LMM - [2005] WASAT 232

JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL

STREAM: HUMAN RIGHTS

ACT: GUARDIANSHIP AND ADMINISTRATION ACT 1990 (WA)

CITATION: LMM [2005] WASAT 232

MEMBER: MS F CHILD (MEMBER)

HEARD: 20 JUNE 2005
28 JULY 2005

DELIVERED : 30 AUGUST 2005

FILE NO/S: GAA 724 of 2005

BETWEEN: LMM
Represented Person

Catchwords:

Guardianship and Administration - Review of administration order - Gifting - Application by administrator to make a gift from the estate to himself - Section 71(5) exercise of the discretion consistent with intention of the legislation

Legislation:

Guardianship and Administration Act 1990 (WA), s 4, s 70, s 71(5), s 72(3), s 77

Result:

Gifting allowed in the amount of $30 000
Administrator reappointed

Category: B

Representation:

Counsel:

Represented Person : Selfrepresented

Solicitors:

Represented Person : Self-represented

Case(s) referred to in decision(s):

Re Mrs M Unreported decision of the Guardianship and Administration Board 13 June 2000
Re the Full Board of the Guardianship and Administration Board [2003] WASCA 268

Case(s) also cited:

Nil

REASONS FOR DECISION OF THE TRIBUNAL:

Summary of the Tribunal's reasons for decision

An application for review of an administration order which appointed him as administrator for his mother was made by the son seeking an authority to make a gift from the estate of $100 000. The son had been appointed sole administrator for his mother who was suffering from Alzheimer's disease. The Tribunal did not authorise the gift as it was considered to be inconsistent with the overall intention of the Guardianship and Administration Act 1990 (WA) (the Act). A lesser amount of $30 000 was authorised.

Reasons

The decision in this case relates to a review of an administration order dated 15 October 2003 by which WPM was appointed plenary administrator for his mother, LMM (the represented person).
WPM, (the applicant) son of the represented person, filed an application for review of the administration order for the inclusion in the administration order of an authority to make a gift from the estate of the represented person.
A gift from the estate of a person the subject of an administration order may be authorised by the State Administrative Tribunal (the Tribunal) pursuant to s 71(5) of the Act.
Part 6 of the Act deals with the administration of estates. Section 72 is headed "Further provisions as to authority of administrators" and subsection 3 provides:
"(3) Notwithstanding this section or section 71, an administrator shall not without the authority of the State Administrative Tribunal under section 71(5) —
(a)make a payment or disposition of a charitable, benevolent or ex gratia nature; or
(b)make a payment in respect of a debt or demand that the represented person is not obliged by law to pay."
Section 71(5) provides:
"(5)In exercising its jurisdiction under this Part the State Administrative Tribunal may take a liberal view of the best interests of the represented person as mentioned in section 4(2)(a), and in particular may, if the circumstances so require, empower an administrator to make a payment or enter into a transaction of a kind described in section 72(3) on behalf of the represented person."
The matter first came on for hearing in June 2005 but at that time the applicant had not provided written information which had been sought from him by the Tribunal.
The information sought from the administrator related to factors identified by the Full Board of the Guardianship and Administration Board (the Board) for members to consider when exercising the discretion under s 71(5) of the Act. (Re Mrs M Unreported decision of the Guardianship and Administration Board delivered 13 June 2000, Mr Keith Chapman, President, Mrs Pamela Eldred, Deputy President and Mr John James, Member).
The jurisdiction and functions of the Board were absorbed by the State Administrative Tribunal in January 2005.
While not binding on the Tribunal, decisions of the Full Board may provide guidance to the members of the Tribunal when dealing with applications made under the Act.
When dealing with an application for "gifting" under s 71(5) the Board identified the following as some of the factors to be taken into consideration when exercising the discretion:
1.The relationship between the represented person and the beneficiary of the gift.
2.The extent of the estate of the represented person.
3.The income and expenditure of the estate.
4.The age and needs of the represented person.
5.The purpose of the gift.
6.The likelihood of the represented person acceding to the request if she had capacity.
7.The alternatives open to the recipient.
8.The attitude of those who are likely to benefit from the estate of the represented person on her death.
9.The needs of any other person dependant upon the represented person.
The proposal made by the applicant in his application for review is that a gift of $100 000 be made to him from his mother's estate to assist him to repay a business loan.
Following a further request from the Tribunal, the applicant submitted information addressing the criteria identified by the Board and supplied copies of documents from his bank. Other information relevant to the application was obtained by the Tribunal including reports from the Public Trustee, the social worker from the facility where the represented person lives and from the represented person's general practitioner.
In summary, the written information before the Tribunal in respect of each of the factors identified by the Board is as follows:
1.The proposed beneficiary of the gift is the applicant son.
2.The extent of the estate of the represented person is according to the applicant "in excess of $300 000". In a document titled "Accounts Examination Program" dated 16 February 2005 from the Public Trustee's file which was provided to the Tribunal for the purposes of the review, the assets are noted as $295 461.62.
3.According to the applicant the combined income of the represented person from pensions and interest is about $35 000 per year and the Public Trustee's file confirms this. Her income more than meets the current expenditure of the represented person which is estimated by the applicant to be $11 000 per year. The main expense noted in the accounts filed by the applicant with the Public Trustee is for accommodation expenses of $9829.53. Other expenditure noted in the accounts is $266.50 for medical expenses. The report of the social worker from the facility notes that "the administrator has ensured that her fees, pharmacy, haircuts, personal needs are met. He has set up a direct debit account." No expenditure against personal maintenance of the represented person is separately noted in the accounts. The applicant advises that if the proposal for gifting of $100 000 from the estate is approved then the income of the represented person will reduce by $5000 per year.
4.The represented person is aged 84 years of age, and is according to the medical reports before the Tribunal diagnosed with advanced dementia. She is, according to the applicant's submission, well cared for in the high care facility in which she lives.
5.The purpose of the gift proposed by the applicant is to pay off a bank loan which he borrowed for his business. The applicant advises that the loan has an interest rate of 8 per cent and a further $750 in fees per year are charged. The original loan approved was for an amount $200 000 in March 2004. The balance as at March 2005 is $100 000.
6.The applicant states that his mother, if she had capacity, would be "100 per cent in favour" of the gift being made to him.
7.The applicant states that there are no alternatives open to him other than continuing to pay high interest and fees.
8.A letter from the applicant's brother, which was provided to the Tribunal, states that he has no objection to a gift of $100 000 being made from the estate. The applicant and his brother are the only beneficiaries of the estate provided for in the will of the represented person.
9.The applicant advises that there was no other person dependent on the represented person.
During the hearing the applicant expanded his written submission in support of the gifting authority. He related details of the sale of his businesses in the previous year for health reasons and the transfer of the leases of properties to the new purchasers. He stated that all but two of the leases had been assigned to the new owners.
As described by the applicant, because of the nature of one of the properties the subject of one of the lease agreements (the details of which it is not necessary to relate for the purposes of these reasons), a director's guarantee given by him under the original lease seven years before still applies so that if the new owner of the business fails to meet the obligations to the landlord under the lease then the applicant will be liable for those obligations including the payment of rent of $20 000 per month. The applicant states that the director's guarantee he has given, has four and a half years to run (the term of the lease) and that it is "hanging over his head".
Because of the potential liability which might arise under the lease, the applicant states that he has transferred his personal assets into a trust, including the company which runs his business of which he is the sole director, the property of about ten acres from which his business is operated, valued at about $600 000 (including the plant of the business), the house in which he and his family live in a nearby country town valued at about $200 000, and his personal and business vehicles. He states that by structuring his business and personal finances in this way, he has limited his liability to potential creditors.
The plan of the applicant as outlined in the hearing is that if the proposed gift of $100 000 is approved, he will transfer it to the trust and from there pay off the business loan. He states that the primary reason for dealing with the funds in this way is that the money will be quarantined from creditors should there be a call on the director's guarantee.
The applicant states that as he is a beneficiary (with his brother) named in the will of his mother, that when he receives his share of the inheritance from his mother's estate on her death that the bequest will form part of his personal assets at that time and may be available to creditors.
The applicant's evidence is that the interest payments on the business loan are a business tax deduction, his business is not in financial difficulty and he has paid off over half of the loan.
It is noted that paying out the loan will not relieve him of the obligations which may arise under the director's guarantee he has given.
The submission made by the applicant that his mother would support the gift and that his brother supports the gift is accepted. It is also accepted that the represented person is well cared for in the facility in which she resides. The applicant states that he considers that his mother's estate has ample money to meet her needs.
Although the represented person has advanced dementia and her current needs are met, the applicant, as her administrator, is bound to consider her needs in the longer term. It cannot be said with any certainty what the life expectancy of the represented person may be or whether she may have treatment or care needs in the future which will need to be met from her own funds.
Even if it were the case that such needs would not arise in the future and that the represented person has sufficient to meet all her needs for the remainder of her life, the application for authority to make the gift of $100 000 from her estate, which represents just over a third of her estate, must be refused.
The primary reason for refusal of this proposal to gift $100 000 from the represented person's estate is that the guardianship and administration jurisdiction is a protective one which provides among other things for the proper management of estates of persons who are unable by reason of mental disability of making reasonable judgements in respect of matters relating to their estates.
The Full Court in Re the Full Board of the Guardianship and Administration Board [2003] WASCA 268 commented on the overall intent of the legislation when considering the meaning to be given to "a disposition in respect of the estate" in s 77 of the Act.
His Honour, EM Heenan J, considered the legislative intent of the Act [at para 43 and para 44] as the protection of the estate for the benefits of the represented person during the lifetime of that person, contrasting it later [at para 45] with the "inevitable transmission of the property on the death of the person".
His Honour said:
"From this, and an examination of the entire Act, it is obvious that the legislation is designed for the protection of adult persons whose faculties may be impaired, for any reason, and who are therefore in need of protection and assistance so as to ensure that their financial affairs and other welfare is not jeopardised by improvident, or ill-considered personal decisions or action, or by unscrupulous or ill-advised influence of relatives, friends and others who may deliberately or inadvertently exploit the vulnerability of the person in need of assistance and protection.
These ends can be achieved, when it comes to dealings with the property and financial affairs of the person in need of assistance, by ensuring that any financial, property or commercial transactions which would, or might, jeopardise the financial security or interests of the disabled person, are only effective when performed by a properly appointed administrator and with the Board's consent. The emphasis is on conserving the property and financial resources of the disabled person to ensure that they are available for his or her own needs, welfare and enjoyment and are not dissipated. These seem to be the primary objectives of the legislation and all the provisions of the Act can be seen to have meaning and effect as leading towards the achievement of those purposes. In the main, these will be accomplished by conserving the resources and property of the person under administration for use to his or her own advantage or, in cases where expenditure or imminent disposition of property are necessary or advantageous, by scrutinising the transaction to see that it is justifiable or provident having regard to all the circumstances, bearing always in mind the continuing and future needs of the person whose estate is under administration."
As can be seen the legislation provides for the proper management of estates of incapable persons during the lifetime of that person. It was not intended that it be a mechanism which would allow the distribution or partial distribution of the estate prior to her death. The proposal that the Tribunal, in effect, authorise the applicant to receive part of his inheritance prior to the represented person's will coming into effect, is not consistent with the primary obligation of the Tribunal set out in s 4 of the Act, to act in her best interests.
While as the applicant submits the represented person may have agreed to such a gift while capable, she has been found to be a person who is unable by reason of a mental disability of deciding these matters for herself. She has been found to need the appointment of an administrator and the protection of an administration order.
An administrator appointed under the Act is required, by s 70 of the Act, to act in the best interests of the represented person. The relationship is a fiduciary one as it requires the administrator to act in the best interests of the represented person to protect the estate, and recognises the represented person is no longer capable of acting on her own behalf.
Although s 71(5) of the Act confirms that the best interests may be liberally interpreted by the Tribunal, the divestment of the represented person of a third of the value of her estate for the purpose as outlined by the applicant cannot be sustained. The transaction is neither, in the words of his Honour, "justifiable or provident". The discretion in s 71(5) must be exercised cautiously and consistently with the overall purpose of the Act.
As was foreshadowed at the hearing, the Tribunal will authorise a gift from the represented person's estate to the applicant of $30 000 which was the amount gifted to his brother in 2003. Although a significant gift, this amount is less than the annual income of the represented person.
It is probable that the represented person would wish her children to be treated equally in relation to gifting from her estate during her lifetime as she has provided in her will for the equal division of her estate between her sons on her death.

Orders

The administration order is revoked and the following order is substituted for it:
1.WPM is appointed plenary administrator of the estate of LMM;
2.The administrator is authorised to gift $30 000 from the estate of the represented person to her son, WPM; and
3.The order is to be reviewed by 18 August 2010.

I certify that this and the preceding [35] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
___________________________________
MS F CHILD, MEMBER