EGS

[2014] NSWCATGD 18

NSW Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

EGS [2014] NSWCATGD 18

Hearing dates:

18 March 2014

Decision date:

18 March 2014

Jurisdiction:

Guardianship Division

Before:

Gurr R, Senior Member (Legal)
McPhee B, Senior Member (Professional)
Koussa J, General Member (Community)

Decision:

Determination not to carry out a review of enduring power of attorney.

Decision to refuse to conduct review of financial management order and decision to refuse to conduct review of appointment of financial manager.

Catchwords:

FINANCIAL MANAGEMENT - application to review financial management order and application to review appointment of financial manager - complex estate - subject person a director of a company - suitability for appointment - conflict of interest - refusal to conduct review.

REVIEW OF ENDURING POWER OF ATTORNEY - application to review revocation - declaration of invalidity of revocation would leave two conflicting powers of attorney in place - need for certainty of authority - decision not to review.

PROCEDURAL FAIRNESS - hearing in the absence of the subject person

Legislation Cited:

Guardianship Act 1987 (NSW)
Powers of Attorney Act 2003 (NSW)
Superannuation Industry (Supervision) Act 1993 (Cth)
Corporations Act 2001 (Cth)

Category:

Principal judgment

Parties:

Mrs EGS (subject person)
Ms FRV (carer, attorney)
Mrs PLM (attorney)
Mr QWS (applicant)
The NSW Trustee and Guardian

File Number(s):

45583

Publication restriction:

Decisions of the Guardianship Division of the Civil and Administrative Tribunal have been anonymised to remove any information that may identify any person involved in the Tribunal's proceedings (s 65, Civil and Administrative Tribunal Act 2013 (NSW)).

reasons for decision

What the Tribunal decided

1. The Tribunal determined pursuant to:

• Section 36(1) of the Powers of Attorney Act 2003 not to carry out a review of the revocation on 16 July 2010 by Mrs EGS of the enduring power of attorney made by her on 18 August 2003 and dismissed the application.
• Section 25O of the Guardianship Act 1987 not to carry out a review of the Financial Management order made in relation to Mrs EGS on 30 January 2013.
• Section 25T of the Guardianship Act 1987 not to carry out a review of the appointment of the NSW guardian and Trustee of Mrs EGS's estate made on 30 January 2013.

Background

1. Mrs EGS is a 74 year old woman of Polish heritage who lives at an aged care facility in the Newcastle area. Mrs EGS's husband passed away approximately eleven years ago and she has two daughters - Mrs PLM and Ms FRV. Mrs PLM is married to Mr QWS.

1. In August 2003 Mrs EGS executed an enduring power of attorney (EPOA) appointing Ms FRV and Mrs PLM as her attorneys, to act jointly and severally. Mrs EGS appointed Mrs PLM as her enduring guardian in October 2009.

1. On 16 July 2010 Mrs EGS revoked both enduring guardianship and power of attorney appointments and appointed Mr HGN, accountant, as her attorney and Ms FRV as enduring guardian.

1. The details of Mrs EGS's estate, which is quite complex and has in total assets of approximately $3.65m, most of which comprise the family home and a self managed superannuation fund, are set out in previous decisions of the Tribunal and are nor reiterated here. It is not disputed that before the estate became subject to management, each of Mrs EGS's daughters received an "early inheritance " of $409,000. It is also not disputed that there is currently an outstanding accommodation bond of $360,000, on which the interest is 8.62% per annum.

1. The history of proceedings in the Tribunal is as follows:

1. An application was received from Mrs PLM on 17 August 2010 requesting the appointment of a guardian and financial manager for Mrs EGS. These applications were considered on 14 October 2010 by the Guardianship Tribunal and dismissed.

1. Mrs PLM successfully appealed the Guardianship Tribunal's decision in relation to the financial management application. The Administrative Decisions Tribunal's (ADT) Order dated 21 April 2011 set aside the decision and remitted the financial management application to the Tribunal for consideration at a further hearing. At a hearing on 13 October 2011 the Guardianship Tribunal appointed the NSW Trustee and Guardian (NSWTG) as financial manager for Mrs EGS.

1. On the 28 February 2012 Mrs PLM submitted an application to review the enduring guardianship appointment of Ms FRV. On 17 May 2012 she submitted an application to review the appointment of the NSWTG as financial manager. At a hearing on 12 June 2012 both applications were adjourned. On the 4 July 2012, the Tribunal decided not to join Mr QWS, husband of Mrs PLM, as a party to these proceedings. Both adjourned matters were listed for hearing on 30 August 2012. Mrs PLM made an application for Mr QWS to represent her as an agent in those proceedings, which was dismissed. Both substantive applications were adjourned for approximately three months.

1. On 30 January 2013 the Tribunal confirmed the appointment of the NSWTG to manage Mrs EGS's finances. This decision was unsuccessfully appealed to the ADT which confirmed the decision. The review of the appointment of the enduring guardianship appointment was adjourned for approximately two months.

1. Mrs PLM submitted a request on 17 February 2013 that the Tribunal declare the revocation of the enduring guardianship appointment of 16 July 2010 invalid. Mrs PLM also requested that her enduring guardianship appointment dated October 2009 be declared effective and valid.

1. On 19 June 2013, the enduring guardianship appointment of Ms FRV was revoked and the application to review the enduring guardianship appointment was treated as an application for guardianship. The Public Guardian was appointed for a period of twelve months with the functions of accommodation, health care, medical and dental consent and services. The Tribunal dismissed the application that the enduring guardianship appointment of 30 October 2009 have effect.

1. Throughout the proceedings in the Tribunal, there is record of ongoing hostility and conflict between Mr QWS and Mrs PLM on one hand and Ms FRV, on the other in relation to both financial and personal decision making for Mrs EGS.

1. On 16 September 2013 the Tribunal received an application from Mr QWS requesting that the financial management order made on 13 October 2011 be revoked. An application to replace the current financial manager was submitted by him on 27 November 2013. On 28 January 2014 Mr QWS submitted an application requesting to review the revocation of the the EPOA which was executed by Mrs EGS on 18 August 2003 and revoked on 16 July 2010.

1. A number of interlocutory hearings have been conducted to date in relation to these three applications. Directions have been made on two occasions in relation to the filing and serving of documents. The three applications now come to be determined.

The Hearing

1. The Tribunal decided to hear and determine the applications in Mrs EGS's absence as it was considered in her best interests to do so because of the distress likely to be caused to her by the Tribunal proceedings and her inability to now participate meaningfully.

1. Ms FRV, daughter and previous carer, stated that she was strongly opposed to Mr QWS's applications and supported the continuation of the appointment of the NSW Trustee in managing her mother's finances. Ms FRV has provided her views in writing to the Tribunal and has declined to attend the Tribunal hearings in person, as she is no longer willing to deal with Mr QWS face to face.

1. Mrs PLM did not attend the hearing in person. The Tribunal was informed that she had family commitments to attend to and would be available on her mobile phone, if the Tribunal considered it necessary to contact her.

What did the Tribunal have to decide?

1. Pursuant to section 25N(4)(b) of the Guardianship Act, the Tribunal must, on an application under section 25R for revocation or variation of the order, review a financial management order. However, despite section 25N(4)(b), the Tribunal may, under section 25O, refuse to review a financial management order if, in its opinion, the application does not disclose grounds that warrant a review, or the Tribunal has previously reviewed the order.

1. Section 25P(2) provides that the Tribunal may revoke a financial management order only if the Tribunal is satisfied that the protected person is capable of managing his or her affairs, or the Tribunal considers that it is in the best interests of the protected person that the order be revoked (even though the Tribunal is not satisfied that the protected person is capable of managing his or her affairs).

1. Pursuant to section 25S(1)(b) of the Guardianship Act, the Tribunal must, at the request of the NSW Trustee, or any other person who, in the opinion of the Tribunal, has a genuine concern for the welfare of the protected person, review its appointment of the manager of the protected person's estate. However, despite section 25S(1)(b), the Tribunal may under section 25T refuse to review an appointment, if in its opinion the application does not disclose grounds that warrant a review, or the Tribunal has previously reviewed the appointment.

1. The Applicant was given notice in writing as part of the Directions issued by the Tribunal on 31st January 2014, when the matter was set down for hearing, that consideration would at that time be given to whether the Tribunal would proceed to review the financial management order and the appointment of the manager, or would refuse to review the order and the appointment pursuant to ss 25O and 25T of the Guardianship Act. During the hearing he was shown copies of these two legislative provisions and specifically asked to address any issues raised by them.

1. Pursuant to section 36(1) of the Powers of Attorney Act 2003, the Tribunal may, on the application of an interested person, decide to review the making, revocation or the operation and effect of a reviewable power of attorney or not to carry out such a review.

1. The Tribunal notes that Mr QWS had to be repeatedly reminded during these proceedings that the lodging of application to review the EPOA did not entitle him to access to Mrs EGS's will or information in relation to it and it was not and could not be the subject of an application to this Tribunal. On a number of occasions he sought to utilise these proceedings to gain access to this information.

The Applicant's Submissions

1. In summary, Mr QWS stated that he considered the decisions of the current financial manager were placing Mrs EGS's estate at a severe disadvantage. Mr QWS has detailed his views in his submissions to the Tribunal and has proposed that Mrs PLM instead manage her mother's estate, preferably pursuant to the EPOA which was executed by Mrs EGS on 18 August 2003 and revoked on 16 July 2010, but if not, as the financial manager.

1. Mr QWS said that, as the Tribunal had decided on 13 October 2011 that Mrs EGS had lacked the mental capacity to make a valid power of attorney in July 2010, the revocation signed on the same day should be declared invalid and the previous power of attorney reinstated. Mr QWS also stated in the application that he wished to have Ms FRV removed as the joint attorney, allowing Mrs PLM to act on her own.

1. Mr QWS provided written submissions detailing his views and elaborated on them at the hearing.

1. Mr QWS's complaints in relation to the NSW Trustee's management may be summarised as follows:

(1)   It was not necessary to sell Mrs EGS' property in order to raise cash to pay the accommodation bond, as claimed by the NSWTG and the cash should have been raised by some other means. This would be more advantageous to Mrs EGS. He alleged the NSWTG was "only selling the home to get the money" i.e. the commission.

(2)   The NSWTG should have been more diligent in following up with the Australian Taxation Office (ATO) to obtain a ruling so that the properties held by the superannuation fund could be retained and would not need to be liquidated, which would be more financially advantageous. Mr QWS said, in addition, that a decision by the Trustee to obtain this ruling was only made a result of an internal review which he had requested.

(3)   There had not been appropriate accountability in relation to Mrs EGS's jewellery.

(4)   The allowance to Ms FRV to provide for her mother ($400pw) was too generous and unnecessary.

Review of the Manager's Appointment

1. The Tribunal has previously reviewed the appointment of the NSWTG and dismissed that application.

1. Mr QWS says that if Mrs PLM was appointed as the manager "we would leave everything exactly the same."

1. In relation to Mr QWS's first complaint - that Mrs EGS' property should not be sold - he has been unable to provide any evidence which would support a claim that its retention is more advantageous to Mrs EGS at this stage of her life. He contends that "you never sell property" and that "there must be some cash in the estate" which could be used or obtained, say by borrowing from him and his family. However, there is no expert (or indeed any other) detailed financial evidence before the Tribunal which would support these contentions.

1. There is evidence that the NSW Trustee and Guardian engaged in correspondence with Mr QWS and Mrs PLM over a long period in relation to the sale of the property, seeking alternative proposals, but none were forthcoming. There was no suggestion for instance that the substantial "early inheritances" received by Mrs EGS's daughters could be used in part to fund the bond.

1. A major issue in relation to the superannuation fund arises from the fact that it is a self-managed superannuation fund (SMSF) and the provisions of Superannuation Industry (Supervision) Act 1993 (Cth) (SISA) s 17(a)(3)(b)(i) and ATO Interpretative Decision ATO ID 2010/139. There is a requirement that the director of a company (in Mrs EGS's case Company A Pty Ltd), which is the trustee of a self-managed superannuation fund, must be a member of the fund. Mrs EGS is the sole member of the fund and was the sole director of Company A. According to the Company A constitution, which is a standard shelf company constitution, she can no longer be the director of Company A, as her affairs are now subject to management. No one now appointed can be a member of the fund. If the NSWTG appoints a director, the fund would be non compliant. In addition, only a real person may be the director of a company pursuant to s 201B of the Corporations Act 2001 (Cth). The NSW Trustee and Guardian, now Mrs EGS's legal personal representative, does not fulfil this requirement.

1. If the fund is rolled over into another type of fund, the real property assets, from which the bulk of the income is derived will have to be sold, as only cash will be accepted by a fund manager. The NSW Trustee and Guardian is of the view this is not beneficial to Mrs EGS. It also affects every person in a similar situation, as a sole member of an SMSF, who is the sole director of its corporate trustee, who loses capacity and whose affairs are managed by the NSW Trustee.

1. The Trustee has, therefore, by a letter dated 6 December 2013 from Law Firm X, sought an exemption ruling from the ATO, which would overcome the legal difficulties and allow the fund to continue and retain its valuable real property assets.

1. Mr QWS says that the decision to do this was a result of a review requested by him and Mrs PLM and the Tribunal accepts this is the case. He also says the ATO Charter promises an answer to queries of this sort within 28 days and that the NSW Trustee and Guardian should have followed this up as a reply has not been received within this time. In relation the first, the Tribunal concludes that it is evidence that the review system within the NSW Trustee and Guardian's office is responsive to the legitimate concerns of family members. In relation to the latter, it is not established that any other person would be more successful than the Trustee in eliciting a speedier response by the ATO to a question important, not only to Mrs EGS, but potentially to many others in her situation . Mr QWS does not suggest that the action taken by the NSW Trustee in seeking the ATO exemption is inappropriate or that a private manager would do otherwise.

1. In relation to Ms FRV's allowance, the NSW Trustee and Guardian says that this allowance has now been reduced to $200 pw as Mrs EGS's needs in her current facility are less than the $400 previously allowed. The applicant has not provided evidence that its level of allowance is inappropriate or that the NSW Trustee and Guardian usual provisions for accountability for the expenditure, which apply to it, are inadequate.

1. The NSW Trustee and Guardian has also provided a list of jewellery in a Receipt of Possessions (to deliver to the NSWTG) Form dated 24 April 2014 signed by Ms FRV. The Applicant has not provided evidence that this is not a complete list and provides appropriate accountability in relation to Mrs EGS's jewellery.

1. Mrs EGS is now unable to give evidence to the Tribunal, but an examination of the transcript of the previous hearing, which she attended, shows that she did not wish either Mrs PLM or Mr QWS to be involved in the management of her financial affairs. The Tribunal has not been provided with any information to suggest that, were she now able to express a view, these views would have changed.

1. There is no evidence that the level of family conflict has diminished since the order was made and the appointment of the manager reviewed.

1. On Mr QWS's own evidence "nothing would change" in relation to the management of the estate if Mrs PLM were to be appointed. There were compelling reasons why the Tribunal appointed the NSW Trustee and Guardian and not a family member. These have been set out in two previous decisions by the Tribunal in the last two and a half years. The most recent of these was confirmed on appeal to the ADT. The Tribunal has concluded on the basis of the evidence before it, that these circumstances have not in essence changed, albeit the situation in relation to the superannuation fund had not been fully explored. A review of that appointment is not warranted at this time and the appointment has also been previously reviewed. The Tribunal, therefore, declines pursuant to s 25T of the Guardianship Act to again review the appointment.

Application to Revoke the Financial Management Order

1. There is no evidence before the Tribunal that Mrs EGS has regained the capacity to manage her financial affairs and the Applicant does not contend that she has done so.

1. If the financial management order is revoked altogether, the EPOAs (or one of them), as noted below, cease to be suspended and become operative. Even if the Tribunal agreed to revoke the revocation of the earlier EPOA, which is the application before the Tribunal, the result would be as set out below, which Mr QWS agrees is not in Mrs EGS's best interests.

1. The Tribunal decided, therefore, that the evidence before the Tribunal in relation to either of the bases on which a financial management order can be revoked, did not warrant a review of the financial management order so as to consider its revocation and declined to review it pursuant to S25O of the Guardianship Act on that basis.

Review of the EPOA

1. Mr QWS's contention that the Tribunal had expressed a view that Mrs EGS lacked the capacity to make an EPOA on 16 July 2010 is correct. However, he also told the Tribunal that he had thought that the Tribunal had, therefore, revoked the EPOA on that date. However, as the application being determined was one for financial management, those issues were not directly before the Tribunal on that day and the Tribunal's expressed view that Mrs EGS "probably lacked capacity" does not mean that the EPOA has been revoked. There is no application now before the Tribunal to revoke that EPOA which appointed Mr HGN, so that instrument stands, although currently suspended by the financial management order.

1. If the Tribunal does revoke the revocation of 16 July 2010, Mrs EGS is left with an EPOA appointing Mr HGN and arguably one appointing Mrs PLM and Ms TRV, although there is law to suggest that the making of a subsequent EPOA impliedly revokes an earlier one.

1. Whilst Mr QWS says he is seeking to have Ms FRV removed as an attorney, there is no application before the Tribunal to review the EPOA dated 18 August 2003, which would allow the Tribunal to consider removing her. That being the case, if Mr QWS's application to revoke the revocation is granted, Mrs EGS is left in one of the following situations - Mr HGN as her sole attorney, assuming that his EPOA of July 2010 impliedly revokes the earlier one of August 2003 or Mrs PLM, Ms FRV and Mr HGN all as her attorneys on a basis that would be difficult to ascertain. The conflict between Mrs PLM on the one hand and Ms FRV and Mr HGN on the other is well documented.

1. The Tribunal asked Mr QWS if this was what he was seeking and whether he thought this situation was workable and in Mrs EGS's best interests and he said that he did not think it was. The Tribunal agrees and declined, therefore, to review the revocation.

1. Without a revocation of the financial management order, the EPOAs are in any case non operative and there is no utility in the review of the revocation at this time.

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I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.

Registrar

Decision last updated: 21 October 2014