Laird v Laird
[2021] VSC 645
•7 October 2021
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
JUDICIAL REVIEW AND APPEALS LIST
S ECI 2020 03564
| NEALE DOUGLAS LAIRD | Applicant |
| v | |
| SUSAN ELIZABETH LAIRD | Respondent |
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JUDGE: | Gorton J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 14 September 2021 |
DATE OF JUDGMENT: | 7 October 2021 |
CASE MAY BE CITED AS: | Laird v Laird |
MEDIUM NEUTRAL CITATION: | [2021] VSC 645 |
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ADMINISTRATIVE LAW – Appeal from a decision of the Victorian Civil and Administrative Tribunal as to costs – Guardianship proceeding – Whether Tribunal’s decision infected by error – Where Tribunal relied on unserved additional submissions – Appeal allowed – Whether to redetermine or remit – Decision to re-exercise costs discretion.
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APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Self-represented litigant | |
| For the Respondent | Mr S Clement | Davies Collison Cave Law |
TABLE OF CONTENTS
A. Background................................................................................................................................... 1
B. The applicants filed additional submissions that were not provided to Neale.............. 2
C. The various VCAT proceedings and Neale’s undertaking.................................................. 3
C.1.The 2015 application............................................................................................................ 3
C.2.The 2017 application and Neale’s undertaking............................................................... 3
C.3.The 2018 rehearing before the vice president.................................................................. 6
C.4.The determination of the application for costs by the senior sessional member........ 7
D. Was the Tribunal’s decision to order costs against Neale infected by error of law?..... 8
D.1.The finding that Neale had breached his undertaking.................................................. 8
D.2.The reliance on the additional unserved submissions................................................... 8
E. Remittance or redetermination?.............................................................................................. 10
F. The power to order costs........................................................................................................... 11
G. What costs order should be made?......................................................................................... 12
G.1.The proceeding before the senior member..................................................................... 14
G.2.The hearing before the vice president............................................................................. 18
G.3.The reconstitution of the Tribunal and the application for costs before the senior sessional member............................................................................................................................... 22
H. Disposition.................................................................................................................................. 23
HIS HONOUR:
A. Background
Ellen Laird,[1] who died on 25 December 2020 as a widow in her nineties, owned a farming property. Mrs Laird[2] had seven children: Neale, Euan, Clyde, Eric, Stuart, David and Susan. For many years, Neale, who is the applicant in this proceeding, lived with his mother on the property. On 23 November 2015, Mrs Laird appointed Neale and her lawyer, John Natoli, as joint attorneys for financial matters and Neale as her sole attorney for personal matters. Under Mrs Laird’s will, Neale and Stuart were to inherit the farm property, and their siblings were to inherit the balance of the estate. Mrs Laird needed a significant amount of expensive care.
[1]This application for leave to appeal arises out of proceedings in the Guardianship List at the Victorian Civil and Administrative Tribunal. The Tribunal itself anonymised the persons involved. The person whose decision-making capacity was in issue has since died. The proceeding in this Court was commenced using the parties’ real names. Neither party in this Court sought a pseudonym order. Accordingly, I will refer to the persons involved by their real names.
[2]The parties informed me that that she preferred ‘Mrs’ to ‘Ms’.
At the times that are relevant to this dispute, Neale considered that his mother retained decision-making capacity and took various steps that he said were in accordance with his mother’s wishes without invoking the power of attorney. Some of Neale’s siblings took the view that their mother had lost the capacity to make decisions in her own best interests and that Neale was not acting in her best interests. Five of Neale’s siblings (‘the applicants’[3]) commenced proceedings in the Victorian Civil and Administrative Tribunal (‘the Tribunal’), seeking an order under the Guardianship and Administration Act 1986[4] for the appointment of guardians and an administrator and an order under the Powers of Attorney Act 2014 for the power of attorney in favour of Neale to be revoked. The Tribunal appointed guardians and an administrator, and made a costs order against Neale.
[3]Not each sibling was recorded as an applicant in the proceedings. But each was a party and, as best I can ascertain, they presented a joint position. For convenience, I will refer to them collectively as the applicants. This was also the approach taken by the Tribunal below.
[4]Since repealed and replaced by the Guardianship and Administration Act 2019 (Vic).
Neale has now sought leave to appeal under s 148 of the Victorian Civil and Administrative Appeals Tribunal Act 1998 (‘the VCAT Act’) against the costs order made against him. He appeared for himself both in this Court and at some hearings at the Tribunal. As Neale acknowledged, any appeal can only be on a question of law. Some of the language in his notice of appeal and submissions raised complaints that could not be characterised as errors of law. But looking at the substance of his complaints,[5] it is apparent that he contends that the costs order was made in circumstances in which he was denied procedural fairness, and that the discretion miscarried because the Tribunal failed to have regard to relevant matters and had regard to irrelevant matters. He also contended that the Tribunal did not have the power to make the costs order against him.
[5]Haritos v Federal Commissioner of Taxation (2015) 233 FCR 315, 341–2[62] (Allsop CJ, Kenny, Besanko, Robertson and Mortimer JJ).
Susan Laird is the only respondent to this application. No issue was taken that Neale ought to have included his other siblings as respondents. The matter proceeded on the basis that the application for leave to appeal and any appeal would be determined by me at the same time.
The outcome of this application turns in large part on two matters: a written submission on costs that was provided to the Tribunal but not to Neale, and how the Tribunal dealt with an undertaking that Neale had given to it.
B. The applicants filed additional submissions that were not provided to Neale
On 5 December 2018, a vice-presidential member of the Tribunal appointed guardians and an administrator. She also made orders for the exchange of submissions on the question of costs and indicated that she would determine the application for costs on the papers. The applicants provided written submissions dated 30 December 2018. Neale provided written submissions dated 30 January 2019. Unfortunately, the vice president ceased to be a member of the Tribunal before she had decided the application for costs and so the Tribunal had to be reconstituted. The Tribunal gave the parties an opportunity to ‘make submissions on the question of reconstitution’. On 25 June 2020, the applicants filed a submission that was headed ‘re reconstitution of the tribunal to consider the application for a costs order’. In fact, that submission also dealt at some length with the question of whether costs should be ordered against Neale.
Unfortunately, this document was not provided to Neale, and he was not aware of its existence until it was referred to by the Tribunal member who determined, on the papers, the costs argument against him.[6] Susan Laird, who as I noted above is the named respondent to this proceeding, contended that, seen in the context in which the costs decision was made and the previous submissions that had been filed, there was nothing in the later submission that could have affected the outcome.
[6]The applicants were self-represented by the time they prepared and filed this submission.
In order to determine whether this is so, it is necessary to consider in some detail the history of the litigation, the issues that had arisen, and the submissions that were made. This includes Neale’s undertaking.
C. The various VCAT proceedings and Neale’s undertaking
C.1. The 2015 application
In 2015, the applicants applied to the Tribunal for the first time for the appointment of guardians and an administrator under the Guardianship and Administration Act 1986 on the basis that their mother had a ‘disability’ as defined under that Act. They also applied for an order under the Powers of Attorney Act 2014 that the power of attorney in favour of Neal be revoked. They alleged that Neale was subjecting their mother to ‘elder abuse’ and that he had ‘taken control of his mother’s finances’. Neale contended that his mother retained decision-making capacity and that the allegations against him were without foundation. On 17 December 2015, the Tribunal dismissed the application on the basis that it was not satisfied that Mrs Laird had a disability. It did not making any findings on the allegations that Neale was engaging in ‘elder abuse’.
C.2. The 2017 application and Neale’s undertaking
Then, in 2017, the applicants applied to the Tribunal for a second time for the appointment of guardians and an administrator and for an order revoking the power of attorney in favour of Neale.[7] Again, Neale opposed these applications.
[7]Susan was the named applicant. She is recorded as making the application on behalf of herself, David, Euan, Clyde and Eric.
The 2017 proceedings first came on for hearing on 20 November 2017. At that stage, a neuropsychologist, Dr Talbot, had commenced but not completed an examination of Mrs Laird. Neale had arranged for this to happen. The hearing was adjourned to a date to be fixed. The Tribunal noted that the adjournment was so that Dr Talbot’s assessment could be completed, and so that the Public Advocate could conduct an investigation and report to the Tribunal on whether there was a need for the appointment of a guardian. The Tribunal also ordered the parties to obtain a report from Blue Cross as to the support needs of Mrs Laird.
The order also notes a series of undertakings given to the Tribunal. This included an undertaking from Mr Natoli not to distribute any of the $1.6 million held in his trust account. Further, Neale gave an undertaking that was noted by the Tribunal in the following terms:
to pay to John Natoli to hold on trust for Ellen Laird all funds held in the name of Laird Young and being the funds described in paragraph 20 (‘the $500,000’) of the applicant’s submission.
Neale did not pay to Mr Natoli the sum of $500,000 that the record of the undertaking suggests that he undertook to pay. Indeed, he paid less than $5,000. Neale accepted that he had arranged for the transfer of $500,000 out of an account in his mother’s name into another account. But he contended that the undertaking in fact given had been only to repay the balance existing in the account, on the basis that moneys from that account had otherwise been applied for the benefit of Mrs Laird.
The matter came back before the senior member on 27 March 2018. By this time, the applicants were also applying for an order that Neale pay compensation under s 77 of the Powers of Attorney Act 2014 and for an order that Neale pay their costs. The parties agreed that Mrs Laird would be provided with 24-hour per day care through Blue Cross. Mr Natoli anticipated that he might resign as Mrs Laird’s joint attorney. Save for the receipt of a further report from Dr Talbot, and for a later meeting between the senior member and Mrs Laird, the Tribunal noted that it had ‘heard the evidence’. Neale was ordered to file and serve ‘further accounts and a summary explanation of expenditure’. On 10 April 2018, the senior member met with Mrs Laird.
On 8 May 2018, the senior member pronounced orders but he did not at that stage publish his reasons.[8] The senior member:
[8]Some additional orders that are not presently relevant were made on 23 May 2018.
(a) revoked the appointments of Neale as joint financial attorney and as sole personal attorney;
(b) appointed Susan and David as guardians, appointed an administrator, and ordered that the administration order be reassessed no later than 30 June 2021;
(c) adjourned the application for compensation from Neale pending examination of the accounts by the administrator; and
(d) reserved the application for costs.
On 5 June 2018, Neale applied under s 60A of the Guardianship and Administration Act 1986 for a rehearing. This was before the senior member had given reasons for his decision, but s 60A only gave a party the right to apply for a rehearing if the application were made within 28 days after the day of the order. An application was also made for a rehearing under s 125 of the Powers of Attorney Act 2014.
On 1 August 2018, the senior member published his reasons.[9] The senior member concluded that Mrs Laird had lost her decision-making capacity at some stage since the earlier 2015 VCAT decision.[10] He also concluded that Mrs Laird was ‘vulnerable to influence’,[11] that guardians should be appointed, and that it was appropriate that Susan and David Laird be so appointed.
[9]WRU (Guardianship) [2018] VCAT 1171 (Senior Member Hoysted).
[10]Ibid [64].
[11]Ibid [71].
The senior member described in his reasons Neale’s undertaking as an undertaking to pay ‘the balance of funds held from the sale of the subdivided land’.[12] He noted that the applicants had asserted that that amount was $500,000, that Neale had not disputed that amount at the hearing, and that the accounts were to be investigated by the administrator. I take these comments to indicate that the senior member accepted that, although Neale had not been as forthcoming at the hearing as he might have been, he had not breached the terms of the undertaking actually given.
[12]Ibid [77].
The orders and findings nonetheless represented a comprehensive victory for the applicants.
C.3. The 2018 rehearing before the vice president
The rehearing was listed before a vice president of the Tribunal on 24 September 2018. It seems that this day was in essence a directions hearing. The matter was set down for hearing on 26 November 2018, and it proceeded on that day. Neither party was legally represented. Neale gave oral evidence. Neale contended, among other things, that the guardians had ‘chemically sedated’ Mrs Laird and acted with ulterior motives. The applicants contended that Neale had acted dishonestly. At the conclusion of Neale’s evidence, the vice president indicated that she did not consider it necessary for the parties other than Neale to give oral evidence.
On 5 December 2018, the vice president pronounced orders and published reasons for her decision.[13] The vice president concluded, based on medical opinion including from Mrs Laird’s long-term doctor, that Mrs Laird had lost her decision-making capacity. In so doing, she rejected Neale’s evidence and submissions. She appointed the same persons as guardians and administrator as had previously been appointed by the senior member, and adjourned the application for compensation for further directions.
[13]WRU (Guardianship) [2018] VCAT 1533.
The application for compensation was then not pursued. This was not because it was accepted that Neale had acted properly. Rather, the administrator took the position, based on legal advice obtained by her, that the power to obtain compensation was only enlivened if a loss were caused by a person contravening a provision of the Powers of Attorney Act 2014 when acting as an attorney, but the ‘questionable’ sums identified by the administrator had been spent without Neale relying on the power of attorney. I assume that the applicants took the same position.
C.4. The determination of the application for costs by the senior sessional member
I have set out in para 6 above the circumstances whereby the costs issue came to be determined by a senior sessional member who had not heard the substantive applications and in circumstances where the applicants had filed an additional submission that had not been provided to Neale.
The senior sessional member decided the application for costs on the papers. She set out the statutory provision and legal principles that applied. She noted that the general rule was that each party bear their own costs and that she could only make an order for costs if she were satisfied that it was fair to do so having regard to the totality of the matters set out in s 109(3) of the VCAT Act. The senior sessional member’s summary of the legal principles to be applied is not challenged in this appeal.[14] The senior sessional member then made it clear that she would not ‘reassess or form an independent judgement on the evidence presented by the parties’ but would instead assess the parties’ submissions by reference to the findings made by the senior member and the vice president.[15] Again, no complaint is made of this approach.
[14]WRU (Guardianship) (Costs) [2020] VCAT 853, [16]–[21] (Judge Jenkins).
[15]Ibid [26].
The senior sessional member ordered that Neale pay 75% of the applicants’ costs up to and including the costs of the hearings before the senior member, and 100% of the costs up to and including the hearings before the vice president.[16] In making that determination, the senior sessional member concluded, among other things, that:
[16]Ibid [103].
(a) Neale had breached his undertaking that related to the $500,000 that had been transferred from an account in his mother’s name;
(b) his explanation was ‘spurious’ and indicated ‘a serious lack of good faith’ on his part; and
(c) Mrs Laird was ‘primarily prejudiced’ by this failure, and that she ‘currently faces a serious shortage of liquid resources to meet the cost of her in home care’.[17]
[17]Ibid [96].
It is apparent that the senior sessional member had before her the applicant’s unserved 25 June 2020 submission.
D. Was the Tribunal’s decision to order costs against Neale infected by error of law?
D.1. The finding that Neale had breached his undertaking
On the approach that the senior sessional member sensibly took of not rehearing the evidence but deciding the costs application based on the findings made by the senior member and then the vice president, it was not open to her to conclude that Neale was in breach of his undertaking given to the senior member. This is because neither the senior member nor the vice president had made a finding that Neale had breached his undertaking. Indeed, as noted in para 18 above, the senior member allowed for the possibility, if not in fact concluded, that Neale had not breached his undertaking, although he had permitted others to make assumptions about what amount of money would be repaid on compliance with the undertaking.
I am satisfied that the senior sessional member’s finding that Neale had breached his undertaking was material to the manner in which she exercised her discretion. Accordingly, I conclude that the discretion miscarried.
D.2. The reliance on the additional unserved submissions
In their 30 December 2018 submissions, which were exchanged, the applicants had asserted that Neale had breached his undertaking. They had not there contended that his breach of the undertaking had placed Mrs Laird in a situation where she was short of funds. In his 30 January 2019 submissions in response, Neale had asserted that his undertaking had only been to repay the ‘residual balance’ of the funds that had been transferred, and that his counsel had explained at the time that this was less than $500,000, as moneys had been applied for the benefit of Mrs Laird. He then said that the administrator had been furnished with a ‘complete reconciliation’ of the account that demonstrated that the funds had been spent meeting his mother’s expenses.
The applicants took this matter further in their unserved 25 June 2020 submissions. They submitted that the administrators had since investigated this issue, had recovered ‘around $100,000 they found in a joint account’, and had identified $208,677 of funds which the administrators had described as having not been spent in Mrs Laird’s best interest. They referred to a letter from the administrator to the Tribunal dated 12 March 2019, which post-dated the earlier submissions. The applicants then made new assertions that Mrs Laird’s funds were ‘running out’, and that the outstanding $208,677 was ‘desperately needed to prevent Mum from having to be removed from her home’.
In this way, the applicants referred the senior sessional member to material that went substantially beyond the material referred to in their initial submission, and they made assertions to which Neale did not have an opportunity to respond. It does not matter that this was done inadvertently; in my view, it is clear that Neale was denied procedural fairness.
The applicants contended, however, that this did not matter in the circumstances of this case. I disagree. I am satisfied that the senior sessional member had regard to these submissions and assertions when she drew the conclusions referred to in para 25 above. In my opinion, the senior sessional member was influenced by the unserved submission when she concluded that Neale’s explanation was ‘spurious’ and Mrs Laird was experiencing a ‘serious shortage of liquid resources’ for which Neale was responsible.[18] Neither the senior member nor the vice president had made such findings, yet that is what was in substance urged by the second set of submissions. I am also satisfied that those conclusions were significant factors in the costs ruling that the senior sessional member made. In this respect, I note that the senior sessional member herself stated that she placed ‘significant weight’ on the aspect of Neale’s conduct adverted to in those conclusions.[19]
[18]Ibid [96].
[19]Ibid.
The applicants also contended that there was nothing that Neale could have said beyond that which he had already said in his earlier submission that would have made a difference. It is true that the senior sessional member may well have come to the conclusion that Neale’s conduct was responsible for his mother experiencing a serious shortage of liquid resources even if Neale had been given an opportunity to respond. But that is not certain. The reference in the senior sessional member’s reasons to there then being $1.6 million in Mr Natoli’s trust account and Neale’s general position that he was acting at all times in his mother’s interest satisfy me that the question as to whether Neale’s conduct was responsible for any financial stress that Mrs Laird faced would have been something that could and would have been contested by Neale. In these circumstances, I consider that the failure to accord procedural fairness was material, in the sense that there is a realistic possibility that, if Neale had had the opportunity to respond to the submissions, the senior sessional member might not have reached the conclusions she did.[20]
[20]See, eg, Minister for Immigration and Border Protection v SZMTA (2019) 264 CLR 421, 445 [45] (Bell, Gageler and Keane JJ)
For this reason too, the costs ruling was infected by error of law.
It is not necessary to consider the various other errors alleged by Neale.
E. Remittance or redetermination?
Under s 148(7) of the VCAT Act, I am able to remit the application to the Tribunal or make an order that the Tribunal could have made.
It seems to me that the interests of justice compel the conclusion that, in the peculiar circumstances of this case, I ought to redetermine the application for costs myself. It might be different were I able to remit the matter for redetermination to the vice president who reheard the matter, but that is not possible. If I were to remit the matter to the Tribunal, the likelihood is that a member of that Tribunal who had no prior experience with the matter would, again, have to make a decision based on the findings of the senior member and vice president as expressed in their reasons for decision. That person would not have any appreciable advantage over me. It is less than ideal, of course, that the application for costs is to be determined by someone other than the person who conducted the hearings, but that situation is now unavoidable.
Also, the parties’ time and associated expense, and the Tribunal’s time, should not be disproportionately spent on this issue of costs. The application concerns the legal costs of a proceeding that is more than three years old and another that is almost three years old.
For these reasons, I propose to set aside the senior sessional member’s orders and substitute for them the orders that I consider ought, in the circumstances, to have been made. It is possible, of course, that I could make the same orders.
Also, and for the same reasons set out in para 38 above, I propose to do so by reference to the findings made by the sessional member and vice president, and the submissions that were filed in accordance with the orders made by the vice president, and not by reference to the additional submissions that the applicants served without leave to do so and did not exchange. It would, in my view, involve disproportionate time and expense to permit or require the parties to prepare further submissions which explore the circumstances that have eventuated since the applications were heard by the vice president. I have no doubt that the facts would be disputed, and could not realistically be determined without hearing evidence, which would require further work to be done by the parties and more judicial time. Further, it seems to me that the question of who ought to bear the costs of the hearings is better determined by reference to the events and facts as they were known at the time, and that events that have taken place since the substantive proceedings were determined ought probably to have little or no impact on a proper determination of what costs should have been ordered.
F. The power to order costs
Neale challenged the power of the Tribunal to make orders against him in two ways. First, he contended that he was not a ‘party’ as that term is used in s 109 of the VCAT Act and accordingly there was no power under that section to order that he pay costs. Secondly, he contended the reconstituted tribunal only had the power to make orders in relation to the 2018 rehearing. Because I propose to consider the costs application myself, it is necessary to consider these arguments.
I do not agree that Neale was not a ‘party’ to the Tribunal proceedings. He appeared before the Tribunal, including by counsel, led evidence, made submissions, and was bound by the decisions made. He was the only contradictor to the relief sought. But were there any doubt, s 59(1)(a)(iv) of the VCAT Act provides that a person ‘specified by … the enabling enactment’ is a party. The applications before the Tribunal included applications where the Powers of Attorney Act 2014 was the enabling Act. Section 124 of the Powers of Attorney Act 2014 provides that the ‘attorney under the enduring power of attorney’ is ‘specified’ for the purposes of s 59(1)(a)(iv) of the VCAT Act. Neale was an attorney under an enduring power of attorney in respect of which relief was sought, and accordingly was a ‘party’.
The ‘rehearing’ was, as the name suggests, a rehearing of the previous hearing. It was not a new or different proceeding. The 2017 application and the 2018 rehearing before the vice president had the same VCAT reference number. The senior member had reserved the application for costs. Before the senior member had determined that application for costs, Neale had applied for a rehearing of the substantive applications. The applicants then applied to the vice president, who was conducting the rehearing of the substantive applications, for costs of the proceeding. That, in my view, included the application for costs of the entire proceeding including the application that had been heard by the senior member. The vice president made directions for the resolution of that application, but left the Tribunal before determining it. The reconstitution order was that the senior sessional member would ‘from the date of [that] Order constitute the Tribunal for this proceeding’.
In these circumstances, it is clear that the senior sessional member was to determine the application for costs that had been before the vice president, including an application for costs of the matters that had been before the senior member.
G. What costs order should be made?
As noted above, I propose to determine the application by reference to the findings made by the senior member and the vice president and the submissions that were made to the vice president. I am not in a position, generally speaking, to draw conclusions on factual disputes that were left unresolved by those members. Further, although Neale appeared before me, he did not give evidence before me. To the extent that my reasoning includes criticisms of his conduct, they are based on the findings made by the senior member and the vice president, and not on the way he presented to me.
Section 109 of the VCAT Act has the effect of removing from the Tribunal the general rule that applies in courts that costs ought to follow the event. I can only make a costs order against a party if I am satisfied that it would be ‘fair’ to do so, having regard to:
(a) whether a party has conducted the proceeding in a way that ‘unnecessarily disadvantaged’ another party;
(b) whether a party has been responsible for prolonging unreasonably the time taken to complete the proceeding;
(c) the relative strengths of the claims made;
(d) the nature and complexity of the proceeding; and
(e) any other matter that I consider relevant.[21]
[21]Victorian Civil and Administrative Tribunal Act 1998 (Vic) s 109(3).
There is, no doubt, good reason for this. It would be unfortunate if persons were reluctant to commence an application for the appointment of a guardian or administrator for fear of being exposed to a costs liability if the Tribunal decided that an appointment was not warranted. Similarly, it would be unfortunate if persons who genuinely and for good reason thought that an aged person was capable of looking after their own interests did not oppose the appointment of a guardian or administrator for fear of being exposed to a costs liability if the Tribunal decided an appointment was warranted. There is, perhaps, some assumption in the policy that persons engaged in such proceedings will generally be acting out of a sense of right and wrong, rather than out of a desire to maximise their own position. But, each case must be assessed on its merits, and costs should be ordered if in the circumstances it is fair that they be so ordered.
G.1. The proceeding before the senior member
There are a number of matters that suggest that it would not be fair to order Neale to pay the applicants’ costs of the 2017 application. I note that:
(a) in 2015, the applicants contended, and Neale disputed, that Mrs Laird did not have decision-making capacity. The Tribunal, in that proceeding, agreed with Neale that his mother did have decision-making capacity. The Tribunal found that ‘many of the allegations of the applicants are unsubstantiated’.[22] The 2017 application was commenced some two years after this previous application had failed. I cannot assume that it must have been obvious in 2017 that Mrs Laird did not have decision-making capacity simply from the fact that the applicants made those allegations in 2017 and this time the Tribunal ended up agreeing with them. In accordance with the usual practice, no order was made as to the costs of the 2015 hearing;
[22]Ellen Laird (Guardianship) (Victorian Civil and Administrative Tribunal, Member Duggan, 17 December 2015) [31].
(b) the 2017 application was made after Neale had engaged Dr Talbot to assess Mrs Laird but before Dr Talbot had completed her assessment;
(c) the senior member did not make a finding that Neale had failed to comply with orders without reasonable excuse or caused unnecessary adjournments or unreasonably prolonged the proceeding by the way he conducted it,[23] or that he had otherwise conducted the proceeding ‘vexatiously’.[24] The proceeding seems to have been concluded efficiently. More specifically:
[23]Cf Victorian Civil and Administrative Tribunal Act 1998 (Vic) ss 109(3)(a)(i), (iv), 109(3)(b).
[24]Ibid 109(3)(a)(vi).
(i) the application first came before the Tribunal in November 2017, and was adjourned to enable the Public Advocate to conduct an investigation and to give time for Dr Talbot to complete her assessment;[25]
[25]WRU (Guardianship) [2018] VCAT 1171, [12] (Senior Member Hoysted).
(ii) the ‘final hearing’ then took place on 27 March 2018. It seems it went for no more than this day;
(iii) the senior member visited Mrs Laird at her home on 10 April 2018;
(iv) the final report from Dr Talbot was received on 23 April 2018; and
(v) the senior member made his orders on 8 May 2018.
On the other hand, the senior member made the following conclusions that I must accept:
(a) Neale had acted without reference to the enduring power of attorney, which would have required him to act jointly with Mr Natoli. Mrs Laird was not aware that Mr Natoli had not been consulted by Neale in decisions about her estate, and she wanted the protection that Mr Natoli’s involvement would have ensured.[26] Neale’s behaviour in this regard was ‘at odds’ with the requirement that he as attorney ‘act honestly, diligently and in good faith’.[27] I take this to be a finding that Neale, in his decision to act without involving Mr Natoli, had not acted honestly, diligently and in good faith. This is a significant finding, given that the application was brought for the purpose of appointing independent persons to the roles that Neale was performing;[28]
[26]Ibid [75].
[27]Ibid [66].
[28]Victorian Civil and Administrative Tribunal 1998 (Vic) s 109(3)(e).
(b) Neale had acted to exclude the other family members in a manner that was ‘inconsistent with his mother’s known preferences and values’,[29] and that his claim that he had transferred money from his mother’s account into a joint account with himself so as to quarantine the funds for his mother’s future needs was ‘disingenuous’;[30]
(c) Neale had presented to his lawyers an authority signed by Mrs Laird for the transfer of property in Mrs Laird’s sole name to Neale as joint owner with her. The senior member said that it was ‘most unlikely’ that Mrs Laird was ‘capable of initiating such a proposal’ and that it was unlikely that she would have agreed to such a proposal unless it was presented to her by Neale as necessary.[31] This is significant, because it was a situation where Neale was acting in his own interests in circumstances where those interests were in potential conflict with Mrs Laird’s; and
(d) an administrator had to be appointed to investigate the accounts, including so as to resolve the ‘doubt’ in the Tribunal’s mind that Neale had acted to benefit himself.[32]
[29]WRU (Guardianship) [2018] VCAT 1171, [73] (Senior Member Hoysted).
[30]Ibid [67].
[31]Ibid [68].
[32]Ibid [87].
I consider that these findings, which are all in a general sense findings that Neale was acting improperly in his dealings with his mother or that there was a real concern that he might be acting improperly in his dealings with his mother, are relevant to the question of costs in a proceeding of this type.[33]
[33]Victorian Civil and Administrative Tribunal 1998 (Vic) s 109(3)(e).
A complication arises relating to the application for compensation and for revocation of the powers of attorney. The senior member revoked Neale’s appointment under the enduring power of attorney, and did not dismiss the application for compensation. Had the senior member heard the application for costs, the applicants’ success or potential success in these matters would have worked against Neale. But, as was later recognised, these applications were legally flawed and bound to fail.[34] I will consider what is fair by considering these applications as legally flawed and bound to fail, rather than by reference to the (mistaken) view that the senior member had of them.
[34]WRU (Guardianship) [2018] VCAT 1533, [124], [136] (Judge Harbison).
Weighing all these matters, in my judgment, it is ‘fair’ that Neale contribute significantly to the applicants’ costs of the 2017 application for the appointment of guardians and an administrator. I place considerable weight on the fact that, on the senior member’s findings, the applicants were faced with a situation where the person in effective control of their mother’s affairs was not acting honestly, diligently and in good faith, and was behaving, at least in part, in a way that was inconsistent with his mother’s preferences and values and where he was in a position of conflict of interest. There was an issue as to the treatment of a significant sum of money, and, on the senior member’s findings, Neale’s explanations for his treatment of that sum were ‘disingenuous’. It is fair that the person behaving in that way contribute to the costs of the persons who are, by reason of that conduct, put in a position where for practical purposes they feel the need to appoint guardians and an administrator.
However, it is, to my mind, of some importance that, on the findings, it was not obvious to Neale at the time of this hearing that the Tribunal would appoint an administrator or guardian, having regard to his success in the earlier proceeding and the fact that Dr Talbot had not yet completed her report. Nor is there any finding that Neale conducted the proceeding in a way that unnecessarily disadvantaged the applicants by failing to comply with Tribunal Orders or otherwise unnecessarily adding to the costs of the proceeding. Finally, an allowance has to be made to ensure that Neale does not end up paying for the non-common costs associated with the applications for an order that the powers of attorney be revoked and for compensation.
I consider it appropriate to make a single costs order rather than make different orders by reference to the different issues that arose, as the latter would likely result in a disproportionately complex taxation. In all these circumstances, and bearing in mind the starting point is that parties to these proceedings ought ordinarily to bear their own costs, I consider it is fair to order that Neale pay one half of the applicants’ costs of the proceeding before the senior member.
I note that Neale contends that some of the costs incurred by the applicants were not costs associated with the prosecution of the application. This, however, is a matter for taxation, rather than for me.
For the avoidance of doubt, in reaching this decision, I have not had regard to:
(a) the question as to whether Neale breached his undertaking;
(b) the issue as to whether or not Neale applied the funds removed from the account the subject of his undertaking other than for the benefit of Mrs Laird; or
(c) the question as to whether or not Neale has, by his conduct, put Mrs Laird in a precarious financial position.
G.2. The hearing before the vice president
The situation before the vice president was not the same as the situation before the senior member. By the time the matter came before the vice president, Dr Talbot had expressed the opinion that Mrs Laird did not have decision-making capacity.[35] Mrs Laird’s long-term general practitioner was of the same view.[36] Indeed, as Neale frankly admitted to me, all the medical evidence was to the effect that his mother lacked decision-making capacity.
[35]Ibid [68]–[70].
[36]Ibid [63], [66].
Neale’s essential position before the vice president was that, although he accepted that by that time Mrs Laird had dementia or Alzheimer’s disease, she still had the capacity to make or assist in making certain decisions with his assistance,[37] and that the preferable course would be for him to utilise the powers of attorney in consultation with her.[38] It was implicit in his position that he had been and would continue to act in his mother’s interest, and explicit in his position that the applicants had improper motivations[39] and that the guardians and administrator were not acting in Mrs Laird’s best interests.[40]
[37]Ibid [36], [83].
[38]Ibid [37], [45], [47], [147].
[39]Ibid [39], [42].
[40]Ibid [38], [51].
In that context, it is relevant that the vice president made the following findings, which I must accept:
(a) Mrs Laird ‘clearly’ had a disability within the meaning of the Guardianship and Administration Act 1986.[41] She did not have decision-making capacity.[42] Neale had ‘at the very least’ an ‘unrealistically optimistic impression of his mother’s intellectual functioning’[43] that was ‘clearly rejected in the medical and ancillary reports’.[44] His submission that his mother did not need a guardian or administrator and his suggestion that he exercise the powers of attorney in consultation with his mother were both ‘untenable’.[45]
[41]Ibid [29].
[42]Ibid [118].
[43]Ibid [36].
[44]Ibid [55]. See also at [76].
[45]Ibid [149].
(b) the criticisms that Neale made of the guardians — that they were not acting in Mrs Laird’s best interests,[46] had an agenda and were intent on putting her into a nursing home in order to be able to sell the house,[47] and were trying to ‘drive a wedge’ between him and his mother[48] — were ‘ill-founded’.[49] The administrator, contrary to Neale’s submissions that she was not acting in Mrs Laird’s best interests,[50] was ‘properly carrying out the functions of administrator in the best interests of the mother’;[51]
[46]Ibid [38].
[47]Ibid [39].
[48]Ibid [42].
[49]Ibid [159]. See also at [161].
[50]Ibid [51].
[51]Ibid [154].
(c) Neale ‘completely identified’ his own wishes with those of his mother[52] and his conduct revealed a ‘troubling lack of understanding’ of his need to separate his own financial interest from that of his mother.[53] The vice president would be ‘very concerned’ if Neale were to exercise a power of attorney,[54] and that if he were to use the power of attorney there would be a ‘real risk’ that he could conflate his own wishes and financial interests with what is best for his mother.[55] The vice president did not otherwise determine the allegations that Neale had in fact acted dishonestly;[56]
(d) Neale had placed a caveat over his mother’s real estate, in which he claimed an equitable interest in that estate. This placed him in a position where there was a potential conflict of interest in him also holding a power of attorney over his mother’s estate, but Neale was ‘unable to see’ this problem.[57] The vice president concluded that there was a ‘fundamental conflict between his interests and the interests of his mother’,[58] and that it was ‘inconceivable’ that he could exercise the personal power of attorney;[59] and
(e) because Neale had not in fact ever used the enduring power of attorney, the Tribunal did not have power to revoke it or to order compensation under the Powers of Attorney Act 2014. However, the vice president noted in her orders that an effect of the appointment of the guardians was that Neale could not exercise any powers under the enduring power of attorney without the Tribunal’s authority, and that the Tribunal did not give that authority.[60] This was a clear indication that the vice president considered that Neale would be an inappropriate person to make decisions as his mother’s attorney.
[52]Ibid [85].
[53]Ibid [106].
[54]Ibid [86].
[55]Ibid [134].
[56]Ibid [130].
[57]Ibid [107]-[112]. See also at [128], [134].
[58]Ibid [148].
[59]Ibid [150].
[60]Ibid [124], [136].
The determination of Mrs Laird’s decision-making capacity was not wholly dependent on medical opinion, and lay opinion remained relevant.[61] However, it is significant that the doctor who knew his mother well, and doctors whose motives or expertise Neale had no reason to doubt, had formed the view that Mrs Laird had lost decision-making capacity. It means Neale’s case could only succeed if his evidence as to his mother’s mental state was sufficiently strong to displace the medical evidence. Seen in this way, his objectivity was very important; there was no real prospect that he could successfully oppose the application, supported as it was by all the medical material, unless he were accepted by the Tribunal as a reliable witness whose evidence was not tainted by self-interest. Also, Neale could no longer take comfort from the decision of the Tribunal in 2015, as, since that decision, a senior member of the Tribunal had concluded that Mrs Laird did not have decision-making capacity, and the medical evidence had developed against him.
[61]XYZ v State Trustees Ltd (2006) 25 VAR 402, 423 [55] (Cavanough J).
I conclude that it is fair that Neale pay the applicants’ costs of the applications before the vice president for the appointment of the guardians and the administrator and the guardians’ application for advice. I place significant weight on the fact that, by reason of the medical evidence and Neale’s position of conflict, the strength of his claims was very much less than the strength of the applicants’ claims — it is very difficult to see how a different outcome could have eventuated in the circumstances — and Neale was or ought to have been aware of that. I also consider it relevant that Neale was found to have been in a position of conflict, and that he made allegations of improper motive on the part of the applicants, including the guardians and the administrator, which were all rejected by the vice president.[62]
[62]Victorian Civil and Administrative Tribunal Act 1998 (Vic) s 109(3)(c), (e).
That said, I do not consider that it would be ‘fair’ that Neale be ordered to pay the applicants’ non-common costs of the applications for compensation or revocation of the powers of attorney, as he succeeded in opposing those applications, and they were legally flawed. As with the application before the senior member, the preferable approach is to adjust the costs order to take this into account, rather than to make an order that would require a detailed and expensive taxation.
In these circumstances, I consider it fair to order that Neale pay the applicants four fifths of their costs of the proceeding before the vice president.
I have read and had regard to the written submission on costs that Neale filed in the Tribunal. For the avoidance of doubt, in evaluating whether it is fair to order Neale to pay costs of the rehearing, and if so to what extent:
(a) I have not had any regard to the fact that Neale applied for the rehearing. He was entitled to do so;
(b) I have not relied on the suggestion that Neale had breached his undertaking;
(c) I have assumed, based on the findings, that Neale was conflicted by self-interest, but not that he was otherwise dishonest. I have not assumed that Neale, by his conduct, has placed his mother in financial stress or caused any disadvantage to his mother;
(d) I have accepted that Neale did not cause unnecessary adjournments or fail to comply with the Act or in that way prolong the hearing;
(e) there was a suggestion that Neale was informed by his mother’s general practitioner in April 2017 that his mother had lost decision-making capacity. This was based on the doctor’s clinical note. Neale disputed this, and there is reason to think that any loss of decision-making capacity at that time may have been temporary in the context of an acute illness. I have assumed, in Neale’s favour, that the discussion he had with his mother’s general practitioner in April 2017 did not convey to him that his mother had by that time permanently lost decision-making capacity; and
(f) There was an issue between the parties as to what renovations ought to be performed to improve Mrs Laird’s access to bathrooms. I have accepted that this was a genuine issue upon which minds might reasonably have differed.
G.3. The reconstitution of the Tribunal and the application for costs before the senior sessional member
The applicants did not serve a copy of the additional submissions that they filed on the reconstitution and on the application for costs. The application for costs before the senior sessional member was determined on the papers. In my view, it would not be fair to order that Neale pay the applicants’ costs associated with the reconstitution of the Tribunal and the preparation of this additional submission.
H. Disposition
For the above reasons, I propose to make orders:
(a) granting leave to appeal, and allowing the appeal;
(b) setting aside the order made by the Tribunal on 7 August 2020 in proceeding with VCAT Reference number G75054;
(c) in lieu thereof, ordering that:
(vi) Neale pay one half of the applicants’ costs of the proceeding up to and including the hearing before the senior member on 8 May 2018 and the making of his orders on 8 May 2018 and 23 May 2018;
(vii) Neale pay four fifths of the applicants’ costs of the rehearing before the vice president on 17 and 24 September 2018 and 26 November 2018; and
(viii) there be no order as to the costs of the applicants’ submissions dated 5 June 2020.
I will hear the parties on the precise form of order and on any application for the costs of this proceeding or for a certificate under the Appeal Costs Act 1998.
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