HFO (Administration)

[2009] TASGAB 6

GUARDIANSHIP AND ADMINISTRATION BOARD
Hobart

HFO on the application of KKO

Neutral citation:  HFO (Administration) [2009] TASGAB 6

REASONS FOR DECISION

Anita Smith (President)

Date of hearing: 30 March 2009

Administration – appointment of an administrator – proposed administrator unable to properly account for proceeds of property transactions – urgent appointment required
Guardianship and Administration Act 1995 s54

1. HFO is a 76 year old man, married to KKO, the applicant, and father of three adult children, BD, SO and XO.   HFO was diagnosed with dementia in November 2007.  The application for appointment of KKO as administrator arose because KKO had entered a contract for the sale of joint property and needed authority to effect the transfer and a purchase of a new property.

2. The applicant and HFO attended the hearing, together with a friend, QN.  XO and SO attended the hearing by telephone.  BD declined to attend the hearing.

3. Dr McKenzie, HFO’s General Practitioner, in a report dated 3 February 2009 confirmed the above diagnosis and confirmed that HFO is unable to make reasonable decisions in relation to his real or personal property and is unable to undertake day-to-day financial transactions. In answer to any question asked of him at the hearing, HFO stated “this, that and the other” it was therefore clear that he has no comprehension of the proceedings. None of the parties to the application took exception to the diagnosis. The Board was satisfied that HFO is a person with a disability within the meaning of section 51(1)(a) of the Guardianship and Administration Act 1995 and that he is incapable of making reasonable judgments as required by section 51(1)(b).

4. The application dated 5 March 2009 states that HFO and KKO and a company of which they are directors together hold approximately $173,000.00 in investment and savings and a property at [Coastal Property] with a value of $365,000.00.   They have no significant liabilities.  The property at [Coastal Property] was placed on the market prior to HFO’s diagnosis.  KKO has entered into a contract for the purchase of a smaller home more suited to their needs.  A string of purchase and sale contracts, of which these two transactions are part, was due for settlement on 3 April 2009.   Because of the nature of his estate and the pending property transactions, the Board was satisfied that there was a need for an administrator pursuant to section 51(1)(c) of the Act.

5. The Board was satisfied that appointment of an administrator represented HFO’s best interests and that no less restrictive alternative is available to meet those interests.  HFO is incapable of expressing his wishes for the purposes of sections 6 and 54. 

6. KKO proposed herself for appointment as administrator. The Board examined her application according to the tests in section 54(1)(d) of the Act. The Board found that subject to providing some explanations regarding previous dealings with joint properties, KKO would be suitable for appointment. Given the pressing nature of the application, with just 3 days until settlement of the properties, the Board appointed the Public Trustee pursuant to section 54(1)(a) of the Act with a contingent appointment of KKO subject to receiving satisfactory results from an audit of the previous transactions.

7. The audit related to the following transactions:  HFO and KKO were the proprietors of 2 blocks of land at [Coastal Property] (Vol xxxx folios 1 and 2) until they were sold in April 2008 for $140,000.00 and $150,000.00 respectively.   The sale caused the Board concern on a number of fronts. 

8. Firstly, KKO was unable to account for the proceeds of sale in an accurate or concise manner at the hearing.  KKO did not answer a question, asked of her at the hearing, whether any of the sale proceeds had been applied to the purchase of a small gallery that she runs at [Rural Property].   The Board’s concern was that, having been joint property, the proceeds of sale need to be distributed equitably between HFO and KKO’s interests.  In other words, KKO has had a fiduciary responsibility to HFO with regard to their joint assets, by reason of his disability and dependence upon her, to ensure that his interest in the proceeds has been appropriately recognised and protected.  As with any fiduciary duty, transparency and accountability of dealings are paramount.   

9. Secondly, XO and SO had been of an understanding that these properties were willed to them in HFO’s will.  Thirdly, the transfer had been signed at a point after HFO’s diagnosis of dementia in November 2007 but his ability to understand signing a transfer at that point were unclear.  

10. The Board appreciated that with time and access to records, KKO may be able to properly account for the proceeds of the sale of the two blocks.  The latter two concerns were not fatal to KKO’s appointment as an administrator.  Therefore, the Board believed it appropriate to appoint the Public Trustee to enable the property transactions to proceed and to allow KKO to provide records of the use or investment of the sale proceeds from Vol xxxxx folios 1 and 2.  

11. If KKO can account for the expenditure or investment of the proceeds of sale of the two properties and has therefore met the fiduciary duty imposed upon her, then she would meet the tests in section 54(1)(d) of the Act. If however she is unable to account for the expenditure or investment of the proceeds of sale, then she would have failed in a fiduciary duty towards her husband and would not be a suitable person to appoint as administrator. In other words, if KKO has taken advantage of HFO’s disability (or merely failed to consider his interests) to apportion a greater share of the proceeds of sale to her own interests than to her husband’s, she would not have demonstrated the necessary qualities of accountability, integrity and transparency that the Board requires of an administrator.

12. Accordingly the Board empowered the Public Trustee to receive the financial records relating to the sale proceeds from KKO, to undertake an audit of those records and report to the Board upon whether the proceeds were equitably invested or expended.  If the report to the Board indicates that KKO has acted equitably, then the appointment will transfer from the Public Trustee.  If the report does not indicate equitable investment or expenditure of the moneys, then the appointment will remain with the Public Trustee.

THE BOARD ORDERS

1. That The Public Trustee be appointed as administrator of the estate of the represented person until the completion of clause 4 below.

2. That the powers and duties of the administrator be those conferred by Division 4 of Part 7 of the Guardianship and Administration Act 1995.

3. That the applicant is directed to submit to The Public Trustee all financial records that they may require to determine whether the represented person’s share of the proceeds of the sale from registered properties folio numbers. xxxxx/1 and xxxxx/2 (the proceeds of sale) have been equitably invested or expended on his behalf and in his best interests.

4. Upon receipt of the financial records The Public Trustee shall audit those accounts and report to the Board.  If the Public Trustee reports that it is satisfied that the proceeds of sale have been equitably invested or expended on the represented person’s behalf and in his best interests, the appointment of The Public Trustee shall cease to be the administrator and the applicant shall be appointed in their stead.

5. That the order remains in effect until 29 March 2012.

Anita Smith
PRESIDENT

Statement of reasons delivered 17 April 2009.