IUO

[2015] NSWCATGD 4

NSW Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:	IUO [2015] NSWCATGD 4
Hearing dates:	3 February 2015
Date of orders:	03 February 2015
Decision date:	03 February 2015
Jurisdiction:	Guardianship Division
Before:	J Currie, Senior Member (Legal) C Kennedy, Senior Member (Professional)
Decision:	Financial management order revoked.
Catchwords:	FINANCIAL MANAGEMENT – self-applicant – capacity undertaking to Tribunal – revocation
Legislation Cited:	Guardianship Act 1987 (NSW) NSW Trustee and Guardian Act 2009 (NSW)
Cases Cited:	P v R [2003] NSWSC 819 PB v BB [2013] NSWSC 1223 Re D [2012] NSWSC 1006
Category:	Principal judgment
Parties:	Mr IUO (person under management under the financial management order and applicant) NSW Trustee and Guardian
File Number(s):	24820
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

What the Tribunal decided

1. The Tribunal decided to revoke the financial management order which had been made for Mr IUO on 17 July 2002.

2. The Tribunal also formally noted Mr IUO's undertaking given at the hearing that he would forthwith use his best endeavours to retain a business consultant to advise and mentor him in relation to his business affairs.

Background

3. Mr IUO was aged 40 years at the time of the hearing and was living in his own home at Southwest Sydney. Mr IUO is of Vietnamese background and culture. Mr IUO is divorced but he continues to have a substantial relationship with his former wife Mrs MQD and Mrs MQD cares for their son. Mr IUO's parents, Mr EJO and Mrs UQW live at West Sydney. They have been providing substantial financial assistance for Mr IUO's business.

4. On 17 July 2002 the Guardianship Tribunal made a financial management order for Mr IUO, committing management of his estate to the Protective Commissioner, which is now the NSW Trustee and Guardian. On 24 February 2010 that Tribunal made a guardianship order for Mr IUO, appointing the Public Guardian. This order was subsequently varied. On 4 March 2011 it was lapsed.

5. On 15 May 2014 this Tribunal received from Mr WBN, Solicitor of a law firm, an application which sought the revocation of the financial management order made on 17 July 2002. As explained below, Mr IUO was substituted for Mr WBN as the applicant. The purpose of the Tribunal's hearing at Balmain on 3 February 2015 was to consider that application for revocation of the financial management order.

The hearing

6. A list of the parties to the review and witnesses at the hearing is attached as an Appendix to these Reasons for Decision [Appendix removed for publication]. The Guardianship Act 1987 (NSW) requires that before the Tribunal makes a decision on any application, it must bring the parties to a settlement or use its best endeavours to do so. The Tribunal was not aware of any differences between the parties which required settlement.

The issues which the Tribunal had to decide

7. Under s 25N (4)(b) of the Guardianship Act 1987, when the Tribunal receives an application of the present sort , it must review the financial management order. Under s 25P(1) of that Act, having reviewed a financial management order under section 25N, the Tribunal must vary, revoke or confirm the order; and s 25P(2) of that Act allows the Tribunal to revoke a financial management order only if the Tribunal:

1. is satisfied that the protected person is capable of managing his or her affairs, or

2. considers that it is in the best interests of the protected person that the order be revoked (even though the Tribunal is not satisfied that the protected person is capable of managing his or her own affairs).

8. Accordingly, the issues which had to be decided by the Tribunal were:

• Is Mr IUO capable of managing his affairs?

• Would it be in the best interests of Mr IUO for the existing financial management order to be revoked?

• If there are insufficient grounds for the existing financial management order to be revoked, should nevertheless the financial management order be confirmed or should it be varied, and if it is to be varied, what variations should be made?

PROCEDURAL DECISIONS

(i) Substituted Applicant

9. Mr WBN, solicitor of a law firm, who was the applicant noted in the application, confirmed that he would seek leave to participate in the hearing as the McKenzie Friend of Mr IUO. In those circumstances Mr WBN agreed that he could not also be the applicant The Tribunal indicated that it would be prepared to substitute Mr IUO as the applicant. This was consented to and the Tribunal ordered accordingly.

(ii) Legal Representation

10. Mr WBN confirmed that he did not seek to be appointed as the Legal Representative of Mr IUO for the hearing but wished to participate in the hearing as his McKenzie Friend. Mr WBN demonstrated an understanding of the role and functions of a McKenzie Friend. The Tribunal decided that it would allow Mr WBN to participate in the hearing in that capacity.

THE TRIBUNAL'S ASSESSMENT OF THE EVIDENCE AND DETERMINATION OF THE ISSUES

Is Mr IUO capable of managing his affairs?

The legal principles

11. The Supreme Court of New South Wales has provided guidance in several decisions as to how the Tribunal should assess a person's capability to manage his or her affairs. In earlier cases the Court had based its test predominantly on the ability of the subject person to conduct the everyday affairs of ordinary people. It was said that if by reason of a failure to do this the person would be disadvantaged or there would be a real risk that they would be disadvantaged or that their money or assets would be at risk of dissipation, then they would properly be treated as being incapable of managing their affairs.

12. In three more recent Supreme Court decisions; P v R [2003] NSWSC 819, Re D [2012] NSWSC 1006, and PB v BB [2013] NSWSC 1223, it has been emphasised that the Tribunal should not be relying just on hypothetical notions such as "the ordinary affairs of people" but rather should focus on the capability of the particular person to deal with his or her actual assets and to do what he or she is proposing to do with them. In P v R, Justice Barrett said that the task of the Tribunal in these circumstances:

"…is to make a judgment as to the capacity and ability of the person concerned to cope with the ordinary routine affairs of living, particularly so far as they concern the person's property. …The requisite judgment is to be made in the light of objective physical facts concerning the relevant person's property, money and other assets and the way the person is able to look after them. If there is a lack of capacity, the reason for it does not matter."

13. In PB v BB, Justice Lindsay confirmed that the question focuses attention on the special circumstances of the person. His Honour stated, at paragraph [7]:

"Of central significance is the functionality of management capacity of the person said to be incapable of managing his or her affairs, not: (a) his or her status as a person who may, or may not, lack "mental capacity" or be "mentally ill"; or (b) particular reasons for an incapacity for self-management."

14. So, as a result of these authorities, the Tribunal will look at the functionality of management capacity of the person concerned rather than their mental capacity or the particular reasons for their incapacity for self-management. It will look at the actual assets of the person concerned, how they are proposing to manage their ordinary affairs of living, whether they can look after their assets and what they are proposing to do with them.

15. If the Tribunal finds that the person under consideration:

1. cannot manage their ordinary affairs of living; or

2. does not have a reasonably sound understanding of what their assets, liabilities and sources of income are, or what needs to be done to preserve them, and for that reason is unlikely to be able to preserve their money or assets or is likely to be disadvantaged in their dealings; or

3. does not have at least some basic understanding of the complications and risks of what is proposed to be done (by themselves or others) with their assets or money and it is unlikely that those proposals will be achieved or there is a substantial risk that they will result in the person's money or assets being dissipated or lost; or

4. lacks the ability to identify situations where others may be attempting to benefit from the person's assets or money and consequently there is a real risk that the person will be disadvantaged or that their money or assets will be dissipated or lost;

16. then the Tribunal can be satisfied that the person is incapable of managing their affairs.

The evidence of Mr IUO concerning his business assets

17. The legal authorities and particularly the three more recent Supreme Court cases cited above require the Tribunal to have regard to the actual financial position and the actual nature of the estate of the person under consideration, in deciding whether they are capable of managing it.

18. Mr IUO's estate is a moderately large and somewhat complex one. Mr IUO himself, in the course of addressing the Tribunal and answering questions from members of the Tribunal over the period of approximately one hour at the hearing, was able to provide a quite detailed explanation of his business, its business purpose, its assets and liabilities, its human resources and its current financial position and sources of finance.

19. The following major points relating to the business emerged from this discussion with Mr IUO.

• The business, which operates under a number of companies, is essentially the business of "Mr IUO Company X" and we shall refer to the business by that term. Mr IUO described his business purpose as being firstly to promote the need for freedom in the Republic of Vietnam and secondly to promote an Australian lifestyle to people of a Vietnamese background living in Australia or living elsewhere in South East Asia.

• Mr IUO Company X originated in May 2013. The three outlets are a newspaper; a proposed television feed and a radio network. However Mr IUO said that the present purposes of the three outlets operate as one and the radio media outlet is presently not operating. The business purpose of Mr IUO Company X is to profit through advertising (in each of these media outlets) and through selling subscriptions for pay television and radio programs; for example news and current affairs programs. A major potential customer is a major government-owned television network (which Mr IUO identified by name but which, for reasons of commercial confidentiality we will refer to as "the target network"). The target network has indicated to Mr IUO that there is a greater potential for its custom if certain business improvements and efficiencies are instituted at Mr IUO Company X and Mr IUO asserted that he regards it as a priority for those improvements to be achieved.

• The business is being financed almost entirely by very substantial advances from Mr IUO's parents Mr EJO and Mrs UQW. On Mr IUO's account, in total his parents have contributed approximately $600,000-$700,000 in the last two years. Mr EJO and Mrs UQW hold no security for their advances, either in any of the companies or from their son personally. No information was provided to the Tribunal as to arrangements for repayment of any of these advances.

• The other business assets comprise equipment such as broadcasting systems, cameras, broadcasting and recording equipment, lighting and computers having a total value of approximately $330,000.

• Mr IUO's parents told the Tribunal that they (and particularly Mrs UQW) monitor their son's business activities closely and they continue to have confidence that the business will become profitable. When asked whether they could continue to contribute large sums as advances to the business and how long they would be able to do this, Mrs UQW replied that they were prepared to continue to assist their son for about the next 18 months. They did not specify a maximum amount of contribution but Mrs UQW thought that their total contribution so far has been in excess of $800,000. Mrs UQW contended that if she and her husband were asked for further contributions they would need an itemised explanation from Mr IUO as to how their further advances would be used for the business.

• Another source of finance was Mr IUO's former wife Mrs MQD. She had in the past contributed a total of approximately $100,000 and these advances were apparently acknowledged in a Shareholders Agreement (although, somewhat surprisingly, it was never intended that Mrs MQD would be a shareholder). Mr IUO said that as a result of the breakdown of their relationship Mrs MQD would not be making further advances.

• Mr IUO himself is the sole director and sole shareholder of each of the operating companies. He employs a General Manager who has three assistants. Mr IUO appeared to have difficulty in describing the areas of responsibility of each of these three assistants in any detail other than to say they each headed a "technical department". Mr IUO appears to working extremely long hours and seven days a week. He asserted that presently he is taking only three to three to four hours' sleep most nights but has one night's sleep of a full eight hours every four or five days. He sleeps mainly at his office although he occasionally goes home at night, particularly to see his young son.

• The business has a fluctuating number of employees. Currently there are eight, some of whom are casual employees.

• Mr IUO asserted that the business and accounting records of his business were maintained by an employee who used Mind Your Own Business (MYOB) software and occasional advice from an accountant.

• The business is not making a profit. Staff salary and wages are paid from advances from Mr IUO's parents. These advances appear to be the sole inward cash flow of the business. The Tribunal understood from Mr IUO that is likely that the company will become profitable when it is permitted to broadcast program material and to a large extent this appears to be tied into support from the target network. The target network, as noted above, has specified certain improvements and efficiencies which need to be made before this stage is reached. Mr IUO's expectation is he will have broadcast right in about a year.

20. Mr IUO's evidence in this regard was not challenged although the Tribunal noted that Mrs UQW had a different view of the total contribution which she and her husband had made to the business than that of Mr IUO himself. Additionally, a representative from NSW Trustee and Guardian emphasised that Mr IUO had consistently refused to provide details of his assets and estate generally when asked by the NSW Trustee and Guardian to do so.

Other aspects of Mr IUO's financial position

21. Mr IUO told the Tribunal that he owned his house at Southwest Sydney and that it was now worth in excess of $850,000. He owns two expensive motor vehicles, an Audi A6 worth approximately $136,000 and a Mercedes-Benz worth approximately $66,000 (although this vehicle is not registered in Mr IUO's name). He owns furniture and other improvements in his house.

22. It appeared from the report from the NSW Trustee and Guardian that the Trustee is holding an amount of a little over $31,000 in a trust account, that Mr IUO has an allocated pension with a superannuation fund of approximately $1.16 million, a superannuation fund with the same superannuation fund of approximately $231,000, cash and fixed interest investments of about $14,000, investments in Australian properties of approximately $290,000 and a share portfolio of over $950,000.

Mr IUO's plans for the future, management of his gambling and anger management.

23. Mr IUO told the Tribunal that if the financial management order was revoked he would invest the assets currently being managed by NSW Trustee and Guardian in accordance with the advice from his financial advisers, Finance Company Z. The Tribunal was shown at an interim report from Finance Company Z, which was undated but appeared to be fairly recent. Much of the information provided in the report was generic, rather than being specific to Mr IUO's situation, but there was some specific attention to his particular financial position and an estimate was that Finance Company Z as a "basic projection" could provide an annual income of $75,000 and a return on investment of 5.5% per annum, after taxation, information and costs. It appeared to the Tribunal that the role of Finance Company Z was that of investment advisers in relation to management, specifically of the superannuation fund and pension and that Finance Company Z did not purport to provide ongoing business consultancy advice. Mr IUO confirmed this.

24. Mr IUO was able to give the Tribunal a detailed account of the action he had taken to manage his past outbreaks of anger. He said he had been doing meditation, including induced deep sleep for several years as well as a Vietnamese form of yoga and that he had successfully managed his previous anger problems. On being questioned further by Tribunal Members, Mr IUO asserted that he had no current gambling problem, had not gambled for some time and would not even place an annual bet on the Melbourne Cup. He said that his alcohol consumption was in control, largely as a result of his long work hours, and that he did drink socially but only occasionally.

Psychiatric opinion and neuro-psychological assessment.

25. The Tribunal considered a detailed report from Dr Y, Clinical Associate Professor of Psychiatry and Consultant Psychiatrist. Dr Y assessed Mr IUO on 23 April 2014. He reported that Mr IUO had made a slow but satisfactory recovery from his severe head injury, that he may achieve further improvement and that on Dr Y's assessment he has a good prognosis. Dr Y noted that Mr IUO appeared well motivated to work and had "realistic work plans for the future." When asked to provide his opinion as to Mr IUO's capacity for work and capacity to carry on business in the future, Dr Y stated as follows:

"In keeping with the above (that is [Dr Y's] findings that [Mr IUO] had a good prognosis, realistic work plans and good motivation), I believe [Mr IUO] is well placed to carry on a small business at the present time, and his capacity should remain unaltered in the foreseeable future."

26. Dr Y did add that an assessment of Mr IUO's higher frontal executive functions should perhaps be assessed by a neuropsychologist.

27. Shortly prior to the hearing, the Tribunal received a report dated 17 November 2014 from Dr W, Clinical Neuropsychologist relating to an assessment of Mr IUO on 13 November 2014. In his report Dr W noted that he had considered Dr Y's report and conclusions. Following neurological assessment Dr W found Mr IUO to be of average intellectual ability with no significant impairment of his intellectual functions apart from a mild impairment in his non-verbal reasoning. Significantly, he was found to have no impairment in his high level frontal executive skills for verbal abstract reasoning, planning and organisational skills, ability to form concepts and adapt and regulate his behaviour given feedback.

28. Significantly, Dr W concluded in the following terms:

"Overall, from the history and results of the current neuropsychological assessment I am of the opinion (that) [Mr IUO] now has the mental capacity to manage his own financial affairs. It is however felt that it would be in his best interests to seek an independent financial adviser to help manage his business and financial investments in the future." [Emphasis added]

The views of Mr IUO's parents.

29. Mr EJO and Mrs UQW expressed their confidence that their son could manage his own affairs and in particular could develop his business so that it became profitable in the fairly short term. Mr EJO and Mrs UQW contended strongly that their son Mr IUO could not properly develop his business or succeed financially unless the financial management order [was] revoked.

The views of the NSW Trustee and Guardian.

30. As noted above, the representative from the NSW Trustee and Guardian emphasised the frustration which her office had experienced in attempting to deal with and obtain information from Mr IUO about his financial position and his business. The representative of the NSW Trustee and Guardian confirmed that it had not been possible to consider the establishment of a regime for Mr IUO to manage some part of his estate, under an appropriate authority under section 71 of the NSW Trustee and Guardian and Guardian Act 2009 (NSW), because of this lack of cooperation and information from Mr IUO himself. The representative of the NSW Trustee and Guardian affirmed that her office had paid a total of $523,000 to Mr IUO's former wife as part of their Family Law settlement and that she understood the settlement to involve payment to UQW of an amount representing 25% of the assessed value of Mr IUO's total assets, being $823,745. The representative of from the NSW Trustee and Guardian added that [the] NSW Trustee and Guardian had no comments for the Tribunal as to the psychiatric and neuropsychological evidence, summarised above.

The Tribunal's analysis and determination.

31. The Tribunal found Mr IUO to be confident, organised in his presentation and quite articulate in describing his business and financial affairs. Mr IUO was able to describe his overall estate, the Mr IUO Company X business and his plans for the future in substantial detail. There were a few significant gaps in his account. In particular he made no independent mention of the very substantial payout which he had to make as a result of the settlement of the matrimonial proceedings with his former wife. But in general his answers to the Tribunal's questions were detailed, well thought out and expressed.

32. On balance the Tribunal found Mr IUO's evidence to reflect an advanced ability to understand his estate, the risks involved in his business activities and in the investment of his money and also to reflect an ability to identify situations where he might be disadvantaged in relation to his financial affairs. There seemed to be no evidence that Mr IUO was currently incapable of managing his ordinary affairs of living.

33. As a result of the three more recent Supreme Court cases cited above on pages 3 and 4, in deciding this fundamental question of a particular person's capability of managing their affairs, the Tribunal must focus on the functionality of management capacity of the person concerned rather than their mental capacity or the particular reasons for any incapacity they may have for self-management. The Tribunal found that on the basis of the evidence Mr IUO had demonstrated, on the basis of such functionality, that he did have the capacity to manage his own affairs.

34. The Tribunal was somewhat concerned as to whether Mr IUO's present business activities would ultimately be successful, particularly in light of the fact that he appeared to be solely responsible for all executive management decisions about the business and did not appear to be taking strategic advice on the development or profitability of the business. The Tribunal informed Mr IUO of its apprehensions in this regard.

35. It is proper for the Tribunal to be concerned about such matters, particularly in a case such as the present one where the financial foundations of the business have been provided almost entirely from family contributions and these contributions are very substantial; in this case in the vicinity of $800,000. The Tribunal has an obligation under section 4 of the Guardianship Act 1987 to take into account the importance of preserving the family relationships and the cultural environments of people in Mr IUO's position. It also has the obligation to have as its paramount consideration the welfare and interests of such people. This does not of course justify a detailed financial analysis or profitability assessment of a particular business by the Tribunal: that would clearly be inappropriate. But where there is an opportunity, for example by the way of undertakings from the person concerned, for such concern is to be addressed, then they should be addressed.

36. The need for such concerns to be addressed is emphasised in this case by the conclusions reached by Dr W as summarised on page 8 above. Dr W clearly saw the need for ongoing strategic business advice to be provided to Mr IUO and the Tribunal agrees that this appears to be necessary in Mr IUO's interests.

37. When this was discussed by Tribunal Members with Mr IUO at the hearing he said that he had considered obtaining such advice and that he would undertake to the Tribunal that he would immediately use his best endeavours to retain a business consultant to advise and mentor him in relation to his business affairs. The Tribunal said that it would formally note this [undertaking] and Mr IUO consented to that.

The Tribunal's conclusion, its order and notation.

38. On the basis of the above analysis and determination of the Tribunal was satisfied that Mr IUO was now capable of managing his affairs and it followed that the financial management order made on 17 July 2002 should be revoked. The Tribunal ordered accordingly. The Tribunal also formally noted Mr IUO's undertaking in relation to the retention of a business consultant to advise and mentor him in relation to his business affairs.

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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: 30 June 2015