EJT

[2015] NSWCATGD 16

NSW Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:	EJT [2015] NSWCATGD 16
Hearing dates:	17 April 2015
Date of orders:	17 April 2015
Decision date:	17 April 2015
Jurisdiction:	Guardianship Division
Before:	B Shipp, Senior Member (Legal) B McPhee, Senior Member (Professional) M Spencer, General Member (Community)
Decision:	Financial management order made; private manager appointed
Catchwords:	FINANCIAL MANAGEMENT – application for private financial manager – consent judgment in District Court appointing NSW Trustee and Guardian as trustee of funds – whether Tribunal should transfer proceedings to Supreme Court – jurisdiction and utility of order – discretionary considerations
Legislation Cited:	Civil and Administrative Tribunal Act 2013 (NSW) Civil Procedure Act 2005 (NSW) Guardianship Act 1987 (NSW) NSW Trustee and Guardian Act 2009 (NSW) Powers of Attorney Act 2003 (NSW)
Category:	Principal judgment
Parties:	Mr EJT (the protected person) Mrs ODT (applicant) NSW Trustee and Guardian
Representation:	Legal representation   Separate representation
File Number(s):	45411
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

The Tribunal appointed Mrs ODT as Mr EJT's financial manager, subject to the authorities and directions ordered by the NSW Trustee and Guardian.

Background

1. Mr EJT is a 67-year old man with some cognitive impairment due to a traumatic brain injury suffered in a motor vehicle accident in 2009. He is married to Mrs ODT. They live together in their home in West Sydney.

Previous Proceedings

2. In November 2010, the Tribunal appointed Mrs ODT as Mr EJT's guardian and financial manager.

3. In August 2011, Mrs ODT applied to revoke the financial management order. At a hearing in November 2011, the Tribunal did revoke the order in the best interests of Mr EJT. In doing so, the Tribunal relied on the following matters:

1. There was a strong bond between Mr and Mrs ODT

2. Mrs ODT had demonstrated ongoing care for her husband

3. Mrs ODT wanted to be more directly involved in the administration of her husband's affairs

4. Mr EJT's estate was not complex, and all assets were jointly owned by Mr EJT and Mrs ODT.

5. Documents were available which clearly demonstrated Mr EJT's intention and wish that Mrs ODT should look after all his affairs if he became incapable.

6. Mrs ODT had generally complied with the requirements of the NSW Trustee and Guardian (NSWTG).

4. Mrs ODT was reappointed as Mr EJT's guardian on three occasions, and remained as his guardian until the ordered lapsed in November 2014.

District Court proceedings

5. Meanwhile Mr EJT had commenced District Court proceedings for recovery of damages for the personal injuries he suffered in the 2009 motor vehicle accident. These proceedings were concluded with a Consent Judgment approved by a Judge on 5 December 2014 (referred to in these Reasons as "the Consent Orders." The relevant parts of the judgment are as follows:

Verdict for the Plaintiff (Mr EJT) for $1,050,000 less statutory deductions

"(The insurer) is to pay the verdict sum, less authorised deductions, to the NSW Trustee and Guardian to manage for the plaintiff over his lifetime."

6. In January 2015, the NSWTG received a cheque for $499,807.96 pursuant to the above Judgment. The Tribunal will refer to these moneys as "the compensation fund" in these Reasons.

Current Application

7. In February 2015, Mrs ODT submitted a fresh application to NCAT for the appointment of a financial manager. At one level, the reasons for the application are not clearly stated. Mrs ODT writes:

"It isn't really about becoming a financial manager it's putting an end to a long 5 years so we can put what has happened to [Mr EJT] behind him…"

8. However it is apparent that Mrs ODT is seeking control of the proceeds of the personal injury claim which the Court ordered to be managed by the NSWTG. She writes:

"I don't believe [Mr EJT]'s money should be held by you or your entities as this money is for the rest of [Mr EJT]'s life and he should be able to have it in his own bank account to access when he needs for medicine or bills like gas, power or food."

9. The Tribunal conducted its first hearing on 16 March 2015. On that day, identified a potential jurisdictional matter which is described as follows:

"…whether the Tribunal has the jurisdiction under Part 3A of the Guardianship Act to make a financial management order in relation to that part of the person's estate which has been placed under the management of the NSWTG by order of a Court. The Tribunal regards this question as requiring consideration of Section 25K of the Guardianship Act and of the general principles under which Tribunal operates. It may also require consideration of the legal authority for the District Court order under which the management of the net verdict was placed under the management of the NSWTG, and the proper manner in which that order may be varied."

10. There was no-one of sufficient expertise or seniority available from the NSWTG to address this issue. The Tribunal therefore adjourned with Directions that written submissions be provided addressing the following questions:

"a. The legislative basis for which the NSW Trustee and Guardian is appointed to manage the compensation funds.

b. Whether the Tribunal has jurisdiction to make a financial management order in light of Section 25K(2) of the Guardianship Act.

c. The legislative basis or mechanism by which the NSW Trustee and Guardian could transfer management of the compensation funds to a financial manager appointed by the Tribunal under the Guardianship Act 1987.

d. Whether there are any alternative options for the application in seeking to manage the funds ordered by the District Court."

Representation

11. Mr CEB, solicitor, sought leave to appear on behalf of the applicant Mrs ODT. The Tribunal granted leave for him to appear in this capacity.

12. The Tribunal also ordered that Mr EJT be separately represented in these proceedings. Mr NAT, solicitor, appeared in this capacity at the hearing.

The Hearing

13. At the end of these Reasons for Decision are lists of the parties to the application and witnesses who attended the hearing [appendix removed for publication].

What did the Tribunal have to decide?

14. The issues for the Tribunal were:

• Is Mr EJT incapable of managing his affairs?

• Is there a need for another person to manage Mr EJT's affairs and is it in his best interests for a financial management order to be made?

• If so, who should be appointed financial manager?

15. The Tribunal considered the preliminary jurisdictional question first. Both Ms DRQ (Legal Officer, NSWTG) and Mr NAT had made written submissions in accordance with the Tribunal's Directions.

The legislative basis for which the NSW Trustee and Guardian is appointed to manage the compensation funds

16. There was some difference of views on this question between the NSWTG legal officer Ms DRQ and Mr NAT, the separate representative. The NSWTG believes that Paragraph 8 of the District Court Consent Judgement of 5 December 2015 forms neither a trust nor a management order under the NSW Trustee and Guardian Act 2009 (NSW). Ms DRQ believes it is unnecessary for the NSWTG to determine this question, as it can approach the Supreme Court for directions as set out below.

17. Mr NAT suggests either of two possibilities:

1. The Consent Order amounts to a declaration or instrument creating a trust for the benefit of Mr EJT in which the NSWTG is appointed as trustee to manage the funds "for the benefit of the Plaintiff over his lifetime." The NSWTG would then have powers to deal with those funds pursuant to Chapter 2 of the NSW Trustee and Guardianship Act.

Alternatively,

2. Paragraph 8 of the Consent Orders has been made under Section 77 of the Civil Procedure Act 2005 (NSW) on the assumption that the NSWTG was the financial manager in accordance with Section 77(3)(b).

18. As the NSWTG was not in fact appointed as financial manager at the time of the Consent Orders, Mr NAT inclines to the first of these options as the correct basis under which the funds are currently held.

Does the Tribunal have jurisdiction to consider this application?

19. The Tribunal has a general jurisdiction to consider applications for the appointment of a financial manager for persons incapable of managing their own affairs who are domiciled in NSW or have property in NSW.

20. Section 25K of the Guardianship Act 1987 (NSW) sets out the main ouster provision:

25K Tribunal cannot make financial management order in certain circumstances

(1) The Tribunal does not have jurisdiction to make a financial management order other than an interim financial management order in respect of a person if the question of the person's capability to manage his or her own affairs is before the Supreme Court.

(2) The Tribunal does not have jurisdiction to make any financial management order (including an interim financial management order) in respect of a person if an order made under the NSW Trustee and Guardian Act 2009 or the Mental Health Act 2007 is in force in respect of any part of the person's estate.

21. There was general agreement amongst the hearing participants that the Tribunal's jurisdiction was not ousted by operation of this provision. The District Court has no power to make orders under the NSW Trustee and Guardian Act or the Mental Health Act 2007 (NSW).

Assuming jurisdiction to make an order, is there a means by which the NSWTG could transfer management of the compensation fund to a private manager appointed by the Tribunal?

22. The Tribunal regarded this as the crux of the issue. It was clear that Mrs ODT had made her application with a view to gaining control of the compensation funds for the benefit of her husband. There was little point in considering her application if there was an insurmountable legal barrier preventing her management of these funds, as a result of the terms of District Court order.

23. Ms DRQ suggested the following methods by which a private manager could gain access to the compensation funds:

1. Amendment of the consent orders by motion to the District Court

2. This may involve Mrs ODT as tutor approaching the District Court to amend Paragraph 8 to read words to the effect that "the settlement funds be paid to the NSW Trustee pending the making of a financial management order that the estate of Mr EJT be subject to management under the NSW Trustee and Guardian Act 2009."

3. Appointment of the private manager as financial manager by the Tribunal or the Supreme Court

4. If this occurs, the Private Management Branch of the NSWTG will issue Directions and Authorities to the appointed manager in the usual way. These will cover the private manager's power to deal with the compensation funds.

24. Ms DRQ notes that the difficulty with the second approach alone is that Paragraph 8 of the Consent Orders will remain in place, effectively barring the private manager from dealing with the funds.

25. To overcome this difficulty, the NSWTG could use its authority under Section 64 of the NSW Trustee and Guardian Act to seek orders from the Supreme Court "as it thinks fit in relation to the administration and management of the estates of managed persons." Ms DRQ suggested that the Supreme Court's powers under this section, and in its inherent jurisdiction, are sufficiently broad to permit the transfer of management of the compensation funds to a private manager, even where the District Court has ordered that those funds be managed by the NSWTG for Mr EJT's lifetime.

26. Alternatively, if the Tribunal was to appoint the NSWTG, it could make a similar approach to the Supreme Court for directions/orders pursuant to Section 61 of the NSW Trustee and Guardian Act.

27. Following from Mr NAT's view that the NSWTG holds the compensation funds on trust, he suggests that there is no restriction on the Trustee's powers to pay those funds to a properly appointed private financial manager (providing, one assumes, that it is properly exercising its authority under Chapter 2 of the NSW Trustee and Guardian Act.)

28. Having heard the view expressed by Ms DRQ, Mr NAT inclined to the view that it was within the Tribunal's powers to appoint the private financial manager, and then allow the NSWTG to approach to the Supreme Court in the exercise of their oversight role, for Directions/Orders about the management of Mr EJT's estate. Mr NAT thought this was the most appropriate outcome having regard to the inherent powers of the Supreme Court in relation to the management of an incapable person's estate.

Are there are any alternative options for the applicant in seeking to manage the funds ordered by the District Court?

29. Ms DRQ and Mr NAT canvassed a range of other options potentially open to Mrs ODT. These included:

1. making an initial approach to the District Court with a view to varying Paragraph 8 of the Consent Orders

2. Mrs ODT making a direct application to the Supreme Court for management of her husband's affairs (Section 41 NSW Trustee and Guardian Act)

3. The Tribunal referring the proceedings to the Supreme Court (Section 25L of the Guardianship Act).

30. Mr CEB representing Mrs ODT urged the Tribunal not to exercise its powers under Section 25L, noting that this would be likely quite costly to the family. Section 25L provides:

25L Tribunal may refer proceeding to Supreme Court

The Tribunal may, if it considers it appropriate to do so, and with the concurrence of the Supreme Court, refer a proceeding relating to a person's capability to manage his or her own affairs to that Court.

31. The Tribunal could find no specific authority on the question of when it might be appropriate to refer proceedings to the Supreme Court pursuant to this section. The wording is very general and does not contain the sort of guidance provided for example in Section 34(2) of the Powers of Attorney Act 2003 (NSW) when determining whether a review Tribunal should refer matters relating to Review of a Power of Attorney to the Supreme Court. This section provides that the Tribunal may take into account the following non-exclusive list of matters:

1. whether the application relates to the effect of the enduring power of attorney or revocation of enduring power of attorney on third parties,

2. whether the application is likely to raise for consideration complex or novel legal issues that the Supreme Court is better suited to determine,

3. any other matter it considers relevant.

32. In the end, the Tribunal saw no utility in using its own referral powers to the Supreme Court in circumstances where the Tribunal's own orders were sufficient to deal with the application. The Tribunal accepted that the Supreme Court's overview of the administration and management of the Mr EJT's estates could be obtained by the NSWTG approaching it for Directions pursuant to Section 64 of the NSW Trustee and Guardian Act, once the Tribunal had made the financial management order.

33. The "guiding principle" for the Tribunal is set out in Section 36 of the Civil and Administrative Tribunal Act 2013 (NSW) (CAT Act). It is:

"to facilitate the just, quick and cheap resolution of the real issues in the proceedings"

34. The Tribunal was of the view that referring the proceedings to the Supreme Court pursuant to Section 25L may well offend this principle by creating the potential for more protracted proceedings at greater cost. There may be cases where despite the questions of cost and delay, it will be appropriate to use these referral powers, in the interests of the subject person. Section 36(5) of the CAT Act confirms that the guiding principle does not require a Tribunal to exercise any function under that Act or enabling legislation in a way that is inconsistent with the objects of principles of that legislation. The Tribunal finds that there is nothing in the objects of the Guardianship Act (Section 4) which requires or would incline the Tribunal to exercise its referral powers to the Supreme Court.

35. For similar reasons, the Tribunal formed the same view regarding the other proposed alternative actions - Mrs ODT directly approaching the Supreme Court for appointment as financial manager, or moving the District Court to amend its own orders.

Conclusion on the question of jurisdiction and utility

36. The Tribunal decided that:

1. its jurisdiction to consider this application was not ousted by any legislative provision

2. the consideration of this application is not a pointless exercise as there is a real possibility that the funds sought to be managed by the applicant - the compensation funds - can become part of the estate to be managed by a private financial manager appointed by this Tribunal, in accordance with Directions obtained from the Supreme Court pursuant to an application under Section 64 of the NSW Trustee and Guardian Act 2009

3. Having made these findings, the Tribunal proceeded to consider the application.

Is Mr EJT incapable of managing his affairs?

37. The leading cases say that a person is not capable of managing his or her financial affairs if:

1. He or she is incapable of dealing, in a reasonably competent fashion with the ordinary routine affairs of man

2. This causes a real risk of either:

1. Disadvantage in the conduct of their affairs; or

2. Loss or dissipation of such moneys or property that they may possess.

3. This does not mean that he or she has to be able to show they can deal with complicated transactions or that they cannot manage simple or routine transactions in the most efficient manner. But it also means more than just being able to go to the bank and draw out housekeeping money. Most people's affairs are more complicated than that that, and also involve planning for the future, working out how to feed oneself and one's family and how to generate income and look after capital.

38. The relevant time for considering whether a person is incapable of managing his or her affairs is not merely the day of the hearing but the reasonably foreseeable future.

39. The Tribunal received a number of medical reports which refer to Mr EJT's brain injury and mental state. Most of these reports are from 2010 and they include assessments by a psychiatrist and rehabilitation physician.

40. In 2010, The Tribunal considered this evidence in the course of considering the first application for the appointment of a financial manager. The Tribunal noted Mr EJT's very limited function, and the severe cognitive impact of Mr EJT's brain injury. The Tribunal noted the opinions that Mr EJT does not have the mental capacity to look after his financial affairs. The Tribunal accepted this evidence and found that Mr EJT was incapable of managing his affairs.

41. In 2011, the Tribunal considered an application to revoke the financial management order. The Tribunal did revoke the order but not on the basis that Mr EJT had regained the capacity to manage his affairs. The Tribunal referred to the most recent report from Mr EJT's GP Dr Z to the effect that Mr EJT remained incapable of managing his affairs.

42. There was one new report provided to the Tribunal for this application. It is another report from Dr Z who indicates he has continued to see Mr EJT regularly. He confirms the previous diagnoses of a moderate traumatic brain injury and post-traumatic psychosis. He notes that Mr EJT remains reliant on his wife for all decision-making since the motor vehicle accident. He maintains his view that Mr EJT remains incapable of independently managing his financial affairs.

43. Both Mr CEB and Mr NAT agreed with this view, noting that Mr EJT remained highly incapacitated. Mr NAT told the Tribunal that Mr EJT had declined his invitation for a separate interview. He told Mr NAT that he did not know why he was at the hearing, and he could not recall any previous hearing. He could not give any indication what it means to be a financial manager.

38. The Tribunal had the opportunity to observe and speak to Mr EJT at both hearings. It was quite clear that he relied entirely on his wife to make sense of the world. When invited by both the Tribunal and his family to express his views, he always looked to his wife for answers.

39. On the basis of the consistent professional reports, previous findings and Mr EJT's presentation, the Tribunal was satisfied that Mr EJT lacks the capacity to undertake the usual tasks associated with the management of one's financial affairs including bill-paying, banking, budgeting and planning for the future. He is therefore a person for whom a financial manager can be appointed.

Is there a need for another person to manage Mr EJT's affairs and is it in his best interests for a financial management order to be made?

46. Information provided to the Tribunal indicates that Mr EJT's assets consist primarily of the jointly owned home in which he and his wife reside valued at about $1.2 million (according to Mrs ODT), and the compensation funds now held by the NSWTG amounting to just over $600,000. Mrs ODT told the Tribunal there is a further amount of $39,000 in a joint account. Mr EJT's income is currently an age pension which gets paid with his wife's income into a joint account.

47. The Tribunal revoked the financial management order in 2011 for the reasons set out in paragraph 3 above. The Tribunal found that it was in Mr EJT's best interests to revoke the order at that time, in substance because Mrs ODT was able to manage her husband's affairs more directly and effectively without the restrictions imposed by an order, and this was what Mr EJT wanted.

48. The situation has changed significantly since then. Mr EJT's estate now also consists of his compensation funds, which is a significant amount. Mrs ODT is unable to manage these funds without formal appointment as a financial manager. There is also some lack of clarity about the basis on which the NSWTG currently holds the funds, and what powers the NSWTG can exercise in the absence of an order (as noted above at paragraphs 16 to 17).

49. In these circumstances, the Tribunal was of the clear view that Mr EJT requires the appointment of someone with the legal authority to manage his financial affairs, and that in the absence of any a Power of Attorney or other authority, it is in his best interests to appoint a financial manager.

Who should be appointed financial manager?

50. In appointing a financial manager, as in making all other orders under the Guardianship Act, the Tribunal must act with the interests of the person concerned as the paramount consideration and in accordance with the other principles set out in section 4 of the Guardianship Act.

51. Section 25M of the Guardianship Act provides that, if the Tribunal makes a financial management order, it may appoint a suitable person to manage the person's estate or may commit the management of the estate to the NSW Trustee and Guardian.

52. Mrs ODT asked the Tribunal to appoint her as her husband's private financial manager. She was aware that Centrelink would impose a preclusion period on her husband's age pension as a result of his receipt of the compensation funds, and that the funds would therefore need to be carefully managed. She had no specific plans for the use of the funds but indicated that some would need to be spent on repairs to their home. Mrs ODT told the Tribunal that she had never been declared bankrupt or convicted of any offences of dishonesty.

53. Their financial affairs are intermingled but only in the way that is common amongst a married couple. The Tribunal accepted the submissions of Mr CEB that Mrs ODT is a caring and loving wife who is purely focussed on what is in her husband's best interests. Mr CEB noted that the Tribunal had found in 2010 that Mrs ODT was a suitable person to appoint as her husband's financial manager, and he urged the Tribunal to make the same finding on this occasion.

54. Ms AQE is Mr EJT's niece. She told the Tribunal she will assist Mrs ODT if necessary. They have already spoken about seeking the advice of a financial planner in relation to the funds.

55. The separate representative Mr NAT agreed with Mr CEB that Mrs ODT is a suitable person to appoint as her husband's private financial manager.

56. The Tribunal noted the evidence given at the 2011 hearing to the effect that Mrs ODT had had some difficulties dealing with the NSWTG, and that this had caused her stress. On the other hand, the NSWTG representative at that hearing indicated that Mrs ODT had generally complied with that office's requirements.

57. Mrs ODT acknowledged at this hearing that she would again be required to comply with the Directions and Authorities of the NSWTG, if appointed by the Tribunal. Mrs ODT indicated a willingness to manage Mr EJT's affairs while meeting these accountability requirements.

58. It was clear to the Tribunal that Mr EJT loves and relies on his wife. To the extent that he understands the concept, Mr EJT had indicated over time that he would prefer his wife over anyone else to manage his financial affairs.

59. While there was no evidence put to the Tribunal that Mrs ODT has any particular experience managing larger sums of money, she clearly has her husband's best interests at heart, and has indicated she will seek professional advice in relation to the management of his estate.

60. In these circumstances, and taking the previous findings and Mr EJT's own views and into account, the Tribunal determines that Mrs ODT is a suitable person to be appointed as Mr EJT's private financial manager, subject to the Directions and Authorities to be issued by the NSWTG.

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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: 28 July 2015