Parsons v Porch (No 2)
[2019] SADC 174
•22 November 2019
District Court of South Australia
(Civil: Application)
PARSONS & ANOR v PORCH (No 2)
[2019] SADC 174
Decision of His Honour Judge Tilmouth
22 November 2019
MENTAL HEALTH - MANAGEMENT AND ADMINISTRATION OF PROPERTY - PROTECTION ORDERS
Application to determine whether an order for protection made pursuant to s 7 of the Aged and Infirm Persons' Property Act 1940 (SA), should be rescinded pursuant to s 11(1) thereof, due to substantial management costs incurred under the order. Discussion in principle of the different considerations involved in managing litigation and in managing judgment sums.
Held: The protection order is rescinded in the particular circumstances of the case.
Aged and Infirm Persons' Property Act 1940 (SA) ss 4, 7, 8, 8A and 11(1); Civil Liability Act 1936 (SA) s 57, referred to.
Porker v Porker & Ors (2007) 249 LSJS 249; Hunter v McKinnon (2002) 81 SASR 229; Dalle-Molle (by his next friend The Public Trustee) v Manos (2004) 88 SASR 193; Jeavons v Chapman (No 2) (2009) 260 LSJS 260; Barac v Farnell (1994) 53 FCR 193; Slaveski v State of Victoria and Ors (2009) 25 VR 160; Hollidge v Pomeroy [2014] SASC 45; Masterman–Lister v Brutton & Co [2003] 1 WLR 1511; Goddard Elliot (a firm) v Fritsch [2012] VSC 87; Campbell v Nangle (1985) 40 SASR 161; Beasley v Marshall (No 2) (1985) 41 SASR 299, considered.
PARSONS & ANOR v PORCH (No 2)
[2019] SADC 174
The interlocutory application
When a Master of this Court made an order on the 23rd of April 2018 appointing the Public Trustee ‘Litigation Guardian’ for the First Plaintiff Paul Parsons, expert opinion was divided as to the exact degree of his cognitive impairment. A traumatic brain injury inflicted on him gave rise to these proceedings, an action in tort claiming damages for personal injury. The situation was the same when the Court approved the compromise of the proceedings in mid‑October this year.
The within Application is brought to reconsider the order for protection made pursuant to s 7 of the Aged and Infirm Persons’ Property Act 1940 (SA), and if necessary for review under s 8A(2) thereof, or more particularly for a determination whether the order should continue or be rescinded, pursuant to s 11(1) thereof.
Underlying facts
The application is driven by the potential for substantial costs of management under the protection order. These are not covered by the award as approved. Such damages can no longer be claimed in this State, due to s 57 of the Civil Liability Act 1936 (SA), which specifically prohibits an award ‘to compensate for the cost of the investment or management of the amount awarded’. The Court was advised by the plaintiffs’ counsel that the situation is otherwise in all other Australian jurisdictions. This proceeding is brought on the premise that those costs unnecessarily and progressively erode the award of $900,000.
The underlying motor vehicle accident founding the claim in damages, occurred on 16 March 2013. Mr Parsons is currently employed as a youth worker on a casual basis. In this position, he earns approximately $1,700 per week. He also earns approximately $1,300 per fortnight as an enrolled casual nurse for SA Health. Both streams of income are paid into a joint bank account, as is his wife’s income.
He lives with his wife and three children in a home that is subject to a mortgage of over $500,000. His wife is responsible for the payment of most of the household bills, although he has discretionary spending, principally for petrol, telephone bills, fortnightly gardening and ‘transferring money for savings’. His payments usually do not exceed $100 per transaction. Otherwise there are no outstanding debts. His wife supports the application. The Public Trustee and the defendant take no position in respect of it. The defendant has liberty to withdraw from further participation in these proceedings.
Legislative context
Even though primary jurisdiction under the Aged and Infirm Persons’ Property Act is vested in the Supreme Court by s 4(1) thereof, when an action is brought for damages for personal injury in the District Court, s 4(1)(a) furnishes this Court with supplementary jurisdiction to make such orders and to ‘hear and determine any consequential or related proceedings under this Act’. It was held in Porker v Porker & Ors that the District Court has jurisdiction to make such an order, which is described as a ‘statutory enhancement of the Court’s parens patriae jurisdiction’. Section 7 of the Aged and Infirm Persons’ Property Act provides so far as relevant to this application:
Part 2 - Aged and infirm persons' property
7 - Circumstances under which protection order may be made
(1) Where it is made to appear to the satisfaction of the court that any person is, by reason of age, disease, illness, or physical or mental infirmity—
(a) unable, wholly or partially, to manage his affairs; or
…
the court may make a protection order in respect of the estate or part of the estate of that person.
Section 8 (1)(a) thereof facilitates applications by ‘the person whose property is sought to be protected’. Once in place, protection orders are as a matter of practise, not lightly rescinded or varied: Hunter v McKinnon. The usual practice of the Court is to appoint the Public Trustee as manager, unless it is otherwise in the best interests of the protected person to appoint some other manager: Campbell v Nangle; Beasley v Marshall (No 2).
It can be seen that the critical question for the Court to determine is whether or not Mr Parsons is ‘by reason of physical or mental infirmity – unable, wholly or partly to manage his affairs’. The focus of the inquiry is on the capacity to manage because of infirmity, rather than the nature of the infirmity itself: Dalle-Molle (by his next friend The Public Trustee) v Manos.
Section 7 confers wide power to make protection orders in all types of litigation: Jeavons v Chapman (No 2). To manage something is to take an active part in running it and to be responsible for decision making and direction of an undertaking: Barac v Farnell. As Kyrou J observed in Slaveski v State of Victoria and Ors, ‘[T]here is no universal test for determining whether a person is capable of managing his or her affairs’.
When the protection order was made in April last year, the context was quite different. At that stage of the proceedings, whilst equally engaging s 7 of the Aged and Infirm Persons’ Property Act, the focus of the inquiry was whether Mr Parsons was able to ‘make rational decisions about taking, defending or settling these proceedings …’: Hollidge v Pomeroy, Masterman-Lister v Brutton & Co. There is therefore an important distinction to be made between the ability and capacity of a litigant to manage litigation and the ability and capacity to manage judgment sums: Goddard Elliot (a firm) v Fritsch. As Bell J rightly observed in that case, a ‘person can lack the mental capacity to participate in legal proceedings yet be capable of performing the usual activities of daily life’. His Honour continued, ‘[t]he standard is based on the subjective understanding of the person. The understanding which is required is contextual and relates to the nature of what the person is doing.’
The appointment of a litigation guardian is a very serious step to take, because it deprives the person of fundamental civil rights under common law, rights ‘long cherished by English law’: Masterman-Lister v Brutton & Co. That case emphasises that:
… the issue – specific nature of the test; that is to say the requirement to consider the question of capacity in relation to the particular transaction (its nature and complexity) in respect of which the decisions as to capacity fall to be made.
The medical evidence
It appears the order the Master made was based on the opinion of a consultant physician in rehabilitation medicine, Dr Stephen Buckley. He diagnosed a ‘very severe’ traumatic brain injury with cognitive, emotional and behavioural impairment. This opinion was based on the understanding that Mr Parsons was ‘most definitely confused at the scene of the accident’ and despite no specific diagnosis of unconsciousness, there was ‘good evidence for past traumatic amnesia extending beyond one week, that is, into the “very severe” range for traumatic brain injury’. It was these considerations that led him to believe Mr Parsons required administration under the Aged and Infirm Persons’ Property Act at that time.
With this opinion in mind, Mr Parsons’ solicitor engaged Dr Patricia Jungfer, a consultant psychiatrist, who reported following an assessment on 11 July 2017, with a diagnosis of a mild traumatic brain injury. In her later report of the 2nd of August 2019, she drew the following conclusions:
On the basis of the information, which was provided at the assessment in 2017, and with reference to the opinion of Dr Buckley and Dr Fitzgerald, I would endorse the opinion of Dr Buckley, that Mr Parsons’ lacks capacity to manage his financial affairs. The opinion is based on the following:
1. He has difficulties with depression and mood, reduced self confidence and social isolation. This will reduce his assertiveness in real world transactions and place him at risk for exploitation.
2. Cognitive assessment demonstrated in a structured controlled environment where tasks for sequentially provided that he had residual impairments.
3. In the real world he cannot do complex financial negotiations or tasks and defers to someone else (his wife). He struggles with complex tasks and requires material reduced to structured material to comprehend and process. He functions better with familiar material and is less competent with that which is new. He thinks more slowly and may repeat errors he has made. I would consider him to be able to manage a most weekly sum of money without great harm do not consider him to have the capacity to manage a large settlement.
I agree with Dr Buckley that as time progresses this is a decision which could be reversed if Mr Parson, especially if his mental health improves, demonstrates improved functioning. If the client strongly objects to this opinion, I would be prepared to re-examine him for the purpose of an assessment of capacity.
A neuropsychology assessment of Mr Parsons was undertaken by Dr Fitzgerald on the 7th of February 2019. She considered him capable of managing his finances in making the following observations:
Mr Parsons has demonstrated a concerted and persistent effort in terms of returning to work, participating in his rehabilitation and attempting further study, despite his cognitive difficulties. He has made gains in terms of his cognitive recovery although continues to experience difficulties which were evident both on assessment and consistent with both his report and his wife’s report. Mr Parson’s primarily demonstrated ongoing difficulties with his new learning and memory, and his executive functions, specifically on tasks of higher level attention. He was able to think through novel problems and provide alternative responses and ideas when required.
Mr Parsons demonstrated good insight into his cognitive and psychological difficulties. He had a good understanding of the settlement process. He was able to describe his current financial situation, and he could describe where he could go for help if required. His wife commented that he tended to become overwhelmed by the ‘bigger picture’ but that he knew when he needed to ask for assistance.
In my opinion, based on the interview and assessment, and despite his cognitive impairment, Mr Parsons has the capacity to manage his financial settlement. I understand that he requires some support to pay bills or to make some decisions, which appears to reflect his reduced confidence. Given his insight, his ability to request help when required, his attitude towards being conservative with money and the lack of evidence that he is impulsive or lacks reasoning (and that capacity is assumed unless shown otherwise), I believe Mr Parsons has the capacity to manage his settlement funds.
On receiving this report, Mr Parsons’ solicitor forwarded a copy to Doctors Buckley, Jungfer and Rosen for their consideration. In his response of the 21st of July 2019, Dr Buckley nevertheless maintained his opinion that a fund manager was required, once again on the premise that the traumatic brain injury was in the ‘very severe’ range. This view was based on the observation that Mr Parsons exhibited ‘significant impulsivity’, which ‘points to serious risk, if he was managing his own settlement funds’.
In her report of 2nd August 2019, Dr Jungfer expressed agreement with Dr Buckley in these terms:
Dr Fitzgerald has examined Mr Parsons specifically examining his financial decision making and found that he has capacity. Dr Buckley was not asked this in 2017 but believed Mr Parson lacked capacity, in 2019 he continues to hold the opinion. Dr Buckley acknowledges that he is more conservative in his recommendations regarding capacity and emphasises the duty to protect.
On the basis of the information, which was provided at the assessment in 2017, and with reference to the opinion of Dr Buckley and Dr Fitzgerald, I would endorse the opinion of Dr Buckley, that Mr Parsons’ lacks capacity to manage his financial affairs. The opinion is based on the following:
1. He has difficulties with depression and mood, reduced self confidence and social isolation. This will reduce his assertiveness in real world transactions and place him at risk for exploitation.
2. Cognitive assessment demonstrated in a structured controlled environment where tasks for sequentially provided that he had residual impairments.
3. In the real world he cannot do complex financial negotiations or tasks and defers to someone else (his wife). He struggles with complex tasks and requires material reduced to structured material to comprehend and process. He functions better with familiar material and is less competent with that which is new. He thinks more slowly and may repeat errors he has made. I would consider him to be able to manage a most weekly sum of money without great harm do not consider him to have the capacity to manage a large settlement.
I agree with Dr Buckley that as time progresses this is a decision which could be reversed if Mr Parson, especially if his mental health improves, demonstrates improved functioning. If the client strongly objects to this opinion, I would be prepared to re-examine him for the purpose of an assessment of capacity.
In his response of 4 September 2019 Dr Rosen, a consultant neurologist, expressed an opinion premised on an inclination ‘to take a conservative view’, agreeing with Dr Buckley in this way:
In my opinion it is more likely than not that Mr Parsons by reason of lack of competence due to his impairment of executive function would struggle to manage financial affairs beyond just managing household bills and there is a real risk that under certain conditions especially without his wife to guide him either he may be disadvantaged in the conduct of his financial affairs or his money and or property could be dissipated or lost. It is more likely than not that he lacks the ability to identify and deal appropriately with individuals who may be attempting to benefit from his assets through unfair dealing especially in the online world of internet fraud and email scams designed to exploit the very weaknesses displayed by Mr Parsons and where lapses in concentration by competent individuals frequently result in considerable financial losses.
Analysis
In the ultimate analysis, there is clearly a degree of professional disagreement as to the capacity of Mr Parsons to manage his own financial affairs, hinged largely on an assessment of the extent of traumatic injury in the first place. The probabilities are however that despite those deficiencies, Mr Parsons is capable of managing his financial affairs in the current circumstances, particularly as his wife largely manages the finances. This conclusion serves best to apply the principles referred to in the cases discussed earlier, that is by assessing the subjective situation in the context of what he is required to do to manage the judgment sum. This is precisely what Dr Fitzgerald considered him capable of doing effectively. As Dr Buckley observed, his family is at present in a position to provide supervision and a structured environment.
As the extent to which management fees will impinge upon and progressively erode the settlement sum, as they certainly will, it is not in Mr Parsons’ best interests for external management in order to maintain the fund which must sustain him and his family for the rest of his years. For a man aged 47, it would not be in his best interests to allow the current regime to continue, at least under the present circumstances.
Of course, things may change. The remedy for that contingency lies in a fresh application by his wife to reinstate the protection order, or for a different management regime. Despite outstanding disagreements as to the capacity to manage funds, in the present circumstances the probabilities are that Mr Parsons will continue to manage them effectively in conjunction with his wife. The maintenance of the present protection order will serve unnecessarily to deplete those funds.
It is for these reasons that it is proposed the protection order be rescinded.
ADDENDUM:
The above order was made following a ‘Second Interlocutory Application’ filed by Mr Parsons on 14 October 2019, pursuant to s 8A(2) of the Aged and Infirm Person’s Property Act 1940 (SA) seeking a ‘determination whether a protection order is required’. The application was argued on this footing.
Following the delivery of this judgment, the court was informed the Master’s order of 23 April 2018 was in fact simply that the Public Trustee be appointed litigation guardian for Mr Parsons. Presumably this order was made pursuant to DCR 78(1) of the District Court Civil Rules 2006 (SA) on the premise that he was a ‘person under disability’.
Accordingly, the matter was recalled so that the parties could debate what the appropriate course was to take. All parties including the Public Trustee accepted that if the application was in fact one to discharge the Master’s order, the test for doing so was the same for practical purposes as was articulated in the above reasons. On 10 December 2019, an order was therefore made by consent revoking the order purporting to rescind the supposed protection order. Once done, that served to correct the record and allow the settlement proceeds paid into the Suitors Fund to be disbursed to Mr Parson’s solicitors as contemplated by the order of 23 November 2019.
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