R by his tutor NSW Trustee v L

[2021] NSWSC 1237

Supreme Court

New South Wales

Medium Neutral Citation:

R by his tutor NSW Trustee v L [2021] NSWSC 1237

Hearing dates:

27 September 2021

Date of orders:

28 September 2021

Decision date:

28 September 2021

Jurisdiction:

Equity - Protective List

Before:

Lindsay J

Decision:

A claim by the daughter of a protected person for an order that the NSW Trustee be removed as the financial manager of a protected estate dismissed without prejudice to such, if any, entitlements the claimant might have to apply to NCAT for review of a decision to be made by the NSW Trustee about a sale of land in management of the estate.

Catchwords:

MENTAL HEALTH — Management of estate — Administration by NSW Trustee — Application by daughter of protected person that NSW Trustee be removed as financial manager and that she be appointed as financial manager instead — Application dismissed

Legislation Cited:

Civil and Administrative Tribunal Act 2013 NSW

Guardianship Act 1987 NSW

NSW Trustee and Guardian Act 2009 NSW

Cases Cited:

CAC v Secretary, Department of Family and Community Services (No 2) [2015] NSWSC 344

CCR v PS (No 2) (1986) 6 NSWLR 622

Holt v Protective Commissioner (1993) 31 NSWLR 227

LP v P (2018) 98 NSWLR 377

M v M [2013] NSWSC 1495

Category:

Principal judgment

Parties:

Plaintiff: R (a protected person) by his tutor NSW Trustee
Defendant: L, a daughter of R
Cross-claimant: L
Cross-defendant: NSW Trustee as tutor for R

Representation:

Counsel:
Plaintiff: C Zucker, solicitor
Defendant: self-represented
Cross-claimant: self-represented
Cross-defendant: J Brouwer, solicitor

Solicitors:
Plaintiff: Zucker Legal
Defendant: self-represented
Cross-claimant: self-represented
Cross-defendant: NSW Trustee

File Number(s):

2021/00120445

Judgment

Introduction

1. This judgment is published in explanation of orders made by the Court on 28 September 2021 dispositive of proceedings then pending in the Protective List of the Court.

Reasons for Orders

2. Context. The NSW Trustee has been financial manager of the protected estate of R (an elderly man) since 14 July 2020.

3. On that date, the NSW Civil and Administrative Tribunal (“NCAT”), in its Guardianship Division, upon an exercise of jurisdiction under the Guardianship Act 1987 NSW, found that R is incapable of managing his own affairs and committed management of the estate of R to the NSW Trustee.

4. On 21 January 2021 NCAT conducted a review of its financial management order and confirmed the NSW Trustee’s appointment as R’s financial manager.

5. Neither NCAT’s order of 14 July 2020 nor its order of 21 January 2021 was the subject of an appeal (pursuant to Part 6 of Schedule 6 to the Civil and Administrative Tribunal Act 2013 NSW), either to an Appeal Panel of the Tribunal or to this Court.

6. A concomitant of the NSW Trustee’s appointment as R’s financial manager is that his estate is subject to management under NSW Trustee and Guardian Act 2009 NSW.

7. A prominent participant in the NCAT proceedings was a daughter of R, the defendant to the current proceedings. She is a daughter of R’s second marriage.

8. During the course of proceedings in NCAT, it became evident that the defendant had transferred a total sum of $95,000 from a bank account of R into a bank account in her own name between 13-19 July 2020. She says that she did this, at the request of R, in the hope of establishing a fund free from control by the NSW as a financial manager.

9. The NSW Trustee’s Statement of Claim. By a statement of claim filed on 30 April 2021 the NSW Trustee, as R’s financial manager and tutor, commenced proceedings in this Court, in the name of R, against the defendant for recovery of the sum of $95,000.

10. On 11 August 2021 the defendant swore an affidavit in which, with corroborative detail, she deposed to having spent substantially the whole of the claimed sum on expenses for R.

11. In response to that affidavit, on 23 August 2021, the NSW Trustee, as tutor for R, sought and obtained leave to discontinue the proceedings on the statement of claim.

12. At the time of granting leave for proceedings on the statement of claim to be discontinued, an order was made (with the consent of the NSW Trustee and the defendant) that, as between the plaintiff and the defendant, each party to the statement of claim pay his or her costs of the proceedings on the statement of claim. The question of whether the NSW Trustee could have recourse to the estate of R for its costs was reserved, with directions for written submissions.

13. Written submissions were received. Those of the NSW Trustee (marked as Exhibit P6) are dated 27 August 2021. Those of the defendant (marked as Exhibit D3) are dated 6 September 2021.

14. The NSW Trustee contends that it commenced proceedings against the defendant in performance of its obligations as R’s financial manager and that, unless the court otherwise orders, it is entitled by virtue of section 113 of the NSW Trustee and Guardian Act 2009 (and as R’s tutor) to be indemnified for its costs out of the estate of R.

15. The defendant’s contention, in essence, is that the NSW should not be indemnified for its costs out of the estate or its costs on the statement of claim because, she contends, it has not acted competently in management of R’s estate.

16. In my opinion, the NSW Trustee was obliged to seek to recover the funds of R appropriated by the defendant; and at an early stage of the proceedings, when served with an affidavit of the defendant sworn on 11 August 2021 substantially accounting for her expenditure of the $95,000 on the account of R, it properly sought and obtained leave to discontinue proceedings on the statement of claim. A substantial proportion of the defendant’s expenditure of the $95,000, without the leave of the NSW Trustee, occurred well after the NSW Trustee’s appointment as financial manager.

17. In my opinion, on these facts, it would have been open to the NSW Trustee to apply for an order that its costs on the statement of claim be paid by the defendant. That it did not make such an application reflects its concern for family relationships, not wanting unnecessarily to impose a financial burden on the defendant.

18. In my opinion, the NSW is entitled to have its costs of the proceedings on the statement of claim paid out of the estate of R on the indemnity basis.

19. The Defendant’s Cross Claim. The larger question is what to do with the defendant’s statement of cross claim filed on 17 June 2021.

20. As was recorded by the Court on 23 August 2021 with the acquiescence of the parties, the questions for determination on the cross claim focus essentially on two questions:

1. whether orders should be made for the estate of R to be managed by the defendant; and

2. whether any (and, if so, what) order should be made for the sale of a property owned by R at Buxton, in the State of NSW, his home for many years before he was admitted to a residential care facility.

21. In accordance with guardianship orders made by NCAT on 14 July 2020, the Public Guardian made a decision to place R in a residential care facility on 6 August 2020. Since that time he has become a permanent resident of the facility with a “Permanent Resident Agreement” having been executed on or about 23 May 2021.

22. The only parties to the statement of cross claim are the defendant as cross claimant and the NSW Trustee, ostensibly in its representative capacity, as cross defendant.

23. The defendant has a strong, continuing desire (and, it must be said, a sense of entitlement that she should be able) to manage the affairs of R. The strength of that desire is reflected in the reasons for decision published by NCAT for its decisions of 14 July 2020 and 22 January 2021; in her appropriation of $95,000 of R’s funds to herself and her application of those funds without reference to the NSW Trustee; and in her agitation of questions of management in her statement of cross claim.

24. That said, a major focus of the defendant’s concern is upon whether R’s Buxton property should be sold and, if so, upon what terms.

25. On 30 July 2021, the NSW Trustee notified the defendant that, as R’s financial manager, it had decided that the Buxton property should be sold.

26. Following representations by the defendant, that decision has been withdrawn.

27. The NSW Trustee has acceded to a request of the defendant that its decision to sell the property be reviewed. The review process, internal to the NSW Trustee, is presently being conducted by a senior officer of the NSW Trustee who had no involvement in the previous decision.

28. The defendant has made submissions to the NSW Trustee in the course of that review (embodied in Exhibit D3 presently before the Court). She has informed the Court that she anticipates receiving a response to her submissions by 8 October 2021. As presently advised, the solicitor appearing for the NSW Trustee on the cross claim anticipates that a decision on the review may be made by 11 October 2021.

29. As confirmed by me during the hearing of these proceedings, the NSW Trustee accepts that, if a decision made as a result of its internal review is contested by the defendant, she will be entitled to apply to NCAT for a review of that decision pursuant to section 62 of the NSW Trustee and Guardian Act. On such an application for a review, the NSW Trustee will not submit that the defendant is not a person whose interests are adversely affected by its decision.

30. Although the defendant is strident in her desire to manage the affairs of R, the evidence she has adduced in support of any change in the management regime affecting him is not sufficient to persuade me that NCAT’s orders for management of his protected estate by the NSW Trustee can properly, or should, be discharged or varied. The underlying message of all her evidence is not so much that there is incompetence on the part of the NSW Trustee, but that she cannot bring herself to accept that she is not entrusted with management of his affairs.

31. I am conscious, as the defendant has reminded me, of the weight to be given to family considerations in the selection of a financial manager: Holt v Protective Commissioner (1993) 31 NSWLR 227 at 242-243; M v M [2013] NSWSC 1495. I am equally conscious of the deep divisions within the extended family of R that led NCAT, not once but twice, to conclude that it was in the best interests of R that his estate be managed by the NSW Trustee, a manager independent of any family member.

32. I am also conscious that no financial manager (whether a public or private manager) has an entitlement to remain in office; but, if a financial manager is to be removed and replaced, the Court needs to be satisfied that such a change is in the best interests of the protected person: LP v P (2018) 98 NSWLR 377.

33. In these proceedings, I am not satisfied that, at the present time or in the foreseeable future, the interests of R would be served by an order that the NSW Trustee be removed from the office of financial manager. I am not satisfied that, if the NSW Trustee were to be removed from office, the defendant would be a suitable replacement. Her deep antagonism towards the NSW Trustee (which has a statutory obligation to supervise private managers) and, as I perceive it, her lack of insight into the role of a financial manager, provide cause for concern. She has a predisposition to believe that she alone can, and should, manage R’s affairs. Her failure to account to the NSW Trustee for her appropriation of $95,000 of R’s funds until it was spent remains a matter of particular concern to the Court, as it has been to NCAT.

34. As the course of proceedings in NCAT demonstrates, any order for the appointment of the defendant as financial manager of R, or for reactivation of an earlier enduring power of attorney executed by R in favour of her and others, would be hotly contested by other members of his family.

35. These proceedings are not constituted in a manner to permit such a contest to be conducted. A determination that such a contest be entertained by the Court would require notice to be given to other family members, with economic consequences for everybody, including R’s protected estate.

36. I am not satisfied that R’s interests would be served by allowing the defendant to maintain these proceedings in one form of another. She has not demonstrated a basis for removal of the NSW Trustee as R’s financial manager or for her appointment in its place.

37. These proceedings do not provide a vehicle for circumvention by the defendant of the statutory scheme for decision making governed by the Guardianship Act 1987 NSW, the NSW Trustee and Guardian Act 2009 NSW, and the Civil and Administrative Tribunal Act 2013 NSW.

38. The defendant has twice litigated in NCAT her application to be appointed as manager of R’s protected estate. That application has twice been refused for reasons which, on the face of the Tribunal’s reasons for decision, seem unimpeachable. NCAT’s decisions have not been appealed.

39. In an appropriate case, the NSW Trustee’s appointment as financial manager remains open to be reviewed by the Tribunal. There is no reason for the Court to intervene upon an exercise of its inherent or any statutory jurisdiction. There are no exceptional circumstances that warrant a departure from the statutory scheme for the appointment and removal of financial managers by NCAT, subject to statutory appeal proceedings.

40. Nor is there any occasion in these proceedings for directions to be given by the Court in relation to the question of whether R’s Buxton property should be sold and, if so, upon what terms. The defendant has the benefit of a statutory review procedure which can engage the jurisdiction of NCAT if need be.

41. I propose, in these circumstances, to order that the defendant’s statement of cross claim be dismissed.

42. Ancillary Matters. In dismissing the cross claim, I invite the NSW Trustee to look favourably upon the defendant’s request that provision be made for R to have access to a “petty cash fund” maintained at the level of $50. I do not propose to make a formal direction to that effect. It is a matter best dealt with by an administrative decision by the NSW Trustee, from time to time, in the ordinary course of management of R’s estate.

43. It is not necessary, in the context of the defendant’s cross claim, for me to give consideration to whether to give a formal direction to the NSW Trustee to provide to her (as she has requested) regular accounting statements relating to management of R’s protected estate. On 22 August 2021 the NSW Trustee resolved to make available to the defendant, at 6 monthly interval copies of financial statements prepared by it in management of R’s estate.

44. At one point during the course of argument I thought it might be necessary to make declarations as to the operation of section 71(1) of the NSW Trustee and Guardian Act 2009 and section 50(3) of the Powers of Attorney Act 2003. However, the defendant accepts that section 71 operates to suspend the powers of R to deal with his estate during the pendency of financial management orders affecting him, and that section 50(3) operates to suspend the operation of any power of attorney that may have been or may be executed by R. Her acceptance of that renders unnecessary the declarations I had in mind.

Orders

45. For these reasons, on 28 September 2021, I made the following orders and notations in disposition of these proceedings:

1. ORDER that the defendant's statement of claim filed on 17 June 2021 be dismissed without prejudice to such, if any, entitlements the defendant/cross-claimant may have to apply to NCAT for a review of any decision made by the NSW Trustee concerning the sale of the property at Buxton.

2. ORDER that the NSW Trustee's costs of these proceedings (on the statement of claim filed on 30 April 2021 and the statement of cross claim filed on 17 June 2021) be paid out of the estate of the plaintiff assessed on the indemnity basis.

3. NOTE that no other orders are made in respect of the costs of these proceedings.

4. ORDER that these orders be entered forthwith.

46. I am satisfied that dismissal of the defendant’s cross claim on terms that recognise that she has a mechanism for ventilating her concerns about any sale of R’s Buxton property best serves the interests of R. The defendant’s engagement of this Court’s jurisdiction, so far as she has thus far endeavoured to do, necessarily exposes his estate to the risks of a costs burden greater than is likely to be encountered if specific questions as to management of R’s estate are dealt with in submissions to the NSW Trustee and, if appropriate, on an application to NCAT for a review of the NSW Trustee’s decision.

47. I have refrained from making any costs orders affecting the defendant in deference to the NSW Trustee’s sense that that is the course best calculated to serve the interests of R in the current circumstances.

48. The defendant should not assume that further proceedings in this Court will not be the subject of costs orders affecting her. As explained CCR v PS (No 2) (1986) 6 NSWLR 622 at 640 and CAC v Secretary, Department of Family and Community Services (No 2) [2015] NSWSC 344 at [11]-[18] “the ordinary rule” in protective proceedings is that the Court may exercise its discretion as to costs, not by reference to its general rule that “costs follow the event”, but having regard to “what, in all the circumstances” seems proper. Nevertheless, the Supreme Court is not a “no costs” jurisdiction. Parties to proceedings in the Court conduct litigation at their own risks as to costs.

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Decision last updated: 30 September 2021