GKO v NSW Trustee and Guardian

[2024] NSWCATAD 334

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

GKO v NSW Trustee and Guardian [2024] NSWCATAD 334

Hearing dates:

10 September 2024

Date of orders:

11 November 2024

Decision date:

11 November 2024

Jurisdiction:

Administrative and Equal Opportunity Division

Before:

J Sullivan, Senior Member

Decision:

The decision of the Respondent to sell the House is affirmed.

Catchwords:

ADMINISTRATIVE LAW – NSW Trustee and Guardian Act 2009 (NSW) – Applicant under financial management order - decision by Trustee to sell house

Legislation Cited:

Administrative Decisions Review Act 1997 (NSW)

Civil and Administrative Tribunal Act 2013 (NSW)

NSW Trustee and Guardian Act 2009 (NSW)

NSW Trustee and Guardian Regulation 2009 (NSW)

Cases Cited:

Drake v Minister of Immigration and Ethnic Affairs (1979) 2 ALD 60; [1979] FCA 39

McDonald v Guardianship and Administration Board [1993] VicRp 36; [1993] 1 VR 521

YG and GG v Minister for Community Services [2002] NSWCA 247

Texts Cited:

None cited

Category:

Principal judgment

Parties:

GKO (Applicant)
NSW Trustee and Guardian (Respondent)

Representation:

Self-represented (Applicant)
R Stormont, NSW Trustee and Guardian (Respondent)

File Number(s):

2024/00227212

Publication restriction:

Publication or broadcast of the Applicant’s name is prohibited under s 64(1)(a) of the Civil and Administrative Tribunal Act 2013 (NSW).

REASONS FOR DECISION

Background

1. The Applicant (GKO) is in her late forties and has an intellectual disability. She has difficulty managing her own financial affairs. She forgets to read emails and paperwork, and pay her bills.

NSW Trustee and Guardian (NSWTG) is appointed as her financial manager

2. GKO was previously married, but divorced some years ago. As part of a family law settlement, her 2 bedroom home in Coffs Harbour (jointly purchased with her husband) was transferred into her sole name, and she took out a loan to pay out her husband. I will refer to that property as “the House”.

3. Her mother, who was elderly, thought it would be best to ask the Tribunal to appoint the Respondent as her financial manager under s 11 of the NSW Trustee and Guardian Act 2009 (NSW) (NSWTG Act).

4. On 25 June 2014, the Tribunal determined that GKO was incapable of managing her financial affairs, it was in her best interests for a financial management order to be made, and that NSWTG should be appointed as GKO’s financial manager (Order). That Order is still in place.

5. As her financial manager, the Respondent has maintained and managed a trust account for GKO since the Order was made, from which ongoing daily bills are paid, including utility bills, council rates, water rates, electricity bills, telephone bills and other matters associated with the ownership of the House and her day to day expenses. Fees are deducted for the Respondent’s services. The trust account receives her Centrelink pension income, NDIS payments and other minor amounts (e.g. dividends on shares). The Respondent has historically paid her regular living allowances from the trust account, although there were no available funds at the date of the hearing.

6. Other Income is received directly by GKO. The Respondent said that GKO is required to report any “other income” to Centrelink because that is taken into account in determining her pension amount. GKO has forgotten to do that on several occasions.

GKO moves to Port Stephens

7. GKO continued to live at the House for many years. Last year, however, she decided to move to Port Stephens. She lives in a campervan (or caravan) there with her current partner. She told me that they don’t have to pay rent, electricity or anything to live there.

8. GKO had left her part-time job at Woolworths when she moved from Coffs Harbour. But she told me at the hearing that she had recently started a part time cleaning job at a local hotel for which she is paid $25 an hour. That is “other income” that she receives directly. She works maybe 4 days a week. She told me she has $37 in her personal bank account.

The Decision under review

9. On 6 March 2024, the Respondent made a decision to sell the House. That decision was made after considering a submission which in turn relied on a “Statement of Advice (Limited)” dated 21 February 2024 (Original Advice) prepared by a NSWTG financial adviser.

10. The Original Advice was prepared by a NSWTG financial adviser. It recommended the sale of the House as the “better financial outcome”. It said, inter alia, that liquidity was an immediate concern, because there were insufficient financial assets to cover the estimated cashflow shortfall of $46,440 pa. This advice recorded that her net assets were $611,564 (including the House, with an estimated value of $550,000), and that her home loan with the credit union (BCU) had a balance of $66,276 as at 15 February 2024.

11. The 6 March Decision, said the reasons to sell the property were as follows:

• Statement of Advice [Original Advice] details that client’s pension has ceased as she is not living in the property, and it is now considered an assessable asset. [GKO’s] only source of income is weekly wages of $226.00. Even with the weekly rent of $480 this is not sufficient to meet the ongoing expenses including the mortgage repayments, strata, council rates and her personal living expenses.

• Statement of Advice [Original Advice] advises recommendation of selling the property.

• [GKO’s] trust account has depleted significantly and will completely deplete in a matter of weeks. [GKO] will no longer be able to make repayments for the current mortgage with BCU if not sold.

• [GKO] does not want to sell the property. She wants NSWTG to take out a second loan to continue covering her expenses. M1C explained that she is unable to repay any loan.

12. GKO (via her advocate) requested an internal review of the 6 March Decision on 8 March 2024. The Internal Review Decision dated 23 April 2024 confirmed the decision to sell the House.

13. These proceedings were filed by GKO requesting a review of the decision to sell the House.

The hearing and the facts presented to the Tribunal

The Hearing

14. The hearing was held in Newcastle. GKO was assisted at the hearing by Mr Stephen Kemp (her appointed NDIS Support Worker) and Mr Paul Waters (from the Disability Advocacy Support Helpline), although they were not there as her legal representatives.

15. The Respondent had filed documents under s 58 of the ADR Act, and submissions (with attachments) dated 4 July 2024 and 2 September 2024.

16. GKO did not file any written submissions. However, she filed two documents:

1. A letter dated 26 June 2024 from her credit union, BCU. This advised her variable home loan account balance was $182,172.61 as at that date (with a “redraw balance” of $19,865.08); and

2. A Centrelink income statement which also detailed assets disclosed to Centrelink (which included her House) and Centrelink pension amounts due to be paid on 4 July 2024.

17. In accordance with the Tribunal’s guiding principle, the proceedings were conducted quite informally, and I thank GKO, the Respondent’s solicitor, Mr Waters and Mr Kemp for their understanding and assistance which allowed me to better understand GKO’s current circumstances, financial position, and the reasons why she wanted to keep the House.

The wishes of the Applicant (the protected person)

18. The object of the Guardianship Act 1987 (NSW) is that the welfare and interests of the protected person should be given paramount consideration. The Applicant’s stated wishes and intentions are one relevant consideration.

19. GKO told the Tribunal that her mother’s main concern in having the Respondent appointed as her financial manager was to protect the House. That is not noted in the orders before me, but I accept that it may have been the case.

20. It is clear that GKO does not want the House to be sold. These are her wishes.

21. Mr Kemp said that GKO is worried that if the House is sold, it will be very difficult, if not impossible, for her to ever buy another house.

22. GKO prepared a written list of points and presented these to me at the hearing:

1. NSWTG was involved because it was her mother’s request for her to be protected by them managing her financial affairs, and in particular to protect her House;

2. She had asked the Respondent to rent the House back in September 2023 (when she moved out) so that she could have an income;

3. She has lost about $20,000 because the House has not been rented out for the last 10 months;

4. She is concerned that her finances have been mismanaged, and said that bank payments could have been stopped because her home loan was in advance; and

5. She has lost trust in the Respondent.

The financial position of GKO

23. It was apparent that the Original Advice was wrong. Both the 6 March 2024 decision and the Internal Review Decision had relied on that advice. At the hearing, the Respondent had sought to provide “updated” financial information in their submissions with relevant documents attached.

24. However, there was no complete picture of the financial position of GKO before the Tribunal, no financial adviser was in attendance, nor had the Original Advice been updated. So I ordered the Respondent to provide an updated advice, answer if any further assets could or should be sold to fund the immediate shortfall, and provide this to me no later than 25 September 2024. The Respondent provided an Updated Statement of Advice from their financial planning unit dated 13 September 2024 (Updated Advice) reflecting the correct numbers. The Updated Advice also confirmed that the sale of the house was required.

25. Concerningly, as noted below, the Updated Advice revealed new matters which were still being “followed up”, including a newly identified Hostplus Superannuation account, and dividends not being received on Woolworths/Endeavour Group shares (with the balance of shares also still to be confirmed).

26. The following facts are drawn from the Updated Advice and the other materials before the Tribunal.

Current income and expenditure

27. The Updated Advice showed forecast annual total income of $23,850 (comprising Centrelink pension at the partnered rate, NDIS transport fare subsidy payments and dividend income) and total recurring expenses of $57,990, resulting in a cashflow shortfall of $34,140 per annum.

28. The expenditure included an allowance which the Respondent paid to GKO of $500 per fortnight ($13,000 pa), home loan repayments of $700 per fortnight ($18,200 pa), life insurance of $22.58 per quarter ($90 pa), personal expenses (i.e.. discretionary, medical, utilities) of $7,000 pa, property expenses (i.e. rates, strata, insurance and repairs) of $10,000 pa, and fees payable to the Respondent (referencing a current portfolio value of “$687,450”) of $9,700 pa.

29. The maximum Centrelink pension is impacted if GKO continues to forget to advise Centrelink of her other income, which has led to a reduced amount being paid in the past.

Assets and liabilities – net assets of $501,525

Assets

30. Cash in trust account – the Updated Advice said there was a current balance of $20.

31. House – current value $550,000:

1. It is a 2 bedroom house with a small yard. It is a bit of a mess (pictures were supplied); a condition report was obtained on 2 July 2024 from a real estate agent. This indicated that the House requires repairs and maintenance to be carried out costing around $3,000.

2. It was submitted at the hearing that if the House were to be rented, then around $15,000 would need to be either paid or set aside because of the above cleaning and repairs; but also because funds would need to be kept on hand for emergencies or in case something breaks and needs replacing. The Updated Advice also said a Safely & Compliance report to ensure the House was at a “rentable standard”, but there were currently insufficient funds to pay that cost.

3. The House is not currently counted by Centrelink as an asset of GKO, but upon it being vacated for a period of 2 years, I was advised this will change. Accordingly, retaining the House could negatively impact upon her pension commencing in 2025.

32. Shares – 454 Endeavour Group Ltd shares (“to be confirmed”, possibly through Woolworths demerger) and 520 Telstra Group Ltd shares are worth approx. $4,330 in total; any change following confirmation is not likely to be relevantly material to my decision.

33. Whole of life insurance policy – held with Resolution Life with a current value (withdrawal benefit) of approx. $17,880, to which contributions are made as noted above. If a withdrawal was made now, the bonus that GKO would be entitled to if the policy was held until maturity would be lost.

34. Superannuation – with REST ($29,060 as at 30 June 2023) and Expand Extra (formerly IOOF: $86,160 as at 27 February 2024). Hostplus also to be confirmed.

Liabilities

35. Home loan:

1. As at 9 July 2024, the loan balance was $182,656.99. There was a “redraw amount” of approximately $19,000, meaning that the client was “ahead of her home loan” by this amount.

2. The Respondent advised in the Updated Advice that redraw was not an option, saying:

This will only increase the interest that is paid on the remainder of the mortgage. Similarly if this was drawn down on the balance it would increase the interest on the balance of the loan. It would also only cover the mortgage for a period before [GKO] would need to begin making payments again, despite not having the income to do so.

3. The current “monthly payment” on the home loan was advised by BCU  to NSWTG on 9 July 2024 to be $663.24 per month at 6.23% pa. This was also stated to be the position on p. 3 of the Updated Advice. However, the Updated Advice prepared all cashflow forecasts with loan repayments of $700 per fortnight (i.e. $18,200 pa) and said (p.6):

Scheduled repayments of $700 per fortnight are made from the Trust Account when funds are available. Currently, there are insufficient funds in the Trust Account and the repayments stopped on 02/08/2024.

36. Outstanding bills – around $3,269; they were unable to be paid due to insufficient funds in the trust account. This included outstanding accounts for property expenses (council rates, water and energy bills) and also Telstra, meaning that GKO was at risk of having her phone service disconnected.

Leasing the House vs Selling the House

Leasing the House

37. The Updated Advice estimated a cashflow shortfall of $16,020 per annum if the House were leased, based on:

1. Rental income of $480.00 per week;

2. Net rental income (after agent fees etc.) of $23,000 p.a; and

3. Ongoing property expenses of $10,000 p.a

38. This also factored in loan repayments of $700 per fortnight.

39. Attachments to the Respondent’s submissions dated 5 June 2024 also stated that receipt of rental income would be taken into account for the purpose of calculating her Centrelink pension.

Selling the House

40. The Updated Advice also considered the “Selling Option” and concluded:

To clear your outstanding arrears and to provide liquidity for ongoing cashflow needs selling the Coffs Harbour property is your only opinion.

If your property is placed on the market and providing the sale price of $550,000 (based on the desktop valuation from SoA [Original Advice] dated 21/2/2024) is achieved, then you could expect to receive net sale proceeds of about $334,000 after allowing all selling expenses (commission, legal, marketing, cleaning/clearing, discharge of mortgage).

After allowing 12 months cashflow shortfall of $34,140 and paying off the remaining arrears of about $3,269, you would have about $434,000 in financial assets.

41. The estimated cashflow shortfall following the sale would reduce to $1,540 p.a.. Under “Outcomes” it stated:

Based on the above, the cashflow shortfall of $1,540 would be funded by the remaining financial assets past your median lifetime.

If the property is sold as your former home, no Capital Gains Tax (CGT) will be applicable. If it’s sold after 6 years, then the estimated CGT amount would be about $20,000. The exact amount will be known when the tax return is prepared in the year of sale.

CONSIDERATION

Legal Framework

42. The Tribunal has jurisdiction to review decisions, under s 30 of the Civil and Administrative Tribunal Act 2013 (NSW) (CAT Act) and ss 6, 7 and 9 of the Administrative Decisions Review Act 1997 (NSW) (ADR Act).

43. Section 6 of the ADR Act defines “decision” to include any of the following:

“(a)   making, suspending, revoking or refusing to make an order or determination; …

(g)   doing or refusing to do any other act or thing.”

44. Section 62 of the NSWTG Act provides that an affected person may apply to the Tribunal for an administrative review under the ADR Act of a decision of the respondent in this case that:

is made in connection with the exercise of the respondent’s function under this Division, and

is of a class of decision prescribed by the regulation for the purposes of this section.

45. Regulation 45 of the NSW Trustee and Guardian Regulation 2009 (NSW) provides:

45   Review by NCAT of estate management decisions of NSW Trustee

All decisions made by NSW Trustee in connection with the exercise of NSW Trustee’s functions under Division 1 of Part 4.5 of the Act are prescribed for the purposes of section 62 (1) (b) of the Act.

46. It is not in dispute that GKO is an “affected person”, nor that the decision made by the Respondent to sell the House was made in connection with its functions in the management of the estates of a protected person, and is therefore within the jurisdiction of the Tribunal.

47. Section 63(1) of the ADR Act prescribes the role of the Tribunal in determining an application such as this. Its role is:

... to decide what the correct and preferabledecision is having regard to the material then before it, including the following:

(a) any relevant factual material,

(b) any applicable written or unwritten law.

48. Section 63(2) allows the Tribunal, for the purpose of making its decision, to exercise all of the functions that are conferred or imposed by any relevant legislation on the administrator who made the decision.

49. The Tribunal must conduct this review without any presumption as to the correctness of the decision: McDonald v Guardianship and Administration Board [1993] VicRp 36; [1993] 1 VR 521 at 529. To decide what the correct and preferable decision is, the Tribunal must consider the material that is available before it, which may include material that postdates the reviewable decision: YG and GG v Minister for Community Services [2002] NSWCA 247 at [25]; Drake v Minister of Immigration and Ethnic Affairs (1979) 2 ALD 60 (Drake) at 77; [1979] FCA 39.

50. It is also clear that the Tribunal’s determination must be carried out at the time the relevant issues come to be decided by it, and not as at the time at which that decision under review itself was made: Drake at 68 (Bowen CJ and Deane J), and numerous subsequent authorities.

51. Having determined an application, the Tribunal may decide:

1. to affirm the decision; or

2. to vary it; or

3. to set the decision aside and make a decision in substitution for it; or

4. to set the decision aside and remit the matter for reconsideration by the administrator in accordance with any directions or recommendations made by the Tribunal.

52. In conducting this review, s 39 of the NSWTG Act requires this Tribunal, standing in the shoes of the Respondent, 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.

What is the correct and preferable decision?

What are GKO’s views?

53. GKO clearly does not want her House to be sold. She asked the Respondent in September 2023 that it be rented and not sold. She now says that she has lost money because the Respondent denied that request. Her support advocates at the hearing were worried that she will never be able to buy another house.

54. She said that there are funds that could be drawn down from her redraw facility, and/or that she could get a second loan so that she could keep the house.

55. She said that she will get income from renting the House.

56. I accept that those are her views, and that the retention of the House is very important to her. I also note that she told the Respondent some time ago about a possible buyer for the House.

Living at Port Stephens

57. GKO said that she is happy living in Port Stephens with her partner. She was also happy she has now found a part-time job there. She is self-reliant to a great degree, although well supported by Mr Kemp and Mr Waters who work within that area, and who attended the hearing with her. She is living effectively rent-free at the moment, but that is not a position that is assured for the long term. Her partner is also on a Centrelink pension, and cannot therefore meaningfully contribute to her financial wellbeing.

58. She is not currently living at the House, and did not say she intends to move back there in the near future. There was no evidence of wider family or community connections to Coffs Harbour. There was no evidence of any issues of domestic tensions, abuse or exploitation.

Freedom of decision and freedom of action

59. It is apparent to me that GKO does not fully appreciate or understand her financial position. This is not a criticism, but more an observation of her at the hearing, and having regard to her disability. It was also the reason why the Tribunal ordered that the Respondent be appointed as her financial manager in 2014. In conducting that role, the Respondent has properly requested the views of the GKO, as have I. However, those views must be assessed against the objective facts relating to her current financial position.

The welfare and interests of GKO

60. I have given paramount consideration, as required, to the welfare and interests of the GKO, and to the principles in s 39 of the NSWTG Act. I understand that it will be devastating for GKO to have the House sold rather than retained and rented. I also accept that if the House is sold, it will be very difficult for her to buy another house in the future.

61. But I agree with the conclusion in the Updated Advice that the financial circumstances, even upon receiving ongoing rental income, does not objectively allow for the House to be kept:

1. The 6 March 2024 decision to sell the House was made when the home loan was taken to be around $66,000. This has been corrected to a much higher liability of more than $185,000, which significantly worsens her financial position.

2. There are currently insufficient funds in the account to meet even her most basic day-to-day expenses, including her telephone bills, council rates, water rates and allowances.

3. If the House is not sold, this position will get worse, and expose GKO to a real risk of a mortgagee sale (not immediately, but in the near to mid future).

4. Further, there is no assurance that the rental income will be regular, or that the House will have a 100% occupancy rate or not require further repairs.

5. The sale of other investment assets (e.g. shares) would only be an interim solution, and would not establish security over the longer term; it would worsen her financial position in coming years, rather than improve it.

6. Funds are also required, regardless of whether the House is sold, or rented, to restore it to a presentable state.

Other comments

62. There are issues, noted above, regarding the Original Advice provided to GKO by the Respondent and the lack of basic due diligence that was conducted in ensuring that the assets and liabilities of GKO are appropriately recorded, updated, and managed. The delay in finalising this matter was caused by the decision being based on that Original Advice. The Updated Advice updated the loan balance to correct the error. However, it did not explain to my satisfaction why fortnightly loan repayments of $700 were continuing when it specifically stated that monthly payments were $663.24. It also identified other omissions or questions that were being followed up or confirmed. The financial management was, in those respects, incomplete and questionable.

63. GKO may also have been charged for advice now found to be incorrect. The Respondent should revisit all charges and adjust them as required to be fair

64. and correct, and that exercise should be at no cost to GKO. The Respondent should also revisit why the fortnightly loan repayments continued to be maintained at the higher level, when funds were clearly required for necessities.

Conclusion

65. The decision the subject of my review is the decision to sell the House. Notwithstanding the matters / errors noted above, the evidence before me is sufficient for me to conclude that maintaining the House is not financially sustainable.

66. The correct and preferable decision is that the House should be sold. That is a decision that would better secure GKO’s interests, wellbeing and welfare in the future.

Orders

67. I make the following order:

1. The decision of the Respondent to sell the House is affirmed.

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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: 11 November 2024