MA and BM
[2010] WASAT 121
•23 AUGUST 2010
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
STREAM: HUMAN RIGHTS
ACT: GUARDIANSHIP AND ADMINISTRATION ACT 1990 (WA)
CITATION: MA and BM [2010] WASAT 121
MEMBER: MR J MANSVELD (MEMBER)
HEARD: 25 JANUARY 2010
25 MARCH 2010
DELIVERED : 23 AUGUST 2010
FILE NO/S: GAA 2940 of 2009
BETWEEN: MA
Applicant
AND
BM
Represented Person
Catchwords:
Guardianship and administration - Administration - Legal action to determine entitlement to estate - Testamentary trust - Trustees obligation to account - Need for an administrator
Legislation:
Guardianship and Administration Act 1990 (WA), s 3, s 4, s 4(2)(b)(iv), s 4(2)(c), s 4(2)(e), s 4(2)(f), s 16(4), s 41(2)(c)(ii), s 64(1), s 64(1)(a), s 68, s 68(3)(a), s 68(8)(b), s 80, s 97(1)(b)(iii)
Inheritance (Family and Dependants Provision) Act 1972 (WA)
Result:
Administrator appointed
Category: B
Representation:
Counsel:
Applicant: Mr M Bassett-Scarfe
Represented Person : N/A
Solicitors:
Applicant: Peel Legal Barristers and Solicitors
Represented Person : N/A
Case(s) referred to in decision(s):
FS [2007] WASAT 202
Re The Full Board of the Guardianship and Administration Board [2003] WASCA 268
REASONS FOR DECISION OF THE TRIBUNAL:
Summary of Tribunal's decision
An application for the appointment of an administrator of the estate of a woman was made by her partner.
The application was for the making of a limited order for administration so that, if necessary, legal action could be taken with respect to the woman's entitlements under her late father's will.
The woman suffered from a mild cognitive impairment.
Under the late father's will, the estate had been distributed equally amongst his four children with the woman's share the subject of a testamentary trust with her two brothers appointed as trustees.
The terms of the trust were that the net income was to be distributed to the woman and that distributions from the capital of the trust were at the discretion of the trustees. Some distributions had been made.
The applicant claimed that the trustees had not properly accounted to the woman which the trustees accepted had not been done. The applicant had also raised the question of whether the woman had been adequately provided for in her late father's will.
The trustees did not trust the applicant and said that he had been instrumental in a breakdown of the relationship between the woman and her siblings. The applicant denied this.
The trustees proposed that the Public Trustee be appointed the woman's administrator to deal with the estate and trust matters.
It was the wish of the woman that the applicant be appointed her administrator.
The Tribunal decided that the applicant should be appointed the woman's limited administrator to decide what action, if any, should be taken to secure her entitlements to her late father's estate and the trust created under his will. Although it was accepted by the Tribunal that the applicant and the trustees did not have a good relationship, it was decided that the applicant was suitable to undertake the role of administrator and that the trustees were bound, in their fiduciary capacity, to engage appropriately with the woman's representative.
Application
An application for an order for administration has been made for BM. The application is made by her de facto partner, MA (applicant).
The relevant legislation is the Guardianship and Administration Act 1990 (WA) (GA Act).
BM is a beneficiary in the estate of her late father (estate); her two brothers, TLO and BLO, are the executors and trustees of the estate (trustees).
The father died on 24 June 1994 and probate was granted on 4 November 1994. The estate was distributed one quarter each to the two sons and one daughter with the remaining quarter held on trust by the trustees for BM (trust).
The will, which is dated 17 May 1991, and is before the Tribunal, states that the trustees must pay the net income derived from the trust to BM. The trustees have discretion to make advances of capital to BM upon her request if it is determined by them that the income of the trust is insufficient to meet the requirements of her lodging, maintenance, medical attention and general well being.
Upon the death of BM, the trustees are to hold the trust for BM's 'issue per stirpes'. BM has one child, a daughter, whose whereabouts are not known to her.
Upon the father's death the net value of the estate was estimated at $129,000 (the statement of assets and liabilities is before the Tribunal). The main asset was a property then valued at $110,000. The property was sold in 2003 and the net proceeds amounted to $186,462.44. The trust's share of the estate was therefore at least $46,615.61.
The applicant contends that the trustees have not accounted for all the income derived by the trust and have not paid all of the net income to BM as is required by the terms of the late father's will. The applicant further says that the trustees have not adequately responded to the inquiries made on behalf of BM over many months.
When the application was first made, the applicant states that BM was unaware of the value of the estate (and trust) because she had never received a statement or other form of accounting from the trustees. The applicant states that he and BM lived in the estate's property at less than market rental for a period until its sale in 2003, but that no payment had been received from the trust since that time.
The application by the applicant is for the appointment of an administrator of the estate of BM with powers limited to the taking of whatever action might be necessary to ensure BM receives her entitlement in the estate and the trust. This may include an action to challenge the provision made for BM in her late father's will. If appointed, the administrator will also need to decide whether to obtain a loan to finance any legal action (BM is of limited means). Counsel for the applicant states that a third party is available for this purpose. The party has no interest in the matter and is simply trying to assist BM. Counsel submits that given the lack of progress of the inquires to the trustees to date and the fact that the trustees are in breach of their duties, there is a strong case for a costs order in BM's favour should any action be undertaken.
The applicant submits that BM is generally capable of managing her day to day financial affairs but is unable to understand the complexities of the trust and the legal actions that need to be considered. He submits that BM is unable to properly consider what could or should be done to make sure that she has received her entitlements.
Through counsel, the applicant submits that there is no reason for him not to be appointed BM's administrator; he is capable of performing the limited role, he has taken legal advice when appropriate to do so and it is the wish of BM that he undertake the role.
The trustees
During the course of these proceedings, the trustees provided a copy of the settlement statement for the sale of the estate's property dated 14 August 2003, a list of transactions on the estate's bank account from 10 May 2002 to 5 June 2008 and a list of cheque payments to BM (or made on behalf of BM) from 9 November 2005 to 5 June 2008.
There are no opening and closing balances on the list of transactions. The transactions from 10 May 2002 to early August 2003 comprise the rental payments received from the applicant and BM (the last rental payment recorded is on 11 April 2003); interest income on the account which is negligible and withdrawals of bank fees and property costs. The net proceeds of the sale of the estate property is shown as a deposit on 13 August 2003. It appears that in the period between August 2003 and October 2003, $45,000 was distributed each to the beneficiaries of the estate except to BM (her share is presumably left in the bank account as the trust). The remaining entries on the list of transactions from 1 October 2003 to 5 June 2008 comprise payments made to or on behalf of BM ($4,000), bank fees ($51.40) and interested credited to the account ($128.61). The payments to or made on behalf of BM comprise eight payments, three of $200, three of $500, one of $600 and one of $1,300. They are described in the list of cheque payments as payments to BM, wedding gifts, clothes and cash, and payment for her dentures.
These payments would appear to be a mixture of the income and capital of the trust.
The trustees accept that they have not properly accounted to BM for the operation of the trust. They say, however, that they did not understand the extent of their obligations and have always had BM's best interests at heart. They say that they have not acted with any ill-will or malicious intent. Through counsel the trustees have undertaken to make good the deficiency in the accounting to BM.
The trustees state that they have no objection to the Public Trustee being appointed the administrator for BM, however object to the appointment of the applicant. They say that since the applicant has come into BM's life there has been a breakdown in the relationship between her and her siblings. They submit that should the applicant be appointed administrator, whatever little money there is in the trust would very quickly be dissipated.
The trustees state that the balance of the trust is approximately $47,000.
The Public Trustee
As a party to the application (s 3, s 41(2)(c)(ii) of the GA Act), and a possible appointee as administrator (s 68), the Public Trustee was asked to make a submission and attend the hearing.
The Public Trustee states that the will of BM's late father requires the trustees to pay the trust income to BM irrespective of her needs. Payments out of the capital of the trust are discretionary. It is submitted that BM has not received regular payments of income from the trust but may have received payment of some of the trust's capital. It is further submitted that the trustees have not properly accounted to BM and have breached their duties as trustees in that regard.
The Public Trustee submits that in the circumstances of BM, there are two legal actions that might be contemplated. One possible action could be taken to determine what BM should receive under the terms of the late father's will, the other action could be to make an out of time application under the Inheritance (Family and Dependants Provision) Act 1972 (WA) (Inheritance Act). In contemplating the first action consideration would need to be given as to the extent (if any) BM has been financially disadvantaged by the actions of the trustees. In contemplating an action under the Inheritance Act, consideration would need to be given, amongst other things, to the likely limited amount that could be obtained even if BM was completely successful. The possibility of third party funding of any action could lead to serious problems if the litigation was unsuccessful.
A further matter raised by the Public Trustee that needs to be considered in any action that might be taken by BM, in respect to the estate and the trustees, is that of determining the persons who may have an interest in the estate upon the death of BM.
The Public Trustee submits that if an administrator is appointed for BM, that person would need at least to be given the functions of making decisions in respect to her entitlements in the estate including but not limited to dealing with any litigation, and receiving and applying any entitlement that arises out of the litigation or her other entitlements to the trust.
The Public Advocate
Under s 97(1)(b)(iii) of the GA Act, a function of the Public Advocate is, relevantly, to investigate and report to the Tribunal on any matter or question referred to her.
The following questions were referred to the Public Advocate:
•Whether BM is a person for whom an administrator could be appointed;
•Whether BM is in need of an administrator;
•If there is a need, who would be able to make decisions in her best interests; and
•The views and wishes of BM as to who should be appointed her administrator (should an administrator be appointed)
BM was interviewed by the Public Advocate's representative and it is reported that she was unable to communicate an informed view about the application and that she deferred to the applicant. This is consistent with how she presented at the hearing. Her wish is that the applicant be appointed her administrator.
The Public Advocate submits that an administrator should be appointed for BM to deal with the estate matters.
In the determination of the question of who should be appointed as administrator, the Public Advocate submits that a relevant factor is what relationship the administrator is likely to have with the trustees generally in the operation of the trust (particularly in the requests for funds) and in settling the conflict which is the subject of the application.
The Public Advocate submits that given the breakdown in the relationship between the applicant and the trustees, it would be in BM's best interests for the Public Trustee, as an independent person, to be appointed administrator.
The relevant legislation
Before it can make an administration order, the Tribunal must be satisfied that a person is unable, by reason of a mental disability, to make reasonable judgments in respect of matters relating to all or any part of his or her estate and is in need of an administrator (s 64(1) of the GA Act).
Mental disability is defined to include dementia, acquired brain injury, psychiatric illness and intellectual disability (s 3 of the GA Act).
The determination of capacity and need is made subject to the principles of the GA Act as stated in s 4. They are, relevantly, that the primary concern of the Tribunal shall be the best interests of the person; that every person shall be presumed capable of making reasonable judgments in respect of matters relating to his or her estate until the contrary is proved to the satisfaction of the Tribunal; that an administration order shall not be made if the needs of the person can be met by other means less restrictive of his or her freedom of decision and action and, in considering any matter relating to the person, the Tribunal shall, as far as possible, seek to ascertain the view and wishes of the person.
If an administrator is to be appointed, the Tribunal needs to be satisfied that the proposed appointee will act in the best interests of the person and is otherwise suitable to act as administrator of the person's estate. In this determination, the Tribunal shall take into account, as far as possible, the compatibility of the proposed appointee with the person (and with the guardian of the person, if one is appointed), the wishes of the person and whether the proposed appointee will be able to perform the functions proposed to be vested in the administrator (s 68 of the GA Act).
BM's capacity
To decide if BM is in need of an administrator I must first decide whether she is unable, by reason of a mental disability, to make reasonable judgments in respect to matters relating to all or any part of her estate (s 64(1)(a) of the GA Act).
A person is presumed to be capable of making reasonable judgments in respect of matters relating to his or her estate until the contrary is proved to the satisfaction of the Tribunal (s 4(2)(b)(iv) of the GA Act).
The resolution of the question of capacity involves finding the presence of a mental disability and deciding to what extent that disability impacts on the ability of the person to make 'reasonable judgments' about his or her estate. The test is set against that person's particular estate (see: FS [2007] WASAT 202 (FS) at [103] - [106]).
The cognitive task in the making of a 'reasonable judgment' is the outcome of mental process that involves knowledge, understanding and evaluation (FS at [108] and [109]).
I have been provided with a number of medical reports dating from January and February 1992 and an amended invalid pension impairment assessment from March 1992. Counsel for the applicant states that BM sustained an injury when she was a child that resulted in a mental (cognitive) impairment. Because of the static nature of the impairment she is not under any treatment for it, hence there are no current assessments regarding her capacity. There is, however, a report from her general practitioner from October 2009 who, although unable to express an opinion on whether BM can make reasonable decisions about her financial affairs, comments that she has a poor understanding and ability with mental maths which he considers to be a 'major problem'.
The invalid pension assessment undertaken by a medical practitioner in October 1991 and March 1992 states that BM's intellectual disability adversely affects her ability to attract and maintain employment. The assessment was supported by information the medical practitioner received from a psychologist and a hospital social worker. This would appear to be related to the reports before the Tribunal from the relevant hospital and a consulting psychologist both addressed to the then Department of Social Security. The former, dated 23 January 1992, states that BM suffers from a mild intellectual disability sustained from an accident when she was five years of age. The assessment of the psychologist, dated 4 February 1992, reports that BM was cared for by her father 'in every way' unless her daughter was available to care for her. The assessment concludes that BM's intellectual disability and lack of formal education would prevent her from greatly benefiting from rehabilitation and that her work possibilities would be restricted to cleaning tasks.
It is agreed by the parties that the estate matters which are the subject of the application before the Tribunal, are beyond the abilities of BM to understand and evaluate but that otherwise, with assistance, she manages her day to day finances.
This view is consistent with the assessments of 1992, which point to a permanent impairment, and the comments of the general practitioner. I am satisfied this is the case. BM suffers from a mental disability (the intellectual disability arising from an acquired brain injury) such that she is unable to make reasonable judgments about matters relating to the late father's will and the estate.
The need for an administrator
The GA Act is essentially protective in its intent (Re The Full Board of the Guardianship and Administration Board [2003] WASCA 268 at [43].
However there is also a respect for the person's autonomy in the requirements that other means less restrictive of the person's freedom of decision and action should be considered before the making of an order (s 4(2)(c)); that any limited order made should impose the least restrictions on the person's freedom of decision and action (s 4(2)(e)) and that, in considering any matter, the person's views and wishes should be ascertained (s 4(2)(f)).
The need for an administrator for BM is identified as being restricted to dealing with the trustees about the operation of the trust and to consider whether her entitlement under her late father's will should be challenged.
The application has come about because BM and the applicant say that their inquiries to the trustees have not been satisfactorily answered. It would appear that the trustees have not fully understood their duties but have also acted under a state of mistrust of the applicant. It is clear to me that at the time of the hearing that mistrust remains.
There appears therefore to be an impasse as to how the matter should be resolved. It is a pity that the situation has been reduced to the contemplation of legal action given the modest size of the estate.
The way the situation has developed has been put as an argument for the appointment of the Public Trustee as BM's administrator. The submission is that it is only by the intervention of an independent person that the matters have the best chance of a resolution other than by legal action. There is some merit in that submission.
The fact remains, however, that the trustees have a duty to properly account to BM under the trust which they have not done but now say they will do. The other issues are how the trust will operate in the future to the benefit of BM and whether there is scope now to consider whether her late father made adequate provision for her in his will.
To deal with the first matter requires a dialogue between the trustees and the person given the authority to speak for BM's best interests. The trustees must engage in this dialogue given their duties and obligations, however it might be argued for example, that the exercise of the discretion available to them under the trust could be clouded by their opinion of the applicant.
That being said the trustees cannot avoid their fiduciary duty to BM (whoever the administrator might be). Their mistrust of the applicant must not influence the mandatory requirement to distribute the trust income and to objectively assess the needs of BM when requests are made for distributions of the trust's capital.
Consideration of a claim under the Inheritance Act will not affect the trustees but rather will be a matter for the individual beneficiaries under the late father's will.
For that reason and what follows I am satisfied that BM is in need of an administrator and that it is in her best interests that the applicant be appointed.
There is a clear compatibility between the applicant and BM as they are in a spousal relationship (s 68(3)(a) of the GA Act. It is the clear wish of BM that the applicant be appointed (s 68(3)(b)). As to the ability of the applicant to perform the functions of administrator, I am satisfied that he will take a common sense approach to the current dispute with the trustees as well as to the consideration of any action under the Inheritance Act. This he must do given the modest size of the estate and trust.
It is not in BM's current best interests to expose her estate to costs in addition to that which she has already incurred in this matter, which would be the case were I to appoint the Public Trustee. That said the Public Trustee raises the issue of the applicant's costs in these proceedings and the fact that he may need to consider an application under s 16(4) of the GA Act to determine if his costs are to be paid from BM's estate.
I am satisfied that the order for administration need only be made in respect to BM's entitlement to the estate and the trust. There was no evidence put to me to indicate that BM cannot continue to manage her pension income.
The applicant, as the appointed administrator, will of course be subject to the reporting requirements contained in s 80 of the GA Act.
I largely agree with the orders proposed by the Public Trustee in this matter.
Orders
1.The applicant be appointed the limited administrator of the estate of [BM] with the following functions:
a)To advocate and make decisions for the represented person [BM] with respect to her entitlement to her late father's estate;
b)To seek legal advice on behalf of the represented person [BM] in relation to her entitlement to her late father's estate, and to bring and defend actions, suits and other legal proceedings in the name of the represented person in relation to the same and related matters and, if appropriate, to settle these matters.
c)To enter into arrangements to fund any legal proceedings; and
d)To receive and apply the represented person's [BM] entitlements from any litigation concerning her late father's estate and from her entitlements to the trust established under her late father's will.
2.The order is to be reviewed in two years.
I certify that this and the preceding [67] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
___________________________________
MR J MANSVELD, MEMBER
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