LS
[2019] WASAT 97
•25 OCTOBER 2019
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
ACT: GUARDIANSHIP AND ADMINISTRATION ACT 1990 (WA)
CITATION: LS [2019] WASAT 97
MEMBER: MR J MANSVELD (MEMBER)
HEARD: 9 APRIL 2019
WITH FINAL REPORTS/SUBMISSIONS FILED ON 12 AUGUST 2019
DELIVERED : 25 OCTOBER 2019
FILE NO/S: GAA 28 of 2019
LS
MATTERRepresented Person
Catchwords:
Guardianship and administration - Administration - Capacity - Presumption of capacity - Clear and cogent evidence - Mental disability - Reasonable judgments - Neuropsychological assessments - Court compensation trust - Court appointed trustee - Transfer of court compensation trust funds to superannuation fund - Member of superannuation fund
Legislation:
Guardianship and Administration Act 1990 (WA), s 3, s 4, s 4(3), s 17A, s 64(1), s 64(1)(a), s 80, s 84
Trustees Act 1962 (WA), s 17
Result:
Administration order revoked
Category: B
Representation:
Counsel:
| Represented Person | : | Mr J Johnson |
Solicitors:
| Represented Person | : | Julian Johnson Lawyers |
Case(s) referred to in decision(s):
FS [2007] WASAT 202
GC and PC [2014] WASAT 10
LS [2018] WASAT 64
Perpetual Trustee Company Ltd v Cheyne [2011] WASC 225
REASONS FOR DECISION OF THE TRIBUNAL:
History
LS is 20 years of age. He sustained a severe brain injury in a motor vehicle accident on 3 August 2008.
LS first came to the attention of the Tribunal in March 2014 when a trustee company (trustee) made an application for the appointment of an administrator of his estate.
The application was made pursuant to the Guardianship and Administration Act 1990 (WA) (GA Act).
At the time LS was 15 years of age.
On 28 February 2014 the trustee had been appointed the trustee of a court trust arising out of the compromise of a personal injuries claim (court compensation trust). The settled amount was just over $8 million.
Order 3.3 of the order of the District Court establishing the court compensation trust reads:
to [the trustee] the balance of the judgment sum to be invested or applied for the benefit of the Plaintiff.
And order 4 of the order reads:
Whilst the trust is in operation, the trustee be empowered at its discretion to apply, from time to time, the whole or any part of the income of the trust fund and, if considered necessary the capital thereof, for the maintenance, welfare and advancement of the Plaintiff, or otherwise for the benefit of the Plaintiff.
The medical information provided to the Tribunal with the application was a report from LS's then general practitioner. That report from March 2014 stated amongst other things that LS suffered from 'severe and global impairment of functioning'.
On 19 May 2014 the trustee was appointed LS's limited administrator with the authority to call upon the court compensation trust to transfer funds to a superannuation fund and to act for him with respect to that fund (2014 administration order).
The need for the 2014 administration order was a response to the decision of Edelman J (as he then was) in the Supreme Court of Western Australia in Perpetual Trustee Company Ltd v Cheyne [2011] WASC 225 (Cheyne).
These types of orders are now common in the Tribunal.
The issues raised in Cheyne will be discussed later in these reasons.
In making the 2014 administration order the Tribunal found and declared that LS was, by reason of his mental disability (the acquired brain injury) unable to make reasonable judgments relating to his estate and that he was in need of an administrator (s 64(1) of the GA Act).
The determination was made subject to the principles set out in s 4 of the GA Act namely that the presumption of capacity had been rebutted by the evidence; there was no less restrictive alternative to the appointment of an administrator; the order imposed the least restrictions possible on LS in his then circumstances; his views and wishes were to the extent possible ascertained and the appointment of the administrator was in his best interests.
The 2014 order was set for review in five years (s 84 of the GA Act).
In October 2016 LS's mother, CM, made an application under the GA Act for the appointment of a guardian and for review of the 2014 administration order. LS was to reach 18 years of age on 19 October 2016.
On 16 January 2017 the Tribunal appointed CM as LS's limited guardian to make decisions regarding his accommodation, support services, education, training and work (2017 guardianship order).
On the same day the 2014 administration order was revoked and replaced by one appointing CM the plenary administrator of LS's estate except for the authority given to the trustee as the appointed administrator in the terms of the 2014 administration order (2017 administration order).
Included in the material before the Tribunal on 16 January 2017 was a report from Dr CP, Clinical Neuropsychologist, dated 22 December 2016 (2016 neuropsychological report).
Dr CP noted that LS had undergone neuropsychological assessment in 2009, 2012 and 2014.
In summary, Dr CP relevantly stated in the 2016 neuropsychological report under the heading 'Capacity' at paras 34 to 37:
•LS indicated he could not make 'big' financial decisions and would prefer to have someone assist him with this;
•He appeared able to understand questions put to him when put in a simplified way but had difficulty fully answering them due to his expressive language difficulties and 'other cognitive limitations';
•LS was able to understand and remember relevant information provided it was put to him in a simple manner, repeated and given the opportunity to ask questions if he was not clear;
•He could retain information and express a consistent choice;
•Despite this LS was socially vulnerable and at risk of exploitation. He had poor sustained attention and listening comprehension. He had difficulties in learning and using higher order thinking and reasoning;
•LS had difficulty with abstract reasoning, verbal problem solving and appreciating information as it applied to his own situation with good judgment and reasoning;
•Given his expressive and receptive language problems LS could have trouble understanding what was being said to him and being effectively able to communicate his decisions to others; and
•LS would be unable to understand complex legal matters, documents or contracts. He would have difficulty making complex financial or legal decisions on his own such as managing a large sum of money or instructing his legal representatives.
At the time of the 2016 neuropsychological report, LS had just reached 18 years of age.
In August 2017, the trustee applied for review of the 2017 administration order and the 2017 guardianship order citing a breakdown in the relationship with CM.
On 6 February 2018 the 2017 administration order was confirmed by the Tribunal (2018 administration order) and the 2017 guardianship order was revoked and an order made appointing the Public Advocate as LS's limited guardian with authority to make decisions concerning his accommodation and support services (2018 guardianship order).
The orders were set to be reviewed in 12 months.
In March 2018, CM applied for review of the 2018 guardianship order by the Full Tribunal under s 17A of the GA Act.
On 18 May 2018 the Full Tribunal revoked the 2018 guardianship order. Its reasons were published in LS[2018] WASAT 64 (LS).
Included in the material before the Full Tribunal was a further report from Dr CP dated 12 December 2017 (2017 neuropsychological report).
Relevantly, in summary, the Full Tribunal in LS, had this to say about Dr CP's expertise and qualifications at [65] and [72]:
•Dr CP is a properly qualified and experienced expert in the fields of clinical psychology and neuropsychology for both adults and children. She is qualified to give factual evidence on the assessments undertaken with LS and to express a relevant opinion on his functional capacities.
•The 2016 neuropsychological report was made in reference to LS as an adult.
•The full extent of LS's cognitive difficulties would only be known when LS reached his early 20's. This was particularly the case with regard to LS's executive, social and emotional functioning.
In her 2017 neuropsychological report, under the heading 'Opinion', Dr CP restated much of her assessment of LS's cognition from the 2016 neuropsychological report, however she relevantly added the following at paras 28 to 33:
… it is apparent that as [LS] has matured he is more capable of having a greater deal of input into decisions relating to his life, such as accommodation and employment/study choices, as well as who provides treatment and services. Thus in my opinion [LS] is capable of managing his own affairs with all aspects of his life (other than financial) provided that he receives adequate assistance and/or input from family members and professional advisors acting in his best interests.
…
… Thus on balance, [LS] appeared to understand the nature and effect of executing an Enduring Power of Attorney.
…
Nonetheless it is apparent that [LS] does have an improved ability to make reasonable choices when presented with the relevant information, and is also keen to improve his financial independence. It would thus be important that he be consulted with all financial decisions so that he can acquire new skills, feel he has more control over his life, and build his independence in this area within a safe and supportive environment. In my opinion, [LS] also has the capacity to make an informed choice about which agency he would like to manage his estate, and this should also be taken into consideration.
The current proceeding
The current proceeding is the review of the 2018 administration order pursuant to s 84 of the GA Act.
LS is seeking revocation of the 2018 administration order on the basis that he is capable of making reasonable judgments concerning his estate.
The revocation is supported by CM, LS's mother and administrator.
In support of the submission to revoke the 2018 administration order, LS filed a report by MJ, Consultant Clinical Psychologist, dated 13 March 2019 from an assessment conducted on 1 March 2019 (2019 neuropsychological report).
MJ gave oral evidence at the hearing on 9 April 2019.
Counsel for LS submitted that MJ's assessment and consequent opinion (see below) speak for themselves and that LS has been assessed as capable of making reasonable judgments regarding his estate which could in his circumstances be valued as much as $8 million.
The trustee reported that currently $7.134 million is invested in a superannuation fund and $1.48 million remains in the court compensation trust comprising the property in which LS lives and about $600,000 in cash.
In this situation it is the submission of counsel for the trustee that if the administration order is revoked LS could withdraw all of the funds held in the superannuation fund.
The right to withdraw monies from the superannuation fund flows from LS's total and permanent disability status. Regardless of what happens in LS's life, including if the court trust ends and the administration order is revoked, provided that the funds remain in the existing superannuation fund, LS retains that disability status.
Counsel for the trustee questioned whether the first step for LS should be an application to the court to wind up the court compensation trust.
The trustee asked the Tribunal to consider the nature, character and purpose of the court compensation trust and the ongoing role of the court which created the court compensation trust. There is also the concern about the obligations of the trustee in regard to the court compensation trust to 'ensure that we [trustee] hold onto the rights attached to the funds. We can't just willingly let this go. We need to make sure that it's in order'; ts 21, 9 April 2019.
Counsel for LS submitted that the question of LS's capacity is best dealt with in the Tribunal's specialist jurisdiction.
As to the ongoing role of the court, counsel for LS submited at ts 25, 9 April 2019:
If [the trustee] is concerned and believes that something other than questions of capacity come into the question of whether the court created trust should be protected or continued, then they should make that application in that jurisdiction and, without instructions, I wouldn't have an issue with these orders that we seek being delayed to permit them an opportunity to go down that path if they wanted to so that the District Court could be presented with a scenario which says this person is no longer incapacitated. There is an already created trust[.]
There is nothing before the Tribunal to indicate that the trustee has made any application to the court in this regard.
2019 neuropsychological report
Dr CP's 2017 neuropsychological report was available to MJ and he provided an extensive summary of Dr CP's testing and opinion from that time.
MJ detailed the tests LS underwent in his neuropsychological assessment and also conducted what he termed a 'Financial Management Interview' with LS.
Under the heading 'Summary and Assessment' at pages 12 to 15, MJ relevantly stated:
•It is clear from the test results that the majority of LS's cognitive abilities are in the Average range or better.
•Comparing the test results of the 2016 neuropsychological report with those obtained from Dr CP in the 2019 neuropsychological report whilst a number of skills are till the same, LS has shown significant improvement in his verbal comprehension abilities in his processing speed in his new learning and memory abilities and in his language expression skills.
•Performances in the borderline range included mental arithmetic (due to slow processing speed but actually accurate) and initial learning and delayed recall on unstructured verbal tasks.
•The only performance in the extremely low range was multiple task processing (slow but accurate).
•LS retains some isolated mild impairments that can be overcome with appropriate compensatory strategies.
•LS is not unduly vulnerable to the influence of others compared to the average person.
In his neuropsychological assessment, MJ further opined at pages 16 to 17:
…
Overall, I am satisfied that [LS] has an acceptable understanding of his financial status and he gave a reasonable account of his current basic financial management. I note that the financial management interview was done when his mother was not in the room and therefore, these were all answers that were supplied by himself with no assistance.
I am also satisfied that [LS] realises that this is a large amount of money that is supposed to last him the rest of his life and that he does not intend just to manage this money himself. He is going to rely on his mother, his family and the advice of a financial planner as to how to invest this money to give him a regular income. This would certainly be a reasonable approach to use.
I also have no concerns that the limited cognitive impairment that [LS] now has would be a major impediment into financial decision-making. As stated previously, there has been a substantial improvement in his processing speed, language skills, and new learning and memory over the past two years. All his language skills are average or better and therefore, he certainly has the capacity to understand information that is given to him as much as the average man in the street. His new learning and memory skills are mostly intact apart from getting initially overwhelmed with complex verbal information. However, his ability to learn logically structured information is in the Superior range and therefore, as long as information is given to him in a structured and logical sense, he will have no difficulty understanding and remembering it. Furthermore, basic planning and organisation, abstract reasoning, logical thinking are all in the average range and again, his ability to weigh up the pros and cons of information and think of solutions to situations is no different to the average man in the street. He does not have a disorder of impulse control, and therefore does not have an impairment where he is just going to spend or waste his money recklessly.
Overall, I am of the opinion that [LS] does in fact have the capacity to manage his financial affairs as the average person and though he may require extra time to process information, he does so accurately. He would require information to be logically structured for him, but this should not be an impediment to his financial management. I am of the opinion that he is able to independently manage his finances, albeit under the advice of a financial planner (which I would recommend for anybody with such a large amount of money)[.]
When considering what might be the basis for the improvement in LS's cognition, MJ stated at page 15 of his neuropsychological assessment:
…
Overall, comparing the results of the current neuropsychological assessment to the previous neuropsychological assessment indicate there has been major improvement in [LS's] verbal intellectual abilities, language skills, processing speed and new learning and memory skills. This was somewhat unexpected given that the previous assessment occurred eight years following his brain injury and this assessment was a further two years later (now ten years post brain injury). For whatever reason (perhaps his brain has continued to develop), he is now performing a lot better than he was two years ago[.]
MJ's oral evidence
In his oral evidence MJ restated the mild impairments that LS continues to have as:
… he's a bit slow and he's a little bit limited in how much he can hold and manipulate in his mind but these things, for the most part, are in the low average range [and LS deals with this] by structure and repetition and, … importantly, the executive skills, the planning, the organising, the problem solving, are actually intact[.]
(ts 17, 9 April 2019)
As to how the remaining impairments may impact on LS's vulnerability to influence, MJ opined:
… So the actual issues about being a bit slow and a little bit overwhelmed, don't – in my opinion, don't raise the risk of him being unduly influenced by others because his executive skills are all intact, including his impulse control[.]
(ts 18, 9 April 2019)
Further report from Dr CP
At a directions hearing on 6 May 2019, the Tribunal decided to request that Dr CP provide the Tribunal with her view on the conclusions reached by MJ concerning the ability of LS to make reasonable judgments in respect to his estate.
This was done to assist in obtaining a longitudinal perspective on the improvement in LS's cognition given that Dr CP had assessed him over a number of years.
Dr CP was provided with MJ's neurological assessment and with a copy of the transcript of his oral evidence.
On 12 August 2019 Dr CP filed her report with the Tribunal.
In that report Dr CP relevantly concluded at para 7:
[MJ] is a very experienced neuropsychologist and I have considerable respect for his opinion. I have carefully reviewed the report dated 13 March 2019 [2019 neuropsychologist report], neuropsychology test profile and [Tribunal] transcript (9 April 2019), and I believe I would have formed the same conclusions based on the information provided. [LS] has made an excellent recovery and provided he receives support and professional advice, is now also capable of managing his financial affairs.
The parties were given the opportunity to examine Dr CP's opinion at hearing but did not seek to do so.
Discussion of the issues
The administration orders made by the Tribunal appointing the trustee as limited administrator concerning LS's interests in a superannuation fund (most recently the 2018 administration order) follow from the decision in Cheyne.
The essential elements (generally) are these:
1)a person being granted an award of damages arising from a claim/action for personal injuries;
2)the creation of a court compensation trust and the appointment by the court of a trustee of the court trust;
3)the trustee being given the power to apply funds in the court compensation trust for the maintenance, welfare, advancement or otherwise for the benefit of the person;
4)if the person can be assessed as having total and permanent disability, the funds in the court compensation trust (or part thereof) can be transferred to a superannuation fund and the person derive potentially significant financial benefits through income tax concessions;
5)the funds in the superannuation fund can be immediately used for the person's needs; and
d)funds can move backwards and forwards from the court compensation trust to the superannuation fund.
In summary, His Honour found in Cheyne:
•The transfer of funds from a court compensation trust to a superannuation fund is not an investment within the terms of s 17 of the Trustees Act 1962 (WA) because the trustee will not receive anything in return; Cheyne at [18] and [56];
•A court appointed trustee is empowered to transfer funds from a court compensation trust to a superannuation fund under the power to apply funds for the maintenance, welfare, advancement or otherwise for the benefit of the person; Cheyne at [47] to [49];
•When funds are transferred from a court compensation trust to a superannuation fund the interest created is a limited interest as a member in relation to the superannuation fund and not a beneficial interest. The limited interest in the superannuation fund accrues to the person (the member) not to the court appointed trustee; Cheyne at [17] and [18];
•The funds in the superannuation fund will not be under the direct supervision of the court as are the funds in the court compensation trust; Cheyne at [46];
•However, provided the Tribunal appoints the court appointed trustee as limited administrator with relevant authority, then all of the rights of the person as member of the superannuation fund will be subject to the control/direction of the Tribunal including the power of removal; Cheyne at [21] and [46];
•As limited administrator the court appointed trustee will be required to file annual accounts with the Public Trustee and will be liable for any defalcation; s 80 of the GA Act; Cheyne at [46];
•The trustee of the superannuation fund will itself be subject to the laws and regulations governing the superannuation industry; Cheyne at [46]; and
•The court retains jurisdiction under its parens patriae power; Cheyne at [46] and [62].
His Honour concluded in Cheyne at [46] that the transfer of court compensation trust funds to a superannuation fund and therefore the removal of the courts supervision of the transferred funds did not detract from the benefits that would accrue to the person because the processes outlined above would offer 'at least the same degree of scrutiny [and] at least the same amount of protection'.
It might reasonably be said that the decision in Cheyne allowed for a practical solution to the problem of how to protect the interests of a person under disability who is subject to a court compensation trust and who stands to receive significant financial benefits from the application of those funds to superannuation.
Although complementary in the circumstances detailed in Cheyne, the jurisdictions of the court and the Tribunal are separate. In appointing an administrator for a person's estate, the Tribunal must independently find that the person satisfies the requirements of s 64(1) of the GA Act subject to the principles set out in s 4.
In Cheyne His Honour recognised that the Tribunal could remove the administrator leading to the possibility of having a court appointed trustee different to the Tribunal appointed administrator.
Given its independent jurisdiction under the GA Act the Tribunal must also, upon review of the administration order, be alive to submissions that the person does not currently meet the statutory test for incapacity and therefore an administration order can no longer be made and the existing order revoked.
This is the position of LS in the current review of the 2018 administration order.
The trustee did not offer any evidence concerning LS's capacity in contradiction to that of MJ and Dr CP.
LS continues to suffer from a mental disability as defined in s 3 of the GA Act, that being the residual effects of the acquired brain injury he sustained in the motor vehicle accident in 2008.
LS therefore satisfied the first limb of s 64(1)(a) of the GA Act.
The question that follows is whether by reason of the mental disability LS is unable to make reasonable judgments in respect of matters relating to all or any part of his estate.
In FS [2007] WASAT 202 (FS), the Full Tribunal found at [109] that the cognitive process of making a reasonable judgment 'involves knowledge, understanding and evaluation'.
Moreover the ability (or not) of making a reasonable judgment concerns the person's actual estate; FS at [103].
At the time of the hearing, LS's estate subject to the 2018 administration order was significant, just over $7 million.
The size of the estate was known to MJ and his assessment of LS's capacity specifically deals with it.
Dr CP's evaluation of MJ's assessment also gives inherent consideration to LS's actual estate. Her only qualification is that LS receive support and professional advice which concurs with the view of MJ but in acknowledgment that he would give that advice to any person with a large estate.
By all accounts LS has made a remarkable recovery. The most recent cognitive assessments show that LS largely falls in the 'average' range. His residual deficits can be overcome by compensatory strategies and the evidence is that he is at no more risk of influence that the 'average man in the street'.
LS intends to take professional financial advice and is open to the support of his family.
In GC and PC [2014] WASAT 10, the Full Tribunal found at [36] that to rebut the presumption of capacity in s 4(3) of the GA Act, 'clear and cogent' evidence is required.
I find that the presumption of capacity is not rebutted on the evidence.
The 2018 administration order is therefore revoked.
It remains for the parties decide what action (if any) should be taken in the jurisdiction of the court in respect to the court compensation trust.
Order
1.The administration order made on 6 February 2018 is revoked.
I certify that the preceding paragraph(s) comprise the reasons for decision of the State Administrative Tribunal.
MR J MANSVELD, (MEMBER)
25 OCTOBER 2019
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