FW and FX v Protective Commissioner

[2009] NSWADT 36

Set aside by Appeal:

CITATION:	FW and FX v Protective Commissioner [2009] NSWADT 36
DIVISION:	General Division
PARTIES:	APPLICANTS FW FX RESPONDENT Protective Commissioner
FILE NUMBER:	083133
HEARING DATES:	10 December 2008
SUBMISSIONS CLOSED:	18 December 2008
DATE OF DECISION:	19 February 2009
BEFORE:	Hennessy N - Magistrate (Deputy President)
LEGISLATION CITED:	Administrative Decisions Tribunal Act 1997 Protected Estates Act 1983
REPRESENTATION:	APPLICANTS In person RESPONDENT T Tunbridge, solicitor
ORDERS:	The decision of the Protective Commissioner to wind up the sole trader business in the name of FW is affirmed.

Introduction

1 FW is a 79-year-old woman with mild dementia, memory problems and some physical disabilities. She and her son, FX, each own a half share in a farm located in the central west of New South Wales. FX operates the farming business under the name of his mother, as a sole trader. Following an application to the Guardianship Tribunal, FW’s estate was committed to the Protective Commissioner on 17 April 2002. Her son strenuously objects to the Protective Commissioner managing his mother’s estate and is determined to make financial decisions on his mother's behalf. He is not co-operating with requests and decisions of the Protective Commissioner.

2 On 25 February 2008 the Protective Commissioner decided to wind up the sole trader business in the name of FW. The reason for that decision was that “as sole trader FW is personally liable for all debts and her personal property may be vulnerable for debts and other business liabilities.” The Protective Commissioner characterised the process of winding up the business as involving “purely paperwork” which would not prevent FX from carrying on his own farming business. FX applied to the Tribunal for a review of that decision on behalf of himself and his mother. FX says that he is not against this decision but that it must be done at the right time. He says that the federal government is planning reforms in relation to pension entitlements in 2009 and that a final decision should not be made until the details of any such reforms are known.

3 Mr Tunbridge, representing the Protective Commissioner, says that the business should be wound up and then arrangements can be made to transfer FW’s share of the property to FX. He added that care needs to be taken to ensure that FX is compensated and receives all the government benefits to which she is entitled. On the basis of the submissions from each party, the issue is whether the decision to wind up the sole trader business should be made now or at some time in the future.

Tribunal’s jurisdiction

4 The Tribunal has jurisdiction to review the Protective Commissioner’s decision: Administrative Decisions Tribunal Act 1997 (ADT Act) section 38(1), Protected Estates Act 1983, section 28A. All decisions made by the Protective Commissioner “in connection with the exercise of the Protective Commissioner’s functions” may be reviewed: Protected Estates Regulation 2003, clause 9.

5 Section 63 of the ADT Act says that the Tribunal is to decide what the “correct and preferable decision is having regard to the material then before it” including “any relevant factual material” and “any applicable written or unwritten law”.

FW’s financial position

6 In October 2008, FW’s assets comprised the sole trader business, a half share of the farm (valued at $222,500 on 13/12/07) and $91,184 in funds held by the Protective Commissioner. Her total assets, which are assessable for the purposes of government benefits is approximately $313,684. There was no evidence as to the value of the business but FX estimated his mother’s gross income from the farming business for the 2007/2008 financial year to be $20,800. He estimated her business expenses to be $27,200, leaving a net loss of $6,400. FW is receiving a benefit of $387.31 a fortnight under the Exceptional Circumstances Relief Payment for Farmers (ECRP) program administered through Centrelink. She is eligible for this assistance, at least until 31 March 2009, because she is a farmer in an area which has been drought declared. FW would no longer be eligible for this pension if she ceased to be a “farmer”, that is if she ceased to own a farming business. According to Ms Neate, a Senior Benefits Officer with the Office of the Protective Commissioner, given her assets, if FW wound up her farming business she would be eligible for the age pension at the rate of $355.00 a fortnight. In addition, FW would be entitled to fringe benefits including reduction in council rates in relation to her principal place of residence and subsidies for electricity, telephone and prescription medication.

Decision to wind up sole trader business

As a sole trader FW owns the business and is personally liable for all business debts. Although it was never made clear, I assume that FX is an employee of the business. All the profit (or loss) from the business is personal income (or loss) in the hands of FW. There was no evidence as to the wages, if any, that FX is taking from the business. When the Protective Commissioner made the decision to wind up the sole trader business, FX was offered three options:

(a) to purchase his mother’s share of the property, equipment and other assets and run the business in his own name;

(b) to sell the property to a third party; or

(c) to rent his mother’s share of the property and run the business in his own name.

7 FX rejected each of these options. He said that he had investigated various entitlements and options available to him and his mother but he had not yet determined which option was going to be the most advantageous. He envisaged that the property would be transferred into his name and that a home unit in Dubbo would be transferred into his mother’s name by way of compensation. He did not specify whether the home unit was an existing asset or a property he planned to buy in the future. He said his mother would be entitled to receive the pension. He said that Centrelink has provided him with some forms to complete to determine his mother’s pension entitlements but he has not yet completed those forms.

8 Another option FX raised was the government’s “Exceptional Circumstances Exit Package”, which he said entitles a recipient to a lump sum payment of $150,000. According to Mr Tunbridge, FW would not be eligible for the $150,000 exit grant because she would not be selling the property (just transferring it to her son) and she does not have effective management and control of the business. He said that a condition of the exit grant is that a person is receiving 80% of their income from the farm. At the hearing FX said that he would forward to the Tribunal some advice from Centrelink on this issue but he did not do so.

9 Ms Neate from the Office of the Public Guardian provided evidence that Centrelink administers a policy relating to farm transfers. The policy is designed to assist farmers to retire and then transfer control of the farm to the next generation. FX said that selling the business is equivalent to an inter-generational transfer.

10 Before any decisions are made about selling or otherwise transferring FW’s interest in the farm to FX, the implications of such a transfer would have to be carefully assessed.

Conclusion

11 Both parties agreed that the decision to wind up FW’s business was the correct and preferable decision. FW is not involved in the business which currently appears to be running at a loss. The dispute was essentially about the timing of the decision to remove FW from any financial involvement with the business. It is not the Tribunal’s role in these proceedings to adjudicate on the decisions that may be made after the sole trader business is wound up such as the transfer of the property and other assets, how FW is to be compensated if the property is transferred and whether she is entitled to any grants, benefits or pension payments. These are separate decisions which the Public Guardian will ultimately make. In relation to the timing of the decision to wind up the sole trader business, nothing FX put to me about potential changes to pension entitlements in 2009 or any other matter satisfies me that the decision to wind up the FW’s sole trader business should be further delayed.

Order

The decision of the Protective Commissioner to wind up the sole trader business in the name of FW is affirmed.