Ejs v NSW Trustee and Guardian

[2021] NSWCATAD 10

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

EJS v NSW Trustee and Guardian [2021] NSWCATAD 10

Hearing dates:

26 November 2020

Date of orders:

18 January 2021

Decision date:

18 January 2021

Jurisdiction:

Administrative and Equal Opportunity Division

Before:

C Mulvey, Senior Member

Decision:

(1) The decision made by the NSW Trustee and Guardian on 30 May 2019 is set aside.

(2) The matter is remitted for reconsideration to the NSW Trustee and Guardian.

(3) The following recommendations are made in determining the reconsideration of EJS’ request:

(a) Whether EJS had capacity to enter into a costs agreement with Papas J - Attorney on 28 October 2011; and what effect his capacity or lack of capacity may have in respect of the contractual relationship with Pappas, J - Attorney.

(b) Whether the fees claimed in the tax invoice of 4 April 2012 were properly incurred by Pappas, J - Attorney, and, if not, whether recovery of those fees is available.

(c) Whether the costs agreement entered into between EJS and Papas J - Attorney on 28 October 2011 was properly terminated.

Catchwords:

ADMINISTRATIVE LAW – review under section 62 NSW Trustee and Guardian Act 2009 (NSW) – Trustee and Guardian - interests and welfare of protected person – whether to pursue refund of legal costs – financial management order.

Legislation Cited:

Administrative Decisions Review Act 1997(NSW)
Civil and Administrative Tribunal Act 2013 (NSW)

Civil and Administrative Tribunal Rules 2014 (NSW)
Guardianship Act 1987

NSW Trustee and Guardian Act 2009 (NSW)

Cases Cited:

McDonald v Guardianship Administration Board [1993] 1 VR 521 at 530

Category:

Principal judgment

Parties:

EJS (Applicant)
NSW Trustee and Guardian (Respondent)

Representation:

Solicitors:
Applicant (Self Represented)
M Rice (Respondent)

File Number(s):

2020/00200707

Publication restriction:

Pursuant to s 64(1)(a) of the Civil and Administrative Tribunal Act 2013 the Tribunal prohibits disclosure of the name of the applicant or of evidence given and received in the Tribunal hearing or in relation to the proceedings which is likely to identify the person.

REASONS FOR DECISION

1. This is an application, filed on 9 July 2020 for administrative review of an internal decision made by the NSW Trustee and Guardian (the Trustee) on 30 May 2019 (the Reviewable Decision). The applicant is referred to as ‘EJS’. The Trustee is the respondent. The Trustee is the financial manager of the estate of EJS.

2. On 14 November 2018, an Officer of the Trustee made a decision to take no action in respect of the recovery of legal costs on behalf of EJS. The Reviewable Decision was an internal review of the 14 November 2018 decision made by the Trustee, following a request from EJS.

Background

3. It is uncontroversial that EJS has for many years been under a protective order whereby the Trustee is managing his estate. The evidence revealed that over the period in which the Trustee has been managing EJS’ estate he has on numerous occasions engaged solicitors to act on his behalf without the knowledge or consent of the Trustee. Relevantly, EJS in about October 2011 engaged the services of ‘Pappas, J – Attorney’ a law firm in Canberra in the Australian Capital Territory (the Law Firm). The Law Firm was engaged to represent EJS in a claim for personal injury against his then employer. EJS purportedly entered into a costs agreement with the Law Firm on 28 October 2011. The costs agreement is clearly marked as a ‘no win no pay agreement’ otherwise known as a conditional costs agreement (the Cost Agreement).

4. Over a number of years the Law Firm issued tax invoices to EJS predominantly for payment of expert reports, photocopying expenses and other disbursements. On its face, it appears that the Costs Agreement provided for the Law Firm to seek payment of such disbursements despite it being a conditional costs agreement.

5. On 11 August 2015, the Law Firm wrote to EJS requesting that he transfer into the Law Firm’s trust account an amount of $6,000. The letter sets out a number of bases upon which that amount was sought, including amongst other things, fees charged by experts to give evidence in support of EJS’ claim, the accommodation costs of the solicitor in attending a hearing for EJS in Sydney and other disbursements. EJS, without the knowledge of the Trustee, deposited that sum of money into the Law Firm’s trust account.

6. The claim for personal injury was set down for hearing in the Administrative Appeals Tribunal for 4 days in October 2015 commencing on 20 October 2015. On the weekend immediately prior to the commencement of the hearing, the solicitor (and Counsel) acting for EJS purportedly terminated their services to act for EJS. The Law Firm formed the view that it could not proceed with the hearing and that the matter should be adjourned. The hearing was adjourned on 20 October 2015 to a date to be fixed. It was recommended by Counsel and the Law Firm acting for EJS that he consider seeking alternate legal representation.

7. It would appear in the documentation before me that the first occasion the Law Firm became aware that EJS was under a protection order was when the Trustee wrote to the Law Firm on 31 October 2016. The Trustee following a request from EJS to seek on his behalf recovery of his costs, including the $6,000, informed the Law Firm that EJS was a protected person and sought information regarding the Costs Agreement, the personal injury claim and the pending proceedings.

8. Ultimately, the Trustee decided to take no action in relation to the legal costs paid to the Law Firm on behalf of EJS.

9. EJS in this application requests the Tribunal to review the decision of the Trustee as he asserts that the Trustee has made the wrong decision in not pursuing the Law Firm for a refund of the costs EJS paid.

The Reviewable Decision

10. Mr Mackey is a Senior Legal Officer in the employ of the Trustee. Mr Mackey is also the reviewer who conducted the internal review which is the Reviewable Decision. Mr Mackey provides the following assessment of material facts and reasoning for his decision:

The solicitor has provided a trust ledger statement which indicates the manner in which he has expended the sum of $6,000. Taking into account the additional information now provided by the solicitor, his trust account statement shows that the $6,000 was expended as follows:

•   a transfer of $567 was made to satisfy the balance owing on an invoice of 4 April 2002 for legal costs (see below) and investigator’s fees ($1,000 having been paid on 11 August 2012);

•   a transfer of $5,432.50 was made on 31 December 2015 to part-pay an invoice of 30 November 2015 for photocopying, non-refundable accommodation expenses for the trial; and other miscellaneous expenses. EJS still owes him an additional $1,402 for this invoice, which the solicitor has had to write off.

EJS asserts that the amount of $6,000 was not payable because of a costs disclosure which was entered into on a ‘no win no pay basis’. The solicitor has stated that he cannot find any signed agreement. EJS has not produced it. As stated above, in 2012, EJS part-paid an invoice claiming ‘professional costs’, and promised to pay the balance when he could, which contradicts his claim that the work was done on a ‘no win, no fee’ basis. No evidence has come to light of the existence of a binding agreement.

In the absence of a signed binding agreement, the solicitor is entitled to be paid for such fair and reasonable professional costs and disbursements or out-of-pocket expenses which he reasonably incurred, up to the date when he ceased to act. The funds have been properly expended by the solicitor on legal professional costs and for reimbursement of costs and disbursements as set out above.

11. The Trustee’s decision made on 21 November 2018, to take no action to recover legal fees paid by EJS was affirmed by Mr Mackey.

Preliminary Matter

12. EJS sought to include in this application for the Tribunal to review a decision made by Ms Rice on 8 September 2020. Relevantly, Ms Rice is the solicitor appearing on behalf of the Trustee in this application.

13. Ms Rice arranged for the 8 September 2020 decision to be emailed to the Tribunal registry which was delivered to the bench after some discussion concerning EJS’s application.

14. Upon reading the decision, I formed the view that it was not appropriate for me to determine this additional decision on two bases. First, this decision was not included in the original application filed by EJS. Second, Ms Rice was the decision maker and she was in a difficult position in that she felt she could not appropriately appear as an advocate on behalf of the Trustee in relation to a review concerning a decision she made. I rejected EJS’ application to include the 8 September 2020 decision of Ms Rice, primarily because this was a new decision which EJS had not filed an application to seek to have it reviewed. There was very likely prejudice on behalf of the respondent given that no notice was provided in relation to this request. Secondly, I accepted Ms Rice’s submissions that she was in a difficult position to act as the solicitor on record in relation a review of a decision she herself made.

Evidence

15. The applicant relied upon the following evidence:

• Application with annexures (Exhibit A1);

• Bundle filed 14 September 2020 (Exhibit A2);

• Bundle filed 20 September 2020 (Exhibit A3);

• Bundle filed 6 November 2020 (Exhibit A4).

16. The respondent relied upon the following evidence:

• S58 documents filed 19 August 2020 (Exhibit R1).

17. It is noteworthy at this stage to indicate that the hearing of this matter had been adjourned part-heard as a result of EJS filing his original bundle of documents marked Exhibit A4 with the Guardianship Division of the Tribunal. The Guardianship Division inadvertently sent the original documents to the Trustee believing it related to a matter in which the Trustee may have been a party. I was able to remedy that error on 29 October 2020 when the matter was first before me by requesting the Trustee to forward the original documents to the Registry for inclusion in the file. Those documents were received.

Relevant Legislation

18. The evidence reveals that the estate of EJS was placed under management by the Trustee on 30 September 1993.

19. Chapter 4 of the NSW Trustee and Guardian Act 2009 (‘the Act’) is concerned with 'management functions relating to persons incapable of managing their affairs.' Pursuant to s56(a) of the Act, the Trustee may exercise all the functions necessary and incidental to the management and care of the estate of the managed person.

20. In managing EJS’ estate, the Trustee is empowered to undertake a number of functions as set out in s10 and s11 of the New South Wales Trustee and Guardian Act 2009 (NSW).

21. I am satisfied that the Reviewable Decision is a power which the Trustee has (s16(g) of the Act).

22. Section 62 of the Act empowers an ‘affected person’ to apply to this Tribunal for administrative review of a decision made in connection with the exercise of the Trustee’s functions under the Act.

23. An ‘affected person’ includes:

1. a managed person in respect of whose estate the decision was made,

2. the spouse of a managed person in respect of whose estate the decision was made,

3. any other person whose interests are, in the opinion of the Tribunal, adversely affected by the decision.

24. It is not in contest that EJS is an affected person and I am satisfied that he can bring this application.

25. In determining application to review the Reviewable Decision, the Tribunal ‘stands in the shoes’ of the Trustee and is required to make the ‘correct and preferable decision’ having regard to any relevant factual material and any applicable written or unwritten law (s63 of the Administrative Decisions Review Act 1997) (the ADR Act).

26. The review is to be conducted ‘without any presumption as to the correctness of the decision’: McDonald v Guardianship Administration Board [1993] 1 VR 521 at 530. On review, the Tribunal may exercise all of the functions that are vested in the Trustee.

27. In exercising its functions under the Act, the Trustee and, on review, this Tribunal must give paramount consideration to the interests of EJS. Section 39 of the Act provides that it is the duty of everyone exercising functions under Chapter 4 of the Act (management functions relating to persons incapable of managing their affairs) to observe the following principles:

‘(a)   the welfare and interests of such persons should be given paramount consideration,

(b)   the freedom of decision and freedom of action of such persons should be restricted as little as possible,

(c)   such persons should be encouraged, as far as possible, to live a normal life in the community,

(d)   the views of such persons in relation to the exercise of those functions should be taken into consideration,

(e)   the importance of preserving the family relationships and the cultural and linguistic environments of such persons should be recognised,

(f)   such persons should be encouraged, as far as possible, to be self-reliant in matters relating to their personal, domestic and financial affairs,

(g)   such persons should be protected from neglect, abuse and exploitation.’

The Submissions of EJS

28. EJS submitted that a costs agreement was entered into between himself and the Law Firm as described above. EJS said he paid a significant amount of money prior to his personal injury claim being determined, which included disbursements and fees for experts to appear at the hearing. EJS said one of the reasons the hearing did not proceed was because an expert witness, Dr De Giovanni, was unable to give evidence during the four days when the matter was set down for hearing. As a result of this and other reasons, the Law Firm purportedly terminated the fee agreement on the eve of the hearing. EJS asserts that the disbursements he paid were inappropriately incurred in these circumstances.

29. EJS further submitted that at all times the Costs Agreement was within the possession of the Trustee and disputes Mr Mackey’s findings that there was no evidence of a binding costs agreement before the Trustee when the reviewable decision was made.

The Submissions of the Respondent

30. Ms Rice submitted that EJS came under management on 30 September 1993. Despite being under management, the Trustee has a list of eleven legal matters where EJS has engaged solicitors to act for him without consulting the Trustee as to the merits of his claims and seeking approval to pursue them. The Reviewable Decision relates to a Comcare claim for damages for personal injuries. EJS undertook himself to commence the Comcare claim and engaged the Law Firm without the knowledge of the Trustee.

31. In about April 2012, Ms Rice said EJS received a payment from Comcare following an appeal and obtained $30,000 plus ongoing medical payments. This claim was also commenced with the involvement of solicitors without the Trustee’s approval.

32. At the time of this hearing, EJS had about $62,000 in his trust accounts, a house and investments worth over $2 million which all remain under management.

33. Ultimately, Ms Rice said EJS was not successful in his personal injury Comcare claim in which the Law Firm acted for him. The Administrative Appeals Tribunal found that EJS lacked capacity to bring the claim and the Tribunal ultimately dismissed the matter on that basis.

34. Ms Rice concluded in her submissions by stating that the decision not to seek recovery of the legal costs associated with the Law Firm should be affirmed as being the correct and preferable decision according to the facts, all of the material and the law currently before the Tribunal.

My Consideration

35. The uncontested evidence reveals that EJS entered a conditional costs agreement with the Law Firm on or about 28 October 2011. A copy of the Costs Agreement is found at pages 117 to 121 of Exhibit R1. I infer based upon Mr Mackey’s decision that an unexecuted copy of that Costs Agreement was included in the Trustee’s file at the time in which the Reviewable Decision was made. I accept that Mr Mackey did not have an executed copy of the Costs Agreement at the time the Reviewable Decision was made, a matter which EJS disputes. However, based on the material which is before me, it would appear, on its face, that there was a signed binding agreement between EJS and the Law Firm, contrary to the findings of Mr Mackey. For this reason alone the reviewable decision should be set aside.

36. The relevant terms of the costs agreement include:

‘You will only be charged if and when your claim is successfully resolved, either by way of judgment in your favour or by way of negotiated settlement. If your claim is unsuccessful, we will not render an account at all. …

When are fees payable

Except in a case where this agreement is terminated by Pappas, J - Attorney we will only charge professional fees to you if and when you have a successful outcome. Pappas, J. - Attorney may terminate the agreement upon the happening of one of the events listed in (a) to (g) below. The events are as follows:

(a)   if you fail to pay your bills for disbursements within 30 days of the date of the bill (see below about disbursements), unless there is a specific agreement between you and Pappas, J - Attorney in respect of payment for disbursements; or

(b)   you fail to provide us with adequate instructions within a reasonable time; or

(c)   you give instructions that you are deliberately false or intentionally misleading; or

(d)   you tell us you have lost confidence in us; or

(e)   you terminate this agreement in writing; or

(f)   you refuse to accept our advice concerning the obligations upon you to the proper preparation and presentation of your case; or

(g)   you refuse to accept an offer which we advise you in writing is reasonable and ought to be accepted.

Upon the happening of one or more of the events listed in (a) to (g) above Pappas, J - Attorney may, at its sole discretion, decide to terminate this costs agreement. If we do decide to do so we will give you at least 14 days’ notice of our intention to terminate the costs agreement and we will advise you the basis of the termination. We will give you a further notice terminating the costs agreement and upon notice being given you may be required to pay our charges for work done and for disbursements incurred to the date of the termination. This would be irrespective of the outcome of your case.

If the agreement is terminated as a result, solely, of (d) above, and you authorise us to hand your file to another solicitor, we will require you to sign an authority permitting our professional fees and any internal disbursements incurred by this firm to be paid upon any successful outcome of your case.

….

You will be taken to have a successful outcome in your claim if:

(h)   you receive a payment of compensation or legal costs from any other party or from an insurer in respect of your injury; or

(i)   you receive a verdict or judgment in your favour; or

(j)   you enter a settlement whereby another party is to pay you some compensation or legal costs, irrespective of whether you receive the money or not.

…’ [my emphasis]

37. During the hearing, I asked Ms Rice about a tax invoice which was rendered by the Law Firm to EJS on 4 April 2012. The tax invoice was rendered after the execution of the Costs Agreement. Line one of the tax invoice describes fees totalling $850 for ‘to our legal professional costs of and incidental to acting on your behalf in relation to your Comcare claim’ and that that notation appeared to be contrary to the terms of the Costs Agreement.

38. Ms Rice agreed that the 4 April 2012 tax invoice claiming professional costs of and incidental to acting on EJS’ behalf in relation to his Comcare claim in the amount of $850 plus GST appeared to be contrary to the Costs Agreement.

39. As set out above, on 11 August 2015 Pappas, J - Attorney requested EJS to deposit $6,000 into the Law Firm’s trust account for payment of outstanding disbursements and costs for the October 2015 hearing. EJS deposited that amount as requested.

37. I note a Trust Transaction Statement has been included at page 74 of Exhibit R1 which describes the disbursements, professional costs and deposits made by EJS and those amounts which are allocated to each tax invoice rendered by the Law Firm. The entries include an allocation for the 4 April 2012 tax invoice.

38. I note that Pappas, J - Attorney ultimately wrote off some additional fees later charged to EJS following the purported termination of the Costs Agreement.

39. The reviewable decision does not refer to the 4 April 2012 tax invoice which appears to be rendered contrary to the terms of the Costs Agreement as set out above. In that regard the descriptor for payment of ‘legal professional costs of and incidental to acting on your behalf in relation to your Comcare claim’ is not provided for in the Costs Agreement.

40. I am not satisfied that the Reviewable Decision is the correct and preferable decision having considered the material which is now before me. The evidence reveals, on its face, that there was a signed binding costs agreement entered into between EJS and Pappas, J - Attorney on or about 28 October 2011. Whether EJS had legal capacity to enter that agreement is an issue requiring further enquiries and legal advice. The invoice rendered by the Law Firm on 4 April 2012 appears to be contrary to the terms of the Costs Agreement.

41. Assuming that the Costs Agreement is binding and enforceable, it is unclear whether the Law Firm has properly terminated the Costs Agreement with EJS. The answer to that question may or may not reveal a different outcome in relation to the request by EJS that he be refunded the $6,000 he paid to the Law Firm. The result will turn on whether those costs were appropriately incurred. I am unable to determine the answer to these question based on the evidence before me. It is obvious to me that further enquires ought be made and legal advice sought in relation to these matters.

42. For these reasons the Reviewable Decision made by the Trustee on 30 May 2019 is set aside.

43. I remit the matter for reconsideration to the Trustee and recommend that the following be included in the Trustee’s reconsideration of EJS’ request:

1. Whether EJS had capacity to enter into the Costs Agreement and what effect his capacity or lack of capacity may have in respect to the contractual relationship between himself and the Law Firm.

2. Whether the costs agreement entered into between EJS and Papas J - Attorney on 28 October 2011 was properly terminated.

3. Whether the fees claimed in the tax invoice of 4 April 2012 were properly incurred by Pappas, J - Attorney, and, if not, whether the recovery of those fees is available.

4. Whether all of the disbursements charges by Pappas, J - Attorney were properly incurred.

Orders

1. The decision made by the NSW Trustee and Guardian on 30 May 2019 is set aside.

2. The matter is remitted for reconsideration to the NSW Trustee and Guardian.

3. The following recommendations are made in determining the reconsideration of EJS’ request:

1. Whether EJS had capacity to enter into a costs agreement with Papas J - Attorney on 28 October 2011; and what effect his capacity or lack of capacity may have in respect of the contractual relationship with Pappas, J - Attorney.

2. Whether the fees claimed in the tax invoice of 4 April 2012 were properly incurred by Pappas, J - Attorney, and, if not, whether recovery of those fees is available.

3. Whether the costs agreement entered into between EJS and Papas J - Attorney on 28 October 2011 was properly terminated.

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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: 18 January 2021