LN
[2024] WASAT 124
•21 NOVEMBER 2024
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
ACT: GUARDIANSHIP AND ADMINISTRATION ACT 1990 (WA)
CITATION: LN [2024] WASAT 124
MEMBER: MS R BUNNEY, MEMBER
HEARD: 15 NOVEMBER 2024
DELIVERED : 19 NOVEMBER 2024
PUBLISHED : 21 NOVEMBER 2024
FILE NO/S: GAA 4917 of 2024
GAA 4964 of 2024
LN
Represented Person
NURSING HOME
Applicant
Catchwords:
Administration - Guardianship - Enduring power of attorney - Enduring power of guardianship - Withdrawal of 70% of refundable accommodation deposit - Purchase of cryptocurrency - Conflict of interest - Revocation of enduring power of attorney - Appointment of Public Trustee as administrator - Direction to investigate - Application for guardianship dismissed
Legislation:
Aged Care Act 1997 (Cth), s 52N-1
Guardianship and Administration Act 1990 (WA), s 40, s 43(1), s 51, s 64(1), s 65, s 107(1)(a), s 107(1)(b), s 109(1)(c)
State Administrative Tribunal Act 2004 (WA), s 32(2), s 32(4)
Result:
Enduring power of attorney revoked
Public Trustee appointed as administrator
Application to revoke enduring power of guardianship dismissed
Category: B
Representation:
Counsel:
| Represented Person | : | N/A |
| Applicant | : | In Person |
Solicitors:
| Represented Person | : | N/A |
| Applicant | : | N/A |
Case(s) referred to in decision(s):
DW and JM [2006] WASAT 366
REASONS FOR DECISION OF THE TRIBUNAL:
Introduction
LN is an 86-year-old woman who has a diagnosis of dementia. In 2017 she signed an enduring power of attorney (EPA) and an enduring power of guardianship (EPG) to appoint her son CB as her attorney and guardian. In 2018, she moved into the Nursing Home as she was no longer able to live independently.
In 2021, CB withdrew almost $370,000 from LN's accommodation deposit held by the Nursing Home. CB gifted $15,000 of LN's money to her grandchildren and invested the balance in cryptocurrency, which has all been lost. LN now owes $14,000 to the Nursing Home and she must move to another facility.
Due to the concerns raised in the applications, the Tribunal appointed the Public Trustee as LN's emergency administrator to protect and secure her estate until the hearing was scheduled to occur on 15 November 2024 (Hearing).[1]
[1] GA Act, s 65.
For the reasons that follow, I have decided to revoke the EPA and appoint the Public Trustee as LN's administrator with a direction to investigate whether CB owes money to LN's estate. I have dismissed the application that relates to guardianship as I am satisfied that CB should continue to act under the EPG.
Matters considered by the Tribunal
The primary concern of the Tribunal when making decisions under the Guardianship and Administration Act 1990 (WA) (GA Act) is the best interests of the person for whom the application was made. The starting point for the Tribunal is that every person is presumed to be capable of looking after their own health and safety, managing their own affairs and making reasonable judgments in respect of matters relating to their estate and their person. This is referred to as the 'presumption of capacity' and if set aside by clear evidence, the Tribunal can consider making guardianship and administration orders.
When deciding whether to appoint a guardian or an administrator, the Tribunal must address three stages of enquiry:
(a)the first stage is to determine whether the person lacks the capacity to make decisions about their personal and financial matters in accordance with the tests for incapacity set out in the GA Act.[2] If the person has capacity, the application will be dismissed;
(b)if the person is deemed incapable, the second enquiry is whether there is a need for the Tribunal to make an order. The Tribunal must consider whether there is another way for decisions to be made for the person that is less restrictive on their freedom of decision and action than the imposition of orders. If there is another way for decisions to be made, the application will be dismissed; and
(c)if there is a need for the Tribunal to make an order, the third stage of enquiry involves the Tribunal determining who the guardian or administrator will be, the functions or powers they require and how long the orders will run before they are reviewed.
[2] GA Act s 64(1) sets out the test for incapacity for financial decisions and s 43(1) of the GA Act sets out the test for incapacity for personal decisions.
If a person has signed an enduring power of attorney or an enduring power of guardianship like LN, the Tribunal will consider the actions of the attorney/guardian at the second stage of enquiry to determine whether that arrangement is a less restrictive way for decisions to be made.
If the attorney/guardian has demonstrated that they have not complied with, or are unable to comply with, their obligations and duties pursuant to the power, the Tribunal can revoke, vary or suspend the power and appoint a guardian and/or an administrator.
The Tribunal will take all facts and circumstances into account when determining the best interests of the person concerned. The Tribunal may inform itself on any matter as it sees fit,[3] and is not bound by the rules of evidence,[4] which ensures, as far as possible, that all relevant information can be considered by the Tribunal to make the correct decision in the best interests of the person concerned.
[3] SAT Act, s 32(4).
[4] SAT Act, s 32(2).
I have taken into account the oral evidence given at the Hearing and the written evidence filed in these proceedings and need not set it out in detail. The relevant features are summarised in these reasons.
LN's views and wishes
The Tribunal must take LN's views and wishes into account, as expressed, or as gathered from her previous actions. LN did not attend the Hearing as she was too unwell, but she expressed her views and wishes seven years ago when she signed the following documents on 21 November 2017:
(a)the EPA appointing CB as her sole enduring attorney and CB's wife DB as her substitute attorney if CB was unable to act; and
(b)the EPG appointing CB as her sole enduring guardian and DB as her substitute guardian if CB was unable to act.
In relation to LN's financial decisions, I am unable to follow her wishes because CB has made financial decisions that were against her interests.
However, in relation to her personal decisions, which are likely to be limited to ongoing medical treatment decisions and deciding where LN is to live, I am satisfied that CB (and DB as substitute) is suitable to continue to act under the EPG. The decision about where LN will live will be driven by what is available and the Nursing Home has indicated that they are investigating whether they can accommodate LN at another of their facilities. I am therefore able to give effect to LN's wishes in relation to CB making decisions about her personal and lifestyle decisions.
How aged care costs are calculated – the importance of the RAD
The payment of aged care accommodation (Accommodation) is means tested so every person entering the aged care system will complete an income and assets test with Centrelink to determine how much they will pay. The Government subsidises the cost of Accommodation for people with low income/assets, referred to as 'concessional residents'.
People with higher income/assets will be assessed to pay a lump‑sum refundable accommodation deposit (the RAD) and daily payments. The resident will choose a room and negotiate the daily cost and the RAD with the Accommodation Provider (Provider). The RAD is a deposit on the room, and there is an option to pay the full RAD or a portion. The RAD is 'locked in' by the Provider and can be used for permitted purposes, which include allowing the resident to draw down on the RAD to pay their ongoing care fees.[5]
[5] Approved providers of residential aged care can use refundable deposits for permitted uses set out under s 52N-1 of the Aged Care Act 1997 (Cth) which include capital expenditure, to repay debt accrued for capital expenditure, investment in certain financial products and to make loans and repay debt in very specific circumstances.
The daily accommodation payment (DAP) is similar to paying rent and all residents will have to pay some form of DAP.[6] The DAP calculation is based on the RAD and uses the maximum permissible interest rate (MPIR) to calculate the DAP that is equivalent to the payment of a RAD for any given room.[7] The MPIR is set by the Government and changes every quarter. As of 1 October 2024, the MPIR is 8.38%.[8]
[6] The daily payments might include a basic daily fee, a means tested care fee or fees for extra services for upgraded access to 'hotel-type' services. The daily fees of concessional residents are usually covered by 85% of their aged pension.
[7] The formula to calculate the DAP is: DAP = (RAD x MPIR) / 365.
[8] The MPIR is set for each resident at the time they enter aged care and will not increase over time.
If a RAD is part-paid, the portion that has not been paid is not available to the aged care facility for their permitted purposes, so Providers can charge a further DAP on the amount outstanding.[9] Similar to how a mortgage offset account operates, people can elect to pay a full RAD and benefit from a correspondingly lower DAP or pay a combination of a part-RAD and higher DAP depending on the desire to spread out the cost over time or to reduce the overall costs with a larger up-front deposit. Therefore, paying a full RAD means that the funds cannot be accessed by the person, but they benefit from an overall lower cost.
[9] If a part-RAD is paid, the formula to calculate the further DAP on the unpaid portion is: DAP = (agreed full RAD – RAD paid) x MPIR / 365.
Payment of LN's aged care fees
When LN became a resident at the Nursing Home in August 2018, CB decided she would live in a high-quality room that attracted a RAD of $800,000. CB paid a part-RAD of $100,000 from LN's bank account and intended to pay the remaining $700,000 when her former home was sold.
CB advised that when LN entered aged care, she was paying a DAP of $269.93 per day which was made up of:
(a)$51.63 as an aged care daily fee;
(b)$103 as a means tested fee; and
(c)$114.30 as the further payment on the unpaid portion of her RAD.
LN was paying the high DAP for around two years while waiting for her home to sell, which was reducing the balance of the RAD. In July 2020, $483,658.34 was deposited into LN's RAD from the sale of her home.
CB explained that in 2021:[10]
… a decision was made to invest the balance of the [RAD] rather than lose money each month by the continued $1,000+ monthly payment of interest to [the Nursing Home] and thereby, reducing the deposit amount over time.
[10] Submissions filed by CB on 4 October 2024, page 3.
The Nursing Home initially refused to release the RAD. CB instructed his solicitor to press for the release of the RAD and on 24 November 2021, $369,989, representing around 70% of the RAD, was released to CB. Gifts of $5,000 were made to three of LN's grandchildren. CB used the remaining $355,000 to purchase ten cryptocurrencies. The Nursing Home retained $150,000 as the RAD.
CB calculated that $150,000 would be sufficient to continue to pay LN's aged care fees for the rest of her life because an employee of the Nursing Home mentioned anecdotally that residents with dementia rarely live in a nursing home for more than five or six years. As LN had been living in the Nursing Home since 2018, CB calculated that she may live for three more years, but if she lived longer, he reasoned that the profits from the investment could be used for her further support.
Unfortunately, the value of all cryptocurrencies dramatically reduced over the next 10 months. CB bought at the height of the market and decided to sell at the bottom of the market. The investment of $355,000 was reduced to $78,204. In April 2023, CB used the remaining $78,204 to purchase Bitcoin. In July 2023, CB decided to move the Bitcoin from an online exchange and store it in a 'cold wallet' (which is like a USB device). However, in January 2024, CB realised he lost the cold wallet and the only passwords that could digitally recover the Bitcoin.
The remaining RAD was exhausted by July 2024, slightly earlier than CB had calculated. LN began accruing a debt of over $3,000 per month. At the Hearing in November, the Nursing Home advised that LN owed around $14,000 in unpaid care fees.
Issue 1 - does LN lack the capacity to make her own decisions?
(1)(a) When can an administrator be appointed? The test for incapacity
To appoint an administrator for LN, I must be satisfied that she is currently unable, by reason of a mental disability, to make reasonable judgments in respect of matters relating to all or any part of her estate.
(1)(b) Does LN have a mental disability?
The aged care assessment team assessment (ACAT) prepared in June 2018 noted that LN had received a diagnosis of Alzheimer's dementia from Dr B from the Memory Clinic at Hospital A, which is a progressive illness. She scored 18/30 on a Montreal Cognitive Assessment Test (MoCA), which indicates a cognitive impairment.
I find that the diagnosis of Alzheimer's dementia falls within the meaning of 'mental disability' as defined in the GA Act.
(1)(c) Does the mental disability cause LN to be unable to make reasonable judgments about her estate?
A person's 'estate' includes their real and personal property, all assets and liabilities, and all of their financial affairs. LN's estate consists of approximately $500 held by the Public Trustee and the liability of $14,000 owing to the Nursing Home.
For the Tribunal to decide whether LN is 'unable' to make reasonable judgments about her estate, I must consider the extent to which LN is able to engage in the cognitive process required to make a 'reasonable judgment' and then compare that against LN's estate and circumstances. The ACAT notes that in June 2018, LN would become confused regarding money and if she was stressed or agitated, the confusion would worsen.[11]
[11] Aged Care Assessment Team assessment prepared following an assessment on 11 June 2018.
I am satisfied, and I find, that the diagnosis of Alzheimer's dementia identified by Dr B is the cause of LN's inability to make reasonable judgments in respect of her estate. LN would be unable to think through and resolve the matters relating to the debt owing to the Nursing Home or make the financial arrangements required to move to a new Provider. The evidence before me as set out in the ACAT, which I accept, is that LN previously ran her own retail business and earned her own income, paid her own bills, and lived independently until she was affected by the symptoms of her illness.
(1)(d) Conclusion on capacity to make financial decisions
Having regard to the documentary and oral evidence provided to the Tribunal, I am satisfied on the balance of probabilities, and I find, that the presumption of capacity has been set aside in respect of LN's ability to make reasonable judgments in respect of her estate. LN is therefore a person for whom I can appoint an administrator.
(1)(e) When can a guardian be appointed? The test for incapacity
To appoint a guardian for LN, I must be satisfied that she is over 18 years of age and that one or more of the following criteria apply:
(a)she is incapable of looking after her own health and safety;
(b)she is unable to make reasonable judgments in respect of matters relating to her person; or
(c)she is in need of oversight, care or control in the interests of her own health and safety or for the protection of others.
(1)(f) Does LN lack the capacity to make personal decisions?
I am satisfied, and I find, that LN is currently incapable of looking after her own health and safety. The report prepared by the clinical nurse manager from the Nursing Home (Report)[12] states that LN is unable to understand or follow the advice of her treating doctors, and that she has no insight into her treatment, support or accommodation needs.
[12] Service Provider Report by Ms C dated 25 September 2024.
I am satisfied, and I find, that LN is currently incapable of making reasonable judgments in respect of her person due to the cognitive impairment caused by the Alzheimer's dementia.
I am satisfied, and I find, that LN is in need of supervision and oversight in order to protect her health and safety. The Report states that LN was initially admitted to the Nursing Home due to being unable to care for herself at home and while she appears to be content living at the Nursing Home, she continues to be resistive to the care offered.
(1)(g) Conclusion on capacity to make personal decisions
I am satisfied, and I find, that the presumption of capacity has been set aside in relation to personal decisions and LN is a person for whom I can appoint a guardian.
Issue 2 - is there a need for orders or a less restrictive option available?
Having regard to that evidence, there is no doubt that LN requires assistance to deal with her estate and to make decisions about her personal matters. The question I need to answer at this stage is not whether she needs assistance, but whether she needs an administrator or a guardian to be appointed for that purpose. I must bear in mind the need to adopt a less restrictive option if possible.
The EPA and EPG are less restrictive as they were prepared at a time when LN had capacity and she was able to decide who she wanted to make decisions for her. It is therefore necessary to examine whether the EPA and EPG are an appropriate way for decisions to be made in LN's best interests.
Power to supervise guardians
An enduring power of guardianship involves the appointor (LN in this case) granting the power to the appointee (or guardian, CB in this case) to make decisions about their lifestyle and personal matters. The appointee must act in the appointor's best interests, which includes (but is not limited to) advocating for the person, taking their views and wishes into account, protecting them from abuse, neglect and exploitation and maintaining the supportive relationships that the person has.[13]
[13] GA Act, s 51.
In addition, the Tribunal will also examine any conflict between family members which may cause the appointor to be unable to spend time with certain family members or prevent them from being involved or updated about important decisions made about the appointor. The Tribunal will investigate whether a conflict of interest exists, or may exist, between the interests of the appointor and the guardian. If the Tribunal is satisfied that the enduring power of guardianship is not an appropriate way for personal decisions to be made for the appointor, the Tribunal can revoke, vary or suspend the power.
(2)(a) Has the EPG been operating in LN's best interests?
I am satisfied that the EPG has been operating in LN's best interests and it continues to be an effective way for decisions to be made. The Nursing Home advised that there have been no issues with contacting CB or for decisions being made promptly in relation to LN's medical treatment.
The only pressing decision that needs to be made is about LN's accommodation, although where she lives is likely to be dictated by what is available. The Nursing Home has identified some options from the other facilities they operate, and I expect that in the circumstances, all efforts will be made to quickly accommodate LN as a concessional resident.
(2)(b) Is there a need for a guardian?
I am therefore satisfied, and I find, that there is a less restrictive way for personal decisions to be made for LN. It follows that she is not in need of a guardian and I will dismiss the s 40 application in so far as it relates to guardianship. I will also dismiss the application to vary or revoke the EPG.
Power to supervise attorneys
An enduring power of attorney is a private agreement where the donor (LN in this case) grants the power to the donee (or the attorney, CB in this case) to make decisions about their financial and legal matters. The Tribunal has the power to supervise the conduct of donees to ensure that they fulfill their obligations under the GA Act which, among other things, requires that the donee:[14]
(a)exercises their power as attorney with reasonable diligence to protect the interests of the donor and, if they fail to do so, they are liable to the donor for any loss occasioned by the failure; and
(b)shall keep and preserve accurate records and accounts of all dealings and transactions made under the power.
[14] GA Act, s 107(1)(a) and (b).
The relationship between donor and donee is an agency relationship which is fiduciary in nature.[15]A fiduciary is defined as:[16]
A person who is under an obligation to act in another's best interests to the exclusion of the fiduciary's own interest. A fiduciary cannot use his or her position, knowledge or opportunity to the fiduciary's own advantage, or have a personal interest in, or inconsistent engagement with, a third party, unless fully informed and free consent is given. …
[15] Dal Pont, Powers of Attorney (3rd ed, 2020) Chapter 1.
[16] Butterworths Australian Legal Dictionary (1997) at 471.
When the donor has lost capacity, they have lost the ability to give fully informed consent as they are unable to engage in the cognitive processes required to consider the financial implications of the proposal and make a reasonable judgment in the context of their entire estate and future needs.
If the Tribunal is satisfied that the donee has not protected, or may not be able to, protect the interests of the donor, the enduring power of attorney can be revoked, varied or suspended.[17] If the Tribunal is satisfied that the donee is the appropriate person to continue to manage the donor's funds, but oversight is required, the enduring power of attorney can be revoked and the attorney appointed as the administrator. Such an appointment subjects the administrator to the ongoing supervision of the Public Trustee by creating an obligation to lodge annual accounts.
(2)(c) Has the EPA been operating in LN's best interests?
[17] If an application pursuant to GA Act s 109(1)(c) is on foot. If the application is pursuant to s 40 only, the Tribunal is empowered only to revoke the enduring power of attorney.
The evidence CB provided to the Tribunal demonstrates that he has not acted with reasonable diligence to protect LN's interests. CB set up a new trust and bank account to receive and share profits from the cryptocurrency investment with an existing family trust. The actions CB described suggest that a disproportionate amount of time was spent planning how to manage the anticipated profits, tax payable and capital gain of the cryptocurrency investment.
CB disclosed that, being a first-time investor, he did not consider that the investment might lose value. Not only did the value of the cryptocurrency drop from $355,000 to $78,204 in 10 months, CB then lost the last $78,204 by throwing the cold wallet and passwords in the bin.
Further, CB gifted $15,000 of the RAD to LN's grandchildren. During discussions with the CEO of the Nursing Home, CB recalled the CEO commenting that CB's request to withdraw such a large portion of the RAD was unusual, although there had been occasions when smaller portions of the RAD had been refunded if a resident wanted to make a gift to family members. The example provided was of a resident making a gift to a grandchild to purchase a vehicle.
CB claims that because there was a precedent where funds held in a RAD had been released to grandchildren to purchase cars, LN wanted to give $5,000 to each of her grandchildren. CB also asserts that LN agreed to invest the RAD in cryptocurrency.
In submissions filed with the Tribunal, CB included the following table he prepared to explain the rationale for the investment and demonstrate the increase in the value of the currencies in the 12 months prior to the investment being made:
I am satisfied, and I find, that in November 2021, three years after LN scored 18/30 on a MoCA, she would not have the cognitive capacity to understand:
(a)what an online digital virtual currency was;
(b)the financial implication of gifting $15,000 to her grandchildren in the context of the imminent investment of the balance of her estate in cryptocurrencies;
(c)the mathematical calculations involved with the increased value of the cryptocurrencies set out in the table CB prepated; or
(d)the risks involved with such an investment.
I am satisfied on the evidence before me, and I find, that CB did not act diligently to protect LN's interests because:
(a)CB did not have the authority to gift $15,000 of LN's money to her grandchildren. LN did not have the capacity to consent to such a gift. Attorneys do not have the authority to gift an incapable donor's estate to others;
(b)CB did not explain the risk to LN of losing all her money invested in cryptocurrency as he did not appreciate it himself;
(c)there was no benefit to LN to withdrawing her RAD and investing it to increase the value. It was to LN's benefit to leave the $370,000 in her RAD, which would have covered the costs of her comfortable accommodation for a significant period of time as the ongoing DAP and MPIR interest charged would be lower with a higher RAD;[18]
(d)CB was not acting in LN's interests, and his interests diverged from hers, at the point he calculated her life expectancy and the allowance of $150,000 for her total future needs, and that the funds in excess of $150,000 were available to him to gift, invest and derive profit;
(e)CB was reckless in investing LN's money in speculative online currencies that he acknowledged he did not understand; and
(f)CB was careless in losing the cold wallet and passwords.
[18] The retention of $370,000 in the RAD would have saved LN $31,006 on an annual basis. Using the formular to calculate the DAP payable on the unpaid portion of the RAD [DAP = (agreed full RAD – RAD paid) x MPIR / 365], the DAP payable with $150,000 of the RAD paid would be = ($800,000 - $150,000) x .0838 / 365 = $149.23 per day, and $54,470 per annum. If the $370,000 was left in the RAD, her DAP would be = ($800,000 - $520,000) x .0838 / 365 = $64.28 per day, and $23,464 per annum.
I find that the EPA has not operated in LN's best interests and I will therefore revoke it. CB indicated at the Hearing that he was considering obtaining new employment in the new year and might consider contributing to a payment plan to assist with LN's debt of $14,000.
(2)(d) Is there a need for an administrator?
I am satisfied on the evidence before me that LN does not have the capacity to sign a new enduring power of attorney and informal assistance is not sufficient as she requires someone to have the legal authority to manage her estate.
I am therefore satisfied, and I find, that there no less restrictive way for financial and legal decisions to be made in LN's best interests and she needs the Tribunal to appoint an administrator.
Issue 3 – who, what and how long?
(3)(a) Who should be LN's administrator?
There are no nominations for appointment. The only option open to the Tribunal is to appoint to the Public Trustee as LN's administrator.
(3)(b) What should the administrator's powers be?
The administration order will be a plenary order, which will allow the administrator to deal with all aspects of LN's estate in her best interests. I am satisfied on the evidence before me that LN is unable to make decisions about simple or complex financial matters.
I will direct the administrator to investigate whether any funds are owing to LN's estate by CB. I have not included a gifting authority as LN is in debt and does have funds to gift.
(3)(c) How long should the order run before review?
When making orders, the Tribunal is required to fix a period for the review of the order. The medical evidence is clear that LN has a diagnosis of a progressive illness such that her need for an administrator will be lifelong. Therefore, these orders are to be reviewed within the maximum term possible, which is within five years.
Orders
GAA 4917 of 2024
The Tribunal makes the following orders:
1.The Tribunal declares that the represented person, [LN] is:
(a)unable, by reason of a mental disability, to make reasonable judgments in respect of matters relating to all of her estate; and
(b)in need of an administrator of her estate.
Administration
2.The order made on 24 September 2024 pursuant to s 65 of the Guardianship and Administration Act 1990 (WA) is revoked.
3.The Public Trustee of 553 Hay Street, Perth, Western Australia is appointed plenary administrator of the represented person's estate with all the powers and duties conferred by the Guardianship and Administration Act 1990 (WA).
4.The enduring power of attorney dated 21 November 2017 by which the represented person appointed [CB] to be their attorney, is revoked.
5.The administrator is directed to investigate whether any funds are owed to the estate by the former enduring attorney [CB] and if so, to bring and defend all actions, suits and other legal proceedings in the name of the represented person and, if appropriate, to settle those matters.
6.The administration order is to be reviewed by 19 November 2029.
Guardianship
7.The application is dismissed.
GAA 4964 of 2024
The Tribunal orders:
1.The application is dismissed.
I certify that the preceding paragraph(s) comprise the reasons for decision of the State Administrative Tribunal.
MS R BUNNEY, MEMBER
21 NOVEMBER 2024
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