
2.The administrator complete and forward to the Tribunal a statutory declaration detailing the financial position of the represented person no later than 16 February 2005.
3.The administrator forward a plan of management of the estate to the Tribunal for approval no later than 16 February 2005.
4.The administrator lodge Forms of Accounts with State Trustees Limited, VCAT Examinations … and give or send a copy to Patricia Lorraine Diver, according to the following schedule:
A.A Form of Accounts, for the period 16 December 2004 to 30 June 2005, is to be lodged no later than 30 September 2005.
B.Thereafter, Forms of Accounts for each financial year, commencing on 1 July and ending on the following 30 June, are to be lodged no later than 30 September in each year.
5.The administrator is entitled to the following remuneration (inclusive of GST) from the estate of the represented person for acting as administrator:
A.1% per annum on assets up to the first $1,000,000 and 0.5% per annum on assets in excess of that amount.
B.An amount of no more than $450 for the preparation of annual tax returns.
C.A management fee not exceeding 1% per annum of the capital invested in any common fund payable out of income earned by that common fund.
6.This administration order be reassessed no later that 16 December 2007.
7.This order shall continue to have effect until further order of the Tribunal.
The remuneration of ANZ Trustees, as approved by the Tribunal, is substantial. On the other hand, ANZ Trustees has received no remuneration[1] since its appointment as administrator in December 2004. During this time, ANZ Trustees has taken the financial risk associated with the proceeding, including payment of legal costs, and has provided the full service of an administrator to the plaintiff and her mother. It is obvious from the evidence as a whole that ANZ Trustees has been involved in substantial work in managing the affairs of the plaintiff for over two years, without any reward to date. This work has included consultation with the plaintiff's mother and her doctors, management of this proceeding and preparation of a financial plan for the plaintiff's future. The plaintiff's mother, Patricia Diver, has been happy with the performance of ANZ Trustees and recognises that it would not have undertaken the role as administrator in the absence of an entitlement to charge a reasonable rate for so acting.
[1]Except for $87.95.
A particular aspect of the administration by ANZ Trustees to date is the obtaining of expert assistance as to the manner in which the house where the plaintiff resides with her mother can be upgraded, by building works and renovation, in order to assist in the care of the plaintiff.
In January 2005, ANZ Trustees filed a proceeding in this Court on behalf of the plaintiff seeking orders, pursuant to Part IV of the Administration and Probate Act1958, that provision be made for her proper maintenance and support out of the estate of the deceased.
The plaintiff’s claim in this proceeding was the subject of a mediation on 23 February 2007. Agreement was reached by the parties at the mediation and terms of settlement were executed by the parties. Relevantly, the terms of settlement provide:
1.Subject to and conditional upon the Court making orders in this proceeding, pursuant to Rule 15.08 of the Supreme Court Rules, approving the compromise of this proceeding on the terms set out herein within 60 days of the date hereof (or such other time as the parties may subsequently agree upon in writing), the Defendants shall, within 14 days of the date of approval of these Terms of Settlement, pay to the plaintiff the sum of $5 million (“the Settlement Sum”) and the Settlement Sum shall be paid by bank cheque or cleared funds into the trust account of ANZ Executors & Trustee Company Limited as Administrator of the Plaintiff.
2.The Settlement Sum shall be used for the maintenance and support of the Plaintiff during her lifetime and shall be administered by the ANZ Executors & Trustee Company Limited as Administrator of the Plaintiff.
3.Upon the death of the Plaintiff, any balance, including interest or accretions, remaining from the Settlement Sum shall be paid to the Defendants.[2]
[2]Emphasis added.
Since the making of the administration order, Patricia Diver has continued to be responsible for the care of her daughter, the plaintiff, and has developed a relationship of trust and confidence with representatives of ANZ Trustees. Patricia Diver swore in her affidavit:
My time is fully occupied in caring for Leih. I am not in a position to administer the funds for Leih. I have developed a good working relationship with the representatives of ANZ Trustees and would prefer that they continue to administer Leih’s funds. I feel confident that I can discuss Leih’s ongoing care and her financial needs with her administrator and I am confident in the knowledge that the representatives of the administrator understand her personal situation and circumstances.
Patricia Diver attended the mediation. She has sworn that she "was pleased to know that the proceeding was settled on the basis that ANZ Trustees would manage the funds for Leih's benefit."
It was recognised by the parties in their negotiations that there may not be sufficient funds to meet the financial needs for the ongoing care of the plaintiff if the capital invested on behalf of the plaintiff did not grow over time. Accordingly, the amount of the settlement sum was calculated by actuaries for the parties on the premise that the capital invested on behalf of the plaintiff would need to grow over the years.
Next, an application was made to a Master of this Court to approve the compromise recorded in the terms of settlement, and for final orders in the proceeding in accordance with that compromise. The application for approval was required under Rule 15.08(1),[3] because the plaintiff is a person under a disability. The application for final orders was made to a Master under the authority conferred under Rule 77.01(b), which gives a Master the power to hear and determine any application and exercise any powers and authorities under Part IV of the Administration and Probate Act “where an order is sought under that Part by consent”.
[3]Supreme Court (General Civil Procedure) Rules 2005 (Vic).
The Master was satisfied that the distribution of the estate of the deceased as effected by his will did not make adequate provision for the proper maintenance and support of the plaintiff. The Master approved the compromise recorded in the terms of settlement. However, the Master did not, as provided for in the terms of settlement and in the form of consent order sought by the parties, order that the settlement sum be paid to the administrator. Instead, the Master ordered that the settlement sum be paid into court to the Senior Master to be invested by him until further order.
The formal orders made by the Master were as follows:
1. The compromise be approved.
2.The plaintiff receive by way of provision out of the estate the sum of $5,000,000 within 7 days after this day as set out in paragraph 1 of the terms of settlement.
3.The defendants pay that sum into court to the Senior Master for the plaintiff to be invested by him until further order.
The senior legal counsel for the administrator, Ms Chapman, has sworn that the Master gave reasons for refusing to order that the settlement sum be paid to the administrator, in accordance with cl. 1 of the terms of settlement. Ms Chapman deposed as follows:
The reasons expressed by the Master for making the order that the settlement sum be paid to the Senior Master’s Office were that:
(a)The Senior Master’s Office is very experienced in looking after the funds of persons with disabilities.
(b)The financial performance of the funds invested by the Senior Master had been successful.
(c)The fee charged by ANZ Trustees as set out in the VCAT orders were higher in comparison with the charges made by the Senior Master’s Office in administering the settlement fund.
(d)In having the settlement sum paid to ANZ Trustees and managing the funds, there was potential for conflict in that ANZ Trustees would receive the benefit of the commission as well as managing the settlement fund.
The plaintiff has appealed against paragraph 3 of the Master’s orders, under which the settlement sum is to be paid into court to the Senior Master to be invested by him until further order. This is the only aspect of the Master’s orders which is the subject of appeal. As this order was not one sought or made by consent, no application for leave to appeal is required.[4]
[4]Compare Rule 77.05(2).
In lieu of paragraph 3 of the Master’s orders, the plaintiff seeks an order in the following terms:
3.The defendants pay that sum by bank cheque or cleared funds into the trust account of ANZ Executors & Trustee Company Limited as Administrator of the Plaintiff.
It is apparent from paragraph 3 of the Master's orders, and from his brief reasons, that he intended to exercise the discretion under s. 66(3) of the Act, or the Court's inherent jurisdiction, to order that the Senior Master be responsible for the investment and management of the settlement sum on behalf of the plaintiff. Mr Wharton, a representative from the Senior Master's (Funds In Court) Office, informed the Court that the Senior Master's Office performs a number of functions which are akin to those of an administrator appointed under the Act, including the preparation of a budget of a person's circumstances, in order to determine whether the Senior Master will accede to an application for the payment of funds to or on behalf of a person with a disability whose funds are under the Senior Master's control. The Senior Master adopts this practice even where an administrator is appointed in respect of the affairs of that person.
II Issues on appeal
The hearing of an appeal from a Master to a Judge is by way of re-hearing de novo of the application to the Master, upon the evidence which was before the Master.[5] On the hearing of the appeal, the judge has power to grant special leave to a party to rely upon an affidavit or oral evidence not used or given before the Master.[6] In this case, I gave the plaintiff special leave to rely upon two affidavits which were not before the Master. First, the affidavit of the plaintiff’s mother, Patricia Lorraine Diver, sworn 3 April 2007. Second, the affidavit of Mercia Diane Chapman sworn 3 April 2007 and the exhibits to that affidavit.
[5]Rule 77.05(7)(a).
[6]Rule 77.05(7)(b).
I granted leave to rely upon these affidavits because they are largely responsive to the reasons given by the Master for refusing to make an order sought by consent. Prior to those reasons being given, the plaintiff had not anticipated the need to respond to the issues raised in those reasons. However, it is important to note that these affidavits contained evidence which was not placed before the Master at the time he exercised his discretion.
The appeal came on for hearing in the Practice Court. The parties joined in the submission that it would be of benefit to the profession as a whole if the Court gave written reasons on the appeal which, notwithstanding that the appeal is a rehearing de novo of the application before the Master, considered whether the Master had jurisdiction under Rule 77.01(1)(b) to make any orders otherwise than in accordance with the exact form of the consent orders which were sought. This submission was based upon the contention that this was not an isolated case. Indeed, there was another appeal raising the same issue, and another issue of general importance, heard together with this appeal. I was informed by counsel that such cases were not uncommon, and that the profession was looking for “a signpost” to guide future cases where applications by consent are made to a Master for final orders under Part IV of the Administration and Probate Act; especially where the application is made on behalf of a person who is represented by an administrator.
III Jurisdiction
Rule 77.01 relevantly provides:
77.01Authority
Subject to this Order, a Master, in addition to exercising the powers and authorities conferred by any other provision of these Rules or any Act may –
(a)in any proceeding to which these rules apply, give any judgment or make any order, including any judgment or order in the exercise of the inherent jurisdiction of the Court;
(b)hear and determine any application and exercise any powers and authorities under the following statutory provisions –
Administration and Probate Act 1958, section 65, and Part IV where an order is sought under that Part by consent;[7]
...
Guardianship and Administration Act 1986, section 66;
…
[7]Emphasis added.
It was submitted on behalf of the plaintiff that the extent of the jurisdiction of a Master to hear and determine an application under Part IV of the Administration and Probate Act was limited to the making of the consent orders sought by the parties. Accordingly, by refusing to make the order sought by consent, that the settlement sum be paid to ANZ Trustees, and instead ordering that the settlement sum be paid into court to the Senior Master to be invested by him until further order, the Master exceeded his jurisdiction. This submission was supported by counsel for the defendant.
I do not accept the submission. Rule 77.01 is in unambiguous terms. Under Rule 77.01(a) a Master has power to exercise the inherent jurisdiction of the Court. The inherent jurisdiction of the Court includes its parens patriae jurisdiction to make orders for the control and administration of funds in court for the benefit of a person incapable of managing his or her own property.[8] Under Rule 77.01(b) a Master may hear and determine any application made under Part IV of the Administration and Probate Act where an order is sought under that Part by consent. That is what happened in this case. Accordingly, the Master had the power and authority to deal with the application.
[8]Smith v Reynolds [1989] VR 309, 312-3; Morris v Zanki (1997) 18 WAR 260, 284-6.
That power was not limited to making the exact orders sought by the parties. In addition to exercising the Court's power under Rule 15.08 to grant or withhold approval of the compromise, the Master had the power to order that the settlement sum be paid into court for the plaintiff and, in addition, a discretion to order that the money remain in court and not be paid out to the administrator of the plaintiff. That discretion arose in the exercise of the Court's inherent jurisdiction and is expressly conferred by s. 66(3) of the Act, which provides:
(3)If in any civil proceedings before a Court it is adjudged or ordered that money be paid to a person with a disability (whether or not that person is a party to a cause or matter) the money –
(a)is to be paid into court; and
(b)unless the Court otherwise orders is to be paid out to the administrator (if any) of the estate of that person or State Trustees.
The scheme of s. 66(3) is straightforward. In the first instance, the sum which is ordered to be paid to a person with a disability is to be paid into court under paragraph (a). That is what the Master ordered. Second, unless the Court otherwise orders under paragraph (b), that sum is to be paid out to the administrator (if any) of the person with a disability, or to State Trustees. Accordingly, a discretion is given to the Court at the time of ordering that money be paid to a person with a disability, to order that the money not be paid out to the administrator. In this case, the Master exercised that discretion and ordered that the money be invested by the Senior Master until further order.
It was submitted on behalf of the plaintiff that the Master had exercised his discretion wrongly. The defendant supported this submission.
IV Discretion
In Smith v Reynolds[9] Kaye J considered that the discretion of the Court under s. 66(3) of the Act was a "procedural" provision which was additional to, and did not displace or reduce, the inherent jurisdiction of the Court in the exercise of its parens patriae jurisdiction to make orders for the control and administration of funds in court for the benefit of a person with a disability.[10] I do not doubt that this is so. However, in exercising its parens patriae jurisdiction, which is itself discretionary in nature, the Court must consider the context in which the discretion arises. Where, as here, an administrator has been appointed to manage the affairs of the person with a disability, the context will include the provisions of the Act concerning administration orders, the form of the administration order in fact made and the provisions of the Supreme Court Act 1986 (Vic) which recognise and complement the administration regime established by the Act.
[9][1989] VR 309.
[10]Ibid, 312-3.
The power to appoint an administrator in respect of a person with a disability, and the grounds upon which that power will be exercised, are specified in ss. 46 and 47 of the Act. The Tribunal is required to determine whether a person who consents to act as administrator is suitable to act, having regard to the criteria specified in s. 47. These criteria include those specified in s. 47(1)(c) that:
(i)the person will act in the best interests of the proposed represented person; and
(ii)the person is not in a position where the person's interests conflict or may conflict with the interests of the proposed represented person; and
(iii)the person is a suitable person to act as the administrator of the estate of the proposed represented person; and
(iv)the person has sufficient expertise to administer the estate or there is a special relationship or other special reason why that person should be appointed as administrator.
Accordingly, when the Tribunal makes an administration order, as in this case, it must be taken to have been satisfied of each of these matters. In this regard, the mere fact that, as here, a professional administrator is entitled to remuneration for acting as administrator will not, by itself, constitute a conflict of interest. Otherwise, there would be an inconsistency between s. 47(1)(c)(ii) and s. 47A of the Act. Section 47A recognises that professional administrators will charge remuneration and provides that such remuneration must be approved by the Tribunal. In this case, the Tribunal approved the remuneration of ANZ Trustees and specified that remuneration in the administration order.
By s. 48 of the Act, an administrator appointed under s. 46 has the powers and duties referred to in Division 3 of Part 5 of the Act. Further, the administrator is to have such of the powers and duties referred to in Division 3A of Part 5 as the Tribunal may specify in the order. In this case, the administration order specifies that ANZ Trustees has all of the powers and duties referred to in both Division 3 and Division 3A of the Act. These Divisions give wide powers to an administrator. Further, they impose upon administrators the duty to keep accounts and lodge those accounts with the Tribunal.[11] The accounts may be subject to examination or audit by a nominated person.[12] In this case, State Trustees and "VCAT Examinations" were nominated in the administration order as examining parties.
[11]Section 58(2).
[12]Section 58(1).
The breadth of the powers of an administrator is illustrated by sub-ss. 58B(1) and (2) of the Act, which provide:
58B. Powers and duties in relation to represented persons
(1)Subject to and in accordance with this Act and the administration order appointing an administrator in each case—
(a)the administrator has the general care and management of the estate of the represented person; and
(b)it is the duty of the administrator to take possession and care of, recover, collect, preserve and administer the property and estate of the represented person and generally to manage the affairs of the represented person and to exercise all rights statutory or otherwise which the represented person might exercise if the represented person had legal capacity; and
(c)the administrator in the name and on behalf of the represented person may generally do all acts and exercise all powers with respect to the estate as effectually and in the same manner as the represented person could have done if the represented person were not under a legal disability.
(2)Without limiting sub-section (1), an administrator may in the name and on behalf of a represented person—
(a)collect, receive and recover income of and money due or which becomes due to and any compensation or damages for injury to the estate or person of the represented person; and
(b)invest any money in any security in which trustees may by law invest; and
(c)demise land at a rent and on conditions as the administrator thinks fit for any term not exceeding 5 years or, with the consent of the Tribunal, for any longer term; and
(d)exercise to the extent and in the manner the administrator thinks proper any power of leasing vested in the represented person; and
(e)surrender any lease, accept any lease, accept the surrender of any lease or renew any lease; and
(f)bring land under the Transfer of Land Act 1958; and
(g)sell, exchange, partition or convert into money any property; and
(h)mortgage or charge any property; and
(i)pay any debts and settle, adjust or compromise any demand made by or against the estate and discharge any encumbrance on the estate; and
(j)carry on so far as appears desirable any trade, profession or business which the represented person carried on; and
(k)agree to any alteration of the conditions of any partnership into which any represented person has entered or to a dissolution and distribution of the assets of the partnership; and
(l)bring and defend actions and other legal proceedings in the name of the represented person; and
(m)execute and sign deeds, instruments and other documents; and
(n)complete any contract for the performance of which the represented person was liable, or enter into any agreement terminating liability; and
(o)pay any sum for the maintenance of the represented person (and, in the event of his or her death, for funeral expenses) and for the maintenance of his or her spouse or domestic partner or any child, parent or other person dependent upon him or her and for the maintenance and education of his or her children as to the administrator seems expedient and reasonable; and
(p)do all matters necessary or incidental to the performance of any of the above-mentioned matters and apply any money from the estate which it is necessary to apply for the purposes of this Act.
Apart from requirements which may be imposed under s. 58(1) of the Act, that accounts lodged by administrators under s. 58(2) may be examined or audited, there are other aspects of the Act which provide for control to be exercised over administrators by the Tribunal. Under s. 60A of the Act, an interested person may apply for a rehearing of the application which resulted in the making of an administration order. Under s. 60C, the Tribunal has wide powers on a rehearing. Section 61 of the Act provides for reassessment of Administration orders at regular intervals, at any time on the Tribunal's own initiative or on the application of any person. In this case, the Tribunal has ordered that there be a reassessment at the expiration of three years from the making of the administration order, which is no later than 16 December 2007. Section 62 specifies the persons who are entitled to notice of a reassessment. Under s. 63, the Tribunal has wide powers upon completing a reassessment of an administration order. The Tribunal may amend, vary, continue or replace the administration order, subject to any conditions or requirements it considers necessary, or it may revoke the administration order.
These provisions of the Act indicate a strong statutory intention to place the power to make administration orders, and to supervise administrators appointed under the Act, in the hands of the Tribunal. Subject to this control, s. 66(3) of the Act provides that money paid under a court order to a person with a disability must, in the first instance, be paid into court and then paid to the administrator unless the Court otherwise orders.
The requirement under s. 66(3)(a) that the money first be paid into court has a purpose. It enables the Senior Master to monitor and enforce strict compliance with court orders requiring payments to persons with a disability. The requirement is recognised in Rule 79.06, which gives the Senior Master power to order interest where there is late payment of money due under a court order to a person with a disability.
This regime established by s. 66(3) of the Act is recognised, and given effect to, by provisions in the Supreme Court Act concerning court orders for the payment of money to persons with a disability. Section 113(1) of the Supreme Court Act provides:
113.Common Funds
(1)Subject to section 66 of the Guardianship and Administration Act 1986 ... all money paid into court under an order of the Court or under any Act or the Rules is to be held by the Senior Master.
Section 113B of the Supreme Court Act gives the Senior Master, in respect of money paid into court for a person with a disability, the same powers as an administrator appointed under the Act who has powers including those referred to in s. 58B(2) of the Act. However, those powers are only exercisable by a Master where there is no administrator appointed. Relevantly, s. 113B provides:
113B. Senior Master to have certain powers of administrator
(1) If –
(a)An administrator has not been appointed under the Guardianship and Administration Act 1986 in respect of the estate of a person under disability; and
(b)The Senior Master holds money on behalf of that person –
the Senior Master has, in respect of that money, the powers referred to in section 58B(2) of that Act that he or she would have if he or she had been named as administrator in an administration order made under that Act that specified the administrator as having those powers.
(2)The Senior Master ceases to have the powers conferred by subsection (1) if another person is appointed under the Guardianship and Administration Act 1986 as an administrator of the estate of the person under disability.
These provisions of the Supreme Court Act evince a clear intention on the part of Parliament that it is only where there is no administrator of the affairs of a person under a disability that the Senior Master is to have the powers of an administrator.
As I have said, it is in the context of these statutory provisions, and the obvious intention of Parliament underlying them, that the discretion under s. 66(3) of the Act falls to be exercised. Parliament has expressed a clear intention that, in the absence of court order to the contrary, the money which is to be paid to a person under a disability is, after initial payment into court, to be paid to his or her administrator, or to State Trustees if there is no administrator. This is the general rule. There must be something about the circumstances of a particular case to justify the Court, in the exercise of its discretion, departing from the general rule. It is at this point that the Court's inherent parens patriae jurisdiction, to protect the interests of those who cannot protect themselves, falls to be exercised. Each case will depend on its own facts.
In Smith v Reynolds,[13] Kaye J considered that the exercise of the discretion involved the Court considering:
the particular unusual pecuniary, social and medical circumstances associated with the plaintiff and his immediate family ... and matters relating to the cost of administering the moneys in court[.] I consider that the court should determine whether to exercise its inherent jurisdiction or to order payment to the State Trust. The determination should be made after consideration of evidence together with all relevant matters and hearing submissions on behalf of all interested parties.[14]
[13][1989] VR 309.
[14]Ibid, 313.
In Morris v Zanki[15] the Full Court of the Supreme Court of Western Australia considered the factors which are relevant to the exercise of a discretion in similar terms to that arising under s. 66(3) of the Act. The relevant provision was contained in the rules of the Supreme Court of Western Australia, in Order 70 Rule 12(1), which relevantly provided:
Where ... in any proceedings money is ... ordered or agreed to be paid to or for the benefit of a person under a disability ... the money shall, unless otherwise ordered by the Court, be paid to the Public Trustee for investment on behalf of the person under disability, and if the Court so orders may be invested by the Public Trustee in investments outside the Common Fund.
[15](1997) 18 WAR 260.
The Full Court posed the question for decision by it in the following terms:
The question which is brought into stark relief in this case is whether the rules should be interpreted as containing an inherent bias towards the Public Trustee. In other words, is it proper to say that unless there are special reasons which dictate to the contrary, funds of this type should be placed under the control of the Public Trustee or is it a wide ranging discretion to examine all available options and make a decision that is in the best interests of the disabled person?[16]
[16]Ibid, 284.
The Full Court noted the decision in Smith v Reynolds, and also unreported Western Australian authority to similar effect, and concluded that, notwithstanding the provisions of the rule of court under consideration, the Court retained its inherent parens patriae jurisdiction.[17] The Full Court was of the opinion that, in the context of the Western Australian legislation, there was a pre-disposition towards ordering that the money be paid to the Public Trustee for investment on behalf of the person with a disability, but that this was "no more than a pre-disposition".[18]
[17]Ibid, 285.
[18]Ibid, 286.
The Full Court rejected an argument that the provisions of the rule of court under consideration could not fetter the parens patriae jurisdiction of the Court.[19] In doing so, the Full Court recognised that the statutory context was relevant to the exercise of the parens patriae jurisdiction of the Court.
[19]Ibid.
The Full Court concluded:
The court has a duty to consider the future management of the verdict moneys and it has a discretion. The governing consideration is "what is best to be done for the [person under the disability]". The discretion must be exercised judicially. It cannot be determined arbitrarily. Where the court is asked to exercise the power to place funds with a private trustee rather than the Public Trustee the judge must examine all of the circumstances and decide what is in the best interests of the person for whose benefit the funds are to be held. This will, of necessity, require a consideration of available options and alternatives. But this is not to say that a pre-disposition toward the Public Trustee is an impermissible fetter on the discretion. It serves a number of purposes. It indicates that the onus is on the person seeking the exercise of the discretion in his or her favour to establish grounds on which the order should be made. It means that if no application is made or if no good reason is shown for preferring a private trustee, the Public Trustee will assume the role. We have chosen the adjective "good" (in relation to the reasons that are advanced in support of the application) quite deliberately. We would avoid other possible descriptions such as "cogent" or "special" or "exceptional".[20]
[20]Ibid.
In my view, the legislative context in Victoria indicates more than a mere pre-disposition towards money payable under a court order to a person with a disability being paid to his or her administrator. For the reasons stated above, I adhere to my view that there is a general rule to this effect. However, I agree with the Full Court in Morris v Zanki that the discretion is to be exercised in the circumstances of each particular case, and that no purpose is served by fettering that discretion by requiring that special or exceptional circumstances be shown in order to depart from the general rule.
Although the discretion must be exercised according to the facts and circumstances of each case, the following matters can be stated as a guide for future cases:
(1)The Court should consider the credentials of the administrator. Where the administrator is a person who is of dubious character, or lacks the experience to manage a fund of the size involved, there may be good reasons to make a contrary order under s. 66(3)(b) of the Act. However, where the administrator is a respectable professional administrator, as in this case, and there is no evidence of partiality or risk of mismanagement, the Court should ordinarily decline to make any contrary order departing from the general rule specified by Parliament.
(2)As part of considering the credentials of the administrator, the Court should consider whether the administrator is likely to manage the funds in a prudent and efficient way which is designed to produce the best return consistent with avoiding undue risks. I do not think that it is necessary, or an efficient use of Court time, for there to be a detailed examination in every case of the likely returns which will result from investment by the administrator on the one hand and the Senior Master on the other. Provided that the administrator is sufficiently credentialed, and the Court is satisfied that the administrator is likely to act prudently and efficiently, the Court should ordinarily decline to depart from the general rule.
(3)The fact that an administrator will charge, with the approval of the Tribunal, fees and commissions which are higher than those which would be charged by the Senior Master's (Funds In Court) Office in administering the settlement fund is not to be given too much weight. Parliament has chosen to permit administrators, in particular professional administrators, to be appointed and charge fees approved by the Tribunal. Unless there is something exceptional about the amount of fees approved by the Tribunal, it is not for the Court exercising a discretion under s. 66(3) of the Act to question the decision of the Tribunal on that issue. However, the amount of fees charged, and the effect which this may have on the financial returns, including capital appreciation, may be a relevant factor in those cases where the credentials of the administrator are in doubt.
(4)The mere fact that the administrator will charge fees and commissions is not, by itself, sufficient to justify a finding that there is a conflict of interest between the interests of the administrator and the interests of the disabled person. This is recognised by s. 47A of the Act.
(5)The Court should consider the wishes of the disabled person and his or her carers and relatives. Their views will be of particular weight where, as here, a special relationship has developed between the plaintiff's mother, and principal carer, and representatives of the administrator.
In this case, I have no hesitation in concluding that the general rule should apply, for the following reasons.
First, ANZ Trustees has been validly appointed by an administration order made by the Tribunal. That order gives ANZ Trustees all of the powers contained in Divisions 3 and 3A of Part 5 of the Act. Those powers are much broader than those of the Senior Master. In the circumstances of this case, there is no good reason why there should be added costs, duplication of work and possible delays in the administration as a result of the administrator having to make application to the Senior Master to access the settlement sum, and to monitor the performance of the Senior Master in managing that sum.
Second, the remuneration of ANZ Trustees has been approved by the Tribunal. It is not out of the ordinary. As I have said, the fact that this remuneration is more than that charged by the Senior Master's (Funds In Court) Office is not enough to establish a conflict of interest. The issue of conflict of interest is a matter upon which the Tribunal must be satisfied before making an administration order.
Third, the administrator has been in office for over two years, has gained a familiarity with the needs of the plaintiff and has established a relationship with the plaintiff's mother, who is her principal carer. The plaintiff's mother has sworn that she wishes ANZ Trustees to manage the settlement sum on behalf of her daughter. Her wishes are based on sound grounds. There is evidence in this case of a special relationship between the plaintiff's mother and the representatives of ANZ Trustees with whom she deals.
Fourth, there is no reason to believe that ANZ Trustees will not manage the settlement sum in a prudent and efficient way which is designed to produce the best return for the plaintiff without taking undue risks. The evidence establishes that ANZ Trustees has the necessary credentials to perform this task, that it intends to do so and can be trusted to do so.
I have no doubt that the Senior Master's Office does an extremely thorough, professional and cost efficient job of managing the funds of persons with disabilities. However, the discretion under s. 66(3)(b) is not, in every case, to be exercised according to a detailed assessment by the Court as to who, in its opinion, will be best able to manage the monetary sum involved in the particular circumstances of that case. Nor should the Court generalise about such matters, as occurred in this case. There must be something about the circumstances of the particular case which justify departure from the general rule specified by Parliament.
I wish to record the Court's thanks to Mr Wharton of the Senior Master's (Funds In Court) Office who appeared, by leave, as amicus curiae. Mr Wharton's submissions were of great assistance on the question of jurisdiction of a Master when faced with an application for consent final relief in respect of a case such as the present. In particular, it was Mr Wharton who drew the Court's attention to the relationship between s. 66(3)(a) of the Act and Rule 79.06. Further, as these reasons evidence, I accept Mr Wharton's submission that a Master considering an application such as that made in this case has power to exercise the Courts inherent jurisdiction and the discretion given to the Court under s. 66(3)(b) of the Act. Quite properly, Mr Wharton did not seek to address the Court as to how that discretion should be exercised in the circumstances of this particular case.
Finally, I note again that I gave leave to the plaintiff to rely upon further affidavit material on the hearing of the appeal. That affidavit material was not before the Master. It was relevant to the exercise of the Court's discretion under s. 66(3)(b).
V Conclusion
For the above reasons, the appeal will be allowed. In lieu of paragraph 3 of the orders made by the Master on 20 March 2007 it will be ordered that:
3(a) The defendants pay the sum of $5,000,000 into court to the Senior Master within seven days.
(b) Upon receipt, the Senior Master forthwith pay that sum by bank cheque or cleared funds into the account of ANZ Executors and Trustee Company Ltd as administrator of the estate of the plaintiff.
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