KSLQ (Review Administration) - [2010] TASGAB 13

GUARDIANSHIP AND ADMINISTRATION BOARD
HOBART

KSLQ – application to review administration order

Neutral citation: KSLQ (Review Administration) [2010] TASGAB 13

REASONS FOR DECISION

Anita Smith (President)
Colin McKenzie (Deputy President)
Gerard Dibley (Member)

Hearing date: 16 July 2010

Administration – represented person’s wishes – remuneration of administrators – meaning of ‘carrying on a business of administering estates’ – whether there can be appointment of more than one administrator

Guardianship and Administration Act 1995 ss 51, 54, 55, 63, 67,
Acts Interpretation Act 1931 s 24(d)

KSLQ was the subject of an order appointing the Public Trustee as his administrator from 19 July 2007 to 18 July 2010. Shortly before its expiry, the order was reviewed pursuant to section 67 of the Guardianship and Administration Act 1995 (‘the Act’). Prior to the review hearing, KSLQ indicated, through his solicitors, that he sought a change of administrator due to his dissatisfaction with operations of the Public Trustee.
The Board was furnished with reports and materials which satisfied the tests in section 51 of the Act; that KSLQ is a person with a disability, that the disability renders him incapable of making reasonable judgments about his estate and that he is in need of an administrator. These matters were not contested at the hearing. The only issue contested at the hearing was a submission by KSLQ’s representative that the Public Trustee be replaced with two remunerated administrators, EE and QU. KSLQ has a significant estate valued at over $3 million.

The hearing:

Notices of hearing were sent on 30 June 2010. The hearing on 16 July 2010 was attended by:
KSLQ and his legal representative, Ms Alison Wells,
Mr Kevin Clarke and Mr Jamie Lawrence, representatives of the Public Trustee,
EE and QU, nominees for appointment, and
JN, friend of KSLQ
EE participated in the hearing by telephone. A copy of the submission by KSLQ’s solicitor was provided to the Public Trustee prior to the hearing. A copy of the Public Trustee’s annual report and a report from Dr B Ferry were provided to KSLQ’s solicitor.
Three issues, which will be considered in turn, were examined in detail at the hearing:
(a)   KSLQ’s concerns with the performance of officers at the Public Trustee,
(b)   Whether the alternative nominees were eligible for remuneration as administrators, and
(c)   Whether it is possible to appoint multiple administrators.

KSLQ’s concerns with the performance of the officers at the Public Trustee:

Outside of proceedings under section 63 of the Act, the Board does not usually undertake a review to examine the past performance of an administrator, but considers the suitability of an administrator for future appointment. Mostly the Board refers complaints about the Public Trustee’s staff members to internal grievance procedures. This case was unusual in that the proposal for new administrators raised the two legislative issues noted above. Because of those issues, the Public Trustee may still be considered for appointment as the statutory administrator of last resort and because of the seriousness of the complaints, the Board deemed it necessary to closely review the basis of those complaints to consider whether re-appointment of the Public Trustee would be consistent with the principles in section 6 of the Act.
Counsel for KSLQ submitted that the relationship between himself and the Public Trustee had irretrievably broken down. She identified three factors which lead to this state. Firstly, KSLQ had been refused access to information about his estate. In particular, he had been denied information about a leasing arrangement to a timber company. Secondly, he felt intimidated in making requests of certain Public Trustee staff members to the extent that he was reluctant to ask them to renew registration for a motor vehicle that he drives. Thirdly, he doubted their competence because executing the contract to lease land to a timber company had taken approximately 2.5 years to complete.
At the hearing, counsel for KSLQ suggested that the relationship broke down early in the administration because of a decision by the Public Trustee to sell garden features and antique water troughs from KSLQ’s heritage property at Ouse. She stated that they were sold without consultation with KSLQ. The sale had caused him distress because they had been part of his mother’s formerly illustrious garden and he would not have chosen to sell them, even if cash flow was required because of their sentimental value to him. This lack of respect for his wishes or his family heritage meant he was unable to establish trust in the Public Trustee from an early stage.
Neither of the persons who attended the hearing on behalf of the Public Trustee is the regular Client Account Manager. Ms Sharon Krantz usually has that role, but was absent for medical reasons. Despite over 2 weeks notice of the complaints regarding her interactions with KSLQ and the hearing, no request was made to adjourn the hearing to a date when Ms Krantz could be present to answer the complaints. No written statement, sworn or otherwise, was provided by Ms Krantz. Mr Lawrence is her manager and said that he had been to some but not all meetings with KSLQ and that he had spoken with Ms Krantz regarding the written complaints.
Mr Lawrence stated that he had made himself available to KSLQ for any concerns and although there were “difficult issues to deal with,” he believed that the relationship was sufficiently functional to allow the Public Trustee to perform its role as administrator. He expressed an awareness of KSLQ’s frustrations with the delays in negotiating a lease with the timber company, but stated that the Public Trustee had kept KSLQ informed of progress on that matter.
Mr Lawrence expressed surprise that KSLQ felt unable to approach the client account manager for simple transactions. He stated that:
“A relationship with the client account manager is possibly a little bit separate to a relationship with the Public Trustee and if the relationship with the client account manager was compromising the Public Trustee’s ability to administer KSLQ’s affairs, moving forward, then that is certainly something that we would consider changing if that was in the best interests of the administration.”
KSLQ stated that he saw the problem being a combination of Ms Krantz’ attitude and working with the Public Trustee rather than purely interpersonal conflict.
In response to the statement that:
“One or more representatives of the office of the Public Trustee have effectively informed KSLQ that he is not entitled to information about the management of his affairs and declined to provide information about the matter.”
Mr Lawrence stated his belief that KSLQ “would have” received 6 monthly statements. No file notes or correspondence was offered to prove that this had occurred. KSLQ stated that he had not received statements and had been told he could not see them because he “might show somebody else”. Again the representatives of the Public Trustee stated that they would be “shocked” and “surprised if that was the case.” They denied the existence of any policy that represented persons cannot see their accounts.
Ms Wells gave evidence about her telephone interactions with Ms Krantz. She said:
“I got the impression that Sharon had really reached the end of her tether with KSLQ.”
“Sharon made it quite clear to me that she thinks that KSLQ may not have capacity to even be instructing me.”
“She has also suggested that he is ‘doctor shopping’ to find a doctor who says that he is not psychotic, and these words were not said in a kind spirit, they were said … in a very negative and aggressive spirit, and I thought it was entirely inappropriate. She’s also mentioned that KSLQ has seemingly tried to interfere in affairs that the Public Trustee has tried to manage on his behalf … and that he ought to not contact anyone at the Public Trustee.”
After hearing these complaints, the Public Trustee was again asked whether it would be appropriate to review the client account manager for KSLQ’s account and Mr Lawrence’s response was:
“Certainly, moving forward, if the Public Trustee was to continue in this role, then there are some issues there that we would need to explore. It would be something that I would give immediate consideration to.”
As well as being KSLQ’s friend, JN had been engaged by the Public Trustee as an agricultural consultant and manager to assist with KSLQ’s estate. He had been involved with the Public Trustee in attempting to make the estate “cash positive”. He said:
“I’ve noticed … there has been a breakdown in the relationship between the account manager and KSLQ, there’s no question about that. And as to the question “has he seen any statements?” well, I know KSLQ and I have discussed on many occasions how it’s all going and how the finances are going. To my knowledge he has not received any statements. Having said that going through the relationship breakdown between the Public Trustee and so on, my view would be that there either has to be a change in the administrator or at least a change in the personnel within the Public Trustee to handle the account.”
The Public Trustee representatives did not effectively refute any of the complaints against the organisation. Both JN and Ms Wells were eminently credible in describing the fractured relationship and the lack of willingness to share information with KSLQ on a day-to-day basis. The Board concluded on the balance of probabilities according to the available evidence, that Ms Krantz had not established a good relationship with KSLQ and had not been successful in demonstrating a suitable level of respect between administrator and represented person or service provider and client. The Board considered that KSLQ’s arguments about Ms Krantz’ performance carried significant weight.
The Board also attributed significant weight to KSLQ’s complaints against the Public Trustee as a whole. For instance, when confronted with significant complaints about the client account manager’s performance, the Public Trustee’s representative’s response at the hearing was one of disbelief. Although Mr Lawrence offered an apology to KSLQ, he resisted giving a firm commitment to replacing the client account manager to address some of KSLQ’s concerns.
The issue of providing reports and financial statements to represented persons is a matter that arises in administration hearings on a frequent basis. The Board’s view is that a represented person ought to be provided with written statements on demand to the same extent as an account holder of a financial institution would be. In stating this presumption, the Board notes that most financial institutions now offer clients access to information about their accounts over the internet or charge a fee for the provision of statements.
The Board has made some exceptions to this view where the represented person is likely to experience actual harm as a result of being provided with that information. For example, a represented person was in the habit of taking his printed account to his local hotel and boasting that he was a millionaire (even though the account only showed tens of thousands of dollars). This boasting had brought him to the attention of unsavoury persons at the hotel who had assaulted him thinking they could intimidate him into releasing the funds. The Board approved a decision to withhold future statements to protect his physical safety. Even though KSLQ has fallen prey to persons who seek to take advantage of his wealth, because his affairs were being handled by the Public Trustee that risk was limited and therefore there was no reason that he ought to have been restricted from access to information about his account.
The evidence showed that, as administrator in this case, the Public Trustee had not adhered to its responsibilities pursuant to section 57 of the Act. The approach that was taken by the client account manager also failed to meet usual standards of customer service. In all, Ms Krantz appears to have been overwhelmed by KSLQ’s interest in his own estate and viewed him as a nuisance. Perhaps KSLQ was more insistent than other clients, but he also had a great deal more at stake than many represented persons. Therefore the Board determined that if there was another suitable person for appointment as KSLQ’s administrator, such an appointment would be more likely to reflect the principles in section 6 than maintaining the appointment of the Public Trustee.

Are the alternative nominees eligible for remuneration as administrators?

QU and EE sought joint appointment as administrators, both seeking remuneration at $150 per hour for their work. QU’s nomination was contingent upon being remunerated for the work, but EE stated that he would be prepared to act without remuneration. KSLQ also expressed wishes, that being his friends, the alternative nominees be remunerated as he did not wish to impose upon long standing friendships by asking them to act without fee.
Section 55 of the Act states:
“Remuneration of professional administrators
(1) An administrator who carries on a business of, or including, the administration of estates, whether under this Act or otherwise, is, if the Board so determines, entitled to remuneration out of the estate of the represented person for the work involved in administering that estate, whether the work was or is performed before or after the commencement of this section.
QU is a chartered accountant and registered tax agent in sole practice. He has previously been a partner of one of Hobart’s best known accounting firms and has 25 years experience in public chartered accountancy. He has acted in various roles as trustee for estates. At the hearing he confirmed that these were living and deceased estates where he had control of accounts and had undertaken a decision making role. While he does not “hold himself out” as having a business of administering estates, such work had been a part of his practice over the years. He had confirmed with his insurers prior to attendance at the hearing that his professional indemnity insurance included cover for any risk associated with being an administrator under the Act. Having not seen details of the estate, he was unable to estimate how much work would be required or comment on the extent of remuneration required. However, he stated that if there is a large amount of work involved as a sole practitioner he cannot afford to undertake that work without remuneration.
EE is a primary producer, semi-retired valuer and agricultural real estate agent. He has managed a $6 million deceased estate, involving property, shares and cash and a large family, on a voluntary basis. He did not promote himself to the Board as a person “carrying on a business” of managing estates and the Board noted that in KSLQ’s case he would approach this role in a spirit is assisting a long-term friend rather than as a business proposition. For that reason, the Board did not consider it possible to appoint him with remuneration with the approval of the Board.
Taking into account KSLQ’s wishes that his friends be appointed and remunerated in the role, the Board indicated that it would approve QU as a remunerated administrator subject to him submitting a plan of management for approval which addresses the terms of remuneration specifying fees and estimates of work required. While EE could not be remunerated as an administrator, he might be eligible for remuneration as a consultant. QU consented to appointment on that basis
The estate is a significant estate with some complexity. The Board considered it is appropriate to appoint an administrator with relevant professional qualifications.

Is it possible to appoint multiple administrators?

Ms Wells submitted that section 24(d) of the Acts Interpretation Act 1931 enables the Board to interpret section 54 to allow for appointment of multiple administrators. In the absence of any other provisions, that would appear to be the case.
Section 20(6) of the Act, which relates to the appointment of a guardian, provides for the appointment of multiple limited guardians with different functions. Section 51 mirrors section 20 in many respects but does not include any provision similar to section 20(6). The Board takes the view that Parliament deliberately provided for joint guardianship but not joint administration. Although no reason for this has been expressed, one rationale may be related to the desirability of accountability in financial transactions and the difficulty that multiple appointments may present in determining accountability.
The Board concluded that appointment of more than one administrator is not consistent with the legislative provisions.

Conclusion:

After hearing a review of an administration order made 19th July 2007 in respect of KSLQ of Hobart (hereinafter called the ‘represented person’)

The Board was satisfied that the represented person

is a person with a disability, and
is unable by reason of the disability to make reasonable judgements in respect of his estate, and
is in need of an administrator;

THE BOARD ORDERS

That the administration order continue in force.
That QU be appointed as the represented person’s administrator in place of The Public Trustee effective 16 July 2010.
That the powers and duties of the administrator be those conferred by Division 4 of Part 7 of the Guardianship and Administration Act 1995.
That the administrator is directed to submit a Financial Plan of Management to the Board (as described in pages 30 and 61-63 of the Handbook for Private Administrators) within 3 months. In addition, the Financial Plan of Management shall include the administrator’s proposal for remuneration for administering the estate and, if required, a plan for remuneration of EE as an advocate or consultant on the represented person’s behalf.
That the administrator is to keep accurate contemporaneous file notes of all decisions made, and the nature of and time engaged on activities for which a fee is charged and is to itemise accounts rendered.
That the order remains in effect to 15 July 2013.

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Anita Smith

CHAIRMAN