HGI
[2013] QCAT 50
| CITATION: | HGI [2013] QCAT 50 |
| PARTIES: | HGI |
| APPLICATION NUMBER: | GAA8680-12 / GAA9874-12 |
| MATTER TYPE: | Guardianship and administration matters for adults |
| HEARING DATE: | 22 November 2012 |
| HEARD AT: | Rockhampton |
| DECISION OF: | P Beckinsale, Member |
| DELIVERED ON: | 17 December 2012, reasons for decision delivered 24 January 2013 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. The Public Trustee of Queensland is appointed as administrator for HGI for all financial matters. 2. The Tribunal dispenses with the requirement for the administrator to provide a financial management plan. 3. The Tribunal directs the administrator to provide accounts to the Tribunal when requested. 4. This appointment of The Public Trustee of Queensland remains current until further order of the Tribunal. |
| CATCHWORDS: | Applications for appointment of administrator – most appropriate appointment Guardianship and Administration Act 2000 |
APPEARANCES and REPRESENTATION (if any):
The Adult HGI
His parents CI and DI
Allan Grant of Grant and Simpson, legal representative for CI and DI
GI, paternal grandmother of adult
Jody Hollett of Public Trustee
REASONS FOR DECISION
Background
HGI was injured in a motor vehicle accident in 1998 when he was three years old.
A payment for damages was sanctioned by Supreme Court Order dated 2 October 2009 with the Public Trustee to hold the monies on HGI’s behalf.
HGI turned 18 on 4 September 2012. He lives with his parents and his sole income is from the investments managed by the Public Trustee. He is not currently employed or studying.
The Public Trustee filed an application on 11 October 2012 proposing the Public Trustee be appointed administrator for HGI.
CI and DI filed an application on 20 November 2012 proposing that they be appointed jointly and severally as administrators for HGI.
The Issues and the Legislation
The issues for the Tribunal are: does HGI have capacity to make decisions about his finances; if not, is there a need for an administrator; and if so, who should be appointed.
Section 7 of the Guardianship and Administration Act 2000 provides there is a presumption that an adult has capacity to make decisions.
The Act defines ‘capacity’ for a matter as meaning the person is capable of
(a) understanding the nature and effect of decisions about the matter; and
(b) freely and voluntarily making decisions about the matter; and
(c) communicating the decision in some way.
The Tribunal when considering the appointment of an administrator must be satisfied not only as to the need for an appointment as set out in section 12 of the Act but as to the appropriateness of a proposed appointee as set out in sections 14, 15 and 16.
Capacity
A health professional report has been completed by neuropsychologist Dr J A Ewing. The report is dated 11 April 2010 and Dr Ewing advises she was instructed to complete the report with regard to HGI’s status at the time of her examination when he was 14 and a half years old. A copy of Dr Ewing’s neuropsychological report dated 2 April 2009 prepared for the court proceedings was also provided.
The health professional report states HGI suffered a severe traumatic brain injury in a motor vehicle accident on 3 August 1998. In the opinion of Dr Ewing, HGI is unable to make decisions freely and voluntarily and can understand and make his own decisions about simple personal health care only, no complex decisions in any area and no simple decisions about accommodation/lifestyle choices or financial affairs. In relation to financial affairs Dr Ewing reports HGI has a severe impairment. She says that at the time of examination he had no idea of the value of money, severe literacy difficulties (grade 2 equivalent) and numeracy difficulties (grade 3-4 equivalent) and that his parents describe an inability to understand likely cost, amount given and whether or not he should get change in simple monetary interactions.
The earlier neurological report relevantly summarises that:
(HGI) has had a number of persistent language, cognitive and behavioural difficulties since the accident. In particular, he has demonstrated persistent expressive and receptive language processing deficits and persistent difficulties with intellectual abilities, particularly verbal abilities, concentration, and memory, all of which have impacted on his academic progress, with severe impairments in literacy and numeracy noted throughout. He has no idea of the value of money and is unable to manage even simple financial interactions independently. Behaviourally, he ... has difficulty with persistence and task completion in the absence of firm structure, is occasionally impulsive ... and tends to be socially isolated.
No current health professional report has been provided but in the neurological report, which is comprehensive, Dr Ewing opines that HGI’s neurological profile could be considered stable from a medico-legal perspective and the deficits noted considered permanent. She stated that HGI was unlikely to ever be able to live independently in the absence of some form of supervision of activities of daily living, that he is not competent to provide legal instruction or manage his own financial affairs and his affairs should continue to be managed by a legal guardian when he reaches adulthood.
In their application to be appointed administrators Mr and Mrs I state that HGI resides with them and they are responsible for his day to day care although they advise HGI is capable of making day to day decisions and decisions in relation to simple personal purchases such as doctors visits, grocery purchases and phone bills. Their application says HGI requires decisions to be made on his behalf regarding the award of damages and the investments made.
At the hearing Mr Grant on behalf of CI and DI said that his clients believe HGI is capable of looking after his weekly monies and paying weekly expenses but he would not be able to manage the invested monies which are significant. When asked about HGI’s ability to manage week to week finances without his parent’s support, Mr Grant advised that it is still a joint undertaking between HGI and his parents with HGI only just starting to deal with his own money and that he needs time to be able to handle money responsibly. Mr Grant informed the Tribunal that HGI did not complete his education and his parents planned that he would resume his studies and obtain a leaving certificate which was an equivalent standard to grade 12. They hoped this would improve his arithmetic and skills he needs to manage his own finances.
HGI appeared unable or unwilling to answer questions put to him by the Tribunal and his parents described him as always being quiet. With maturity and further education it is possible HGI may develop the skills to manage his day to day financial affairs although that was not the expectation of Dr Ewing. Currently the evidence is he is limited to managing simple purchases and his parents informally manage the income HGI receives fortnightly from the Public Trustee.
The Tribunal finds that HGI suffered a severe traumatic brain injury in a motor vehicle accident in 1998 resulting in persistent language, cognitive and behavioural difficulties. He has processing deficits and difficulties with intellectual abilities, particularly verbal abilities, concentration and memory. These difficulties have impacted on his academic progress with severe impairments in literacy and numeracy. He continues to be dependent on his parents for day to day support in all areas.
The Tribunal finds that HGI is unable to understand the nature and effect of decisions about finances.
Conclusion
The Tribunal finds the presumption of capacity to make decisions about financial matters is rebutted. The Tribunal concludes that HGI has impaired capacity for making decisions about finances.
Is There a Need for the Appointment of an Administrator
The damages paid to HGI pursuant to the 2009 order were in a sum of $2,000,000. The Public Trustee now holds on HGI’s behalf funds in excess of $2,500,000. The current budget for HGI anticipates, in round figures, income of $103,000 and expenses of $58,000 leaving a surplus of $45,000. This budget was established whilst HGI was still a minor and could vary with his changed needs. Currently HGI receives a sum of $500 a week from the Public Trustee with $400 being paid to HGI and $100 to his mother for board. Previously a sum of $600 was paid each fortnight to CI.
At this time HGI is not employed and the return from the invested funds will continue to be his only income. At the time the award of damages was made it was anticipated that HGI would need to rely on the return from these funds for his lifetime. Decisions are needed to be made about ongoing investment and about the control of expenditure of these funds.
The Tribunal finds there is a need for decisions about the ongoing management of the recovered damages and that without an appointment HGI’s needs would not be adequately met and HGI’s interests not adequately protected.
Who is Most Appropriate Appointment
CI and DI’s application seeking they be appointed administrators for HGI states that ‘given the adult’s age and living situation the parents (are) more appropriate in the circumstances to act as administrators for the adult’. They have provided some personal particulars, including education and work history, in an annexure to their application. As part of the application they have each provided a statutory declaration to satisfy the requirements of section 16 of the Act.
At the hearing CI and DI were asked specifically how they were a more appropriate appointees than the Public Trustee.
Mr Grant made a number of oral submissions on CI and DI’s behalf which are summarised as follows.
HGI’s parents consider it will benefit HGI that they are involved with him on an ongoing basis managing his finances and they will be able to teach him the necessary skills so in the future he may be able manage his finances himself.
HGI’s parents believe they should have more say as to the management of HGI’s funds than what they have experienced with the Public Trustee in control. Mr Grant said that the Public Trustee had invested in a ‘high risk’ portfolio whereas his clients’ preference for HGI was to have a ‘low risk’ portfolio.
CI and DI also consider it cumbersome dealing with the Public Trustee when making requests for HGI’s needs.
CI and DI have recently proposed that a house be purchased in HGI’s name in which the family can live so that CI and DI can continue to provide day to day support for Isaac. They advise that presently they live with DI’s mother in her rented home which is too small for all the siblings. They propose a residence be purchased which can house the whole family and that in time, that house might be retained or sold by HGI depending on his future requirements.
The purchase of a motor vehicle for HGI is also proposed by his parents. They suggest that will assist his attendance at any training, education or work in the future. The issue of whether HGI has obtained a driver’s licence or has the ability to do so was not raised.
CI and DI wished to be able to make these decisions in consultation with HGI without having the additional involvement of the Public Trustee.
CI and DI have no financial experience other than managing their household budget. DI said he had worked for 34 years and is currently employed casually as a cultural heritage field officer. CI undertakes home duties. They do not own their own home and the Tribunal was not advised why the family is currently sharing a home with DI’s mother. DI advised they do not have savings or other assets but mentioned holding life and home contents insurance policies as well as superannuation.
The Tribunal noted that the Court order dated 2 October 2009 had also ordered the payment to DI, who had acted as HGI’s litigation guardian, the amount of $50,000 for out of pocket expenses incurred on behalf of HGI and for past gratuitous services provided to him. CI initially responded that she hadn’t received any payment but subsequently said she thought she may have got about $30,000 as a plaintiff in the same proceedings which had gone on bills ‘over the years’.
In addition to herself being a plaintiff, the order indicated CI had also been litigation guardian for seven other plaintiffs and which the proceedings indicated were all her children. CI advised that only three of these seven were her children, the other four were her nephews and the documents had been in error. She was unable to clarify what payments if any were received by any other plaintiffs.
Mr Grant’s submission was that financial expertise was not necessary for his clients to be administrators as they would rely on the advice of a financial planner, Commonwealth Financial Planning Limited, if appointed administrators. A Statement of Advice and Portfolio Report from Commonwealth Financial Planning Limited both dated 15 November 2012 were provided to the Tribunal at the hearing.
Mr Grant further suggested that HGI and his parents would essentially receive ‘better attention’ if paying for a private service which has to be competitive whereas the Public Trustee is an organisation with many clients and may tend to ‘go through the motions’. He said his clients had found the documentation from the Public Trustee confusing whereas the financial planner had sat down and explained things in a way they could understand.
Mr Grant pointed out that the investments made by the Public Trustee on HGI’s behalf were ‘swayed’ to Public Trustee owned investments whereas to use ‘someone more independent’ may result in a ‘bit better overall investment plan’.
Further Mr Grant submitted that considerable savings could be achieved as regards the costs of funds management with his clients being advised that the Public Trustee’s annual charges would be in the vicinity of $35,000 whereas those of their proposed financial planner would be $9,000 to $10,000. Those figures were inconsistent with those in the written Statement of Advice provided and at the hearing the Public Trustee’s representative was unable to advise with certainty the Public Trustee’s costs.
Given the discrepancy, the hearing was adjourned and the Tribunal directed the Public Trustee to provide an estimate of costs of acting as administrator to CI and DI by 2 December 2012 and CI and DI to provide any response to that estimate by 12 December 2012.
Following the adjournment of the hearing the Public Trustee provided an 8 page letter dated 28 November 2012 with 5 annexed documents. CI and DI responded with a 7 page letter from Grant & Simpson, Lawyers dated 5 December 2012 with 4 annexed documents.
The Public Trustee estimates the Public Trustee’s annual charges, made up of a service fee and asset management fee as $14,034 and investment fees to manage HGI’s investment portfolio as $23,980, a total of $38,014. Upfront fees were not charged by the Public Trustee when establishing HGI’s portfolio.
The Public Trustee notes that the ongoing portfolio investment fee to be incurred by CI and DI’s proposed financial planner is $23,243 but would increase to $29,010 if the portfolio were changed to adopt an assertive risk profile which is the profile of the portfolio managed by the Public Trustee. The Public Trustee suggests the service fee of $12,450 to be charged annually must be added to that figure to obtain an annual cost of $41,460. Upfront fees of the financial planner establishing the portfolio are quoted as $11,678.
The Public Trustee advises that the original court order provided for an amount of $500,000 to cover ‘reasonable fees and charges incurred in the administration, management and investment of the compromise sum’. The Public Trustee suggests that as it is such a significant amount, that the appointment of a professional administrator has been allowed for and argues that it is therefore not reasonable to take the Public Trustee’s administration fees into consideration when comparing the costs to manage the investment portfolio.
The Tribunal was provided with a copy of only the court order dated 2 October 2009. That order included the provision that the question of the sum to additionally compensate HGI in respect of fees and charges of the Public Trustee or other appointed administrator be adjourned to a date to be fixed. The Tribunal expects the matter was dealt with at a later date and accepts that a later order provided for the additional sum to be paid to HGI.
The Public Trustee raises a number of concerns with the proposals made for managing HGI’s fund by Commonwealth Financial Planning. In particular, the Public Trustee submits that the strategy currently implemented by the Public Trustee and recommended by RBS Morgans, the financial planner engaged by the Public Trustee, applies the requirements of the ‘Prudent Person’ rule as embodied in Part 3 of the Trust Act 1973 whereas the strategy proposed by Commonwealth Financial Planning is based on HGI’s family’s preferences and does not meet all the requirements of section 24(1) of the Trust Act 1973.
Mr Grant has included an amended Statement of Advice from Commonwealth Financial Planning. Whilst an upfront cost of establishing the portfolio would be incurred, Mr Grant advises the ongoing adviser service fee of $12,450 is included in the annual ongoing management and administration fees of $23,243. This ongoing annual amount would be $29,010 if the assertive risk portfolio ‘Firstchoice Wholesale Balance Fund’ were implemented. The Public Trustee has submitted that this portfolio choice is comparable to that implemented by the Public Trustee so that if annual fees are to be compared that is the appropriate fee. As it has now been clarified that the annual fee is inclusive of the service fee, the annual fee for the assertive portfolio is only $29,010, not $41,460 as suggested in the Public Trustee’s submissions.
Mr Grant argues that the Public Trustee’s asset management and service fees should be included in any comparison of fees as they relate to the ongoing management and supervision of the portfolio, as does the ongoing advisor service fee charged by Commonwealth Investment Planning.
Mr Grant also responds to the concerns raised by the Public Trustee and disagrees that the approach taken by Commonwealth Investment Planning does not meet the requirements of the Trust Act 1973.
Mr Grant submits that CI and DI have advised it has become increasingly difficult to deal with the Public Trustee in relation to HGI’s needs:
The Public Trustee are not obliging in the event that additional monies are requested for (HGI) to go on a holiday or attend friends or family members house(s) outside of the Rockhampton area on the weekend...on one occasion, in addition to the weekly allowance, a sum of $600 was requested so (HGI) could have a holiday with his cousin. The Public Trustee only allowed an additional amount of $200 for this purpose.
The Public Trustee has submitted it is not reasonable to take into account the Public Trustee’s administration fees when comparing the costs to manage the investment portfolio because of the sum provided for this purpose in the damages award.
The Tribunal acknowledges that the expectation at the time the court order was made was that a professional administrator would be involved, given the large sum to cover fees.
In this matter significant ongoing fees will be incurred whether the Public Trustee continues as administrator or whether CI and DI are administrators engaging a financial planner. On the figures provided, after the first year when set up costs will be incurred, the annual costs of the Public Trustee will be greater than if CI and DI were appointed and engaged Commonwealth Financial Planners, however that extra cost reflects the extra service being provided, that of professional administrator. The Tribunal does not agree that it is unreasonable to take into account Public Trustee charges because the costs of a professional administrator have been recovered. There may be matters when that is a consideration. In this matter however the Tribunal is not persuaded that the costs savings means that CI and DI are the more appropriate appointment.
Written submissions have canvassed in some detail the alternative proposals for management of HGI’s funds. The proposals have been formulated by professional persons. Whilst the Tribunal may in some cases, need to consider alternative financial management plans in considering the appropriateness of proposed appointees, in this matter, the Tribunal does not consider that necessary.
CI and DI have cited their wish to work with HGI and help him gain the skills to manage his own money as a reason to seek appointment as administrators. This approach is to be encouraged and shows an application of the general principles in encouraging HGI’s self reliance but this can and should occur whether or not the Public Trustee is appointed.
In practice, CI and DI are involved in the week to week management of HGI’s funds and education about budgeting needs to start on a weekly basis. The Tribunal was surprised by the submission from CI and DI regarding funds for weekends and holidays not being provided by the Public Trustee. Given that HGI currently receives $400 a week clear of board, and an amount of $100 a week is included in the budget provided by CI and DI for entertainment, alcohol and tobacco for HGI, the Tribunal expects it would be a good exercise in budgeting for HGI to save for holidays or weekend breaks from the money he receives.
CI and DI have complained that it is cumbersome dealing with the Public Trustee, particularly when they want to go ahead with purchases of assets such as a house and car for HGI.
If CI and DI were administrators for HGI the purchase of a house in which the whole family lived is a conflict transaction requiring the approval of the Tribunal. It is a complex conflict because CI and DI are saying that the house needs to be big enough to accommodate the whole family although in the future HGI may live there himself or sell the house. While it is reasonable to suggest that it is in HGI’s interests to reside in a home with his parents and siblings, at the time of purchase there may well be a conflict about what house is appropriate for the family’s needs versus HGI’s needs both personal and on an investment basis. How the outgoings for a residence are to be apportioned requires consideration and further, the apportionment of household expenditure and how HGI is to contribute would require the Tribunal’s approval.
If the vehicle purchased for HGI is used by the household generally or for the benefit of other household members sometimes, then how the costs of running the vehicle are apportioned has also to be considered.
One of the appropriateness considerations that the Tribunal must have regard to is the extent to which the interests of HGI and the interests of CI and DI are likely to conflict. There are at least two major purchases just discussed which are likely to give rise to conflicts of interest between HGI and his family. If the Public Trustee is appointed administrator for HGI the Public Trustee will not have these conflicts and can agree to arrangements which best meet HGI’s needs and can take into account the views of his parents without the need for the Tribunal’s approval.
When CI and DI were asked at the hearing whether they considered they may as administrators face the difficulty of HGI or other family members making requests for money, DI answered that they were a close family and he could foresee no such difficulty. The Tribunal considers CI and DI have a huge role to play in supporting HGI as his parents without also being in final control of his money. Despite the evidence of DI, it is reasonably able to be anticipated that refusals to agree to requests for funds outside the agreed budget would lead naturally to disagreements with HGI and would tend to undermine the relationships within the family. The Tribunal considers it more appropriate that with such a large sum involved an administrator independent of the family is appointed so that the family can focus on providing love and support to HGI.
The Tribunal is not persuaded by Mr Grant’s suggestions that CI and DI would receive better service or more independent investment advice should they be appointed rather than the Public Trustee. Whilst it is the case that CI and DI can rely on professional advice as to the investment of such a large sum and therefore may not require expertise in this regard, the evidence from the hearing did not satisfy the Tribunal that CI and DI have a relevant history of successful management of their own finances. In particular, CI, despite being litigation guardian for HGI and 7 other infant plaintiffs was unable to give an account of moneys recovered in a settlement effected only 3 years ago or explain why she did not receive a payment for past gratuitous care ordered in her favour.
The Tribunal makes the following findings about appropriateness of the proposed appointees. The Public Trustee has competently managed the financial affairs of HGI since being appointed pursuant to court order. The Public Trustee has competently managed the financial affairs of adults with impaired decision making capacity and is well resourced to carry out that role. CI and DI would endeavour to act in their son’s best interests but their financial interests and those of HGI are likely to be in conflict and they do not have experience in managing large investments and have not satisfied the Tribunal that they have adequate and relevant financial management skills derived from their own financial history.
Conclusion
The Tribunal is satisfied that the Public Trustee of Queensland can assess the relative merits of options for decisions about financial matters and make decisions that best meet the adult’s needs. The Public Trustee of Queensland is an independent decision maker and has extensive skills and experience. The Public Trustee of Queensland is considered the most appropriate appointment as administrator for HGI.
An option for the Tribunal is to appoint the Public Trustee administrator of the sum received pursuant to the court order. CI and DI could continue to support HGI’s day to day financial decision making informally. This could include income received by HGI in the future from sources other than the Public Trustee managed funds.
However, the Tribunal is of the view that the complications which can arise from the management of such a large sum mean that HGI’s interests are best met by a plenary appointment of the Public Trustee. As a matter of practicality HGI’s parents will still support him in the day to day management of the income received from the Public Trustee but it is in HGI’s interests that his administrator is not hampered in any way when dealing with financial and other organisations and individuals who may have a financial relationship with HGI.
Accordingly the Tribunal orders that the Public Trustee of Queensland is appointed administrator for HGI for all financial matters until further order. The administrator is exempted from providing a financial management plan and required to produce accounts to the Tribunal when requested.
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