M v M

Case •

[2013] NSWSC 1495

•

11 October 2013

Supreme Court


New South Wales

  • Amendment notes
Medium Neutral Citation: M v M [2013] NSWSC 1495
Hearing dates:-
Decision date: 11 October 2013
Jurisdiction:Equity Division
Before: Lindsay J (in Chambers)
Decision:

Orders for discharge of the NSW Trustee and Guardian as manager of the estate of a protected person, and for appointment of a member of the protected person's family as a private manager, with ancillary orders, including an order confirming that the estate of the defendant continue to be subject to management under the NSW Trustee and Guardian Act 2009 NSW.

Catchwords:

GUARDIANSHIP - protected person - financial management - change of manager - order for discharge of management of NSW Trustee and Guardian - Order for appointment of member of family as private manager - principles governing a change of manager - paramount consideration remains protection of welfare, and interests, of protected person - prudential management requires flexibility, consultation with protected person and family, and respect for protected person's autonomy.

MENTAL HEALTH - protected person - appointment of manager of estate - change of manager - substitution of private manager for NSW Trustee and Guardian - principles governing change of manager - paramount consideration remains protection of welfare, and interests, of protected person - prudential management requires flexibility, consultation and respect for autonomy.

PRACTICE - NSW Trustee and Guardian Act - protected person - appointment of manager of estate - change of manager - substitution of private manager for NSW Trustee and Guardian - paramount consideration remains protection of welfare, and interests, of protected person - prudential management requires flexibility, consultation and respect for autonomy
Legislation Cited: Administrative Decisions Tribunal Act 1997 NSW
Corporations Act 2001 Cth, chapters 5D and 7
Guardianship Act 1987 NSW
Guardianship and Protected Estates Legislation Amendment Act 2002 NSW
Interpretation Act 1987 NSW, s 47
Lunacy Act, 1878 NSW, s 105
Lunacy Act 1898 NSW, s 115
Mental Health Act, 1958 NSW, s 51
NSW Trustee and Guardian Act 2009 NSW, s 39, s 41(1)(a), s 41(1)(b), s 68, s 127
Protected Estates Act 1983 NSW, s 5(8)
Supreme Court Act 1970 NSW
Supreme Court (Amendment) Act 1972 NSW, s 14
Trustee Companies Act 1964 NSW
Cases Cited: CCR v PS (No 2) (1986) 6 NSWLR 622 at 640
Countess of Bective v Federal Commissioner of Taxation (1932) 47 CLR 417 at 420-423
Fletcher, Ex parte (1801) 6 Ves Jun 427; 31 ER 1127
GDR v EKR [2012] NSWSC 1543
Gell v Gell (2005) 63 NSWLR 547 at 553-554 [21]-[23]
Holt v Protective Commissioner (1993) 31 NSWLR 227
In Re W.M. (A person alleged to be of unsound mind) (1903) 3 SR (NSW) 552 at 561, 567, 569 and 570
JMK v RDC and PTO v WDO [2013] NSWSC 1362
JJK v APK (1986) Australian Torts Reports 80-042 at 67, 881
JMK v RDC and PTO v WDO [2013] NSWSC 1362 at [60]-[62
Jones v Moylan (1997) 18 WAR 492 at 496-497, 501 and 509-510
Macedonian Orthodox Community Church St Petka Incorporated v Bishop Petar (2008) 237 CLR 66 at 93 [69]
Morris v Zanki (1997) 18 WAR 260 at 284-286
Re L [2000] NSWSC 721 at [10]
Re McL [2001] NSWSC 280 at [3]-[5]
Re Walker (1848) 2 Phil 630; 41 ER 1087
Re Westbrooke (1848) 2 Phil 631; 41 ER 1087; G v B (Powell J, 27 May 1992) BC 9201855 at 13
Texts Cited: BE Porter and MB Robinson, Protected Persons and their property in New South Wales (Law Book Co, Sydney, 1987), pp 28-29, 29-30
HS Theobald, The Law Relating to Lunacy (Stevens and Sons, London, 1924), pp 380 and 382
Category:Principal judgment
Parties: Plaintiff (sister of protected person)
Defendant (protected person)
Representation: Counsel: -
Solicitors: -
File Number(s): 2011/00231893

Judgment

INTRODUCTION

  1. On the application of the plaintiff (the sister of the defendant) by a summons filed in the principal proceedings, and with the consent of the defendant, the Court, on 5 September 2011, made orders to the following effect:

(1)   Declare (pursuant to the NSW Trustee and Guardian Act 2009 NSW, s 41(1)(a)) that the defendant is incapable of managing his affairs.

(2) Order (pursuant to s 41(1)(a) of the Act) that the estate of the defendant be subject to management under the NSW Trustee and Guardian Act 2009 NSW.

(3) Order (pursuant to s 41(1)(b) of the NSW Trustee and Guardian Act 2009 that management of the estate of the defendant be committed to the NSW Trustee and Guardian ("the NSW Trustee").

  1. Now, by a notice of motion filed on 9 September 2013 in the same proceedings, the plaintiff (at the request of the defendant) applies to the Court for orders to the following effect:

(1)   An order that the NSW Trustee be discharged as manager of the estate of the defendant.

(2)   An order that the plaintiff, herself, be appointed manager of the estate.

(3)   An order that the NSW Trustee transfer management of the estate of the defendant to the plaintiff within a particular time frame.

(4)   An order that the costs of the motion (including the costs of the NSW Trustee) be paid out of the estate of the defendant.

  1. In response to the plaintiff's notice of motion, the NSW Trustee has filed an affidavit by one of its legal officers in which she deposes, inter alia, to the following:

(a)   The NSW Trustee does not oppose the orders sought in the notice of motion.

(b)   The estate of the defendant presently comprises property having an estimated net value of $463,326.35 or thereabouts.

(c)   The assets of the estate (with an estimated value of $594,840.80 or thereabouts) comprise: vacant land with an estimated value of $100,000; a motor vehicle purchased in 2012 for $18,000; a trust account with the NSW Trustee with a credit balance of $112,747.73 or thereabouts; superannuation with a value of $5,499.89 or thereabouts; and a cash investment with a value of about $358,593.18.

(d)   The liabilities of the estate (totalling $131,514.45 or thereabouts) comprise: a bank mortgage over the defendant's land for $120,649.96 or thereabouts, repayable in fortnightly instalments of about $237.75; and a personal loan, taken out for purchase of the defendant's car, upon which the defendant presently owes $10,864.49 or thereabouts, repayable by monthly instalments of about $367.16.

(e)   As manager of the defendant's estate, the NSW Trustee has routinely attended to repayments on the defendant's loans, payment of insurance referable to the defendant's land and motor vehicle, and the provision to the defendant of a weekly allowance (of the order of $250.00 - $300.00 or thereabouts).

  1. The evidence adduced by the plaintiff in support of her motion comprises: an affidavit sworn by herself; an affidavit sworn by the father of the defendant and herself; two affidavits by unrelated deponents deposing to the fitness of the plaintiff (a school teacher, presently aged 24 years) to act as manager of the defendant's estate; and an affidavit of service on the defendant of the motion and the several affidavits filed in support of it.

  1. The plaintiff's evidence demonstrates that she has taken advice from a local chartered accountant about how best to manage the defendant's estate should she be appointed manager of it.

  1. In her affidavit in support of the motion the plaintiff refers, in such a way as to rely upon it in support of her motion, to the affidavit she swore in support of her summons.

  1. No affidavit has been sworn by the defendant in response to the notice of motion.

  1. No appearance was filed on behalf of the defendant in response to the summons. Nor has any been filed in response to the plaintiff's notice of motion.

  1. I accept that, notwithstanding the absence of any contradictor to the plaintiff's motion, the Court can, and should, accept the evidence filed in support of the plaintiff's motion as, in substance, factually correct. There are some discrepancies in the evidence which, in contested proceedings, might have been explored but they do not, as I perceive it, materially alter the general picture.

THE ADMINISTRATIVE REGIME, AND ROLE, OF THE NSW TRUSTEE UNDERPINS PROCEEDINGS RELATING TO MANAGEMENT OF PROTECTED ESTATES

  1. Comfort can be taken from the fact that, as manager of the defendant's protected estate and as the public authority entrusted with monitoring the work of all private managers of protected estates in New South Wales, the NSW Trustee has formally recorded its non-objection to the orders sought in the motion.

  1. The functions, and powers, conferred on the NSW Trustee by the NSWTrustee and Guardian Act 2009 empower, and require, it (as a corporation with the status of a NSW Government agency) to manage the estates of protected persons committed to its care (by the Court under s 41 of that Act, by the Mental Health Review Tribunal pursuant to ss 44-48 and 52 of the same Act or by the Guardianship Tribunal pursuant to Part 3A of the Guardianship Act 1987 NSW) or (pursuant to the NSW Trustee and Guardian Act, particularly ss63-70) to oversee the management of protected estates by private managers to whom management of a protected estate is entrusted by the Court or the Guardianship Tribunal.

  1. In the exercise of its protective jurisdiction (both statutory and inherent) the Court looks to the NSW Trustee, and relies upon it, to supply administrative machinery essential for the due administration of protected estates.

  1. Importantly though, unlike its statutory predecessors, the NSW Trustee has never been an officer of the Supreme Court. Its immediate predecessor, the Protective Commissioner was: NSW Trustee and Guardian Act 2009, s 127, schedule 1, clauses 10(2) and 11; Protected Estates Act 1983 NSW, s 5(8) as first enacted. So too was their historical predecessor, the Master in Lunacy: Lunacy Act, 1878 NSW, s 105; Lunacy Act 1898 NSW, s 115; Mental Health Act, 1958 NSW, s 51, as enacted and as amended by the Supreme Court Act 1970, second schedule, itself amended by Supreme Court (Amendment) Act 1972 NSW, s 14; Protected Estates Act 1983 NSW, s 5; BE Porter and MB Robinson, Protected Persons and their property in New South Wales (Law Book Co, Sydney, 1987), pp 28-29.

  1. The decisive shift away from the concept of a subordinate officer of the Court performing both judicial and administrative functions in exercise of the Court's protective jurisdiction came with enactment of the Guardianship and Protected Estates Legislation Amendment Act 2002 NSW. That Act repealed s 5(8) of the Protected Estates Act 1983 and made provision for the Administrative Decisions Tribunal (constituted by the Administrative Decisions Tribunal Act 1997 NSW) to entertain appeals from decisions of the Protective Commissioner as a statutory officer.

  1. The Second Reading Speech in support of the Guardianship and Protected Estates Legislation Amendment Bill, 2002 NSW (Legislative Assembly, 21 November 2002; Legislative Council, 4 December 2002) included the following observations by the responsible Minister:

"This bill provides a simple, cheap and quick process for appeal to the Administrative Decisions Tribunal [ADT] from decisions of the Guardianship Tribunal, the Mental Health Tribunal, and magistrates against guardianship and financial management orders. It allows the ADT to review the decisions of the Public Guardian and the Protective Commissioner. The bill implements the recommendations of the Public Bodies Review Committee Report entitled 'Personal Effects: The Roles of the Public Guardian and the Protective Commissioner in Managing Clients' Affairs'. The Committee recommended that the Protective Commissioner function independently from the Supreme Court and that an external right of appeal to the ADT should be available for clients. The bill makes amendments to four Acts: The Guardianship Act 1987, the Protected Estates Act 1983, the Administrative Decisions Tribunal Act 1997 and the Defamation Act 1974. ...
I turn now to the amendments to the amendments to the Protected Estates Act 1983. Historically, the Protective Commissioner was an officer of the Supreme Court who performed judicial as well as administrative functions relating to financial management orders. This is not consistent with modern best practice. The bill separates the functions of judicial decision making from financial management. Under the new scheme the Supreme Court and the Guardianship Tribunal will continue to have the power to make financial management orders, and the Protective Commissioner will act exclusively as the financial manager or the supervisor of private financial managers.
The bill promotes transparency and independence in the decision-making process. It allows the Ombudsman to review the administrative decisions of the Protective Commissioner. This provides clients and their families with a cheap and simple avenue for resolving complaints and is consistent with the recommendations of the Public Bodies Review Committee. Alternatively, clients can ask the ADT to review the decisions of the Protective Commissioner relating to the approval of a private manager to authorise a protected person to deal with part of the estate, and the general management of estates of protected persons.
The bill also allows the Protective Commissioner to supervise the functions of private estate managers who have been appointed by the Supreme Court or the Guardianship Tribunal. It creates an offence for failing to comply with a direction of the Commissioner. The provisions are necessary because the Protective Commissioner needs statutory power to perform the duties previously undertaken by an officer of the Supreme Court and coercive powers to ensure compliance. The decisions of the Protective Commissioner in relation to the functions of private managers will be reviewable by the ADT unless the decision was as a result of a direction by the Supreme Court. The bill allows private estate managers to lodge estate funds with the Protective Commissioner and allows the Commissioner to invest the funds. These provisions give private estate managers greater choice in where they lodge their investments and will allow the Protective Commissioner to compete with private sector trust companies for estates which are managed privately. ...[Emphasis added]"

  1. The Public Bodies Review Committee was a standing committee of the Legislative Assembly of the New South Wales Parliament. Its report, Personal Effects [etc], referred to in the Second Reading Speech, was dated 1 October 2001. It was tabled in Parliament on 16 October 2001.

  1. The reform process continued with the NSW Trustee and Guardian Act 2009, which facilitated a merger between the Office of the Protective Commissioner and the Public Trustee in the office of the NSW Trustee.

  1. In his Second Reading Speech in support of the bill that became the Act (Legislative Council, 23 June 2009), the then Attorney-General explained that the legislation "does not involve substantive amendment to the roles and responsibilities currently exercised by the Protective Commissioner or the Public Trustee. Rather it integrates the two, repeals the existing legislation and replaces it with one Act, focussing on the roles of the merged entities - personal trustee and financial management services."

  1. In the course of that speech, the Attorney made the following observations:

"Historically, the Protective Commissioner was an officer of the Supreme Court who performed judicial as well as administrative functions relating to financial management orders. In 2002, however, the Protected Estates Act was amended to separate the functions of judicial decision-making from financial management. The aim of the changes was to ensure the Protective Commissioner acts exclusively as the financial manager or as the supervisor of private financial managers. There are a number of proposed changes [in the bill that became the NSW Trustee and Guardian Act 2009] which are consequential on the separation of judicial power from the business of financial management and oversight. The Supreme Court has been consulted and agrees with these proposals [Emphasis added]."

  1. Confinement of the NSW Trustee's functions to administrative decision-making, and the withholding from it of judicial decision-making functions, is an important development that facilities the delivery of services to the public by a government administrative agency, subject to the ongoing supervisory jurisdiction of the Supreme Court. It also enables that government agency to adapt its practices to meet felt necessities of the time.

THE FACTS OF THIS CASE : A FELT NEED FOR A CHANGE OF MANAGER

  1. Given the public functions exercised by the NSW Trustee under the NSW Trustee and Guardian Act 2009, its familiarity with the personal circumstances of the defendant and the nature of his estate, and the Court's expectation that the NSW Trustee would draw to attention any problems of which it may materially have notice in relation to past, present or prospective management of the defendant's estate, there is no reason for the Court not to accept the evidence of the plaintiff and her father to the following effect:

(a)   There has been no substantial change in the defendant's circumstances since the Court made its orders of 5 September 2011, save that the defendant no longer lives with his father, but has rental accommodation of his own.

(b)   The parents of the plaintiff and the defendant separated at about the time of the defendant's birth in 1990.

(c)   The defendant remains close to the plaintiff and his father, and is in regular personal contact with his mother.

(d)   At the time the defendant (by the Court's orders of 5 September 2011) became a protected person, his family was of the view that it was in his best interests that his estate be committed to management of the NSW Trustee.

(e)   The injuries suffered by the defendant (in 2000, at which time he was nine years of age), rendering him incapable of managing his own financial affairs, do not preclude him from having an understanding of financial matters or being able to involve himself in discussions with a financial manager who can ensure that, vulnerable to being taken advantage of, he is protected in the prudential management of his property.

  1. As deposed to by both the plaintiff and her father in support of the current notice of motion, the reasons for the plaintiff's application to substitute herself for the NSW Trustee as manager of the defendant's estate are threefold: First, the defendant, having expressed frustration in dealing with institutional management of his affairs, has requested the plaintiff to assume the role of manager. Secondly, the defendant is personally very close to his sister, trusts her and regularly discusses his personal affairs with her for the purpose of obtaining the benefit of her guidance. Thirdly, within the parties' family, and in the broader community of which she is part, the plaintiff is recognised as having management skills.

  1. I do not take any of this to be criticism of the management of the defendant's estate by the NSW Trustee. In fact, his father's affidavit records the following observations:

"[The defendant] finds it difficult and frustrating to deal with [the NSW Trustee]. This is most likely a consequence of his medical condition. He has difficulty dealing with authority and in particular has problems trying to sort his financial needs over the telephone. ... [He] shares a very close relationship with his sister [the plaintiff] who is the proposed financial manager [of his estate]. [She] is a qualified school teacher currently in employment at [a] Public School. [He] discusses all of his problems with her both personal and financial. [She] plays a significant role in his life and he relies upon her a lot. ... [She] has a very calm and easy manner which allows her to cope with [him] when he is frustrated. [She] is well aware of [his] shortcomings. She is also aware of his needs financially and in particular the need to ensure that his expenditure is managed."

CHANGING ATTITUDES TO MANAGEMENT OF PROTECTED ESTATES IN NEW SOUTH WALES

  1. In the social, economic and regulatory environment in which the estates of protected persons are managed in this State, and in which the Court is called upon to exercise its protective jurisdiction, the likelihood is that, as decisions about management continue to be made under the influence of s 39 of the NSW Trustee and Guardian Act 2009:

(a)   there will be a migration from public to private management of protected estates; and

(b)   there will be greater flexibility than formerly may have been the case in changing the identity of managers, public or private.

  1. Before, and perhaps in the immediate aftermath of, Holt v Protective Commissioner (1993) 31 NSWLR 227 the jurisdiction of the Court, in the appointment or replacement of a manager, was exercised in a manner that favoured the appointment of a public manager (the Protective Commissioner) over the appointment of a private one other than a statutory trustee company.

  1. New South Wales was not unique in this. Other Australian courts also manifested a predisposition towards public entities: Morris v Zanki (1997) 18 WAR 260 at 284-286; Jones v Moylan (1997) 18 WAR 492 at 496-497, 501 and 509-510.

  1. In New South Wales it can be seen, for example, in the advocacy of the Protective Commissioner's services in BE Porter and MB Robinson, Protected Persons and Their Property in New South Wales (1987) at pp 29-30. The authors were, respectively, the Protective Commissioner and a legal officer in the Protective Division of the Supreme Court.

  1. It can also be seen in many of the seminal judgments of the then Protective Judge, Powell J.

  1. However, the paradigm shifted towards the turn of the century. In Re L [2000] NSWSC 271 at [7] Young J recorded that "... if a responsible member of [an] incapable person's family, with the consent of other members of the family and particularly when joined with a person with financial expertise, seeks to be the manager [of a protected estate], such an order will, at least at present, usually be made almost as of course". Holt v Protective Commissioner was instrumental in that shift.

  1. As Kirby P noted in Holt v Protective Commissioner at 31 NSWLR 237G-238A, the statutory power of the Court to appoint a manager (then found in ss 13 and 22 of the Protected Estates Act 1983 NSW, now found in s 41 of the NSW Trustee and Guardian Act) includes, by virtue of s 47 of the Interpretation Act 1987 NSW, a power to remove a manager which is expressed "in the widest possible terms". It is supplemented by the powers of the Court in exercise of its inherent jurisdiction: 31 NSWLR at 241B.

  1. Section 41(1) of the NSW Trustee and Guardian Act is in the following terms:

"41 Orders by Supreme Court for management of affairs
(cf PE Act, s 13)
(1) If the Supreme Court is satisfied that a person is incapable of managing his or her affairs, the Court may:
(a) declare that the person is incapable of managing his or her affairs and order that the estate of the person be subject to management under this Act, and
(b) by order appoint a suitable person as manager of the estate of the person or commit the management of the estate of the person to the NSW Trustee.

  1. Section 47 of the Interpretation Act is in the following terms:

"47 Powers of appointment imply certain incidental powers
(1) If an Act or instrument confers a power on any person or body to appoint a person to an office:
(a) the power may be exercised from time to time, as occasion requires, and
(b) the power includes:
(i) power to remove or suspend, at any time, a person so appointed,
(ii) power to appoint some other person to act in the office of a person so removed or suspended,
(iii) power to appoint a person to act in a vacant office, whether or not the office has ever been filled, and
(iv) power to appoint a person to act in the office of a person who is absent from that office, whether because of illness or otherwise.
(2) The power to remove or suspend a person under subsection (1) (b) may be exercised even if the Act or instrument under which the person was appointed provides that a holder of the office to which the person was appointed shall hold office for a specified period of time.
(3) The power to make an appointment under subsection (1) (b) may be exercised:
(a) as occasion requires,
(b) in anticipation of a particular event, so as to provide that the appointment shall take effect when that event occurs, or
(c) in anticipation of a particular state of affairs, so as to provide that the appointment shall have effect while that state of affairs exists."

  1. The Court's power to remove a financial manager appointed by the Guardianship Tribunal is grounded, not on s 41 of the NSW Trustee and Guardian Act and s 47 of the Interpretation Act, but upon other legislation (including, where applicable, ss 11(4), 63 and 64 of the NSW Trustee and Guardian Act and, more generally, ss 22 and 23 of the Supreme Court Act 1970 NSW) and the inherent jurisdiction of the Court: Re C [2012] NSWSC 1097 at [61]-[67].

  1. Holt v The Protective Commissioner liberalised the jurisprudence relating to changes in the identity of a manager of a protected estate and, at 31 NSWLR 241-243, provided guidance as to considerations material to decision-making in that area.

  1. Further liberalisation of the jurisdiction came with: (a) separation of judicial and administrative functions in the management of protected estates in 2002; and (b) enactment of the NSW Trustee and Guardian Act, including s 39, based upon a set of general principles contained in s 4 of the Guardianship Act 1987 NSW.

  1. Other changes in the way the jurisdiction is administered may evolve in consequence of two developments in a context broader than the Court's protective jurisdiction. First, there is the transfer of regulatory control of trustee companies (formerly governed by the Trustee Companies Act 1964 NSW) from a state-based system to a national one (governed by chapter 5D of the Corporations Act 2001 Cth), and a related system of issuing Australian Financial Services Licences (governed by chapter 7 of the Corporations Act). Secondly, there are associated changes in the way financial management services are marketed and delivered in the Australian community.

  1. The implications of these developments for the management of protected estates are currently being worked through following White J's judgments in GDR v EKR [2012] NSWSC 1543 and CC v RAM [2012] NSWSC 1555: JMK v RDC and PTO v WDO [2013] NSWSC 1362.

  1. In that context, a particular focus for attention is the proper approach to the appointment, and regulation, of a private manager who conducts a business of estate management for reward. It is not necessary to dwell on that topic in these proceedings. The plaintiff is a member of the defendant's family, not a corporation or a professional manager, and she makes no application for remuneration for prospective service as manager of her brother's estate.

  1. Whatever may be the outcome of further deliberation on the role of institutional or professional management of protected estates, the enactment of s 39 of the NSW Trustee and Guardian Act has been a factor in facilitating the assumption of management functions by private managers.

  1. This is as the New South Wales Parliament intended.

  1. In his Second Reading Speech in support of the Bill that became the NSW Trustee and Guardian Act (in the Legislative Council on 23 June 2009), the then Attorney-General made the following observations:

"While the Bill essentially provides for re-enacting the existing Public Trustee and Protected Estates Act, a number of amendments are also being introduced to improve the regime for managing the estates of people who do not have legal capacity to manage their own financial affairs and require a financial manager to make substitute decisions for them. I will now outline these amendments. New South Wales has retained two different legislative regimes for the making of financial management orders. The Supreme Court and the Mental Health Review Tribunal make orders under the Protected Estates Act whereas the Guardianship Tribunal makes its orders under the Guardianship Act. The Protected Estates Act has evolved in line with mental health laws, including the Mental Health Act 2007, and seeks to protect a person's estate at a critical point in the onset or treatment of mental illness, or other disability, while in hospital.
The Guardianship Act deals with substitute decision-making orders more generally, including for a person with an intellectual disability, a person of advanced age, a person with an acquired brain injury, or a mentally ill person who is not in hospital. The powers in the Protected Estates Act and the Guardianship Act are not identical in every regard. Consistency is desirable to bring the same level of flexibility to the making of orders in each jurisdiction, to prevent forum shopping and to ensure that the least restrictive approach is encouraged in each court and tribunal. Ideally, the making of an order, or not, should not depend on the forum in which the application is brought. The following four amendments are designed to bring greater consistency between the two regimes.
The first amendment is contained in clause 39 of the Bill. It will replicate the set of general principles contained in s 4 of the Guardianship Act insofar as they apply to financial management. Currently the Protected Estates Act, unlike the Guardianship Act, does not contain a set of general principles to guide the making or orders or the performance of functions under the Act. This is anomalous because people with disabilities who require others to make decisions for them about health and lifestyle matters, including medical and dental treatment, may also need a substitute decision-maker to manage at least some of their financial affairs.
Clause 39 of the Bill will create a duty on everyone exercising functions under the new Act to: give paramount consideration to the welfare and best interests of protected persons or patients, restrict their freedom of decision and action as little as possible, encourage them to live, as far as possible, a normal life in the community, seek and take into account their views as far as possible, recognise the importance of preserving their family relationships and cultural and linguistic environments, encourage, as far as possible, self-reliance in their financial affairs, and protect them against neglect, abuse and exploitation. The benefits of this approach will include greater consistency in decision-making across these related areas of law, giving legislative recognition to the models of 'best practice' which already exist in the provision of services to people with disabilities, including within the Office of the Protective Commissioner, and giving greater protection to the human rights of people with disabilities to live with dignity and as much autonomy as possible. ...[Emphasis added]"

  1. It is not necessary here to deal with the other three amendments to the legislative regime identified by the Attorney. The second of the four related to a statutory presumption of incapacity. The third related to interaction between the Guardianship Tribunal and the Protective Commissioner. The fourth related to limitation of the length of an interim order for management.

  1. Section 39 of the NSW Trustee and Guardian Act might reasonably be regarded as a statutory embodiment of the jurisprudence that informs the Court's inherent jurisdiction. Nevertheless, its significance in the present context is twofold. First, it makes explicit that which might reasonably be thought to be implicit in the Court's inherent jurisdiction. Secondly, it imposes upon all decision makers, including those exercising administrative rather than judicial functions, a disciplined statement of the purpose of protective functions.

  1. Section 39 is in the following terms:

"39 General principles applicable to Chapter
It is the duty of everyone exercising functions under this Chapter with respect to protected persons or patients to observe the following principles:
(a) the welfare and interests of such persons should be given paramount consideration,
(b) the freedom of decision and freedom of action of such persons should be restricted as little as possible,
(c) such persons should be encouraged, as far as possible, to live a normal life in the community,
(d) the views of such persons in relation to the exercise of those functions should be taken into consideration,
(e) the importance of preserving the family relationships and the cultural and linguistic environments of such persons should be recognised,
(f) such persons should be encouraged, as far as possible, to be self-reliant in matters relating to their personal, domestic and financial affairs,
(g) such persons should be protected from neglect, abuse and exploitation."

  1. The NSW Trustee has accommodated itself, and its administrative practices, to conformity with s 39.

  1. If I am not mistaken, its current attitude to estate management (informed by s 39) includes a working assumption that, although ever present to serve as manager of any protected estate management of which is committed to it, the NSW Trustee should endeavour to facilitate deployment of private managers and to focus attention on its supervisory function in the monitoring of management of protected estates by private managers. Whereas once the Protective Commissioner may have been viewed as a manager of "first resort" , the NSW Trustee is more inclined to see itself as a manager of "last resort".

  1. This accords with the view taken by the Court of Appeal of the equivalent of s 41(1)(b) of the NSW Trustee and Guardian Act in Holt v Protective Commissioner (1993) 31 NSWLR 227 at 238G-239B and 244F. The Court there noted that the reference in the statutory power of appointment to appointment of a "suitable person" before the reference to committal of management to the State's public manager (at that time the Protective Commissioner, now the NSW Trustee) represented "a sensible hierarchy of choices" in the context of appointment of a family member to manage a protected person's estate.

  1. The shifts in thinking that have taken place in this area of the law bring to mind observations of the Full Court of the Supreme Court in In Re W.M. (A person alleged to be of unsound mind) (1903) 3 SR (NSW) 552 at 561, 567, 569 and 570: a change in procedure does not, of itself, change the availability, nature or extent of the Court's protective jurisdiction. It is necessary, always, to bear in mind the breadth of the Court's inherent, protective jurisdiction and the way that jurisdiction informs each legislative regime which, from time to time, may provide different administrative machinery for giving effect to the protective functions of government.

ENDURING VALUES IN THE APPOINTMENT OF A MANAGER OF A PROTECTED ESTATE

  1. In a decision-making environment undergoing a process of change, attention needs to be given to identification of what can change, and what must remain constant, to serve the ends for which decisions are made.

  1. As presently advised, and subject to reconsideration in light of further experience and argument in contested cases, I adopt the following propositions as non-exhaustive "guidelines" (or, in deference to Kirby P's observations in Holt v Protective Commissioner (1993) 31 NSWLR 227 at 241E-F and 243E-F, a "framework of approach" or a "checklist of considerations") that might be borne in mind when the Court is called upon to make a decision about the identity of a manager of a protected estate or the substitution of one manager for another:

(a)   First, the jurisdiction the Court is called upon to exercise is not a "consent jurisdiction". An order for the appointment, removal or replacement of a particular manager is not to be made merely because a party, or some other person, seeks it, consents to it or acquiesces in it: JJK v APK (1986) Australian Torts Reports 80-042 at 67, 881 (first guideline); JMK v RDC and PTO v WDO [2013] NSWSC 1362 at [60]-[62]. The Court is bound to exercise an independent judgment because of the public interest element in the decision to be made and the possibility, if not the fact, that the protected person lacks the mental capacity requisite to informed decision-making.

(b)   Secondly, the governing purpose of the jurisdiction exercised by the Court is protection of the welfare and interests of the particular protected person concerned: Holt v Protective Commissioner (1993) 31 NSWLR 227 at 238B-C and 241A-B and F-G.

(c)   Thirdly, any decision made affecting the welfare or interests of a protected person must be made in a manner, and for a purpose, calculated to be in the best interests, and for the benefit, of the protected person: Holt v Protective Commissioner (1993) 31 NSWLR 227 at 238D-F and 241G-242A.

(d)   Fourthly, care needs to be taken in all decision-making affecting a protected person to focus on the facts of the particular case, preferably with due consultation with the protected person, his or her family and carers who may be well placed to inform the Court of the protected person's particular circumstances: Holt v Protective Commissioner (1993) 31 NSWLR 227 at 238C-239B, 240D, 241B-F and 243E-F; Re L [2000] NSWSC 721 at [10].

(e)   Fifthly, in the choice of a manager consultation of the welfare and interests of a protected person may favour appointment of a member of his or her family over the appointment of an institutional manager: Holt v Protective Commissioner (1993) 31 NSWLR 227 at 238G-239B.

(f)   Sixthly, decisions need to be made in the context of a prudential management regime that can be administered, without strife in the simplest and least expensive way, in the interests of the protected person: HS Theobald, The Law Relating to Lunacy (Stevens and Sons, London, 1924), pp 380 and 382.

(g)   Seventhly, regard needs to be had to the value and nature of the property comprising a protected person's estate in deciding upon the identity of a manager or an appropriate management plan: Holt v Protective Commissioner (1993) 31 NSWLR 227 at 242E and 243D-F.

(h)   Eighthly, recognition needs to be given to the status and obligations of a manager of a protected estate as the holder of a fiduciary office. This means that the Court, managers and other affected persons need to be alive to the importance of avoiding, or at least minimising, exposure of a protected person to dangers associated with a manager having a conflict between a duty owed to the protected person and the manager's personal interests: Holt v Protective Commissioner (1993) 31 NSWLR 227 at 239B and 242B-C; Re L [2000] NSWSC 721 at [12]. Nevertheless, it must also be recognised that the liability of a manager of a protected estate to account may differ from that of a trustee of an ordinary trust to the extent necessary to accommodate the protective purpose of the manager's appointment: Countess of Bective v Federal Commissioner of Taxation (1932) 47 CLR 417 at 420-423.

(i)   Ninthly, in conformity with fiduciary law, the office of a manager of a protected estate must generally be regarded as a gratuitous one unless, by an order of the Court or by legislation, a special arrangement to the contrary is made: Gell v Gell (2005) 63 NSWLR 547 at 553-554 [21]-[23]; Macedonian Orthodox Community Church St Petka Incorporated v Bishop Petar (2008) 237 CLR 66 at 93 [69].

(j)   Tenthly, in deciding whether, when and on what terms a manager of a protected estate is to be allowed remuneration out of the estate, care needs to be taken not to shift the focus of decision-making from what is in the best interests, and for the benefit, of the protected person to a perceived "right" on the part of any, or any prospective, manager to remuneration. If a manager is to be allowed remuneration, a decision to that effect must be driven by the perspective of the protected person, not the perspective of the manager: Fletcher, Ex parte (1801) 6 Ves Jun 427; 31 ER 1127; Re Walker (1848) 2 Phil 630; 41 ER 1087; Re Westbrooke (1848) 2 Phil 631; 41 ER 1087; G v B (Powell J, 27 May 1992) BC 9201855 at 13.

(k)   Eleventhly, the primacy given to the protective purpose of the Court's jurisdiction carries with it, as a correlative, the absence in any manager (public or private) of a legal entitlement to be, or to remain, manager of a particular protected estate: Holt v Protective Commissioner (1993) 31 NSWLR 227 at 237F-238F.

(l)   Twelfthly, a decision about whether a manager should be replaced may need to be approached differently from one made about the identity of an appointment as an initial manager because of a perceived need to identify an acceptable reason (ie, one governed by the purpose of the protective jurisdiction and consideration of the best interests of, and benefits available to, the protected person) for change. Depending on the facts of the particular case this may, but will not necessarily, involve recognition that an applicant for change bears, at least, a forensic onus to establish a case for change: Holt v Protective Commissioner (1993) 31 NSWLR 227 at 237F, 238B-F, 239C-G and 242A-B.

(m)   Thirteenthly, a manager, or prospective manager, of a protected estate needs to have given thoughtful attention (in the case of a private manager, in consultation with the NSW Trustee and, in the context of the Corporations Act, the Australian Securities and Investments Commission) to the development, and operation, of a plan for management of the protected person's estate: Re L [2000] NSWSC 721 at [11]-[12]; Re McL [2001] NSWSC 280 at [3]-[5].

(n)   Fourteenthly, although disputes about the management of a protected estate may at times need to be determined in an adversarial setting, an exercise of protective jurisdiction is not inherently, or necessarily, adversarial in nature. That reality finds expression in the Court's approach to orders for costs in protective list proceedings. The Court ordinarily exercises its discretion, not by reference to a rule that costs follow the event, but having regard to what, in all the circumstances, seems proper: CCR v PS (No 2) (1986) 6 NSWLR 622 at 640.

(o)   Fifteenthly, part of the role of the Court in its exercise of protective jurisdiction is to give consideration to the manner and form of a decision-making process calculated to ensure that the protective purpose of the jurisdiction is duly served.

(p)   Sixteenthly, in the context of the current legislative and administrative regime for management of protected estates, the Court will ordinarily require that any substantial decision it may be called upon to make affecting a protected estate, beyond the routine, is made on notice to the NSW Trustee, allowing the NSW Trustee to be heard in an appropriate case and inviting its assistance where necessary.

CONCLUSION

  1. In the present proceedings, having considered the identified guidelines in the context of the affidavits filed in support of the plaintiff's notice of motion, and having taken account of the absence of any objection on the part of the NSW Trustee, I am prepared to accede to the plaintiff's application.

  1. The consensus within the protected person's community (not limited to his family) is that his preference for his estate to be managed by the plaintiff can be accommodated. She evidently has the ability, aptitude and empathy necessary to manage his property in a prudential manner.

  1. She has not sought, and there is no occasion for the Court to make, any order for the plaintiff to be remunerated for her work as manager of the defendant's estate.

  1. It will be necessary for the plaintiff, as manager of the defendant's estate, to continue to work with, and subject to, the orders and direction of the NSW Trustee.

ORDERS

  1. I make the following orders:

(1) Declare, pursuant to s 41(1)(a) of the NSW Trustee and Guardian Act 2009 NSW, that the defendant remains incapable of managing his affairs.

(2) Order, pursuant to s 41(1)(a) of the NSW Trustee and Guardian Act 2009, that the estate of the defendant continue to be subject to management under the Act.

(3) Order, pursuant to s 41 of the NSW Trustee and Guardian Act and s 47 of the Interpretation Act 1987 NSW, that the NSW Trustee be removed as manager of the estate of the defendant.

(4) Order, pursuant to s 41(1)(b) of the NSW Trustee and Guardian Act and s 47 of the Interpretation Act 198, that the plaintiff be appointed manager of the estate of the defendant subject to the orders and direction of the NSW Trustee and Guardian.

(5)   Order that the plaintiff may not do anything in reliance on her appointment as manager of the estate of the defendant until the NSW Trustee has authorised her to assume management of the defendant's estate.

(6) Order, pursuant to s 68 of the NSW Trustee and Guardian Act, that the plaintiff give such, if any, security in respect of her management of the defendant's estate as the NSW Trustee may determine to be appropriate.

(7) Order, pursuant to ss 61(1) and 64 of the NSW Trustee and Guardian Act, that the NSW Trustee take such steps as may be necessary or expedient to transfer management of the estate of the defendant from itself to the plaintiff.

(8)   Order that the costs of the plaintiff, the defendant and the NSW Trustee be paid out of the estate of the defendant on an indemnity basis.

(9)   Order that all parties be at liberty to apply as they may be advised.

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Amendments

30 October 2013 - File number omitted


Amended paragraphs: Title page

Decision last updated: 11 October 2013

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HLT [2014] NSWCATGD 5
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