HFO (No2)(Administration) - [2009] TASGAB 15

GUARDIANSHIP AND ADMINISTRATION BOARD
HOBART

HFO review of administration order of the Board’s Own Motion

Neutral Citation: HFO (No2)(Administration) [2009] TASGAB 15

REASONS FOR DECISION

Anita Smith (President)

Date of hearing: 31 July 2009

Administration – review of conditional administration order – suitability for appointment as administrator – significant conflict between proposed administrator and represented person’s adult children – proposed administrator’s lack of concern for compliance with the law
Guardianship and Administration Act 1995 s. 54, 67

Holt & Anor v Protective Commissioner (1993) 31 NSWLR 227

Singh v Calvary Hospital Act Incorporated (No2) (2009) 166 ACTR 78

HFO is a 76 year old man who was the subject of an earlier order by the Board appointing the Public Trustee as administrator pursuant to Part 7 of the Guardianship and Administration Act 1995 (the Act) subject to some conditions. If those conditions had been satisfied, the order allowed for the appointment to transfer to the original applicant, KKO. The purpose of this review was to determine whether those conditions had been satisfied and whether a change of administrator was appropriate.
Following the last hearing, the Board was satisfied that HFO is a person with a disability, that he is incapable by reason of that disability of making reasonable decisions and that he is in need of an administrator. The Board appointed the Public Trustee on the following conditions:
“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. XXXX/1 and XXXX/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.”
The Board’s decision included the following paragraphs:
“The audit related to the following transactions: HFO and KKO were the proprietors of 2 blocks of land (Vol XXXXX folios 1 and 2) until they were sold in April 2008 for $[removed] and $[removed] respectively. The sale caused the Board concern on a number of fronts.
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 business she runs. 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.”
The Public Trustee reported that the net proceeds of sale of the subject properties were $[removed]. That sum was used or invested as follows:
·Repayment of a business loan  -            $[removed]
·Holiday expenses for both persons                  -            $[removed]
·Balance purchase price of property                 -            $[removed]
·KKO’s online savings account  -            $[removed]
·Balance (business & living expenses)              -            $[removed]
The Public Trustee reported that the couple’s funds are invested in some 9 different accounts and that this setup was ‘confusing at best’. The Public Trustee concluded that the funds had been expended in HFO’s best interests, but did not state that the funds had been equitably invested, presumably because almost half of those funds are currently invested in an account solely in KKO’s name. In light of an inconclusive report, the Board considered that there was ambiguity regarding whether clause 4 of the order would become operative, so it was determined that the order should be reviewed of Board’s own motion pursuant to section 67(a) of the Act.
The Board’s Investigation and Liaison Officer received an email from the Public Trustee’s representative dated 2 April 2009. That email reported KKO’s behaviour immediately following the conclusion of the last hearing.
It read:
“Directly after the hearing I attempted to speak with KKO as she was making a fast exit from the area.
KKO almost immediately broke into a hysterical and rather dramatic outburst.
She threw herself on the ground, wailing and making various wild statements. These included saying she was sick of this, would divorce HFO as this was all too much trouble after caring for him for X number of years, that his children were only in this for the money & they didn’t care for him. When I managed to ask her for information relating to the impending settlement she went on to say that no-one in authority cared about her or HFO and went off on other tangents.
The friend in attendance assisted to calm KKO somewhat but there was no way to have any conversation with her at the time. I handed the friend my business card and asked her to have KKO contact me the next day.
KKO did contact me next day far calmer but still obviously aggravated about the whole situation.”
KKO was provided with a copy of the report and the email. In response, the Board received a letters dated 27 and 28 July 2009 together with twenty four separate personal references for KKO, a medical report for KKO and a press article with references to HFO’s sporting activities. The themes of most of the personal references were:
·That HFO is happy and well supported in the community
·That KKO is a dedicated carer who puts her husband’s needs ahead of her own
·That the move was primarily for HFO’s benefit
·That KKO’s actions following the hearing were an uncharacteristic outburst brought about by the tension of the hearing and other stressors
·That when KKO put HFO in respite care, he returned after only 1 night because she was so distressed about his absence
Dr McKenzie G.P. provided a report that stated that KKO has a history of ‘near faints’ when stressed and that this is possibly what happened when she fell to the ground after the hearing.
The following references were provided as evidence of KKO’s financial acumen:
·EC and DC who employed KKO as the book keeper and manager of their gallery for nine years.
·Dr CB who knew her in her role as treasurer of a voluntary association.
·DQ and PU who appointed KKO as administration manager in 1997 where she had responsibility for invoicing, banking and payroll.
·KC who worked with KKO between 1992 and 1997
·JS who has been the accountant taxation agent for the companies operated by HFO and KKO for 15 years.
These referees attested to her skill with computer based financial programs, her honesty, integrity and professionalism.
With the exception noted below, the above documentation was discussed at the hearing on 31 July 2009. The hearing was attended by KKO with her legal representative, Ms Alison Wiss, and two representatives of the Public Trustee, with XO, SO and BD attending via telephone link up. KKO made an application that financial matters not be discussed as she and HFO had a history of keeping financial details from their children. The Board acceded to this request to the extent of referring to various figures in broad terms rather than actual balances.
In support of her appointment as administrator, KKO contended that her behaviour leading up to, during and after the March hearing was affected by severe stress involved in moving house, establishing the gallery and caring for HFO added to the shock of being challenged by HFO’s two older children about her management of the proceeds of sale of the two properties and the management of the hearing. She also contended that the events after the hearing had been exaggerated by the author of the email note.
KKO’s behaviour following the hearing was also referred to in a referee report by QN who sought to explain why such actions arose rather than deny that they occurred.
Insofar as there is conflict about the contents of the email dated 2 April 2009, I accept the author’s version of events. I also do not accept that KKO had a ‘near faint’ or that her actions were unconscious.
No real objection was taken to any part of the Public Trustee’s audit report. The explanation for a significant proportion of the funds being invested in an account solely in KKO’s name is that this is an operating account for the couple and their businesses.
Because she is seeking appointment as administrator, KKO’s character is important to the tests in section 54(1)(d) of the Act. There are a number of inconsistencies arising in the evidence presented at this hearing about KKO’s character.
The first inconsistency concerns the referees’ attestations to KKO’s aptitude to computer based record keeping systems and her professionalism. Such reports tend to run counter to her attempts to account to the Board for expenditure of the sale proceeds at the March hearing and subsequently to the Public Trustee. Neither attempts impressed the Board as professional or organised. KKO claimed that she was ambushed at the hearing and was not expecting to have to provide such an account. However, according to the file note of the Investigator, she had notice of the relevant issue at least five days before the hearing but was still unable to provide a coherent account of the expenditure or investment of the proceeds of property sales at the hearing. Information supporting the use of funds was supplied to the Public Trustee some two months after the Board made the order and was described as ‘confusing at best’. In short, KKO’s management of the couple’s finances does not match the descriptions of her skills as described by her former employers.
Secondly, as noted in the previous decision, it is of concern to the Board that a previous transfer of joint property was executed after HFO had lost the capacity to undertake such a transaction. In addition, a significant proportion of the proceeds from sales of joint property is currently in KKO’s account. These examples may be explained as arising from oversight, but they tend to show a lack of professionalism or concern for compliance with the law when one is managing the affairs of a person with a disability.
KKO stressed that a new property purchased since the appointment of the Public Trustee has been registered between HFO and KKO as tenants in common rather than joint tenants at her own suggestion. She submitted this as proof of her recognition of HFO’s separate estate. While the Board does not dismiss the significance of such an action, it does not assuage the concerns outlined above.
The third area of inconsistency arose regarding the various assertions about KKO’s ability to cope with the stressors of being a carer. The personal references were full of admiration for the manner in which KKO approaches HFO’s care. However, when faced with a challenge to her appointment as administrator, which might otherwise have been viewed as a minor set-back at the time, she acted in an apparently uncharacteristic manner and threatened to divorce HFO. This behaviour was again attributed to the stress and ‘ambush’ of the hearing, despite there being 5 days notice of the relevant concerns.
The Board considers that an organised person acting with professionalism in the above circumstances could have (i) copied relevant financial records prior to the hearing for the information of the Board, (ii) provided a statement of the investment and expenditure of sale proceeds to allay Board concerns, and (iii) viewed the conditional order of the Board as facilitating the necessary property transactions as well as an opportunity to present further financial information. None of this occurred.

The major flaw in KKO’s application for appointment as administrator is the level of conflict between her and HFO’s two eldest children. A significant feature of both hearings was the high level of tension between KKO and HFO’s two oldest children, SO and XO. Clearly the relationship, which might have been civil but strained prior to the March hearing, has deteriorated to fairly open hostility by the July hearing. KKO’s evidence at the July hearing inflamed such conflict by claiming that neither of the elder children had shown any appropriate level of concern or care for their father in recent years and that SO denies his half-brother, BD’s, existence.
In this regard the Board found XO and SO’s protestations that relationships are workable to be disingenuous. This is especially so since it was they who introduced the questions about possible misuse of the sale proceeds into the investigation and hearing process, which has ultimately undermined KKO’s application.
It is relevant to the question of the appointment of an administrator how that nominee might approach potential beneficiaries of the estate. It is in the represented person’s best interests that tensions arising from expectations of inheritance from the estate are carefully and sensitively managed during administration. Parliament has recognised this with the inclusion of section 60 of the Act. It is possible that, at the time of listing the properties for sale, neither HFO nor KKO were alive to the expectations that SO and XO had of inheritance of those properties. However, since those expectations have come to light in this hearing process, KKO’s response has been to dismiss their concerns, preferring instead to level criticisms of the potential beneficiaries about a lack of attention or care for their father’s needs.
Having carefully read the decisions in Holt & Anor v Protective Commissioner (1993) 31 NSWLR 227 and Singh v Calvary Hospital Act Incorporated (No2) (2009) 166 ACTR 78, I take into account that appointment of KKO would provide benefits for the management of the estate in that she can provide familiarity with the assets and liabilities in the estate and the fact that such an appointment would be free of cost. I also take into account that KKO’s appointment could add the ingredients of love and affection and a sensitivity for the daily and personal needs of HFO in guiding the management of the estate, which appointment of the Public Trustee cannot.
However, I also take into account that there is significant conflict within HFO’s family regarding the disposition of two blocks which XO and SO had reason to believe were willed to them. The funds from the sale of those blocks have now been integrated into HFO and KKO’s household and business accounts and are subject to day-to-day management.
This scenario is prone to conflict. Such conflict will benefit from a dispassionate and neutral approach such as the Public Trustee can provide. Additionally, because of the Board’s concerns over inconsistencies between KKO’s perceived professionalism and her actual performance during these proceedings, the Board is not satisfied that she meets the tests in section 54(1)(d) and 54(2) of the Act.
I note the concerns in the Public Trustee report that their appointment will cause distress because of the entwined nature of the personal and business assets for HFO and KKO.
KKO wishes to use the joint funds currently in her account to renovate the business premises behind which they live. The business has not operated recently, pending the outcome of this hearing. As a fledgling business, the business has not yet produced income. I believe that it is appropriate that the Public Trustee consider whether further investment in the business by HFO is prudent. In making that consideration it is expected that the Public Trustee will factor into the equation the enjoyment and sense of purpose that HFO derives from participating in the work of the business demonstrating the levels of compassion, vigilance and efficiency expected of professional administrators as described in Holt.
Taking all of this into account, it is appropriate to appoint the Public Trustee to manage HFO’s estate in the future. Therefore it is appropriate to amend the terms of the Board’s order dated 30 March 2009 to the extent of removing clauses 3 and 4 of the order.

THE BOARD ORDERS

That The Public Trustee be appointed as administrator of the estate of the represented person.
That the powers and duties of the administrator be those conferred by Division 4 of Part 7 of the Guardianship and Administration Act 1995.
That the order remains in effect until 29 March 2012.

Anita Smith
PRESIDENT

Statement of reasons delivered 4 August 2009.