L N v Public Trustee for the Act
[2014] ACTSC 190
•8 August 2014
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | L N v Public Trustee for the ACT |
Citation: | [2014] ACTSC 190 |
Hearing Date(s): | 4 August 2014 |
DecisionDate: | 8 August 2014 |
Before: | Mossop M |
Decision: | See [70] |
Category: | Principal Judgment |
Catchwords: | TRUSTS – where a person under a disability at the time of a settlement of proceedings, who has had the proceeds of judgment paid to a trustee, has sought termination of the trust on the basis that the person was no longer under a disability – jurisdiction to be exercised – rule in Saunders v Vautier – parens patriae jurisdiction – Trustee Act 1925 (ACT) s 71 – whether plaintiff is in a position to give a good discharge to the trustee and is capable of managing the funds currently held in trust in a manner which makes it appropriate that she have that property and those funds invested in her |
Legislation Cited: | Public Trustee Act 1985 (ACT) Trustee Act 1925 (ACT) |
Cases Cited: | Cadwallender v Public Trustee [2003] WASC 72 Erdogan v Ekici (2012) 36 VR 579 |
Texts Cited: | Roger Bird, Osborn’s Concise Law Dictionary (Sweet & Maxwell, 7th ed, 1983) |
Parties: | L N (Plaintiff) Public Trustee for the Australian Capital Territory (Defendant) |
Representation: | Counsel: Mr R Thomas (Plaintiff) Mr W Andrews (Defendant) |
| Solicitors: Capon & Hubert Lawyers & Mediators (Plaintiff) Sneddon Hall & Gallop (Defendant) | |
File Number(s): | SC 328 of 2014 |
The Originating Application
By amended originating application, the plaintiff who I will refer to as “L N” by her litigation guardian, who I will refer to as “H N” seeks orders that:
1.Pursuant to s 70 of the Trustee Act 1925 the trust created by order of the ACT Supreme Court, proceedings 670 of 1998 be terminated and the following consequential orders made.
2.The corpus and capital of the trust referred to in order 1 vest in the Applicant [L N].
3.1 It is hereby declared that the respondent holds the legal title to the property at 27 Deloraine Street Lyons otherwise described in the Land Titles Office as Block 20 Section 4 Lyons, Certificate of Title Volume 865 Folio 95 on behalf of the Applicant [L N].
3.2. The Respondent transfer the home of [L N] namely the property at 27 Deloraine Street, Lyons in the Australian Capital Territory into the applicants name as the party holding the beneficial interest in the property.
The Public Trustee, the current trustee of the amount paid pursuant to the judgment, took, in effect, a neutral stance in relation to the application.
Background facts
The plaintiff was born on 12 February 1982 and in October 1984 suffered a serious injury when she was run over by a car while crossing a road with five other children.
In August 1998, in proceedings SC 670 of 1998, the plaintiff obtained a settlement of her negligence claim against the driver of the motor vehicle. The proceedings were settled for $1,412,500 and that settlement was approved by the Master. Because she was a minor, the money was placed on trust with the Public Trustee. As a consequence of a subsequent decision of Miles CJ, $150,000 of that was paid to her mother in recognition of past gratuitous care: see Public Trustee v Thompson (2000) 155 FLR 18 (Thompson).
The trust currently comprises:
(a)the house at 27 Deloraine Street, Lyons, valued at around $650,000;
(b)monies held as either cash or investments in the Common Fund maintained by the Public Trustee which, as at 30 June 2013 was valued at just over $900,000; and
(c)an investment held with AMP which had an account balance of just over $63,000 at 30 September 2013.
Jurisdiction being exercised
The orders sought are said to be pursuant to s 70 of the Trustee Act 1925 (ACT) (Trustee Act). That is a section which empowers the Court to appoint new trustees to a trust. It could have no application in the present circumstances.
Counsel for the plaintiff did not clearly articulate the jurisdictional basis for the application. Both parties referred to and relied upon the decision of Powell J in PY v RJS (1982) 2 NSWLR 700 at 701-703. However that was a decision made in a particular statutory context, addressing, in particular, the statutory test set out in s 18 of the Mental Health Act 1958 (NSW). As the decision of the New South Wales Court of Appeal in Guthrie v Spence (2009) 78 NSWLR 225 at [163]-[176] makes clear, the test for capacity or disability varies depending on the area of the law in which the question needs to be decided. It is certainly not possible simply to pick up an explanation of a statutory test in another jurisdiction and apply it to the present application without considering the nature of the jurisdiction being exercised by this Court.
It is therefore necessary to examine what jurisdiction the Court may exercise in order to determine what the test to be applied in the present case is and whether that test is satisfied in the circumstances disclosed by the evidence.
The terms of the order made by the Court upon the settlement of the proceedings in 1998 were not in evidence before me. In Thompson, Miles CJ recorded that on 21 August 1998 the Master approved judgment in favour of the plaintiff for $1,412,500 clear of out of pocket expenses. That amount was paid to the Public Trustee on 11 September 1998. Payment to the Public Trustee was required by s 25 of the Public Trustee Act 1985 (ACT) (Public Trustee Act). Therefore, while payment is likely to have been made pursuant to an order of the Court, that order was giving effect to a statutory requirement that unless the Court otherwise ordered, the amount of the judgment was required to be paid to the Public Trustee.
10. Once the money was paid to the Public Trustee the obligation of the Public Trustee was set out in s 25(7) of the Public Trustee Act, as then in force, which provided:
(7)Where money is paid to, or property is accepted by, the Public Trustee under this section, the Public Trustee—
(a)shall hold the money or property upon trust; and
(b)shall, subject to any direction of the court, apply the money or property, together with any interest or income derived from it, for the maintenance, advancement or benefit of the person in whose favour the relevant judgment, order or agreement was given, entered or made or such other person, being a dependant of that person, as the court directs.
11. The possible jurisdiction of the Court could arise from one of six sources:
(a)it might be an exercise of the parens patriae jurisdiction of the court;
(b)it might involve simply determining whether the plaintiff had been effective in terminating the trust pursuant to the rule in Saunders v Vautier (1841) 4 Beav 115; 49 ER 282;
(c)it might involve an application to vary the order of the Court made by the Master in 1998;
(d)it might involve an exercise of a power under s 25(7) (or its present equivalent) of the Public Trustee Act to give a direction to the Public Trustee;
(e)it might involve another power given by the Trustee Act (for example: s 71(2)(i)); or
(f)it might involve a combination of some of these powers.
12. For reasons which I explain below the jurisdiction does not arise from (c) or (d) above.
The terms of s 25 of the Public Trustee Act, in the form that it was at the time the order was made, are important in that they indicate that once paid to the Public Trustee, the amounts are to be held are held on trust: s 25(7)(a). An equivalent statement now appears in s 25A(1) of the Act. There was also a power to give directions in relation to the application of the money: see s 25(7)(b). I do not consider that the power of the Court in s 25(7)(b) to give a direction permits the giving of a direction to terminate the trust. That is because the reference to a direction of the Court sits within paragraph (b), which relates to the application of money and property rather than in paragraph (a), which establishes an unqualified obligation to hold the money or property upon trust. The position remains the same under s 25A of the Public Trustee Act, which now places the obligation on the Public Trustee to hold the amount or property on trust for the person and provides power in s 25A(2), which is subject to the direction of the Supreme Court, to do particular things with the money or property (cf Cadwallender v Public Trustee [2003] WASC 72 at [39]-[40] where Heenan J reached a different conclusion in relation to a generally similar provision). Hence in my view the jurisdiction does not arise from option (d) above.
14. There are a series of cases from the Western Australian Supreme Court which address the circumstances where a person under a disability at the time of a settlement of proceedings, who has had the proceeds of judgment paid to a trustee, has sought termination of the trust on the basis that the person was no longer under a disability. These cases have had to examine the jurisdictional basis for such an application.
15. Two decisions of relevance involve a Mr Max Naso. Mr Naso was severely injured when hit by a motor vehicle. Personal injury proceedings were commenced and the amounts in question were ordered to be paid to a trustee company. It does not appear that there was any provision in an Act equivalent to s 25 of the Public Trustee Act which was applicable but rather the payment was made because of the terms of the Rules of the Supreme Court of Western Australia. Mr Naso, after he had attained his majority, had written to the trustee company purporting to determine the trust and directing that the assets be vested in him and be paid at his direction. This was said to be open to him as a result of the rule in Saunders v Vautier, which provides that where the sole beneficiaries are sui juris and have an absolute indefeasible interest in the trust assets and call for the trustee to pay over the trust fund, the trustee is bound to transfer the trust property to the beneficiaries whereby the trust comes to an end.
16. The term sui juris is a Roman law term indicating “[a]n independent person not subject to any of the three forms of authority, potestas, manus, mancipium. In English law, a person who can validly contract and bind himself by legal obligation uncontrolled by any other person”: Roger Bird, Osborn’s Concise Law Dictionary (Sweet & Maxwell, 7th ed, 1983) 315.
17. The trustee company had declined to comply with Mr Naso’s request, and Mr Naso commenced proceedings by way of an originating summons in the Supreme Court of Western Australia seeking, in essence, a declaration that the trust constituted by the order of the District Court was at an end. The trustee company applied for an order that Mr Naso undergo a psychiatric assessment and that order was refused by the Master. An application for leave to appeal was then made to the Full Court of the Supreme Court of Western Australia. Justice Parker gave the decision of the Court: see Perpetual Trustees (WA) Limited v Naso (1999) 21 WAR 191 (Naso [No 1]). His Honour was ultimately of the view that the case was not one to which the rule in Saunders v Vautier applied. That was because of the specific terms of the order made in that case which constituted the trust and which said that the amount paid was “to be held by it on trust for the first plaintiff until further order…”. His Honour considered that because of the terms of the court order constituting the trust and the provision that the trust was to continue “until further order”, that took the case outside of the application of the rule in Saunders v Vautier. For those reasons he considered that the proceedings were misconceived and that the appropriate application to be made was an application to the District Court for an order varying or discharging the relevant orders of that Court made at the time of the settlement. However, it is useful to set out some of his Honour’s consideration of the application of the rule in Saunders v Vautier:
19 Before the learned Master in the present proceedings in this Court the issue arises in a context different from that relevant to the trial Judge. The respondent seeks a declaration that he has terminated the trust. He relies on the rule in Saunders v Vautier. His case necessarily involves the proposition that he has the capacity necessary for him to terminate a trust pursuant to the rule in Saunders v Vautier. A presumption assists him in this respect. Nevertheless, for the purposes of the application before the Master, in my respectful view the question was not, as the Master appears to have understood it, whether the evidence showed that the respondent lacked mental capacity, but whether there was a live issue in the proceedings as to his mental capacity. There being no formal pleadings in the originating summons procedure, that question must be informed by the affidavit material.
20 In Saunders v Vautier at 282 the relevant capacity is identified as being "competent to give a valid discharge". In Jacobs' Law of Trusts in Australia (6th ed) at [2308] it is said that the beneficiary must be sui juris, ie of full age and full legal capacity, or a person who can validly contract and bind himself by legal obligation uncontrolled by any other person. By invoking the rule in Saunders v Vautier the applicant necessarily asserted he had that capacity. In my respectful view one must question that it could properly be concluded that there was no foundation in the evidence sufficient to give rise to a live question as to the mental capacity of the applicant in this respect. The total state of the evidence before the learned Master, while obviously not compelling or determinative, provided in my view a sufficient foundation to reveal that there was a live question in the proceedings that the applicant had the capacity necessary for him to terminate the trust.
...
24 Saunders v Vautier concerned a legacy of stock which was directed under the terms of the will to accumulate until the sole beneficiary attained the age of 21 years. The principal, together with the accrued dividends and interest, were then directed to be paid to the beneficiary absolutely. On the beneficiary attaining the age of 21 years he petitioned the court to have the funds transferred to him. The case was decided by applying a principle which was stated by Lord Langdale MR in these terms (at 282):
"... where a legacy is directed to accumulate for a certain period, or where the payment is postponed, the legatee, if he has an absolute indefeasible interest in the legacy, is not bound to wait until the expiration of that period, but may require payment the moment he is competent to give a valid discharge."
That principle, which has become known as the rule in Saunders v Vautier, has been applied not only to legacies to individuals, but also to gifts to a charity, both corporate and unincorporate; Wharton v Masterman [1895] AC 186, Thomas v Perpetual Trustee Co (Ltd) (1955) 94 CLR 537, 549. It is also been applied where there is more than one beneficiary, provided they are unanimous: Polairet v Carew; (1863) 32 Beav 564, 55 ER 222.
25 No case has been referred to the Court, however, in which the rule has been applied to a trust constituted pursuant to an order of a court. The cases appear to deal only with trusts in respect of legacies and gifts. While the basis of the rule has been said to be that any restriction on the enjoyment by a beneficiary, who is sui juris, of a vested interest is inconsistent with the nature of that interest and must be disregarded ... there does not appear to be any basis on which the rule, even if so understood, can be extended to allow a beneficiary of a trust such as the present to terminate the trust by calling for the fund from the trustee notwithstanding the order of the court. It may prove to be the case that, on an application to the court to terminate the trust, in the absence of any other relevant consideration, the principle underlying the rule in Saunders v Vautier might guide the decision of the court, but that is an entirely different issue from that presently postulated for the respondent.
18. Following that decision Mr Naso did in fact make an application for the discharge of the District Court order. In Naso v Cottrell [2001] WADC 7 (Naso [No 2]), although Judge Nisbet found that there was no or minimal evidence of brain damage and no psychiatric disorder, he found that the extent of the physical disabilities and emotional dependence of Mr Naso made him incapable of managing his own affairs: Naso [No 2] at [44].
19. His Honour considered the question of his jurisdiction in the light of the submission that, because the evidence demonstrated that Mr Naso was not of unsound mind the Court’s supervisory jurisdiction was at an end. His Honour referred to the decision of the Full Court and the decision of McKechnie J in Newton v The Public Trustee [2000] WASC 118 (Newton [No 2]) which held that the rule in Saunders v Vautier had no direct application to a court-appointed trust. His Honour then considered whether or not the parens patriae jurisdiction of the Court extended to ordering the continuation of a court-appointed trust where the beneficiary was of full age and was not by reason of mental illness, defect or infirmity incapable of managing his affairs. His Honour made a review of the authorities and considered that he did have such jurisdiction, including jurisdiction to find as a fact that the plaintiff was not capable of managing his own affairs by reason of the circumstances which he had set out notwithstanding that he was no longer an infant and notwithstanding that the evidence disclosed that he had no mental infirmity, disease or defect. He therefore refused to grant the relief sought in the summons.
20. The decision of McKechnie J in Newton v The Public Trustee [1999] WASC 179 (Newton [No 1]) involved a similar situation to that in Naso [No 1] except that the order of the District Court was not expressed to be until further order. His Honour therefore found that there was no further jurisdiction in the District Court in respect of the trust. He then considered whether the decision in Saunders v Vautier applied to trusts imposed by the Court. He recognised that the decision in Naso [No 1] was influenced by the nature of the order and the possibility of applying to the District Court under the terms of the original order. However, he noted that the Court had not been referred to any case in which the rule in Saunders v Vautier had been applied to a trust constituted pursuant to the order of a Court. His Honour, however, said that he considered himself bound by the ultimate conclusion in Naso [No 1] and therefore held that the trust created by a Court cannot be brought to an end by a demand from the beneficiary to the trustee. At [22]-[24] his Honour said:
22Where a trust is created for the benefit of a person under a temporary incapacity, such as age, it might be argued that the mere creation of the trust by order of a court does not take the case beyond the general principle of Saunders v Vautier.
23 In such a case, the intention of a settler of a trust or a court is to protect the body of the trust until the beneficiary comes of age and is presumed to be competent to deal with the trust property for his or her own purpose.
24 In the present case however I consider that I am bound by the ultimate conclusion in [Naso [No 1]] I therefore hold that a trust created by a court cannot be brought to an end by a demand from the beneficiary to the trustee.
21. His Honour then considered whether the Court had power to discharge the trust. His Honour referred to the general power of the Supreme Court to do justice in equity and concluded that the Court had jurisdiction to entertain the proceedings and resolve the question. His Honour said at [27]:
For that purpose the Court may receive evidence as to whether it is just in equity to determine a trust ordered by another court on the basis of circumstances which may not have existed when the trust was created but now exist.
22. His Honour said at [30]-[32]:
30 Trusts may be created for a number of reasons and most obviously when a person is under some form of incapacity, either a temporary incapacity, such as age or a possibly permanent incapacity relating to mental acuity.
31 On the one hand, there is little difference between a court ordered trust and any other trust where the incapacity is brought about by age. Logically the rule in Saunders v Vautier, if not of direct application to court ordered trusts, would be strongly persuasive as to the course to be followed.
32 On the other hand, where the incapacity is not a temporary one such as age, there is a requirement to decide the extent, if any, that any incapacity might have on the ability of the beneficiary to manage the funds which would become his or her property. To this extent, although the provisions of the Guardianship and Administration Act(WA) offer a useful and simple method of resolving the question, while protecting the rights of the beneficiary, this court is not absolved by that Act from deciding the controversy in accordance with equitable principles to do justice in a particular case.
23. In Newton [No 2] his Honour considered the evidence and ultimately determined that he should terminate the trust. At [1] his Honour said:
1 In Newton v The Public Trustee [1999] WASC 179, I set out the powers of the Court to make the orders sought by the plaintiff. In Saunders v Vautier [1841] EngR 629; (1841) 4 BEAV 115; 49 ER 282 the test of competence propounded was whether a person was competent to give a valid discharge. While that is a convenient expression of the test, translated into modern times I consider that this Court is required to be satisfied that the plaintiff is generally competent to understand the nature and effect of the application to vest the trust property in him or her.
24. He concluded at [14]:
14 Of course, the funds are safer with the Public Trustee and the order I propose is attendant with some risk. However, risk is not part of the test. If the plaintiff has demonstrated competence, he has a right to call for the delivery of the trust funds into his own hands. His use of the funds thereafter is a matter for him. His plans for their use are an indicator of competence, not a test as to whether the trust should be terminated. This is why I have remarked previously that the rule in Saunders v Vautier, if not having direct application to court-ordered trusts, is strongly persuasive of the course to be followed.
25. The issue was again considered in Cadwallender v Public Trustee [2003] WASC 72. The case was similar in some respects to the present, in that the plaintiff had suffered a brain injury but had demonstrated over a number of years since the injury a capacity to manage his affairs in an effective manner. Justice Heenan reviewed the previous decisions in Naso and Newton. His Honour referred to a number of powers to make the order sought: s 93 of the Trustees Act 1962 (WA) (a provision in similar terms to s 92 of the Trustee Act, although his Honour may have been intending to refer to s 92, which gave a power to the Court to make directions in relation to any property of a trust), Order 70 Rule 12 of the Rules of the Supreme Court, the parens patriae jurisdiction and the rule in Saunders v Vautier. His Honour appeared to approach the matter (at [42]-[45]) on the basis that the parens patriae jurisdiction empowered the Court to determine whether or not the circumstances which prompted the necessity for the establishment of the trust had disappeared. As to the operation of the rule in Saunders v Vautier and the previous decisions of the Court, his Honour said at [46], [48] and [51]:
46 In Perpetual Trustees (WA) Ltd v Naso (supra) and in Newman's case [sic] there was discussion of whether or not the rule in Saunders v Vautier [1841] EngR 629; (1841) 4 Beav 114; 49 ER 282 applies to such a court appointed trust and there were some judicial dicta to the effect that the express or implied terms of the order of the court establishing the trust may exclude the operation of that rule. In Newman's case [sic] McKechnie J, however, seemed inclined to the view that if the beneficiary were no longer under any disability he would be entitled to invoke that rule and to seek an order that the court terminate the trust and direct the payment of the proceeds to him, but that the court retained the responsibility of determining whether or not the disabling condition had ended, or had reduced sufficiently for the beneficiary to have control of the corpus. With respect, I consider that this is the proper formulation.
...
48 There can be no doubt that, under a typical court appointed trust to hold the proceeds of a claim for damages for personal injuries for a disabled person, the beneficiary takes a fully vested interest in the trust estate from the moment the trust is established. There is no possibility of a contingency arising which would deprive the beneficiary of his or her entitlement to the funds and it is only the real or deemed incapacity to manage the funds which accounts for the fact that the property is then vested in interest but not in possession. The rule in Saunders v Vautier (supra) may only be invoked by a beneficiary who is sui juris, that is of full age and without incapacity, but if sui juris, I see no reason why such a beneficiary should not be entitled to apply to the court which established the trust at some time in the past when he or she was disabled, and on proof of the passing of that disability, demand, as of right, the termination of the trust and the transfer absolutely of the trust property.
...
51 I return to the question of whether this Court has power in the present case, and in other like cases, to make the orders sought by Mr Cadwallender in circumstances where the trust was created by an order of another court which retains the jurisdiction to supervise that order. The short answer to this question is that such a power is expressly conferred upon this Court by s 93 of the Trustees Act 1962. However, the authorities cited plainly establish that the court also has the "parens patriae" jurisdiction which also enables it to determine the application. This being the case, I am satisfied that this Court can and should accede to the relief being sought on behalf of Mr Cadwallender although, in future cases, despite the existence of such a jurisdiction in this Court, I consider that it would generally be preferable for such applications to be brought in the court whose order established the trust in question.
26. Notwithstanding Heenan J’s approval of the approach in Newton, his Honour’s reference to the rule in Saunders v Vautier does create some uncertainty as to precisely how his Honour saw the relationship between the rule and the operation of the parens patriae jurisdiction or other statutory powers that were available to him.
27. The Western Australian cases do not finally resolve the basis on which court-created trusts for persons under a disability are to be terminated. In the present case, unlike Naso’s case (or Erdogan v Ekici (2012) 36 VR 579), there is no evidence that the Court’s order was made “until further order” and, having regard to s 25 of the Public Trustee Act, it is unlikely to have done so. Therefore, there is no ongoing jurisdiction as a result of the Court’s original order which finalised the proceedings and hence option (c) set out above is not the source of the Court’s jurisdiction.
28. As to the relationship between the rule in Saunders v Vautier and the parens patriae jurisdiction of the Supreme Court, the Western Australian cases do not resolve how far beyond the capacity to give a good discharge a plaintiff must go in order to justify termination of the trust.
29. Further, the fact that the Western Australian cases were decided in a different statutory context cannot be ignored although it must be said in a general sense that the general objects and structure of the legislative regime in the ACT are similar to that considered in those cases. However, the existence of ss 25 and 25A of the Public Trustee Act are significant features of the legislative regime and no direct equivalent was considered in the Western Australian cases.
30. The precise jurisdictional basis of the orders sought might be significant in some cases. That is because the requirement of the rule as articulated in Saunders v Vautier is that the previously disabled person be able to give a good discharge to the trustee. This involves the person being of full age and legal capacity or a person who can validly contract and bind himself by legal obligation uncontrolled by any other person: Naso [No1] at [20]; or generally competent to understand the nature and effect of the application to vest the trust property in him or her: Newton [No 2] at [1]; see also Gibbons v Wright (1954) 91 CLR 423 at 438; Guthrie at [174].
31. However, in the exercise of the parens patriae jurisdiction broader considerations might exist in relation to the capacity of the person to manage the funds if made available to them. The scope of that jurisdiction is described in Naso [No 2] at [53]-[59] and the breadth of the considerations emphasised in the authorities cited in that case at [56]-[59]. In this Court the jurisdiction is discussed in Thompson and Singh v Calvary Hospital [No 2] (2009) 3 ACTLR 247 at [11]-[31].
32. Naso’s case itself is an authority which illustrates the possible difference between the two tests: see Naso [No 2] at [61]. Further, if the rule in Saunders v Vautier only applied then, in obvious cases (such as where a minor attains his or her majority) there would be no necessity for a court order. Yet if the parens patriae jurisdiction is involved then it would appear to me that an order might be required even in obvious cases such as at the end of minority. If the rule in Saunders v Vautier is applicable then any risks arising out of impaired decision-making ability following the termination of the trust would need to be managed through the potential for the appointment of a manager under the Guardianship and Management of Property Act 1991 (ACT), or equivalent statutory provisions available in other jurisdictions.
33. Because I was not assisted by submissions from the parties on the jurisdictional issue, this is not an appropriate case in which to finally resolve the basis for the making of the orders sought. I am satisfied that I have jurisdiction to make orders to the effect of those sought, either by virtue of the rule in Saunders v Vautier, or the parens patriae jurisdiction of the Court supplemented, if necessary, by the powers in s 71 of the Trustee Act.
Facts
34. The plaintiff is the daughter of [M N] and H N. They have three children: Stephanie, Jane and L aged approximately 40, 34 and 32 respectively.
35. The plaintiff attended a special school for children with disabilities until kindergarten when she was moved to a mainstream school. She initially attended Monash Primary School and then from about 1990 commenced at Trinity Christian School. As a consequence of both her own efforts and the very significant efforts of her parents, the plaintiff recovered from her injuries to a greater extent than had been expected. She graduated from year 10 at the Trinity Christian School. A reference dated 26 March 1998 records that L was “always courteous, friendly and helpful” and is “totally honest and trustworthy”. She attended McKillop College and completed years 11 and 12. She received special assistance at that school. In years 11 and 12 she studied maths, science, English, sport, art and home economics. She obtained average grades and did not have any behavioural problems. Her reference recorded that her grades were of a very high standard and that she was “a very friendly and positive student”. After year 12 she attended an interior design course at Canberra Institute of Technology. She completed this course in March 2003. She has also done various short courses including a course in home economics, deportment and grooming (2000), and a course with the Australian Public Service Commission on job applications and interview skills (2008).
36. She volunteered at a local library in Griffith before getting a casual position in the Australian Public Service in the Department of Employment and Workplace Relations. She was then offered a permanent part-time position in that department. She now works in the payroll team and has been in that job for almost 10 years.
37. She works 18 hours per week. Her duties include sending payslips to employees on long-term leave or maternity leave and other administrative work. She does not work full time because she prefers to do other things throughout the week. She earns approximately $950 per fortnight. She has also been paid a weekly amount of $550 as living expenses from the fund managed by the Public Trustee.
38. In 2000 she obtained her driver’s license and purchased a car. She obtained her provisional driver’s licence in November 2001. She still has the same Toyota Tarago that she bought in 2000. She has travelled overseas with different members of her family to Vietnam, China, USA and Europe.
39. She assists at a Sunday School at the Hughes Baptist church and has in the past performed volunteer work at Tuggeranong Art Centre, Companion House in O’Connor and at the Griffith Library.
40. She remains close to her family. She has occasionally, since 2013, flown to Melbourne to visit her sister Jane. She has not been in a romantic relationship although she has good male friends who she has known for a long time. She leads a quiet life. She enjoys playing the piano, reading, drawing, walking and spending time with her family and friends.
41. Her mother records that she is very careful with money, doing research prior to a significant purchase and asking her family for advice. In 2003 she wished to purchase her own house and after researching the issue asked the Public Trustee to purchase a house in Lyons. Her sister Stephanie showed her how to use NetBank and she now pays all her household bills by herself including home and contents insurance.
42. She has her own accountant, lawyer and financial adviser.
43. She maintains her house and cooks for herself.
44. She has maintained her own savings account in which she has accumulated some $35,000. Her salary is paid into that account and she controls expenditure from that account without intervention of the Public Trustee. She has done that for many years.
45. She doesn’t smoke or drink. She records that she has a strong relationship with her parents and family.
46. Her mother is clearly very proud of the progress that she has made and supports her wish to take control of the funds currently held on trust for her.
47. The plaintiff recognises that she is slower in thinking than other people. She works around this by writing things down so that she does not forget them.
48. She records that she does not wish the Public Trustee to continue to manage her money because she needs to ask permission from the Public Trustee to spend amounts of money which she finds frustrating. She perceives that she is able to take care of her own finances. She recognises that there will be issues in relation to which she will need to obtain financial advice.
49. She has clearly done substantially better than was anticipated at the time at which the proceedings were settled. In his decision in Thompson referred to above, Miles CJ said at [13] that “[t]he medical evidence available to counsel suggested that remunerative employment for [L] was likely to be available only in a sheltered workshop…”.
50. In 2011, in response to correspondence from the plaintiff, the Public Trustee indicated that it accepted that where a beneficiary of a trust is of full age and capacity the beneficiary may terminate the trust by requiring the trustee to transfer the assets to the beneficiary. The Public Trustee indicated that its understanding was that the plaintiff did not have the requisite mental capacity but would be happy to give consideration to terminate the trust on being provided with certain information. In April 2011 the plaintiff’s solicitors sent to the Public Trustee a draft statutory declaration from the plaintiff as well as a report from Tom Sutton, a psychologist, dated 23 March 2011. Mr Sutton had previously assessed the plaintiff when she was aged 16 for the purposes of her personal injury claim.
51. Mr Sutton’s report recorded that on the General Ability Index she would be classified as “Borderline”, not “Mildly Retarded”. He said that her full-scale IQ at 72 is now borderline.
52. He based his opinion on the behavioural observations reported to him spanning 14 years since his last assessment, noting that the plaintiff could manage bill paying and was socially interactive. He noted that she had a supportive family and there had been no reported episodes of poor impulse control or behavioural acting out issues. He said:
8. She will require “adult” help in dealing with novel situations where qualitative changes to her circumstances occur, and will continue to need external help in establishing any new routines to manage her financial affairs if circumstances change. These actions require her to make decisions to seek help, in the same way any person seeks help with financial matters they cannot manage. I saw no lack of insight nor poor impulse control issues in this lass’s recent history, nor in the test performances. I am confident that she would appreciate when such changes occur, and seek the requisite help.
53. He concluded:
10. In summary, there remains significant issues with her cognitive status: it remains decidedly lowered and in statistical terms, not significantly different to previous assessments if based on the error measurement ranges. However, the data has crept into the Borderline regions of performance and is bolstered by 14 years of behavioural achievement. She will still require external “adult” help with changing circumstances and with the establishment of new routines when required.
11. The exact meanings of “ordinary routine affairs of man” leaves room for interpretation of the data to mean she cannot fully manage her affairs, as this is also possible in terms of the test result being Borderline. I acknowledge it could be argued either way with equal force, but have formed an opinion based on the combination of her specific data obtained in 2012 now falling at the Borderline measured levels, plus a long history of behavioural stability and my experience of those with such results managing their life. This combination indicates she has more probability of managing than if she were obtaining Mild Retardation levels, where she would not. It does boil down to a few points difference in obtained scores, and statistically there is no significant change per se, but specific single number measures are present to help with marginal decisions in the real world. The current psychometrics just creep across the line between Mild Retardation and Borderline and I have to go with that.
54. The Public Trustee did not accept that the report of Mr Sutton indicated that the plaintiff had the required capacity to terminate the trust. Subsequently Mr Andrews, acting for the Public Trustee, wrote to the plaintiff’s solicitors on 1 July 2011 referring to the earlier reports of Mr Sutton as well as the decision of Justice Powell in PY v RJS (1982) 2 NSWLR 700 at 702 as well as the discussion of the meaning of “ordinary routine affairs of man” by Young J in H v H (unreported, New South Wales Supreme Court, 20 March 2000).
55. On 18 January 2012 the plaintiff’s solicitors wrote to Mr Sutton again seeking a further report. The evidence is not clear as to whether a further report was provided to the solicitors for the plaintiff. An additional report from Dr Sutton which had been provided to the plaintiff’s general practitioner appears to have been provided to the solicitors for the Public Trustee by letter dated 9 February 2012.
56. In that report, following psychometric assessment, Mr Sutton reported:
Test Results & Conclusions:
1. [L] has borderline intellectual and achievement abilities: this is the region between deficient and low average, but above the classification of retardation. Some of her working memory and verbal reasoning processing are low average.
2. Literacy levels, including basic arithmetical calculations, are functional for daily living (but not paid occupational work). Her comprehension of written information is actually better than her reading level.
3. She is quite capable of maintaining an independent life with adequate training and repetition of procedures, though she will struggle with novel situations. She does not have mental retardation nor significant focal deficits in any cognitive area that would sabotage other cognitive functioning e.g. her working memory is satisfactory.
4. Neuropsychologically, given her borderline to low average status, there is no reason why she is unable to legally manage her own affairs. She has a strong and close family support network, a sensible personality and clear goal directed behaviours: whilst advice and guidance in more complex financial areas will always be required, this is no different to that which many people receive.
57. The detail of the results of the psychometric assessment undertaken were consistent with the conclusions expressed by Mr Sutton.
58. In July 2013 the solicitors for the plaintiff asked Dr Bruce Westmore, a forensic psychiatrist, to examine and report on the plaintiff. The plaintiff was examined in his rooms on 10 September 2013 and he reported to the solicitors for the plaintiff on 16 September 2013.
59. One of the questions that Dr Westmore was asked was whether the plaintiff was suffering from any disability or incapacity and if so whether she was capable in a reasonably competent manner of dealing on a day-to-day basis with the ordinary routine affairs that she would be required to deal with having regard to her actual financial living and employment circumstances. Dr Westmore said:
It is clear that Ms [N] receives considerable ongoing support and assistance from her family and that assistance has also no doubt helped her in terms of her evolving personality structure, coping style and her level of maturation.
Ultimately it is, I think, a matter for others to determine whether she is “suffering under any disability, or incapacity, in relation to her ability to manage her own affairs. I, as a psychiatrist, can highlight her strengths and vulnerabilities which might assist in that determination. She is essentially leading an independent life and lifestyle, but the effectiveness of that and her ability to do so, as well as the quality of her life is no doubt assisted considerably by the support she receives from her family. I agree with the psychologist that she has no history consistent with poor impulse control. She has some insight into the nature and extent of her limitations and is able to express, verbally at least, that she would seek and consider appropriate advice if required. She is effectively functioning at a level not very different from many other people in society who have cognitive problems (from whatever cause), but whose affairs are not being managed by the Public Trustee. It is probable that there are many people in society who function below the level Ms [N] functions and their affairs are also not being managed by the Public Trustee. In other words, she continues to have a disability arising from the original head injury, which will result in her being reliant to some degree at different time in her life on friends and family and others, such as financial consultants and advisers, but her disability is probably not of such severity to make her significantly different from many other “functional and independent” members of the community.
The definition contained in the letter from Sneddon Hall & Gallop, 1 July 2011, refers to a person’s level of “competence”. This is a difficult concept to interpret psychiatrically. She certainly has high levels of competence in some areas, but some clear deficits in others. If for example she was to enter a general knowledge quiz she would certainly fail. On the other hand if there was a test for “common sense” then I suspect she would perform quite well. Again these are matters best determined by a Tribunal rather than a psychiatrist. She will require assistance in managing her finances although, as the psychologist correctly points out, most people do. The question is whether or not she will receive good advice but, again, that probably does not differentiate her from the rest of the general population.
She is likely to rely on the support and advice of family members indefinitely but, again, that does not necessarily distinguish her from many other members of the community. I think the issues of “common sense” are likely to provide her with some “protection” and are likely to make her wary of the advice of strangers and that would be considered by me to be a positive aspect of her presentation.
60. He said in addition:
Ms [N] is capable of dealing in a reasonably competent manner with ordinary affairs that she will be required to deal with on a day to day basis having regard to her actual financial living and employment circumstances.
61. He was asked whether, if she was permitted to manage her own affairs, there would be a risk that her moneys and assets would be dissipated. He said:
If Ms [N] were to be permitted to manage her own affairs, there would be a risk that her moneys and assets would be dissipated if she was given bad advice, if she trusted somebody who gave her bad advice or if she acted without advice.
62. He declined to indicate whether that risk was an acceptable one or not.
63. He explained the basis for his opinion that she was reasonably competent to deal with her ordinary affairs on a day-to-day basis as follows:
My opinion, that Ms [N] is reasonably competent to deal with her ordinary affairs on a day to day basis, is founded on the history that she is living an independent lifestyle (with some support and assistance from family), that she holds part-time employment, that she can shop and cook for herself, that she manages her own savings account, that she can purchase clothing, that she has a functional social network and a range of interests. With the exception of her impaired general knowledge skills and some impairment in her arithmetic skills, her clinical presentation was extremely good. She was alert and attentive, oriented to time, place and person, she is not suffering from any major psychiatric disability, such as a mood disorder. She has a mild cognitive disorder. There is evidence that her personality has developed and matured over the years, that she has insight and she presents as a person with no impulse control problems and in fact she presents as an individual with a reasonable amount of “common sense”. She appears to have a close relationship with her family and obviously their ongoing support and positive affection towards her will have a major impact on the outcome if she is allowed to manage her own financial affairs.
64. In the light of this evidence I make the following findings.
(a)The plaintiff continues to have a mild cognitive impairment.
(b)That puts her on the borderline of what would be considered mild retardation.
(c)She has a significant history of independent living and ability to cope with the ordinary affairs of day-to-day life.
(d)She is and will remain dependent upon others for advice about major matters to do with property and finance. That need is, however, one which she has in common with many members of society who live independently and control their own property and finances.
(e)She has no history of poor impulse control which would indicate a significant risk of dissipation of her assets contrary to her best interests.
(f)She has a history of good family support, which is a factor which tends to reduce the risk of dissipation of her assets in a manner contrary to her best interests.
(g)Notwithstanding her impairment, she is likely to be able to understand the nature and affect of a discharge given to the Public Trustee if it was explained to her.
Conclusion
65. As Justice McKechnie recognised in Newton [No 2] the fact that funds may be safer with the Public Trustee and that ending the trust is attendant with some risk is not the test for the purposes of the rule in Saunders v Vautier or for its application by analogy if that is the relevant approach. If, for the purposes of the exercise of the parens patriae jurisdiction, the test is a broader one then the extent of risk is a factor which can be given greater consideration.
66. In the present case I am both satisfied that the plaintiff is in a position to give a good discharge to the trustee and that she is capable of managing the funds currently held in trust in a manner which makes it appropriate that she have that property and those funds vested in her.
67. Thus if the issue is to be determined by reference to the rule in Saunders v Vautier, I am satisfied that the plaintiff is entitled to the trust property. If the issue is determined in the parens patriae jurisdiction of the Court either by analogy to the rule in Saundersv Vautier or upon broader considerations then I am satisfied that an order should be made permitting the plaintiff to take possession of the trust property and hence terminating the trust. If, contrary to my view expressed above, the provisions of s 25A of the Public Trustee Act empower the making of a direction to terminate the trust then, I am satisfied that it is appropriate to terminate the trust.
Orders
68. Although the terms of the orders set out in the plaintiff’s amended originating application were not opposed by the Public Trustee, I consider it appropriate to make orders in slightly different terms which are intended to achieve the same effect. I consider that making a declaration as to the entitlement of the plaintiff to the money and property held by the Public Trustee will be sufficient. I would anticipate that, having regard to the approach taken by the Public Trustee to the application, in the light of the declaration no further order will be necessary to compel the trustee to transfer the money and property, but in case there is some difficulty or some need for a formal order I will grant liberty to apply in relation to any further order that is necessary. I will also make the declaration as to the beneficial ownership of the property at Lyons which may resolve any difficulties in having the property registered in the plaintiff’s name.
69. Having regard to my conclusions as to the capacity of L N, she does not need to proceed by litigation guardian. I will therefore amend the title of proceedings to delete the reference to her litigation guardian.
70. The orders that I make are:
1. The Court declares that the plaintiff is entitled to the transfer of money and property held on trust by the Public Trustee as a consequence of the settlement of proceedings 670 of 1998.
2. The Court declares that the Public Trustee for the Australian Capital Territory of the legal title to the property at 27 Deloraine Street Lyons, also known as Block 20 Section 4 Lyons (being certificate of title volume 865 Folio 95) on behalf of [L N].
3. The parties have liberty to apply in relation to any further orders necessary to give effect to these orders.
| I certify that the preceding seventy [70] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Master Mossop. Associate: Date: 20 January 2015 |
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