HLT (No 2)

[2017] NSWCATGD 18

NSW Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

HLT (No 2) [2017] NSWCATGD 18

Hearing dates:

2 February 2017

Date of orders:

06 February 2017

Decision date:

06 February 2017

Jurisdiction:

Guardianship Division

Before:

J Currie, Senior Member (Legal)

Decision:

1. The appointment of the NSW Trustee and Guardian as the financial manager of the estate of Mrs HLT is revoked.

 

2. Mr KCC is appointed the manager of the estate of Mrs HLT.

 

3. The NSW Trustee and Guardian is to pay over or hand over the estate to Mr KCC.

 4. This order is to be reviewed by the Tribunal within 12 months.

Catchwords:

FINANCIAL MANAGEMENT – application to review financial management order – complexity of subject person’s affairs – delay in administration by NSW Trustee and Guardian – best interests – appointment of NSW Trustee and Guardian revoked – private financial manager appointed

  INTERLOCUTORY – application for leave to be legally represented – s 45(1) – importance of the proceedings to party seeking leave – leave to be legally represented refused – leave for McKenzie friend granted – adjournment request – welfare and interests – adjournment request refused

Legislation Cited:

Guardianship Act 1987 (NSW), ss 3(6), 3(7), 25N(4), 25P, 25U(4), 25Y(3)

Texts Cited:

NCAT Guardianship Division, “Procedural Direction 2: Representation”

Category:

Principal judgment

Parties:

Mrs HLT (person under consideration)
Mr KCC (applicant)
Mr GAU (carer of Mrs HLT)
Mr BES (appointed attorney of Mrs HLT under power of attorney dated 25 July 2012)
Ms MMR (appointed attorney of Mrs HLT under power of attorney dated 25 July 2012)
The NSW Trustee and Guardian

File Number(s):

52523

Publication restriction:

Decisions of the Guardianship Division of the Civil and Administrative Tribunal have been anonymised to remove any information that may identify any person involved in the Tribunal’s proceedings (s 65, Civil and Administrative Tribunal Act 2013 (NSW)).

REASONS FOR DECISION

APPLICATION TO REVOKE APPOINTMENT OF FINANCIAL MANAGER

What the Tribunal decided

Substantive order

1. The Tribunal decided to revoke the appointment of NSW Trustee and Guardian as financial manager of Mrs HLT and decided to appoint Mr KCC as her financial manager, subject to the authority and direction of NSW Trustee and Guardian.

Interlocutory orders

2. The Tribunal refused leave for Mr GAU to be represented by Mr Simon Dunn, an Australian legal practitioner, in all proceedings pending at the Tribunal.

3. The Tribunal refused a request by Mr BES for an adjournment of the hearing.

Background

4. Mrs HLT is an 86-year-old widowed woman who has been diagnosed with Alzheimer’s disease, which is reported to have been present since 2008. She has a recorded medical history which includes depression, hypertension, and paroxysmal atrial fibrillation. She has two surviving adopted adult children: Mr GAU who lives in Northern Sydney and Mr BES who lives in Tasmania.

5. On 4 November 2013, the Guardianship Tribunal made a guardianship order for Mrs HLT under which it appointed the Public Guardian as her guardian for 12 months with authority to make decisions for Mrs HLT about her access to others, accommodation, health care, legal services, medical and dental consent, and services. That order was reviewed by the Guardianship Division of this Tribunal on 24 November 2014 and the order was renewed for two years and was varied. The Public Guardian was appointed with authority to make decisions for Mrs HLT about her access to others and accommodation only. On 22 November 2016, that order was renewed for a further 12 months and the Public Guardian was again appointed as guardian with the same decision-making functions.

6. On 7 February 2014, the Tribunal made a financial management order for Mrs HLT under which the management of her estate was committed to NSW Trustee and Guardian. On the same date, the Tribunal made a declaration that Mrs HLT did not have the mental capacity to make a valid power of attorney when she purported to do so by instrument dated 17 December 2012 (“the December 2012 Power of Attorney”). I note in passing that Mrs HLT purported to make a number of enduring powers of attorney between May 1999 and December 2012.

7. On 23 September 2016, the Guardianship Division Registry received from Mr KCC, a cousin of Mrs HLT, an application for the review of the financial management order. In accordance with Mr KCC’s indication as to the nature of this review, his application was registered as an application to revoke the appointment of the appointed financial manager, NSW Trustee and Guardian (matter number 2016/8646). On 22 November 2016, the hearing of that application was adjourned with directions.

8. The purpose of these proceedings at Sydney on 2 February 2017 was to resume the hearing of Mr KCC’s application to the Tribunal to revoke the appointment of NSW Trustee and Guardian as financial manager for Mrs HLT.

Parties and witnesses

9. The Appendix to these Reasons for Decision identifies the parties to the application and the witnesses who participated in the hearing. [Appendix removed for publication.]

The nature of the application and the scope of the review

10. Mr KCC’s application was on the Tribunal’s form headed “Application to review or revoke a financial management order”. Under s 25N(4) (b) of the Guardianship Act 1987 (NSW), where an application is made for the revocation or variation of a financial management order, the Tribunal must review the order. Additionally, under s 25P, I have the discretion, if I think it appropriate to do so, to conduct a review of the appointment of the financial manager. In this case, I was satisfied that it was appropriate to conduct such a review and that my review should be limited to such a review. That is, it was not necessary for me to review whether the financial management order should be revoked or varied in any other way. I reached that view for the following reasons:

1. Mr KCC’s application and the supporting documents which he lodged with it made it clear that he sought only a review of the appointment of NSW Trustee and Guardian as financial manager;

2. no other party either prior to or at the hearing sought revocation of the order or that the order should be varied in any other way; and

3. it was apparent that the following discussions with Registry staff, Mr KCC’s application was registered as an application to review and revoke the appointment of a financial manager.

11. Accordingly, I proceeded on the basis that the hearing was solely concerned with a review of the appointment of the existing financial manager, NSW Trustee and Guardian.

The issues for determination

12. Subsection 25U(4) of the Guardianship Act allows the Tribunal to revoke the appointment of a financial manager only where:

1. the person appointed seeks the revocation, or

2. the Tribunal is satisfied that it is in the best interests of the protected person that the appointment be revoked, or

3. the financial management order in respect of the estate concerned is revoked.

13. Paragraphs (a) and (c) are not applicable in the present case, so the issue for determination was whether I could be satisfied that it is in the best interests of Mrs HLT for the appointment of NSW Trustee and Guardian as her financial manager to be revoked.

14. Section 25Y(3) of the Guardianship Act confirms that if as a result of the hearing of such an application the appointment of the current financial manager is revoked, the Tribunal must appoint another person to be the financial manager. It follows that the issues for determination by me were:

1. is it in the best interests of Mrs HLT for the appointment of NSW Trustee and Guardian as her financial manager to be revoked; and

2. if that appointment is to be revoked, who should be appointed as Mrs HLT’s financial manager?

Preliminary issues and interlocutory orders

Ms MMR’s and Mr BES’s status as parties

15. For avoidance of doubt, I confirm that Ms MMR, Solicitor, and Mr BES are parties by operation of ss 3(6) and 3(7) of the Guardianship Act. Subsection 3(7) specifies that the parties to review proceedings such as these include:

“(d1) the person, if any, appointed attorney by the person to whom the relevant financial management order relates under a power of attorney (whether in force or suspended).”

16. Ms MMR and Mr BES were appointed jointly and severally as Mrs HLT’s attorneys by instrument dated 25 July 2012 (“the July 2012 Power of Attorney”). That was the instrument “next in line”, in the sense that it is the next prior appointment to that made under the December 2012 Power of Attorney. The December 2012 Power of Attorney was of course the subject of the Tribunal’s declaration on 20 January 2014 that Mrs HLT lacked the capacity to make it. The December 2012 Power of Attorney was made of no force and effect by the Tribunal’s declaration: it was not merely “suspended”.

Application for Legal Representation by Mr GAU

17. Mr GAU sought to be legally represented in all proceedings pending at the Tribunal by Mr Simon Dunn, Solicitor. I considered a letter from Mr GAU to the Registrar dated 31 January 2017 and oral submissions which, with my leave, were made at the hearing by Mr Dunn. In Mr GAU’s letter he emphasised that he had no formal education in financial or legal matters and that he had in the course of this matter become very frustrated and angry, with this frustration and anger apparently being directed particularly at NSW Trustee. Mr GAU said:

“If I had to speak for myself at the Tribunal about (NSW Trustee) I would get worked up to the point where I would leave out important details and would not be thinking clearly.”

18. At the hearing I asked Mr Dunn to focus his submissions on the issue of how it would assist the Tribunal to identify and resolve the real issues in the proceedings in a quick, just, and cheap manner for Mr GAU to be represented by him, whether allowing his application would be fair as between the parties and to address any other factors set out in [24] and [37] of Procedural Direction 2 issued by the Guardianship Division, entitled “Representation”, which he felt to be relevant. Mr Dunn indicated that the other principal parties would be represented at the hearing by people with professional backgrounds and experience whereas Mr GAU had no formal training or financial or legal experience. In particular, he contended that Mr KCC had a substantial business career and the representatives of NSW Trustee and Guardian were experts in their field. Mr Dunn conceded that Mr GAU had no formal disability, but he emphasised that he would need assistance in following the issues being discussed and in expressing his own views.

19. I understood two of the parties to object to legal representation of Mr GAU. The first was Mr BES. Although at this stage of the hearing I had not been able to make telephone contact with Mr BES, I took it from his correspondence with the Tribunal Officer and in particular his letter dated 16 December 2016 that he was opposed to his brother Mr GAU being legally represented. Ms MMR appeared to oppose the application for legal representation. She told me that she could not see why Mr GAU needs to be legally represented.

20. Mrs HLT herself, who participated for part of the hearing by telephone, did not express a view in relation to the application and Ms Ilkur Al-Attar from NSW Trustee and Guardian indicated that they had no views on the application.

21. Ultimately, I was not persuaded that the application for legal representation should be granted and I refused it on the following grounds.

1. Notwithstanding that Mr KCC had business experience and that the representatives of NSW Trustee and Guardian could be regarded as highly experienced in their particular field, that does not of itself constitute or lead to any inherent imbalance of fairness to any unrepresented party. It might be different if it were established that the other parties’ representatives were legally trained or in legal practice in some capacity, but that was not suggested here.

2. Conversely, allowing Mr GAU to be legally represented might place the other parties (at the least, other than Ms MMR who is a Solicitor) at some disadvantage.

3. In accordance with the usual Tribunal practice, I was prepared to give to Mr Dunn leave to participate in the hearing as a McKenzie Friend of Mr GAU. In that capacity he could provide quiet assistance to Mr GAU in relation to any part of the proceedings or the evidence for which Mr GAU required explanation. That should solve Mr GAU’s apprehension that he might leave out important details.

4. I was not persuaded that any of the other factors discussed in [24] of the Procedural Direction supported the grant of representation here. In particular, I could not see that granting the application would promote the welfare and interests of Mrs HLT, that it would assist me to facilitate the just, quick, and cheap resolution of the real issues in the proceedings or that it would assist any party to focus on the relevant issues or may promote a conciliatory approach in the proceedings.

22. For those reasons I refuse to grant leave and dismissed the application for legal representation. I granted leave to Mr Dunn to participate in the hearing as McKenzie Friend for Mr GAU.

Application for adjournment by Mr BES

23. After some initial difficulties in contacting Mr BES by telephone, apparently caused by temporary regional system connection faults, I was successful in speaking to him at approximately 3:18 PM; approximately one hour after the opening of the hearing. I outlined the issues to Mr BES and summarised the course of the proceedings up to that time. Mr BES told me that he was likely to have some ongoing difficulty in participating by telephone because of connection problems and because his battery was low. He said, however, that he wished to apply for the hearing to be adjourned or, at least, as he put it, “not finished today”. Mr BES told me that this was based on the fact that he had received all documentation relating to today’s hearing at 10:30 AM on 31 January 2017 (two days before the hearing) and that he had not had time to digest the documentation and information.

24. I understood from Mr BES that he also based his request for adjournment on his assertion that he had requested the NSW Trustee and Guardian to take immediate steps to instigate an investigation of serious fraud concerning Mrs HLT’s estate. I understood him to say that he had placed the matter before the Serious Crime Squad and that the Police would be charging someone in relation to the affairs of his mother. I asked Mr BES who would be charged but he did not identify that person. He provided no further details of these matters. However, I note that in his handwritten letter to a legal firm in regional NSW (“the legal firm”), attached to his letter to the Case Officer of 20 December 2016, Mr BES provides brief details of these allegations and Police reference numbers. However, there was no independent verification of the fact that the matter had been placed before the Police or the nature of the claim. No information in this regard was available from the other parties.

25. I told Mr BES that on the basis of what he had said I could not see that his referral of a matter to the Police was a ground for adjourning these proceedings and that I was not prepared to adjourn them on the basis only of those allegations.

26. I put it to Mr BES that, as indicated in the Registry’s records, Mr KCC’s application and substantial accompanying documentation, which included a detailed submission on the need for the financial manager to be changed, was lodged on 23 September 2016 and provided to him shortly thereafter. I also noted that Mr BES appeared to have a detailed understanding of the issues before me and the case put by the applicant, Mr KCC. This was demonstrated by the course of his correspondence with the Registry and in particular the Tribunal’s Case Officer. Mr BES did not deny that he had received the application and supporting documentation or that he had substantial correspondence with the Case Officer.

27. It was evident to me from perusal of the Tribunal’s file that Mr BES had had substantial knowledge of the current application and the issues before me, through his written submissions by letter and email to the Case Officer and his detailed telephone conversations with her from an early stage. His correspondence included:

1. an email to the Case Officer dated 16 November 2016, received the following day, in which he made some submissions and confirmed that he strenuously opposed any changes to the current arrangements under the financial management order. That email included the following phrase:

“I strongly appose (sic) any applications by [Mr GAU] or [Mr KCC] to take over mum’s guardianship or financial affairs.”

2. a six-page handwritten letter dated 20 December 2016, which consists in the main of a detailed letter sent by Mr BES to a legal firm in regional NSW;

3. a typed letter of approximately three pages to the Case Officer, which is undated but which was received on 21 December 2016 and which contains detailed submissions as to the financial management order and the identity of the financial manager;

4. a letter which was received at the Registry by email on 22 December 2016;

5. telephone conversations with the Case Officer on or about 16 November 2016, on or about 27 January 2017 and again on 1 February 2017; and

6. a 14-page handwritten letter containing detailed submissions dated 1 February 20117 which was received at the Registry that day (that is, the day before this hearing).

28. I assured Mr BES that I had given all his written submissions detailed consideration and that, if the hearing were to proceed, he would be given further opportunity to state his views. On the basis of my consideration of the application and the accompanying documents and the written submissions made by the parties, I was satisfied that Mrs HLT’s welfare and interests might well be prejudiced by any adjournment of this hearing. The adjournment of the proceedings was not supported by any other party and was opposed by Mr GAU and Mr KCC.

29. I could not be satisfied that in all the circumstances refusal of the adjournment application would cause Mr BES to be denied procedural fairness by reason of his recent receipt of certain papers relating to the matter.

30. The Case Officer sent certain documents electronically to Mr KCC and Mr BES on 31 January 2017 (that is, two days prior to this hearing). Having perused that material I am satisfied that Mr BES (and indeed the other recipients) in all the circumstances had adequate time to digest the information and to prepare any response, either in writing or to be given orally at this hearing. For completeness, I note that on 1 February 2017 (that is, the day before this hearing), Mr BES told the Case Officer that he intended to make a further submission and that this is apparently the 14-page submission document I refer to in paragraph 27 (6) above. Significantly, those submissions appear to make specific reference to most of the material sent by the Case Officer on 31 January 2017.

31. On the basis of this analysis and these conclusions, I refused the application for adjournment.

Participation in the hearing by Mrs HLT and her views

32. The Tribunal tries to hold its hearings in a way which promotes the participation of the person who is the subject of the proceedings and each Tribunal Panel does its best to obtain their views whenever possible.

33. Mrs HLT participated in the hearing by telephone. I put two questions to her, but she did not seem to understand either of them. I asked firstly whether she would prefer NSW Trustee and Guardian to continue to look after her financial affairs. She indicated that she did not understand the question. I then asked: “Who would you trust to manage your financial affairs?” She replied: “Could you please ring me back later?”

32. There was consensus amongst the family members of Mrs HLT that she did not understand the nature of the proceedings or the issues to be determined at this hearing and that there was some likelihood that if she were required to continue her participation she may well become confused and distressed. In all the circumstances, I decided that the hearing should proceed in Mrs HLT’s absence and I excused her from further participation.

33. I took into account a note by the Case Officer which appears in the Hearing Report, that prior to the hearing (on a date which is not recorded):

“[Mrs HLT] said that she is willing to receive help to manage her finances and propose [Mr GAU] be appointed in the role. She said she trusts [Mr KCC] to manage her affairs.”

ASSESSMENT OF THE EVIDENCE AND DETERMINATION OF THE ISSUES

Is it in the best interests of Mrs HLT for the appointment of NSW Trustee and Guardian as her financial manager to be revoked?

Summary of NSW Trustee and Guardian’s actions and major issues in relation to Mrs HLT’s estate

36. I commence with a summary of NSW Trustee and Guardian’s actions in managing the estate and the major issues which have arisen, insofar as this is apparent from the Tribunal’s file including recent submissions by the parties. I understand that the basic facts summarised below are not in dispute.

37. The financial management order, under which the Tribunal committed the management of the estate to NSW Trustee and Guardian, was made on 7 February 2014.

38. As was noted in the Tribunal Panel’s Reasons for Decision from that date, it appeared that there was a need for any appointed financial manager to appoint accountants to investigate Mrs HLT’s financial affairs including her interest in family trust, which for convenience I will refer to as “the Trust”. The trustee of the Trust was and is a company, which for convenience of reference I will refer to as “Company A”. The Trust, through Company A, apparently owned or had substantial ownership and control of a hotel business in regional NSW (which for reasons of confidentiality I shall refer to as “the Hotel”).

39. It was also noted in those Reasons that the financial manager would have to take decisions concerning Mrs HLT’s property at regional NSW (“Property D”). It was noted that the property may need to be sold and Mrs HLT’s furniture may need to be removed for storage.

40. It appears to be common ground (including by way of concessions from the NSW Trustee and Guardian) that progress on the significant matters of administration was, to put it conservatively, slow. Mr Simon Dunn, the Solicitor for Mr GAU, through his legal firm, wrote a series of letters to the NSW Trustee and Guardian seeking advice as to progress. This correspondence appears to have culminated in the intervention by Mr GAU’s Local Member of the NSW Legislative Assembly, in April 2016, and a letter from the Attorney-General, the Hon. Gabrielle Upton MP to Mr GAU’s Local Member of 26 April 2016, in which the Attorney indicated as follows:

“I am advised by NSWTG that there has been an unacceptable delay in completing a financial audit of Ms (sic) [HLT]’s affairs. I sincerely apologise on behalf of NSWTG for the inconvenience this has caused. NSWTG’s Director, Legal Services, advises that an external solicitor has now been instructed to look into this matter on behalf of NSWTG. Due to the complexities involved, which include a company, family trust and hotel business, an investigation will take some time to complete. However, I am advised by NSWTG, that the external solicitor has been asked to give immediate attention to the matter.”

41. Shortly after the Attorney-General’s intervention, apparently in late April 2016, NSW Trustee and Guardian instructed the legal firm, and in particular the principal of that firm, Mr DZA, to act on its behalf to investigate Mrs HLT’s affairs and to report on them.

42. In a letter dated 10 August 2016, from the legal firm to Mr BES and Mr GAU, Mr DZA confirmed that the main focus of his firm’s enquiries to date had been the affairs of Company A. The following significant matters were raised in that letter.

1. Company A had 12 issued shares, 10 owned by Mrs HLT and one each by Mr BES and Mr GAU.

2. Company A’s board of directors consisted of Mrs HLT, Mr BES, and Mr GAU but, in Mr DZA’s words:

“...because of the decline in [Mrs HLT]’s health and the breakdown of relationships between the two of you (that is [Mr BES] and [Mr GAU]), the company has been foundering for some time.”

3. The company’s records included references to debts owing to the Trust, although Mr DZA indicates that he is aware of contentions that there may be some inaccuracies in the financial records and statements.

4. Suggestions had been made at a previous hearing of the Tribunal that some of the proceeds of the sale of the Hotel were paid to Mrs HLT personally, whereas they should have been paid to the Trust and that a term deposit in the hands of former solicitors instructed in the matter of the sale was invested in the wrong account.

5. As Mr DZA correctly pointed out, all of those issues need to be investigated by the company, that is Company A, but at that time it was not functioning. Mr DZA emphasised that the first and critical step in resolving these matters was the appointment of directors to manage and control Company A. He confirmed that the position of Mrs HLT as a director had become vacant by reason of her capacity and that the NSW Trustee and Guardian itself cannot be a director because it is a corporation.

6. The NSW Trustee and Guardian, as financial manager for Mrs HLT, effectively controls 83.33% of the issued shares in Company A and therefore can control the composition of the board.

7. Mr DZA indicated that the view of the NSW Trustee and Guardian was that it was in the interests of Mrs HLT for independent directors to be appointed to the board of Company A. Mr DZA nominated two chartered accountants for appointment. He proposed that the three current directors be removed and that his two nominees be appointed to replace them. He observed that the removal of the current directors could be affected by way of a general meeting called by the directors at the request of the members, or failing that by the members. As Mr DZA correctly pointed out this is an expensive and time-consuming process and he therefore requested Mr BES and Mr GAU to sign copies of an attached Minute of a resolution which, as I understand it, he believed would effectively bring about the requested changes in the membership of the board of Company A without the need for a general meeting of the shareholders.

43. There is nothing before me and there has been no indication by any of the parties that this change to the membership of the board of Company A has been effected, or indeed that any steps towards achieving the aims set out by Mr DZA in his letter have occurred.

44. For completeness, I confirm that I decided not to contact Mr DZA directly during the hearing. There was no request by the NSW Trustee and Guardian that I should do so. However, Ms MMR did ask me whether I intended to do this. As I told her, I did not. My principal reason for this course of action was that the real issue in these proceedings, or at least this part of the proceedings, is whether the welfare and interests of Mrs HLT are best served by allowing the NSW Trustee and Guardian to continue in office as her financial manager. It is not the role of this Tribunal to investigate in precise detail each aspect of the administration of an estate and each issue which has arisen in the course of that administration.

45. I am therefore not required to, nor should I, investigate in any detail what Mr DZA has done or achieved as the appointed legal agent of the NSW Trustee and Guardian. Rather my attention must be directed to the actions of the NSW Trustee and Guardian itself. Accordingly, my proper consideration is whether the available evidence demonstrates that the course of administration of the estate by the NSW Trustee and Guardian, in particular any delay in establishing the estate’s true assets and its financial position and in resolving the significant issues raised by Mr DZA, is such that Mrs HLT’s interests would best be served by retaining the NSW Trustee and Guardian as financial manager or by removing it from office.

46. A secondary reason for my course of action was that the time for this hearing was limited, there was substantial evidence and submissions to hear, there had been a prior adjournment and (as had been agreed at the commencement, other than by Mr BES) it was in Mrs HLT’s interests for the hearing to be finalised this day.

47. For avoidance of doubt, I confirm that nothing stated above or anywhere in these Reasons is intended to reflect adversely upon Mr DZA or his firm.

The evidence on behalf of the NSW Trustee and Guardian

48. I considered the two recent written reports received from the NSW Trustee and Guardian. The first of these was a report dated 18 January 2017, from Ms Jill Biddell, Principal Client Service Officer, Financial Administration. She advised firstly that a report into Mrs HLT’s affairs was commissioned by the NSW Trustee and Guardian from an accountant in regional NSW but (for unstated reasons) the accountant “…did not commence work and as such no audit report exists”.

49. Ms Biddell then observed as follows:

“2. It is acknowledged by NSWTG that there were some delays in this matter. However it has been determined by [Mr DZA] that [Mrs HLT] did not suffer any financial detriment as a result of these delays. At this stage, [Mr DZA] cannot comment in relation to [Mrs HLT]’s best interests.”

50. This statement, taken alone, is frustratingly incomplete. I note that there has been no statement by Ms Biddell or anyone else on behalf of the NSW Trustee and Guardian as to the grounds upon which they conclude that Mrs HLT did not suffer any financial detriment by reason of delays in the matter.

51. Ms Biddell also reported that:

“A filing cabinet has been located at [Property D]. NSW TG Property Branch is making arrangements to have the filing cabinet returned to NSW TG. Contents will be reviewed. Any documentation pertaining to the legal issue will be forwarded to [the legal firm].”

52. Ms Biddell attached to her report a statement of account for the period to February 2014 to 17 January 2017. That appears to be a detailed account of all transactions on the Trust Account. I note in passing that the balance of estate is shown to have reduced from just under $885,000 on 16 April 2014 to just under $265,000 as at the closing date of 17 January 2017, although some of the major debit items appeared to represent transfers to “Australian Cash” investments or payments to the Australian Taxation Office, so I draw no adverse inference from the diminution in the balance.

53. The second report dated two days later, 19 January 2017, provides more details as to the current estimated value of Mrs HLT’s three properties, being Property D and two in Northern Sydney. It confirmed the stated balance of the Trust Account of just under $265,000 and noted that there are investments in Australian Cash of just under $417,000. The total value of assets is shown as $4,687,932.85. However, under the heading “General” there are two items: Company A and the Trust, and no value is ascribed to those entities or Mrs HLT’s interest in them. For completeness, I also reviewed a report from the NSW Trustee and Guardian dated 18 November 2016.

54. At the hearing I asked Ms Al-Attar of the NSW Trustee and Guardian to outline the current nature of the NSW Trustee and Guardian’s administration of Mrs HLT’s estate, with particular reference to any current issues which were being investigated, the status of Mrs HLT’s interests in and directorship of Company A as trustee of the Trust and any update on the progress of Mr DZA’s investigations.

55. Ms Al-Attar confirmed the contents of the NSW Trustee and Guardian’s two reports and in particular confirmed that the filing cabinet had been located. But she was unable to provide any detail as to why the filing cabinet or its contents would be important or to provide any detail of the investigative work being undertaken by the legal firm, the nature of the NSW Trustee and Guardian’s instructions to that firm, or in fact anything about the firm’s work in relation to the estate.

56. Ms Al-Attar advised however that the NSW Trustee and Guardian’s contact with the firm had been undertaken by the Legal Branch of the NSW Trustee and Guardian. Ms Al-Attar made arrangements for a Manager from the Legal Branch to be available at a later stage in the hearing, by telephone.

57. Unfortunately, when the Manager joined the hearing he conceded that he was not fully familiar with the NSW Trustee and Guardian’s file and that he could provide no update on the position concerning the filing cabinet, or its importance or the steps which were being taken to ascertain and analyse its contents. The Manager was able to confirm the following matters.

1. The engagement by the NSW Trustee and Guardian of the legal firm was on the basis that Mr DZA and his colleagues would not take any significant steps on their own initiative without prior consultation with the NSW Trustee and Guardian.

2. No changes had been effected to the Board of Directors of Company A. Mr DZA had indicated in a letter in mid-October 2017 reporting that he had considered correspondence from “Mr GAU” relating to the proposed board changes but there was no indication of the stage reached in persuading the existing directors to resign voluntarily or alternatively to hold an extraordinary general meeting of members to affect the proposed board changes.

3. The NSW Trustee and Guardian had received some correspondence from Mr EXS (who I understand to be Mr BES’s son) recommending that Ms MMR be appointed as an additional director.

4. I understood the Manager to observe that it appeared from Mr DZA’s correspondence that the NSW Trustee and Guardian should proceed on the assumption that only Mr GAU opposed the appointment as directors of the nominees put forward by Mr DZA.

The views and submissions of Mr BES

58. It is clear from Mr BES’s correspondence with the Case Officer and his written submissions that he is strenuously opposed to any revocation of the appointment of the NSW Trustee and Guardian as financial manager and in particular he objects to the NSW Trustee and Guardian being replaced by Mr KCC. In answer to my questions as to his reasons for opposing any appointment of Mr KCC, Mr BES asserted that he was “too lazy to even mow the lawn” and made it clear that he was not impressed by Mr KCC’s curriculum vitae, indicating that, in his words: “anyone can write a good CV for themselves”.

59. I reviewed each of Mr BES’s written submissions in detail. The submissions are broad ranging, but it is clear that his contention is that Mr KCC’s does not have the substantial business experience which his curriculum vitae would indicate; in short, that Mr KCC has fabricated at least part of his curriculum vitae. Mr BES asserts that Mr KCC has been unemployed for substantial periods, that he has had numerous job changes and that there is no proof of Mr KCC’s claims as to his employment and experience. In his submissions of 1 February 2017, Mr BES asserts that if Mr KCC is as qualified as he represents, then he should not need assistance in managing Mrs HLT’s estate, and that the additional costs which would be incurred as a result of Mr KCC engaging accountants and other consultants would not be justified. Mr BES asserts that Mr KCC has not quantified these extra costs. Mr BES also accuses Mr KCC of having “a personal vendetta” against him, but he provided no details of this assertion and there was no independent verification of it.

60. For completeness, I should add that Mr BES addressed me on these matters for approximately 15 minutes and that during my examination of Mr KCC, Mr BES constantly interrupted both my questions and Mr KCC’s answers, despite my requests that he desist from doing so. Eventually, I told Mr BES that he may well have some further valuable input but that I needed to speak to one witness at a time and that was not going to permit him to interject constantly when other witnesses were addressing me. The phone line to Mr BES was then immediately disconnected at Mr BES’s end and Mr BES took no further part in the proceedings.

The views and submissions of Mr GAU

61. Mr GAU provided detailed written submissions which I considered carefully and he gave further evidence and expression of his views at the hearing. He contended strenuously that the NSW Trustee and Guardian should be replaced as financial manager. He disputed the NSW Trustee and Guardian’s assertion that his mother has not suffered financial loss by reason of the admitted substantial delays in managing her estate. Mr GAU strongly supported the appointment of Mr KCC as financial manager to replace the NSW Trustee and Guardian. He emphasised that Mr KCC had strong and ongoing connections with the family and had the business experience to arrange for the prompt and effective administration of his mother’s estate. He refuted the suggestion (apparently implied from what his brother, Mr BES, had submitted) that Mr KCC was unqualified or that he would favour the interests of himself, Mr GAU, if appointed as financial manager.

The views of Ms MMR

62. Ms MMR was of the view that the status quo should remain; that is, that the NSW Trustee and Guardian should be permitted to remain as financial manager. I understood Ms MMR to contend that Mr KCC was more closely involved with Mr GAU than he was with Mr BES and that the relationship between Mr BES and KCC was mutually antagonistic, so that the NSW Trustee and Guardian, as an independent party, should be preferred for the role of financial manager.

63. Ms MMR added that she was holding in her office 10 years of financial records concerning Company A. Ms Al-Attar of the NSW Trustee and Guardian asked why the records had not been produced to the NSW Trustee and Guardian and in response, Ms MMR asserted that she had never been asked to produce these documents to the NSW Trustee and Guardian despite the fact that her possession of these records had been clearly on the record since the inception of Tribunal proceedings. In answer to my further question on this subject, Ms MMR confirmed that she was holding these records as a solicitor on behalf of her client, Company A.

The views and submissions of Mr KCC

64. In his written submissions and at the hearing, Mr KCC contended that the NSW Trustee and Guardian as financial manager had been guilty of substantial delay in arranging investigation and resolution of important legal and accounting matters relating to Mrs HLT’s estate. He asserted that despite the concession by the Attorney-General that there had been an unacceptable delay in completing a financial audit of Mrs HLT’s affairs and the assurance that an external solicitor’s appointment would result in the outstanding issues receiving attention, no significant progress had been made on certain issues had been delegated to another accounting firm, with apparently no result. Mr KCC added that it was his understanding that the Lawrence Property D had not been sold and has not generated any income for Mrs HLT during the period in which the NSW Trustee and Guardian had managed the estate.

65. Mr KCC asserted that he had extensive experience at a senior management level in major corporations and that he had operated a family trust with significant assets for more than 22 years. He added that he had been until fairly recently, a director of a number of community organisations. He attached a detailed curriculum vitae. He also asserted that he was willing to engage all appropriate professional assistance to ensure the proper management of Mrs HLT’s estate. He told me that this may involve the engagement of forensic accountants.

64. Having explained the concept of a conflict of interest as relates to a financial manager, I asked Mr KCC whether there was any basis upon which a reasonable and objective person would consider him to have a potential or actual conflict of interest if appointed. He indicated that there was none and that he had no connection with or interest in any of Mrs HLT’s property or assets including Company A and did not derive any benefit from them nor could he see how it could be suggested that he would derive any personal benefit from his appointment as financial manager.

65. I put it to Mr KCC that given the circumstances of the estate, there would be substantial amount of work, probably full-time work at least for a period, involved in being financial manager. Mr KCC accepted that this was so and asserted that he would be available full-time if necessary and would claim no remuneration for his time and work as financial manager. He would only claim his proper expenses which in any case he understood to be subject to approval by the NSW Trustee and Guardian.

66. Mr KCC explained that he regarded a role as financial manager to be a repayment by him of personal (as opposed to financial) debt owed to Mrs HLT. That arose by reason of the fact that when he was a young boy, his father was seriously injured in a mining accident at regional NSW and Mrs HLT as his elder cousin, then aged about 13 years, had acted as his friend and supporter and to some extent his principal carer from that time for a number of years.

67. Mr KCC indicated that he had researched the role of the NSW Trustee and Guardian in relation to private managers and the obligations of private managers and liabilities on the estate including the NSW Trustee and Guardian, oversight fees, and the likelihood that the private management of the estate would attract a surety bond. He said he believed that he could comply with the authorities and directions of the NSW Trustee and Guardian and work effectively with the NSW Trustee and Guardian staff.

My analysis and determination

70. I was satisfied on the basis of my analysis of the evidence that the appointment of the NSW Trustee and Guardian as financial manager for Mrs HLT should be revoked. My analysis of the evidence and my grounds for reaching that decision are as follows.

1. It seems uncontested that there were substantial delays by the NSW Trustee and Guardian at two separate stages. The first of these was the period from the making of the financial management order up until the letter of apology from the Attorney-General on behalf of the NSW Trustee and Guardian in late April 2016. The second was a period from that date until the present.

2. The delays at both stages reflect either a reluctance or an inability by the NSW Trustee and Guardian to complete important steps. These involved, at a minimum ascertaining the true extent of Mrs HLT’s assets and liabilities, identifying and attempting to resolve substantial and important legal and accounting issues arising from the affairs of the Trust and the affairs of Company A and composition of its Board of Directors, the conduct and the distribution of the profits and other assets of the Hotel business.

3. I accept the two most recent reports from the NSW Trustee and Guardian as accurate and reliable. In particular, the records of Trust account transactions attached to the report of 18 January 2017 is useful and indicates that the NSW Trustee and Guardian has effectively managed payments for Mrs HLT’s regular needs and comforts, her taxation affairs and the need to maximise returns from her investments. But these achievements are not reflected when consideration turns to the identification and resolution of the legal and accounting issues I have referred to above.

4. Although those issues may be seen as difficult and may require detailed analysis and consideration, on any objective view it is difficult to comprehend why greater progress could not have been achieved. For example, if (as seems to be the case) the issue concerning the composition of the board of directors of Company A has been delayed (for over six months) by lack of consensus between Mr GAU and Mr BES on this matter, then why has Mr DZA’s sensible alternative suggestion of a general meeting of the members to remove directors not been adopted or at least progressed?

5. Another frustrating element in my consideration of the matter has been the inability of any of the available officers of the NSW Trustee and Guardian to explain these delays or to provide a detailed explanation of the status quo in relation to the outstanding legal and accounting issues. In saying that I intend no reflection on the individual offices who have participated in the hearing or who have provided reports. I am forced to observe, however, that a cloud of inertia seems to gather over the affairs of the estate whenever a difficult or complex issue becomes apparent.

6. I found the evidence of each of the principal witnesses to be genuine. In particular I accept that Mr BES has a genuine concern for his mother’s welfare and interests. Unfortunately, even when allowance is made for his current disability and for what appears to be his occasional vitriolic and hyperbolical method of expression, he seems to have allowed his antagonism towards his brother, Mr GAU, and towards Mr KCC to predominate. He was unable to provide any substantial support or verification of most of his allegations. Many of them, particularly those directed to Mr KCC, verged on the vituperative. He provided no corroboration or verification for his assertions that Mr KCC was unsuitable for appointment, unqualified, or biased or that only the NSW Trustee and Guardian could provide the necessary degree of objectivity necessary to preserve his mother’s interests. For all these reasons I gave only limited weight to his evidence and submissions.

7. I gave greater weight to the evidence and submissions of Mr GAU on the basis that, despite his frustrations with the delay in the administration of his mother’s estate, his written submissions and his evidence at the hearing reflected the predominance of his genuine concern for her welfare and interests.

8. I found Ms MMR’s evidence and views to be genuine and useful and gave them substantial weight.

9. I also gave substantial weight to the evidence and views of Mr KCC. For the reasons more fully examined in the next section of these Reasons, I was satisfied that Mr KCC is a suitable person to be appointed as financial manager. There was no evidence which persuaded me that Mr KCC would lack the proper motives and objectivity in managing Mrs HLT’s affairs which might be obtained through continuation of the appointment of the NSW Trustee and Guardian.

Who should be appointed as Mrs HLT’s financial manager?

71. Before appointing a private person as financial manager I must be satisfied that the person seeking appointment is willing to act and is suitable for appointment. There are no express criteria for determining suitability in the relevant legislation, but the Tribunal normally ensures that the candidate has:

1. reasonable familiarity with the subject person’s estate;

2. a reasonable level of understanding of how to deal with and account for other people’s money. This can usually be demonstrated through their having held a relevant position in a corporation or business (including as an owner or employee), or in a not-for-profit organisation such as an industry association or a trade union, a community or sporting club or association. In some cases this can be satisfied by demonstrating substantial experience in relation to the subject person’s own affairs;

3. no conflict of interest which would prevent their appointment on the basis that they might not be seen to be acting solely in the interests of the subject person; and

4. nothing in their public record, in particular by way of any criminal or bankruptcy proceedings or orders, which might render them unsuitable for appointment.

72. In the course of my examination of Mr KCC and his detailed answers to my questions, he demonstrated to my satisfaction that he met each of these criteria for suitability for appointment. I accepted Mr KCC’s account as to the extent and depth of his corporate experience at an executive level, matched by genuine affection and concern to Mrs HLT and the “personal debt” to her, summarised at [68] above, which has influenced him to undertake his role as financial manager without remuneration other than expenses. For avoidance of doubt, I am satisfied that Mr KCC has expressed a genuine intention, if appointed as financial manager, to act at all times in the best interests and welfare of Mrs HLT.

73. It follows that Mr KCC is a suitable person to be appointed as financial manager and that he should be appointed, subject to the authority and direction of the NSW Trustee and Guardian. I ordered accordingly.

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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 September 2017