JL
[2015] WASAT 1
•7 JANUARY 2015
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
STREAM: HUMAN RIGHTS
ACT: GUARDIANSHIP AND ADMINISTRATION ACT 1990 (WA)
CITATION: JL [2015] WASAT 1
MEMBER: MR J MANSVELD (SENIOR MEMBER)
HEARD: 15 SEPTEMBER
DELIVERED : 7 JANUARY 2015
FILE NO/S: GAA 1650 of 2014
MATTER :JL
Represented Person
Catchwords:
Guardianship and administration Administration Gifting Interest free loan repayable on death of represented person Liberal view of the represented person's best interests Application dismissed
Legislation:
Guardianship and Administration Act 1990 (WA), s 4, s 4(2), s 71(5), s 72(3), s 72(3)(a), s 84, s 109, Pt 6
Result:
Application dismissed
Summary of Tribunal's decision:
In June 2013 the Public Trustee was appointed as the administrator of the estate of JL, an 85 year old woman who resides in a nursing home.
JL has five children who were in dispute about the nature and value of her estate.
Upon review of the order in September 2014, the Public Trustee was reappointed as JL's administrator.
In the course of the review proceeding, a daughter of JL made an application to have the Tribunal empower the administrator to advance her an interest free loan, repayable upon the death of JL.
The daughter was seeking the funds to assist in the purchase of a property for her and her daughter to live.
The application was opposed by the sons of JL but supported by her other daughters.
The Tribunal found that there remained a number of matters concerning the estate of JL that required resolution by the administrator which affected not only the quantum of JL's estate but also, relevantly, the amount of cash funds available to her.
The Tribunal found that whatever the merit in the application of the daughter for the loan and even taking a liberal view of JL's best interests, the present circumstances of JL's estate were such that it was not in her current best interests to authorise the loan. She did not have access to readily available cash funds to make the loan and she also had a deficit in her income relative to her expenditure.
The application was dismissed.
Category: B
Representation:
Counsel:
Represented Person : N/A
Solicitors:
Represented Person : N/A
Case(s) referred to in decision(s):
Mrs M [2000] (13 June 2000)
REASONS FOR DECISION OF THE TRIBUNAL:
Background
JL is an 85 year old woman who has lived in a nursing home since November 2009.
JL has five children, her sons ML and LL and her daughters, MDL, AL and GW.
In February 2013 GW made three applications under the Guardianship and Administration Act 1990 (WA) (GA Act). The first application was for the appointment of an administrator of the estate of JL. The other applications were made under s 109 of the GA Act seeking orders requiring the attorneys under an enduring power of attorney made by JL to file records and accounts and for those records and accounts to be audited. The attorneys were ML and LL.
On 6 June 2013, the Tribunal made orders appointing the Public Trustee as the plenary administrator of the estate of JL (administrator). The administrator was directed to ascertain the extent of JL's estate including but not limited to her interest in certain properties; an inheritance from overseas (inheritance) which the Tribunal's order characterised as being received in 2006 and 'immediately loaned to [LL]' and shares purchased by a family entity but held in the name of ML and LL.
The administrator was also directed as follows:
… to consider what actions may need to be taken, including but not limited to consideration of a deed of family arrangement, in order to ensure that all of [JL]'s estate is held in such a way that reflects [her] previously expressed intentions, as agreed by all the parties in the hearing of 18 April 2013, that her deceased estate be shared equally amongst her children and that her interest in the assets referred to in order 3 [the properties, inheritance and shares] comprise part of such estate[.]
The enduring power of attorney made by JL on 8 December 2004 appointing ML and LL as her attorneys, was revoked.
The administration order was set for review in 12 months and the applications made under s 109 of the GA Act were adjourned for the same period.
The review of the administration order and the s 109 applications were heard by a differently constituted Tribunal on 17 July 2014 and adjourned. LL was directed to provide the Tribunal with all relevant documentation regarding the inheritance.
At the hearing on 17 July 2014 an application was made by AL seeking an order that the Tribunal empower the administrator to pay her $100,000 from JL's estate representing an interest free loan or advance repayable on the death of JL from AL's share of JL's deceased estate (loan).
The loan was to be used to assist AL purchase her own property.
At the final hearing on 15 September 2014 the Public Trustee was reappointed the plenary administrator of the estate of JL. The order was set for review in five years, the maximum period available under s 84 of the GA Act.
Also on 15 September 2014, GW sought leave to withdraw the applications under s 109 of the GA Act and leave was granted.
I gave my reasons orally at the conclusion of the hearing.
The decision regarding the loan was reserved and forms the basis of these reasons.
Relevant law
Section 4(2) of the GA Act states that the primary concern of the Tribunal shall be the best interests of the represented person.
Section 72(3)(a) of the GA Act states that an administrator shall not without the authority of the Tribunal under s 71(5), make a payment or disposition of a charitable, benevolent or ex gratia nature.
Section 71(5) of the GA Act states that in exercising its jurisdiction under Pt 6 (estate administration) the Tribunal may take a liberal view of the best interests of the represented person and in particular may empower an administrator to make a payment or enter into a transaction of a kind described in s 72(3) on behalf of the represented person.
I have decided that because the application by AL is for an interest free loan from the estate of JL, it is to be characterised as a payment contemplated by s 72(3)(a) of the GA Act.
The decision of the Full Board of the former Guardianship and Administration Board in Mrs M [2000] (13 June 2000) provides a useful if nonexhaustive guide to the factors that should reasonably be considered by the Tribunal when exercising its discretion under s 72(3) of the GA Act. The factors which are stated in the context of a 'gift' are:
1.The relationship between the person under the administration order (the represented person) and the beneficiary of the gift.
2.The extent of the estate of the represented person.
3.The income and expenditure of the estate.
4.The age and needs of the represented person.
5.The purpose of the gift.
6.The likelihood of the represented person acceding to the request if she had the capacity.
7.The alternatives open to the recipient.
8.The attitude of those who are likely to benefit from the estate of the represented person on her death.
9.The needs of any other person dependent upon the represented person.
The estate of JL
In deciding whether to authorise the loan it is relevant to understand the complexities of JL's estate.
The administrator reports as follows:
•JL owns two residential properties in her own right which are tenanted and which the administrator shows in the statement of assets and liabilities as valued together at nearly $2,000,000.
•Two units in a strata complex jointly owned by JL, ML and LL have been sold. Part of the proceeds due to ML and LL were used with their consent to pay for the accommodation bond to enable JL to enter an aged care facility. The current balance of the accommodation bond standing to the credit of JL is approximately $383,000. The net amount owing by JL to ML as a consequence of the payment of the accommodation bond is $123,249.61 and to LL is $143,669.65. ML and LL have requested that the debts be repaid, however JL has insufficient cash funds to do so unless a property is sold.
•The debt to LL is complicated by an ongoing investigation by the administrator concerning the inheritance, the payment of that inheritance to LL in 2006 and whether that payment constituted a loan or gift to LL. In the course of the administration the administrator has been unable to obtain details of the inheritance from LL.
•A unit in the strata complex jointly owned by JL, ML and LL remains unsold and is tenanted. It is valued in the accounts of the administrator as $400,000. ML and LL have initially agreed with the proposal of the administrator that the unit be sold, however, at the date of the hearing the sale was on hold because the administrator continues to seek clarity regarding the inheritance and LL has not agreed to change the ownership structure of the unit from joint tenants to tenants in common.
•JL owns company shares in her own right valued at approximately $60,000 but also has an interest in shares owned by a family entity in which ML and LL also have an interest (family entity). The value to JL has yet to be clarified.
•Currently JL's yearly expenditure exceeds her income by an estimated $8,000. She has approximately $188,000 in cash funds held by the administrator.
GW states her concern at what she considers to have been a longstanding intermingling of the interests of ML and LL with the interests of JL. She states that funds for the development of the strata complex derived mainly from her late father and that ML and LL did not contribute any capital. She submits that unless ML and LL can verify their financial contribution to the development then the remaining unit (see above) should be taken to be held in trust for JL, and further that the amounts purportedly due regarding the sale of the two units (see above) should not be paid to them.
GW submits there should be a detailed accounting of the assets and liabilities of the family entity which holds shares in which JL has an interest.
The administrator states that upon an investigation of JL's bank accounts provided by ML and LL '[n]one of the bank accounts showed any untoward use of funds' (Report 10 July 2014).
Further to the order made on 17 July 2014 regarding the inheritance, LL provided the Tribunal with two documents titled 'Credit Advice Confirmation' purportedly evidencing JL's instruction or 'order' that in May 2006 and September 2006 $228,881.45 be credited to an account held by LL.
LL states that in the hearing on 6 June 2013 he did characterise the inheritance as a loan to him but would now say that it was a gift. He explains the discrepancy as:
My poor understanding of the proceedings … I understand how things work a lot better now. I didn't understand what the - you know. What it was that was being asked of me at the time (T:49; 15.09.14).
LL states that JL gifted the inheritance to him because she 'knew I was doing it tough' (T:41;15.09.14). He states he was surprised when the second amount was received in September 2006, having only expected the amount paid in May 2006.
GW states that she had very recently received a communication from an aunty overseas (a sister of JL) regarding the inheritance (the document was not before the Tribunal at the time of the hearing). The communication purportedly states that in respect to the funds remitted to Australia that JL wanted to have some money available to her when she travelled to Europe.
AL submits that JL had 10 kilo bars of silver that are now in the possession of ML which he denies.
Submissions of the parties
AL states that her living circumstances have changed. She had been living in the same rental property for the past 14 years, however the tenancy had recently been terminated. She submits:
The possibility of owning my own home, with the sense of permanence and security it would provide, has become very important to both myself and my daughter … [I] request an advance of $100,000 which would come out of my inheritance from my mother's estate. The money would be used towards purchasing my first home. Given my age [59 years], the mortgage restrictions do limit my capacity to borrow.
I do believe my mother's attitude towards this request would have been positive. In her previous Will, she had stated that she had wished for me to solely inherit an apartment, which was separate to the rest of her estate, which was to be divided equally between my siblings and myself. (Submission 11 May 2014)
AL enclosed with her submission an unsigned and undated will she says evidences JL's intentions regarding the apartment.
GW states that AL has always lived in rented accommodation with her only daughter who is not in good health. AL's tenancy, which she held for 14 years, was recently terminated and she is finding it difficult to find another affordable rental property. GW states that AL has been trying to purchase her own property for many years and has saved $30,000 for a deposit. The reason for the loan from JL's estate is to enable AL to purchase a home.
GW states that she and her siblings (except AL) have their own homes. She submits:
I am sure that if my mother was in her right mind she would be in agreeance [sic] to this request. She has always helped all of us except [AL]. I cannot see this as any deterrent to my mother's assets and to her wellbeing.
(Submission 11 May 2014)
MDL supports the loan being made and submits:
My mum and dad had always made it clear that they would help [JL] financially which was stated in mother's first will were [sic] [JL] was left a [sic] apartment, which for some unknown reason was removed when the boys requested mum write a new will as she was starting to forget lots of things and didn't realise she had a will already.
(Submission 13 September 2014)
ML submits that the loan:
… [is not] appropriate at the moment, until all other matters are resolved, including the $28,000 that [MDL] has been given from Dad's superannuation. Both [MDL] and [GW] are multimillionaires and if they are so concerned about [AL] surely they could help their sister out, until this is resolved. I have in the past.
(Submission 19 August 2014)
In his submission ML refers to an amount of $91.636.50 as having been repaid and an extra amount 'we' paid into what appears to be the strata development and that this needs to be acknowledged by MDL, GW and AL and other 'money matters' resolved 'before we can divide up mum's estate' (Submission 19 August 2014).
LL states that he does not support the loan. He submits that repayment of the debts to him and ML should be given priority and that there are therefore insufficient funds in JL's estate to pay for the loan. He does not support the selling of assets to pay for the loan because it will reduce JL's income (rent and dividends) and affect future capital appreciation which will impact on all the children of JL as beneficiaries of her estate.
The administrator states that if the loan to AL is approved then together with the debts to ML and LL, JL would be required to find cash funds of $367,000. The administrator submits that the loan (if made) should be subject to a deed with AL to evidence the arrangement that AL repay the loan upon the death of JL.
The decision of the Tribunal
I have decided to dismiss the application of AL for the following reasons.
Although JL has a large estate it is far from settled as to what ultimately comprises her estate. The children of JL are in significant dispute about the nature of transactions that have occurred over many years including the period where ML and LL were the attorneys for JL.
At a minimum, the inheritance matter, the sale of the remaining unit in the strata complex, the ownership of the two sold units in the strata complex and the entitlement to JL in the family entity which holds cash and shares, need to be resolved because they will impact not only on the quantum of JL's estate but also, relevantly, on the cash funds available to her.
As it currently stands, with these matters unresolved, the administrator will be required to sell assets to pay the debts to ML and SL. The administrator proposes to sell the unit in the strata complex which the administrator values at $400,000. At the date of the hearing the sale was on hold given the dispute with ML and LL who jointly own the unit with JL.
If the unit is ultimately sold and it is assumed that $400,000 is received, then JL's gross share will be $133,000 which together with the funds held by the administrator of $188,000 will total $321,000 which would be insufficient to repay ML and LL and pay the loan to AL, the sum of which the administrator estimates at $367,000.
As already stated, however, this all depends on the determination of the ultimate owner of the unit and the other unresolved matters (see above).
As for JL's current needs, she has a yearly cash deficit estimated by the administrator to be $8,000 and she must currently call on her existing funds to cover that loss.
JL does own two properties in her own right which are unencumbered and either or both can be sold. It is the case that the sale of these properties would crystallise their capital value and, in my view, it is at least arguable that the disposal of those primary assets should in the first instance only take place to meet the direct needs of JL.
Whatever merit there is in the application of AL for the loan, and even taking a liberal view of JL's best interests taking into account the factors given in Mrs M, the present circumstances of JL's estate are such that, in my view, it is not in her current best interests to authorise the loan. She does not have access to readily available cash funds to make the loan.
Should the circumstances of JL's estate change when the administrator is in a position to finally determine the extent of her estate to his satisfaction, it may be possible for the request for the loan to be reconsidered on the basis of available cash funds, the ongoing needs of JL and the statutory requirement to take a liberal view of JL's best interests.
At the current time, however, the application by AL should be dismissed.
Order
1.The application made by AL pursuant to s 71(5) of the Guardianship and Administration Act 1990 (WA) for the Tribunal to empower the administrator of the estate of JL to make a payment of a kind described in s 72(3) of the Guardianship and Administration Act 1990 (WA) is dismissed.
I certify that this and the preceding [49] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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MR J MANSVELD, SENIOR MEMBER
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