JMK v RDC and PTO v WDO

[2013] NSWSC 1362

Supreme Court

New South Wales

Medium Neutral Citation:

JMK v RDC and PTO v WDO [2013] NSWSC 1362

Hearing dates:

19 September 2013

Decision date:

19 September 2013

Jurisdiction:

Equity Division

Before:

Lindsay J

Decision:

1. Declarations and Orders made under s 41(1)(a) of the NSW Trustee and Guardian Act 2009 NSW.

2. Reservation of applications for the appointment of a private manager of the estate of each protected person, pursuant to s 41(1)(b) of the Act, for further consideration.

3. Orders for appointment of the NSW Trustee as receiver and manager of each protected estate pending consideration of questions arising from GDR v EKR [2012] NSWSC 1543.

Catchwords:

GUARDIANSHIP - protected person - Financial management - appointment of manager - Private manager - terms of appointment - Remuneration- regulatory regime - interlocutory orders pending consideration of terms of appointment - appointment of NSW Trustee as interim receiver and manager.

MENTAL HEALTH - protected person - appointment of manager of estate - Private manager - remuneration - regulatory regime - interlocutory orders pending consideration of terms of appointment - appointment of NSW Trustee as interim receiver and manager

PRACTICE - NSW Trustee and Guardian Act - protected person - appointment of manager of estate - private manager - terms of appointment - remuneration - regulatory regime - interlocutory orders pending consideration of terms of appointment - appointment of NSW Trustee as interim receiver and manager

Legislation Cited:

NSW Trustee and Guardian Act 2009 NSW
Protected Estates Act 1983 NSW
Uniform Civil Procedure Rules 2005 NSW r 57.7(2)
Trustee Companies Act 1964 NSW Corporations Act 2001 (Cth) 601RAA and 601RAB(1)(b)
Supreme Court Act 1970 NSW
Civil Procedure Act 2005 NSW

Cases Cited:

PB v BB [2013] NSWSC 1223 at [2]-[10], [27]-[29] and [38]-[60]
David by his Tutor the Protective Commissioner v David (1993) 30 NSWLR 417 at 436F-437B
GDR v EKR [2012] NSWSC 1543
GNM v ER [1983] 1 NSWLR 144 at 148C-149D
JJK v APK (1986) Australian Torts Reports 80-042 at 67,881-67,882
Gell v Gell (2005) 63 NSWLR 547 at 553[21]), careful
Ex-parte Fletcher (1801) 6 Ves Jun 427; 31 ER 1127
Re Walker, a Lunatic (1848) 2 Phil 630; 41 ER 1097
Re Westbrooke (1848) 2 Phil 631; 41 ER 1087; G v B (Powell J, 27 May 1992) BC 9201855 at 13
Anson v Anson [2004] NSWSC 766; 12 BPR 22,303 at [76]
Ex-parte Warren (1805) 10 Ves Jun 622
32 ER 985 at 986
Holt v Protective Commissioner (1993) 31 NSWLR 227 at 242B-243F
CC v RAM [2012] NSWSC 1555

Texts Cited:

HS Theobald, The Law Relating to Lunacy (Stevens & Sons, London, 1924), pp 54, 401-403 and 511-513
LI Rotman, Fiduciary Law Thomson, Canada, 2005 at pp 56-66, 303-305, 318, 339-340, 343, 736-738 and 747-748

Category:

Principal judgment

Parties:

JMK v RDC; and
PTO v WDO

Representation:

Counsel:
For the plaintiff in JMK v RDC: Michael Levenson (of Matthews Folbigg)

For the plaintiff in PTO v WDO: George Bordon (of Steve Masselos & Co)

For Ability One: Michael Heath

For the NSW Trustee: Catherine Phang of NSW Trustee and Guardian
Solicitors:
For the plaintiff in JMK v RDC: Matthews Folbigg

For the plaintiff in PTO v WDO: Steve Masselos & Co

For Ability One in both proceedings: Matthews Folbigg

File Number(s):

2013/00214521 (JMK v RDC) 2013/00225178 (PTO v WDO)

Judgment

INTRODUCTION : MANAGEMENT OF A PROTECTED ESTATE

1. Before the Court are two separate, unrelated sets of proceedings in which a plaintiff, by summons, seeks relief under s 41(1) of the NSW Trustee and Guardian Act 2009 NSW against a defendant, a member of the particular plaintiff's family.

1. Section 41(1) is a key provision in the legislative regime currently operating in New South Wales for management of the affairs of a person incapable of managing his or her own affairs (that is, a person in need of protection) by an exercise of the Court's "protective jurisdiction".

1. The protective jurisdiction of the Court is both statutory and inherent. Insofar as it is statutory, its operation is informed by the Court's inherent jurisdiction: PB v BB [2013] NSWSC 1223 at [2]-[10], [27]-[29] and [38]-[60]. That was acknowledged in parliamentary debate leading to enactment of s13 of the Protected Estates Act 1983 NSW, the legislative predecessor of s 41 of the NSW Trustee and Guardian Act 2009. An extract of that debate can be found in the judgment of the Court of Appeal in David by his Tutor the Protective Commissioner v David (1993) 30 NSWLR 417 at 436F-437B.

1. The present focus for attention is s 41(1)(b) of the 2009 Act, necessary context for which can be found in the first three sub-sections of s 41.

1. They are in the following terms:

"41 Orders by Supreme Court of management of affairs (cf PE Act, s 13)

(1) If the Supreme Court is satisfied that a person is incapable of managing his or her affairs, the Court may:

(a) declare that the person is incapable of managing his or her affairs and order that the estate of the person be subject to management under this Act, and

(b) by order appoint a suitable person as manager of the estate of the person or commit the management of the estate of the person to the NSW Trustee.

(2) The Supreme Court may make an order on its own motion or on the application of any person having a sufficient interest in the matter.

(3) For the purposes of this section:

(a) evidence of a person's capability to manage his or her own affairs may be given to the Supreme Court in any form and in accordance with any procedures that the Court thinks fit, and

(b) the Court may personally examine a person whose capability to manage his or her affairs is in question or dispense with any such examination, and

(c) the Court may otherwise inform itself as to the person's capability to manage his or her own affairs as it thinks fit [Emphasis added]".

1. As can be seen in these provisions, the Court has broad discretionary powers, including a power under s 41(1)(b) to appoint a "suitable person" to manage the estate of a person in respect of whom orders under s 41(1)(a) have been made (that is, a "protected person") or to commit management of his or her estate to the NSW Trustee (by virtue of s 3(1) of the Act, the short form of the name of the NSW Trustee and Guardian).

1. A proper exercise of the power for which s 41(1)(b) provides calls, in each case, for consideration of the personal circumstances and best interests of the protected person: Holt v Protective Commissioner (1993) 31 NSWLR 227 at 241G.

1. Confirmation of that, in the context of the Act, can be found in s 39, the first paragraph of which (s 39(a)) mandates that, upon consideration of the power of appointing a manager, the welfare and interests of a protected person should be given paramount consideration.

1. Each summons filed in the proceedings presently before the Court seeks relief to the following effect:

(a) A declaration, pursuant to s 41(1)(a) of the NSW Trustee and Guardian Act 2009, that the defendant is incapable of managing his affairs.

(b) An order, pursuant to s 41(1)(a) of the Act, that the estate of the defendant be subject to management under the Act.

(c) An order, pursuant to s 41(1)(b) of the Act, that Ability One Financial Management Pty Limited ACN 113 553 852 ("Ability One") be appointed as manager of the estate of the defendant.

1. Each summons calls for consideration of what consequential orders should be made, including:

(a) Orders falling within the description of "the usual orders" identified in r 57.7(2) of the Uniform Civil Procedure Rules 2005 NSW designed to facilitate performance by the NSW Trustee of its statutory function of supervising the management of protected estates not committed to its management; and

(b) Orders for the remuneration of Ability One, as a manager, pursuant to s 115(1) of the NSW Trustee and Guardian Act.

1. The "usual orders" for which UCPR r 57.7(2) provides include, in the case of appointment of a manger who is not the NSW Trustee, an order that the manager not do anything in reliance on the appointment until the NSW Trustee has authorised him, her or it to assume management of the protected person's estate.

1. This form of order mirrors a requirement found in s 25M(2) of the Guardianship Act 1987 NSW in the case of an appointment of a financial manager by the Guardianship Tribunal under ss 25E(1) and 25M(1)(a) of that Act.

1. The object of provisions of this character is to permit the NSW Trustee to become seized of each protected person's estate, at least in its capacity as a monitor of management functions, before another manager becomes entitled, in possession as well as in interest, to perform management functions.

1. The NSW Trustee's regulatory regime is designed to ensure that, in fact as well as in theory, protected estates are duly managed. It is the guard set over managers appointed to guard the estates and interests of protected persons, all ultimately under the supervision of the Court.

1. Section 115 of the NSW Trustee and Guardian Act is in the following terms (with emphasis added):

"115 Supreme Court or NSW Trustee may order certain costs to be paid out of managed estate (cf PE Act, s 77)

(1) The Supreme Court or the NSW Trustee may order that the following costs be paid, in accordance with the order, from the estate of a managed person:

(a) costs with respect to actions taken for the purposes of complying with any order or direction under this Act, or any transfer or conveyance under Chapter 4,

(b) remuneration, of a specified amount, to the manager of estate.

(2) The NSW Trustee may make an order under this section only in relation to costs arising from an order or direction given by the NSW Trustee under Chapter 4 or work carried out by the manager of an estate of a managed person in connection with any such order or direction."

1. The reference to ch 4 is a reference to that chapter of the NSW Trustee and Guardian Act 2009 (entitled "Management functions relating to persons incapable of managing their affairs") in which both ss 39 and 41 of the Act are located.

1. Critical attention needs to be given to the meaning, and operation, of s 115(1)(b) in the context of any order that might, in due course, be made for the appointment of Ability One as a "private manager" of a protected estate pursuant to s 41(1)(b).

1. Colloquially, in the context of s 41(1)(b) and similar provisions found in s 25M(1) of the Guardianship Act 1987, any manager appointed as a "suitable person" to manage a protected estate in lieu of committal of management of the estate to the NSW Trustee is described as "a private manager". By virtue of the NSW Trustee and Guardian Act 2009, the NSW Trustee is a statutory corporation (s 5) and a NSW Government agency (s 6).

1. Conceptually, the divide between a "government" manager (the NSW Trustee) and a "private" manager is blurred by the existence of legislation which, in the public interest, governs corporations engaged in the conduct of a licensed estate management business. Even within the ranks of "private" managers, there are gradations of "public" management.

1. Traditionally, until recently, the only corporations appointed as a private manager of a protected estate have been corporations with the legislative status of a "trustee company".

1. Trustee companies, formerly governed by the Trustee Companies Act 1964 NSW, are now (as "licensed trustee companies") governed by chapter 5D of the Corporations Act 2001 (Cth). That chapter contemplates that a trustee company (as defined by ss 601RAA and 601RAB(1)(b) of the Corporations Act) will hold an Australian Financial Services Licence governed by chapter 7 of the Act: s 601RAA.

1. Ability One is not, and never has been, a statutory "trustee company".

THE JUDGMENT IN GDR v EKR, AND ANCILLARY PROCEEDINGS

1. In GDR v EKR [2012] NSWSC 1543 White J held that, nevertheless, it could properly be appointed as manager of a protected estate (by an order made under s 41(1)(b) of the NSW Trustee and Guardian Act) provided that, inter alia, it obtained an Australian Financial Services Licence.

1. It obtained such a licence on 17 June 2013.

1. As White J anticipated, the prospect of it conducting business as a manager of protected estates gives rise to consequential questions about whether (and, perhaps more particularly, how) it should be allowed remuneration, out of the estate of a protected person, for its performance of managerial functions - as well as broader questions about how its performance of those functions might be regulated.

1. Those questions may concern the operations of licensed trustee companies as well as those of holders of an Australian Financial Services Licence who are not a licensed trustee company : CC v RAM [2012] NSWSC 1555.

1. With the intention of complying with undertakings given to the Court in GDR v EKR, Ability One has commenced proceedings (which may be styled Ability One Financial Management Pty Limited v JB) in which, on notice to the NSW Trustee, it has invited the Court to address questions arising consequentially from the ruling in GDR v EKR.

1. Those proceedings will next be before the Court for directions on 23 September 2013. Subject to any contingencies that may arise, they are expected to be the subject of further consideration by the Court on 14 October 2013.

1. In my judgement, having regard to pendency of Ability One Financial Management Pty Limited v JB, the orderly management of the protected estate of each of the defendants presently before the Court would be best served by deferral of consideration of each plaintiff's application for appointment of Ability One as a manager.

1. In forming that judgement I intend no criticism (or endorsement) of Ability One.

1. The reality is that a proper consideration of whether (and, if so, upon what terms) Ability One is to be appointed as a manager of the protected estates of the defendants presently before the Court requires the Court to form a view about larger questions that are expected to be canvassed in Ability One Financial Management Pty Limited v JB.

1. Those questions include:

(a)   Whether (in the context of the operation of the NSW Trustee and Guardian Act 2009 and cognate legislation) there is, in principle, any (and, if so, what) material distinction between:

(i) a licensed trustee company governed by chapter 5D of the Corporations Act 2001; and

(ii) a holder of an Australian Financial Services Licence (governed by chapter 7 of the Corporations Act) which is not a licensed trustee company.

(b)   Where (as envisaged by draft order 10 recorded in GDR v EKR [2012] NSWSC 1543 at [48]) an order is made (under s 115(1)(b) of the NSW Trustee and Guardian Act or in the inherent jurisdiction of the Court) that a private manager be allowed remuneration out of the estate of a protected person, capped at a specified amount over the lifetime of that person:

(i)   what, if any, limits are there on the enforceability of the cap?

(ii)   how can, and will, management of the protected person's estate operate effectively after the cap is reached?

(iii)   what, if any, protection exists for the protected person to ensure the provision of quality management services after the limit of capped remuneration has been reached?

(iv)   is there a risk of a period of "unfunded management" and, if so, what (if any) protection against it exists for the protected person?

(v) can any problems attending a risk of unfunded management be addressed by an order (under s 68 of the NSW Trustee and Guardian Act or in the inherent jurisdiction of the Court) for the provision of security and, if so, what form should an order for security take?

(c)   Where the Court makes an order authorising a private manager, prospectively, to take remuneration from the estate of a protected person:

(i)   what, if any, entitlement does that confer on the manager vis á vis the protected person?

(ii)   what, if any, control do the Court and the NSW Trustee have over the future remuneration of, and the quantity and quality of services provided by, the manager?

(d)   Do any (and, if so, what) particular considerations flow, in the exercise of the Court's protective jurisdiction or in the NSW Trustee's administration of the regulatory regime that underpins it, from involvement a prospective private manager may have had in proceedings instituted by, or on behalf of, a protected person for personal injury compensation including an award of compensation for future estate management fees?

1. Caution is required in making a departure from the traditional stance of the law of fiduciaries: informed, as it is, by hard experience and a desire to maintain standards of conduct.

1. Under the sway of fiduciary law, the office of a manager of a protected person must generally be regarded as a gratuitous one unless, by an order of the Court or by legislation, a special arrangement to the contrary is made:GDR v EKR [2012] NSWSC 1543 at [32] and [38]; JJK v APK (1986) Australian Torts Reports 80-042 at 67,881-67,882; Gell v Gell (2005) 63 NSWLR 547 at 553[21].

1. When the Court is called upon to make, or sanction, a "special arrangement" particularly careful attention must be given to the existence, effective operation and ongoing effectiveness of a regulatory regime designed to protect the protected person from any risk of exploitation by a manager whose interests, ostensibly, conflict with the duty of a manager.

1. The rationale for any order made for remuneration of the manager of a protected estate is, ultimately, that such an order is necessary for the benefit of the protected person - not for the benefit of the manager: Ex-parte Fletcher (1801) 6 Ves Jun 427; 31 ER 1127; Re Walker, a Lunatic (1848) 2 Phil 630; 41 ER 1087; Re Westbrooke (1848) 2 Phil 631; 41 ER 1087; G v B (Powell J, 27 May 1992) BC 9201855 at 13; Anson v Anson [2004] NSWSC 766; 12 BPR 22,303 at [76].

1. Any manager engaged in a business of estate management may be apt to forget this or, at least, to be distracted by his, her or its own financial imperatives. Hence the need for a regulatory regime to counterbalance those natural tendencies that are addressed (as explained in LI Rotman, Fiduciary Law (Thomson, Canada, 2005) at pp 56-66, 303-305, 318, 339-340, 343, 736-738 and 747-748) by the fiduciary law's strictures against: (a) a fiduciary occupying territory where his, her or its duty as a fiduciary and his, her or its personal interests are in conflict; and (b) a fiduciary benefiting from profits accruing from his, her or its office as a fiduciary.

MAINTENANCE OF NSW TRUSTEE'S REGULATORY POWERS

1. Although larger questions of this character must await consideration in Ability One Financial Management Pty Limited v JB, where Ability One's articulated application for remuneration places them centre stage, there is one question identified in those proceedings, by the NSW Trustee, that can be conveniently dealt with in this judgment.

1. In more than one of the appointments it has hitherto received as manager of a protected estate, Ability One's appointment has been accompanied by an order in substantially the same terms as "Draft Order 7" recorded in GDR v EKR [2012] NSWSC 1543 at [48].

1. "Draft Order 7" is an order to the following effect: "Order (pursuant to s 64(1) of the NSW Trustee and Guardian Act 2009) that Ability One be authorised to exercise any of the functions set out in s 16(1)(a)-(y) of the Act that the NSW Trustee could exercise if it were appointed as manager of the protected person's estate."

1. In each of the proceedings presently before the Court the plaintiff has at one time or another sought, or anticipated, an order in similar terms. In JMK v RDC that is seen in proposed order 7 of draft Orders submitted in support of the summons. In PTO v WDO it appeared in paragraph 5 of the summons, but was deleted in an amended summons subsequently filed.

1. I do not exclude the possibility that amendment of the summons in PTO v WDO reflects an appreciation, on the part of Ability One, that an order in terms of "Draft Order 7" as recorded in GDR v EKR is problematic.

1. In Ability One Financial Management Pty Limited v JB, the NSW Trustee objects to, and Ability One invites the Court in due course to set aside, an order made in favour of Ability One, in terms similar to those recorded in "Draft Order 7", affecting management of the protected estate the subject of those proceedings.

1. The NSW Trustee fears, and I accept, that an order expressed in terms of "Draft Order 7" has the potential of allowing a private manager to carry out a function which has not been authorised by the NSW Trustee.

1. An order in the form of "Draft Order 7" has the potential to undermine the public regulatory regime underpinned by the NSW Trustee and Guardian Act (including, particularly, ss 64-68 of the Act) and related legislation such as s 25M(2) of the Guardianship Act 1987.

1. The legislative scheme centred upon the NSW Trustee and Guardian Act is designed to provide protection of the interests and estate of an incapable person by having the NSW Trustee monitor private managers through, inter alia, written "Directions and Authorities".

1. An order in terms of "Draft Order 7" purports to confer on a private manager (by an order made under s 64 of the Act trumping any direction of the NSW Trustee) functions which, read cumulatively, leave little scope for regulation by the NSW Trustee.

1. That can be seen on a review of the extensive nature of the powers for which s 16 of the NSW Trustee and Guardian Act provides:

"16 Powers of NSW Trustee relating to property and other matters

(cf PT Act, s 35, PE Act, s 24)

(1) The NSW Trustee may exercise the following functions when acting in a trust capacity or protective capacity:

(a) receive money, rent, income and profit of real and personal property,

(b) grant leases of property for a term not exceeding 10 years and give to a lessee an option of renewal if the aggregate duration of the lease and any such renewal does not exceed 10 years,

(c) enter into a share-farming agreement for a period not exceeding 3 years,

(d) surrender a lease and accept a new lease,

(e) accept a surrender of a lease and grant a new lease,

(f) execute a power of leasing vested in a person having a limited estate only in the property over which the power extends,

(g) buy, sell, realise and mortgage (with or without a power of sale) real and personal property,

Note: Mortgage includes charge (see section 3 (1)).

(h) pay interest secured by a mortgage out of capital, if income is insufficient,

(i) postpone the sale, calling in and conversion of any property that the NSW Trustee has a duty to sell, other than property that is of a wasting, speculative or reversionary nature,

(j) settle, adjust and compromise a demand made by or against the estate,

(k) exchange or join in a partition of property and give or receive money for equality of exchange or partition,

(l) carry on a business, so far as may appear desirable for the purpose of more advantageously disposing of, or winding up, the business or preserving the business of a managed person until the managed person is able to carry it on,

(m) agree to an alteration of the conditions of a partnership into which a managed person has entered, for the purpose of more advantageously disposing of an interest in the partnership or terminating liability,

(n) carry out a contract entered into before the appointment of the NSW Trustee or enter into an agreement terminating the liability,

(o) surrender, assign or otherwise dispose of, with or without consideration, onerous property,

(p) exercise a power, or give a consent required for the exercise of a power, where the power is vested in a managed person for the benefit of the person or the power of consent is in the nature of a beneficial interest in the person,

(q) sequestrate the estate under the bankruptcy laws,

(r) take proceedings to cause a company to be placed in liquidation and vote or act by proxy at meetings of creditors or shareholders, whether the company is in liquidation or not,

(s) bring and defend actions, suits and other proceedings,

(t) without limiting paragraph (s), take criminal proceedings touching or concerning property,

(u) pay rates, taxes, assessments, insurance premiums, debts, obligations, costs and expenses and other outgoings,

(v) without limiting paragraph (u), pay the reasonable costs of the erection of a memorial or a tombstone over the grave of a deceased person or, if a deceased person is cremated, the reasonable costs of a memorial or any arrangements for the preservation of the ashes of the deceased person,

(w) repair and insure against fire or accident any property,

(x) bring land under the Real Property Act 1900,

(y) do or omit all things, and execute all documents, necessary to carry into effect the functions of the NSW Trustee.

(2) The functions conferred by this section are in addition to, and do not restrict, any other functions of the NSW Trustee."

1. I do not presently know the origins of "Draft Order 7". The fact that such an order was ever made, and the fact that Ability One has now resiled from it, together provide, I suspect, an illustration of a process of learning by experience that has attended the development over recent years of a financial services industry and "deregulation" of estate management services. Another illustration of the same phenomenon might be Ability One's initial perception that the office of manager of a protected estate could be assimilated with that of a trustee to the extent of vesting title to a protected person's estate in the manager: See GDR v EKR [2012] NSWSC 1543 at [36], where White J exposed the error of that reasoning.

1. If, in due course, Ability One is appointed as manager of the protected estates of one or both of the defendants the subject of the current proceedings, its appointment should not include a grant of powers similar to that contemplated in "Draft Order 7".

INTERIM ORDERS : APPOINTMENT OF NSW TRUSTEE AS RECEIVER

1. More generally, in each of the cases presently before the Court, the Court needs to be satisfied (with the benefit of assistance from both Ability One and the NSW Trustee) about the nature, and intended operation, of the regulatory regime that underpins any characterisation of Ability One (or any other prospective private manager not being a "licensed trustee company") as a "suitable person" within the meaning of s 41(1)(b) of the NSW Trustee and Guardian Act.

1. Conversely (and bearing in mind that a "private manager" of a protected estate is, generally, not appointed to that office without his, her or its consent) Ability One needs to be informed of the terms upon which it may be appointed to manage an estate before it formally confirms its consent to appointment to that office.

1. What is presently called for, in each of the proceedings presently before the Court, is a set of orders designed to protect the interests of the defendant while the implications of the judgment in GDR v EKR are worked through, as they are presently expected to be, in Ability One Financial Management Pty Limited v JB.

1. A set of orders answering that description is one providing for the making of a "declaration" and an "order" under s 41(1)(a) of the NSW Trustee and Guardian Act, postponing consideration of business referable to s 41(1)(b) of the Act and, in the meantime, appointing the NSW Trustee as a receiver and manager of each protected estate.

1. The Court's jurisdiction to appoint a receiver and manager is both statutory and inherent. "Receivers" have long been appointed in exercise, or in aid of an exercise, of the Court's protective jurisdiction: GNM v ER [1983] 1 NSWLR 144 at 148C-149D; HS Theobald, The Law Relating to Lunacy (Stevens & Sons, London, 1924), pp 54, 401-403 and 511-513. In Ex-parte Warren (1805) 10 Ves Jun 622; 32 ER 985 at 986 Lord Eldon regarded as immaterial whether a person appointed to manage the estate of a lunatic was called "Committee" or "Receiver". White J appointed the NSW Trustee receiver and manager of the protected estate in GDR v EKR while questions requiring consideration in those proceedings were worked through.

1. The Court's inherent jurisdiction to appoint a receiver and manager is supplemented by the jurisdiction it has under s 67 of the Supreme Court Act 1970 NSW to appoint a receiver, by interlocutory order, in any case in which it appears to the Court to be just or convenient so to do. The conferral of jurisdiction on the Court by the NSW Trustee and Guardian Act can generally be taken to carry with it recognition of the Court's general jurisdiction, practice and procedure.

1. In deciding upon the course to be taken, I have allowed the parties in each of the proceedings presently before the Court an opportunity to be heard on the proposal that the NSW Trustee be appointed as an interim receiver and manager.

1. Having regard to the pendency of Ability One Financial Management Pty Limited v JB, I have also, by a grant of leave without opposition from any party to the proceedings, allowed Ability One to make submissions; not having been appointed as a manager of the estate of either defendant, it has no entitlement to be heard, or any legitimate expectation that it will be, about the course of the proceedings.

1. I have also, without objection from any quarter, invited the NSW Trustee to participate in the proceedings; it has, appropriately, limited its participation to that of an observer, in the character of an amicus curiae, coupled with submission to the orders of the Court.

FAMILY PREFERENCES, A RELEVANT CONSIDERATION

1. In JJK v APK (1986) Australian Torts Reports 80-042 at 67, 881 Powell J elaborated guidelines to which, his Honour said, resort might be had upon a consideration of the terms upon which a manager of a protected estate might be appointed.

1. The first of those guidelines is that "the person who has the carriage of the proceedings has no preference in the appointment of [a committee or manager of a protected estate]".

1. At one level, that is true because such questions must be determined by the Court, independently of any expression of personal preference, bearing in mind the duty of the Court to ensure that management of the estate of a protected person is calculated to serve his or her best interests.

1. However the law has evolved since JJK v APK. We now have the benefit of the Court of Appeal's guidance in Holt v Protective Commissioner (1993) 31 NSWLR 227 at 242B-243F; the enactment of s 39 of the NSW Trustee and Guardian Act 2009; and a regulatory regime governed by different legislation generally.

1. Section 39, to which passing reference has already been made, is in the following terms (with emphasis added):

"39 General principles applicable to Chapter

It is the duty of everyone exercising functions under this Chapter with respect to protected persons or patients to observe the following principles:

(a) the welfare and interests of such persons should be given paramount consideration,

(b) the freedom of decision and freedom of action of such persons should be restricted as little as possible,

(c) such persons should be encouraged, as far as possible, to live a normal life in the community,

(d) the views of such persons in relation to the exercise of those functions should be taken into consideration,

(e) the importance of preserving the family relationship and the cultural and linguistic environments of such persons should be recognised,

(f) such persons should be encouraged, as far as possible, to be self-reliant in matters relating to their personal, domestic and financial affairs,

(g) such persons should be protected from neglect, abuse and exploitation.

1. Sections 39(b)-(f) mandate that the Court notice, with due attention, any views that may be expressed about the identity of a prospective manager by a protected person, his or her family or any carer well placed to express a view about his or her welfare, interests and autonomy. Such views do not, of themselves, bind the Court; but they can, generally, be taken into account, and they do warrant special consideration.

1. In deciding upon the course to be followed in these proceedings I have taken into account, and I remain mindful of, the fact that in each set of proceedings evidence has been adduced of a preference, within the defendant's family, for the appointment of Ability One as manager of the defendant's estate.

1. I am mindful, also, of the importance attached in GDR v EKR [2012] NSWSC 1543 at [43] to the fact that Ability One had the confidence of the protected person's family as a prospective manager of the estate.

ORDERS ON APPOINTMENT OF NSW TRUSTEE AS RECEIVER

1. In each of the proceedings before the Court, and leaving aside particular adjustments appropriate to the circumstances of each case, I propose to make orders to the following effect:

(1) Declare, pursuant to s 41(1)(a) of the NSW Trustee and Guardian Act 2009, that the defendant is incapable of managing his affairs.

(2) Order, pursuant to s 41(1)(a) of the NSW Trustee and Guardian Act 2009, that the estate of the defendant be subject to management under the Act.

(3)   Reserve for further consideration the application of the plaintiff for the appointment of Ability One Financial Management Pty Limited as manager of the estate of the defendant.

(4)   Order, subject to further order, that consideration of that application be deferred until after determination of Ability One Financial Management Pty Limited v JB (Case number 2013/00214490) involving an application by Ability One Financial Management Pty Limited (and its parent company, Ability One Pty Limited ABN 41 090 569 743) for directions (including directions as to remuneration of a private manager of an estate governed by the NSW Trustee and Guardian Act 2009) in management of an unrelated protected estate.

(5) Order, pending determination of the plaintiff's application for appointment of Ability One Financial Management Pty Limited as manager of the defendant's estate or until further order, that the NSW Trustee and Guardian be appointed as receiver and manager of the estate of the defendant with all the powers and discretions that it would have if management of the defendant's estate were committed to it pursuant to s 41(1)(b) of the NSW Trustee and Guardian Act 2009.

(6) Order (without prejudice to the generality of the proceeding order) that, as receiver and manager of the estate of the defendant, the NSW Trustee and Guardian be at liberty (subject to compliance with ss 72 and 73 of the NSW Trustee and Guardian Act 2009):

(a) to make an application (pursuant to s 77 of the Civil Procedure Act 2005 NSW) for the payment out of court to the NSW Trustee and Guardian (in its capacity as receiver and manager) of the whole, or part, of funds presently held in court on behalf of the defendant in relation to earlier determined proceedings brought by the defendant for personal injury compensation.

(b)   to pay any costs payable pursuant to these orders.

(7)   Order that the costs of the plaintiff and the defendant in these proceedings to date be paid out of the estate of the defendant on an indemnity basis.

(8) Direct that any application for an order (referable to s 77 of the Civil Procedure Act 2005) for the payment out of funds in court be made to the Protective List Judge or as that judge may direct.

(9)   Order, subject to further order, that these proceedings be adjourned to a particular date later this year for directions or (as the nature of the case may require) consideration of:

(a) the application of the plaintiff for appointment of Ability One Financial Management Pty Limited as manager of the estate of the defendant pursuant to s 41(1)(b) of the NSW Trustee and Guardian Act 2009;

(b)   the continuing operation of orders for the appointment of the NSW Trustee and Guardian as receiver and manager of the estate of the defendant and ancillary orders; and

(c)   the payment out of court of so much of the funds of the defendant as may then remain in court.

(10)   Reserve liberty to apply generally.

1. Sections 72 and 73 of the NSW Trustee and Guardian Act 2009, to which reference is made in these proposed orders, are in the following terms:

"72 Consultation by NSW Trustee (cf PE Act, s 50)

(1) The NSW Trustee must take the following steps before taking any action in respect of the estate of a managed person:

(a) the NSW Trustee must determine whether the action is of such a nature that the person or a relative or relatives of the person should be consulted about the action,

(b) if the NSW Trustee determines that consultation should take place, the NSW Trustee must cause to be taken all steps that are reasonably practicable in the circumstances to give notice to the person or the relative or relatives of the person of the action,

(c) the NSW Trustee must consider any submissions made in response to the notice within the time specified in the notice.

(2) In determining whether consultation is required in relation to the action, the NSW Trustee must consider all relevant circumstances and matters, including (without limitation) the following:

(a) the value of the estate,

(b) the value and nature of any particular property proposed to be affected,

(c) the consequences of the proposed action,

(d) the necessity or practicality of the proposed action,

(e) the extent (if any) to which the estate may be prejudiced by any delay in the proposed action being taken.

73 Temporary provision for maintenance (cf PE Act, s 72)

(1) The NSW Trustee may, if of the opinion that it is desirable to do so, make an order authorising payments from any part of the estate of a managed person for the provision of maintenance and other necessary requirements of the managed person or the managed person's family, pending orders being made as to the management of the estate.

(2) An order:

(a) is to be in writing addressed to the person holding the relevant part of the estate and the person to whom payment is to be made, and

(b) is to specify the person or persons, or the purposes, for which the payment is to be made, and

(c) may specify the purposes for which the payment is to be used, and

(d) is to specify the amount payable.

(3) A person to whom an amount is paid under this section must, if directed to do so by the NSW Trustee, account to the NSW Trustee for the application of the amount."

1. Appointment of the NSW Trustee as a receiver and manager of each protected person's estate should permit the implications of the judgment in GDR v EKR to be worked through in an orderly manner for the better protection, and benefit, of each protected person whose estate Ability One may be appointed to manage.

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Decision last updated: 20 September 2013