Re LSC and GC

[2016] NSWSC 1896

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:	Re LSC and GC [2016] NSWSC 1896
Hearing dates:	10 October and 23 November 2016, and written submissions
Date of orders:	23 December 2016
Decision date:	23 December 2016
Jurisdiction:	Equity - Protective List
Before:	Lindsay J
Decision:	In each of two protected estates, orders made (under s 86 of the NSW Trustee and Guardian Act 2009 NSW) for revocation of management orders made under s 41 of the Act, together with remedial orders consequent upon management of the estate by Perpetual Trustee Company Limited as legal successor of The Trust Company (by virtue of voluntary transfer determinations made by the Australian Securities and Industries Commission under Part 5D.6 of the Corporations Act 2001 Cth) without any order of the Court discharging or varying the order made under s 41(1)(b) of the NSW Trustee and Guardian Act 2009 for the appointment of The Trust Company as manager
Catchwords:	PROTECTIVE JURISDICTION – Protected estate management order - Voluntary transfer determination made by ASIC under the Corporations Act 2001 Cth Part 5D.6 does not, of itself, displace an order made by Court for ongoing management of a protected estate – Remedial orders made on exercise of protective jurisdiction   MENTAL HEALTH - Guardians, committees, administrators, managers and receivers – Financial management orders - Revocation
Legislation Cited:	Corporations Act 2001 Cth Guardianship Act 1987 NSW Interpretation Act 1987 NSW NSW Trustee and Guardian Act 2009 NSW Trustee Companies Act 1964
Cases Cited:	Ability One Financial Management Pty Limited and Anor v JB by his tutor AB [2014] NSWSC 245 C v W (No. 2) [2016] NSWSC 945 GDR v EKR [2012] NSWSC 1543 Holt v Protective Commissioner (1993) 31 NSWLR 27 JJK v APK (1986) Aust Torts Reports 80-042 M v M [2013] NSWSC 1495 Re The Trust Company [2013] NSWSC 1680 Re The Trust Company [2013] NSWSC 1946 Re The Trust Company Ltd [2013] NSWSC 1947
Texts Cited:	H S Theobald, The Law Relating to Lunacy (London, 1924
Category:	Principal judgment
Parties:	The plaintiff (in each set of proceedings): An applicant for a Revocation Order.   Putative Protected Estate Manager: Perpetual Trustee Company Limited ACN 000 001 007.
Representation:	Counsel: Plaintiff LSC (2016/00161585): I King Plaintiff GC (2016/00241612): P Li, solicitor Perpetual Trustee Company Limited: M K Meek SC NSW Trustee: C Phang, solicitor   Solicitors: Plaintiff LSC (2016/00161585): Roderick Storie Plaintiff GC (2016/00241612): Stephen Smart & Associates Perpetual Trustee Company Limited: Makinson D’Apice (2016/00161585) and Diamond Conway (2016/00241612)
File Number(s):	2016/001615852016/00241612

Judgment

INTRODUCTION

1. Before the Court are two applications, each by a different “protected person” (within the meaning of section 38 of the NSW Trustee and Guardian Act 2009 NSW) , in separate proceedings under section 86 of the Act, for an order to the effect that management orders made under section 41 of the Act be revoked.

2. On the face of the Court’s Protective List records, each application appears to be irregular because the manager appointed under section 41 (a licensed trustee company governed by a chapters 5D and 7 of the Corporations Act 2001 Cth and the Trustee Companies Act 1964 NSW) is not, in fact, the manager (another licensed trustee company) presented as the entity to be discharged from the office of protected estate manager if a revocation order is made under section 86. Such an irregularity has to be addressed.

3. The object of this judgment is to deal with issues of principle and practice arising from a need to accommodate different regulatory regimes governing the work of a licensed trustee company in management of a protected estate.

THE FACTUAL MATRIX

4. Each of the applications before the Court concerns: (a) a proposed revocation of orders initially made under section 41 of the NSW Trustee and Guardian Act 2009 appointing The Trust Company Limited ACN 004 027 749 or The Trust Company (Australia) Limited ACN 000 000 993 (at the risk of over-simplification, but for convenience, described in this judgment, jointly or severally, as “The Trust Company”) as the manager of a protected estate; (b) an acquisition of all the ordinary shares in The Trust Company by Perpetual Trustee Company Limited ACN 000 001 007 (a wholly owned subsidiary of Perpetual Limited ACN 000 421 927) pursuant to a Scheme of Arrangement approved by this Court under the Corporations Act 2001; (c) a Voluntary Transfer Determination made by the Australian Securities and Investments Commission (ASIC) under section 601WBA of the Corporations Act 2001 to the effect that there be a total transfer of estate assets and liabilities of The Trust Company from that company to Perpetual Trustee Company Limited; and (d) an absence of any orders under section 41 of the NSW Trustee and Guardian Act and section 47 of the Interpretation Act 1987 NSW for the removal and replacement of The Trust Company as manager of the particular protected estate.

5. The usual form of orders made upon removal and replacement of a protected estate manager under section 41 of the NSW Trustee and Guardian Act and section 47 of the Interpretation Act 1987 are set out in M v M [2013] NSWSC 1495 at [55]. No such orders were sought, or made, in the course of management of the estates of the protected persons who have, in the proceedings presently before the Court, applied for revocation orders.

6. On 18 December 2013 The Trust Company became part of the Perpetual Group of Companies pursuant to a Scheme of Arrangement approved by the Court (on 3 December 2013) in proceedings conducted in the Court’s Corporations List: Re The Trust Company Ltd [2013] NSWSC 1947, read with judgments of the same name reported at [2013] NSWSC 1680 and [2013] NSWSC 1946. Pursuant to the terms of the scheme, Perpetual Trustee Company Limited acquired all the ordinary shares in The Trust Company.

7. Following implementation of the Scheme, The Trust Company Limited was delisted from the Australian Stock Exchange.

8. On 2 February 2015 ASIC made Voluntary Transfer Determinations under section 601WBA of the Corporations Act and, under section 601WBG of the Act, issued Certificates of Transfer stating that the transfer of estate assets and liabilities from The Trust Company to Perpetual Trustee Company Limited was to take effect on 1 March 2015.

9. ASIC’s “Statements of Reasons” accompanying the Voluntary Transfer Determinations were to the effect that (for the purpose of section 601WBA(2) of the Corporations Act) ASIC was satisfied that:

1. The Trust Company, as “the transferring company”, was a company that was previously authorised as a trustee company under the law of an Australian state or territory;

2. Perpetual Trustee Company Limited, as “the receiving company”, was a licensed trustee company;

3. having regard to a determination made by the Minister under section 601 WBD of the Corporations Act dated 6 August 2012, and taking effect on 22 September 2012, the Minister’s consent to the transfer was not required;

4. the transfer was in the interests of the clients of the Trust Company (when viewed as a group) and the clients of Perpetual Trustee Company Limited (when viewed as a group) because:

1. The Trust Company became part of Perpetual Group on 18 December 2013 following approval by the Court of a Scheme of Arrangement on 3 December 2013;

2. consolidation under one Australian Financial Services licence holder would ensure a consistency of service to clients no matter where they are located and from which entity they were to receive traditional trustee company services;

3. the Perpetual Group had a centralised estate administration system and a national model of service delivery for functions such as finance, people, legal, risk and compliance and information technology which supported the delivery of traditional trustee company services;

4. following the total transfer of estate assets and liabilities to Perpetual Trustee Company Limited, that company would be the sole holder of an Australian Financial Services Licence covering the provision of traditional trustee company services in the Perpetual Group of Companies. This was expected to have a positive impact on the Group’s business costs, including in the costs of holding an Australian Financial Services Licence due to the reduction of the number of licence holders, economies of scale and improved efficiencies; and

5. there were no disadvantages to the clients of The Trust Company and the clients of Perpetual Trustee Company Limited; and

5. legislation to facilitate the transfer that satisfied the requirements of section 601WBC of the Corporations Act had been enacted in the state or territory in which The Trustee Company and Perpetual Trustee Company Limited were respectively registered.

10. Having recited the matters about which ASIC was “satisfied”, the instrument of determination added the following paragraph:

“ASIC also made this determination because the transfer of estate assets and liabilities by [The Trust Company] to [Perpetual Trustee Company Limited] in order to rationalise the arrangements for holding an AFS licence within a corporate group was anticipated by the amendments to [the Corporations Act] enacted in 2009. The reorganisation of licensing arrangements within a group and a reduction of duplicate regulation arising from the differing state and territory regimes were part of the policy intent behind the national regulation of trustee companies and the transfer of their regulation to the Commonwealth”.

11. With section 601WDA(3) in mind, on 23 February 2015 The Trust Companies and “Perpetual” published an advertisement in the public notices section of the Sydney Morning Herald, a newspaper circulating throughout New South Wales, and on or about 27 February 2015 Perpetual Trustee Company Limited wrote to each of the NSW Trustee and the “Supreme Court Registry” a formal letter marked to the attention of nobody in particular.

12. The Sydney Morning Herald advertisement, in terms, announced that The Trust Companies were transferring their traditional trustee company services to Perpetual Trustee Company Limited (effective 1 March 2015), that Perpetual Trustee Company Limited would be the only “Perpetual entity” providing such services, that The Trust Companies would be transferring their estate assets and liabilities to Perpetual Trustee Company Limited and that further information could be obtained via a specified telephone number or email address.

13. By letters dated 27 February 2015 Perpetual Trustee Company Limited advised the NSW Trustee and the Court that: ASIC had issued certificates of transfer following the making of voluntary transfer determinations pursuant to the Corporations Act; Perpetual Trustee Company Limited was, from 1 March 2015, to become the successor in law of The Trust Companies; the provisions of section 601WBI(1) of the Corporations Act applied to the transfer of the duties, obligations, immunities, rights and privileges of the companies; and any appointment or nomination of The Trust Companies to a particular capacity (for example as trustee, executor or administrator) in relation to transferred estate assets and liabilities was to be taken as an appointment or nomination of Perpetual Trustee Company Limited to that capacity in relation to those assets and liabilities pursuant to section 601WBJ of the Corporations Act.

14. Each letter ended:

“The same Perpetual personnel will continue to provide the same service as previously for these matters and the only difference will be a change to the name on the letterhead and other documents issued by Perpetual.

We would be grateful if you would note your records accordingly. If you need to discuss this further, please do not hesitate to contact [a named individual on a specified telephone number or at a specified email address].”

15. No application was made to the Court (or to the NSW Trustee), or (I infer) to the Guardianship Division of the NSW Civil and Administrative Tribunal (NCAT), for any form of order or direction, in relation to any protected estate, upon an exercise of protective jurisdiction. No attention was drawn to the possibility that questions relating to an exercise of protective jurisdiction had arisen, or might arise.

16. The correspondence has all the appearances of a formality, a fait accompli, unattended by any consciousness of larger questions of principle or practice. An ungenerous mind might construe it as correspondence calculated to be ignored or overlooked. I choose to believe otherwise. I proceed on the basis that it reflects an unconscious over-confidence in the paramountcy of the law of corporations, and the “group” thinking of a large corporation, and a failure to reflect on how, and why, the protective jurisdiction of the Court, and associated statutory authorities, work on a day-to-day basis.

17. Following ASIC’s issue of voluntary transfer determinations, and as part of an ongoing process of consolidation within the Perpetual Group of companies, the Australian Financial Services licences held by The Trust Companies under chapter 7 of the Corporations Act were, on 20 May 2015, restricted to the provision of traditional trustee company services to wholesale clients (as opposed to wholesale and retail clients) within the meaning of section 761G of the Act.

18. Pursuant to section 761G(6A) of the Corporations Act, if a financial service provided to a person is a “traditional trustee company service” within the meaning of section 601RAC(1), the service is deemed to be provided to the person as a “retail client” unless regulations otherwise provide. In this scheme, each of the plaintiffs in the current proceedings is a “retail client”. By default, pursuant to section 761G(4), a financial service is provided to a “wholesale client” if the person to whom it is provided is not a “retail client”.

19. The effect of all this is that, since 20 May 2015, The Trust Companies’ respective Australian Financial Services licences have been restricted to the provision of traditional trustee company services to wholesale clients within the meaning of section 716G of the Corporations Act. Within the Perpetual Group, traditional trustee company services in the nature of management of protected estates are provided under an Australian Financial Services licence held by Perpetual Trustee Company Limited.

ASIC’S “TRANSFER DETERMINATION”: THE LEGISLATIVE FRAMEWORK

20. The legislative framework within which ASIC acted is that for which part 5D.6 (sections 601WAA-601WDA) of the Corporations Act provides (here, with emphasis added):

“601WAA. Definitions

(1) In this Part:

"asset " means property, or a right, of any kind, and includes:

(a)   any legal or equitable estate or interest (whether present or future, vested or contingent, tangible or intangible, in real or personal property) of any kind; and

(b)    any chose in action; and

(c)    any right, interest or claim of any kind including rights, interests or claims in or in relation to property (whether arising under an instrument or otherwise, and whether liquidated or unliquidated, certain or contingent, accrued or accruing); and

(d)    any CGT asset within the meaning of the Income Tax Assessment Act 1997 .

"authorised ASIC officer " , when used in a particular provision of this Part, means a person authorised under subsection (2) to perform or exercise the functions or powers of an authorised ASIC officer under that provision.

"cancel " , in relation to a licence, means:

(a)    cancel the licence under Part 7.6; or

(b)    vary the conditions of the licence under Part 7.6 so that the licence ceases to cover traditional trustee company services.

"certificate of transfer " has the meaning given by subsection 601WBG(1).

"compulsory transfer determination " has the meaning given by subsection 601WBA(1).

"estate assets and liabilities , " of a company, means assets (including assets in common funds) and liabilities of an estate, or incurred in relation to an estate, in relation to which the company was performing estate management functions, if the assets and liabilities were vested in or otherwise belonged to the company:

(a)    because of its performance of those functions; and

(b)    immediately before:

(i)   If ASIC has cancelled the company's licence--the cancellation; or

(ii)    otherwise--a relevant certificate of transfer comes into force.

Note: This Part does not apply to liabilities for breach of trust etc.: see section 601WBK.

"interest", in relation to land, includes:

(a)    a legal or equitable estate or interest in the land; or

(b)    a right, power or privilege over, or in relation to, the land.

"liability" includes a duty or obligation of any kind (whether arising under an instrument or otherwise, and whether actual, contingent or prospective).

"licence" means an Australian financial services licence that is held by a trustee company and that covers the provision of one or more traditional trustee company services.

"receiving company" has the meaning given by subsection 601WBA(1).

"transfer determination" has the meaning given by subsection 601WBA(1).

"transferring company” has the meaning given by subsection 601WBA(1).

"Voluntary Transfer Determination" has the meaning given by subsection 601WBA(1).

(2)    ASIC may, in writing, authorise a person who is a member of ASIC, or of its staff, to perform or exercise the functions or powers of an authorised ASIC officer under a particular provision of this Part.

601WBA. Transfer determinations

(1)    ASIC may, in writing, make a determination (a transfer determination ) that there is to be a transfer of estate assets and liabilities from a specified company (the transferring company ) to another specified company (the receiving company ) if:

(a)    ASIC has cancelled the licence of the transferring company (the determination is a compulsory transfer determination ); or

(b)    the transferring company has applied in the prescribed form for a determination (the determination is a Voluntary Transfer Determination ).

(2)    ASIC may make a transfer determination only if:

(aa)    for a compulsory transfer determination--the receiving company is a licensed trustee company or the Public Trustee of a State or Territory; and

(ab)    for a Voluntary Transfer Determination:

(i)    the transferring company is a licensed trustee company or a company that was previously authorised as a trustee company under a law of a State or Territory; and

(ii)    the receiving company is a licensed trustee company; and

(a)    either:

(i)    the Minister has consented to the transfer; or

(ii)    the Minister's consent to the transfer is not required (see section 601WBD); and

(b)    ASIC is satisfied that:

(i)    the transfer is in the interests of clients of the transferring company (when viewed as a group); and

(ii)    unless the receiving company is a Public Trustee-- the transfer is in the interests of clients of the receiving company (when viewed as a group); and

(iii)    the board of the receiving company has consented to the transfer; and

(iv) legislation to facilitate the transfer that satisfies the requirements of section 601WBC has been enacted in the State or Territory in which the transferring company is registered and the State or Territory in which the receiving company is registered or of which it is the Public Trustee.

(2A)    Even if the Public Trustee of a State or Territory is not a company:

(a)    the Public Trustee may still be specified as a receiving company for the purposes of a compulsory transfer determination; and

(b)    references in this Part (however expressed) to:

(i)    a company; or

(ii)    the board of a company;

are taken to be references to that Public Trustee.

(3)    The determination must include particulars of the transfer, including:

(a)    the names of the transferring company and the receiving company; and

(b)    for a compulsory transfer determination-- whether it will be a total transfer or a partial transfer of the transferring company's estate assets and liabilities; and

(c)    if it will be a partial transfer--an indication of the part of the transferring company's estate assets and liabilities that is to be transferred ; and

(d)    for a Voluntary Transfer Determination--that it will be a total transfer of the transferring company's estate assets and liabilities.

(4)    The determination must include a statement of the reasons why the determination has been made.

(5)    The determination is not a legislative instrument.

601WBB. When consent of receiving company is in force

(1)    The consent referred to in subparagraph 601WBA(2)(b)(iii) remains in force until it is withdrawn by the receiving company's board with the agreement of ASIC.

(2)    ASIC may agree to the consent being withdrawn if ASIC considers it appropriate to allow the consent to be withdrawn having regard to any of the following:

(a)    circumstances that have arisen since the consent was given;

(b)    circumstances that were in existence at or before the time when the consent was given but that were not known to the receiving company's board when it gave its consent;

(c)    any other relevant matter.

601WBC. Complementary State or Territory legislation

State or Territory legislation referred to in subparagraph 601WBA(2)(b)(iv) must include provision to ensure that, when a certificate of transfer comes into force under this Division, the receiving company is taken to be the successor in law in relation to estate assets and liabilities of the transferring company, to the extent of the transfer. In particular, the legislation must provide that:

(a)    assets of the transferring company become assets of the receiving company, to the extent of the transfer; and

(b)    liabilities of the transferring company become liabilities of the receiving company, to the extent of the transfer; and

(c)    the duties, obligations, immunities, rights and privileges applying to the transferring company apply to the receiving company, to the extent of the transfer; and

(d)    if the certificate of transfer includes provisions of a kind referred to in subsection 601WBG(3) specifying:

(i)    that particular things are to happen or are taken to be the case--those things are taken to happen, or to be the case, in accordance with those provisions; or

(ii)    a mechanism for determining things that are to happen or are taken to be the case--things determined in accordance with that mechanism are taken to happen, or to be the case, as determined in accordance with that mechanism.

601WBD. Minister's power to decide that his or her consent is not required

(1) The Minister's consent to the transfer of estate assets and liabilities is not required if the Minister has, in writing, determined that his or her consent is not required in relation to:

(a)    the transfer; or

(b)    a class of transfers that includes the transfer.

(2)    The regulations may prescribe criteria to be taken into account by the Minister in deciding whether to make a determination.

(3)    A determination is a legislative instrument if it is expressed to apply in relation to a class of transfers (whether or not it is also expressed to apply in relation to one or more transfers identified otherwise than by reference to membership of a class).

(4)    If subsection (3) does not apply to a determination, the determination is not a legislative instrument.

601WBE. Determinations may impose conditions

(1)    The transfer determination may impose conditions of either or both of the following kinds:

(a)    conditions to be complied with by the transferring company or the receiving company before a certificate of transfer is issued in relation to the transfer of estate assets and liabilities;

(b)    conditions to be complied with by the transferring company or the receiving company after a certificate of transfer has been issued or has come into force in relation to the transfer of estate assets and liability.

(2)    ASIC may, by notice in writing given to the transferring company or the receiving company, vary or revoke any condition of a determination if ASIC is satisfied that the variation or revocation is appropriate.

(3)    The transferring company or the receiving company may apply in writing to ASIC to have a condition of a kind referred in paragraph (1)(b) that applies to it varied or revoked.

(4)    ASIC may, by notice in writing given to the company that made the application, approve the variation or revocation if ASIC is satisfied that the variation or revocation is appropriate. A variation or revocation that is approved by ASIC has effect accordingly.

(5)    The transferring company or the receiving company must comply with any conditions that are imposed under subsection (1) as conditions to be complied with by that company.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1)).

(6)    The transferring company or the receiving company does not commit an offence against this Act merely because the company is complying with a condition imposed under subsection (1).

Note: A defendant bears an evidential burden in relation to the matter in subsection (6), see subsection 13.3(3) of the Criminal Code .

601WBF. Notice of determination

ASIC must give a copy of the transfer determination to the transferring company and the receiving company.

601WBG. Certificate of transfer

(1)    If:

(a)    ASIC has made a transfer determination; and

(b)    ASIC considers that the transfer should go ahead; and

(c)    the consent referred to in subparagraph 601WBA(2)(b)(iii) has not been withdrawn under section 601WBB;

ASIC must, in writing, issue a certificate (a certificate of transfer ) stating that the transfer is to take effect.

(2)    The certificate of transfer must:

(a)    include the names of the transferring company and the receiving company; and

(b)    for a compulsory transfer determination-- state whether the transfer is a total transfer or a partial transfer; and

(c)    if the transfer is a partial transfer--include, or have attached to it, a list of the estate assets and liabilities that are being transferred to the receiving company; and

(ca)    for a Voluntary Transfer Determination--state that the transfer is a total transfer; and

(d)    state when the certificate is to come into force (either by specifying a date as the date it comes into force, or by specifying that the date it comes into force is a date worked out in accordance with provisions of the certificate).

(3)    The certificate may include provisions specifying, or specifying a mechanism for determining, other things that are to happen, or that are taken to be the case, in relation to assets and liabilities that are to be transferred, or in relation to the transfer of estate assets and liabilities that is to be effected, whether the transfer is total or partial.

(4)    The certificate comes into force in accordance with the statement included in the certificate as required by paragraph (2)(d).

(5)    The certificate is not a legislative instrument.

601WBH. Notice of certificate

ASIC must:

(a)    give a copy of the certificate of transfer to the transferring company and the receiving company; and

(b)    publish notice of the issue of the certificate.

601WBI. Time and effect of transfer

(1)    When a certificate of transfer comes into force, the receiving company becomes the successor in law of the transferring company in relation to estate assets and liabilities of the transferring company, to the extent of the transfer. In particular:

(a)    if the transfer is a total transfer--all the estate assets and liabilities of the transferring company, wherever those assets and liabilities are located, become assets and liabilities of the receiving company (in the same capacity as they were assets and liabilities of the transferring company) without any transfer, conveyance or assignment; and

(b)    if the transfer is a partial transfer--all the estate assets and liabilities included in the list referred to in paragraph 601WBG(2)(c), wherever those assets and liabilities are located, become assets and liabilities of the receiving company (in the same capacity as they were assets and liabilities of the transferring company) without any transfer, conveyance or assignment; and

(c)    to the extent of the transfer, the duties, obligations, immunities, rights and privileges applying to the transferring company apply to the receiving company.

(2)    If the certificate includes provisions of a kind referred to in subsection 601WBG(3):

(a)    if the provisions specify that particular things are to happen or are taken to be the case--those things are, by force of this section, taken to happen, or to be the case, in accordance with those provisions; and

(b)    if the provisions specify a mechanism for determining things that are to happen or are taken to be the case--things determined in accordance with the mechanism are, by force of this section, taken to happen, or to be the case, as determined in accordance with that mechanism.

601WBJ. Substitution of trustee company

When a certificate of transfer comes into force, any appointment or nomination of the transferring company to a particular capacity (for example, as trustee, executor or administrator) in relation to the transferred estate assets and liabilities is taken to be an appointment or nomination of the receiving company to that capacity in relation to those assets and liabilities.

601WBK. Liabilities for breach of trust and other matters not affected by this Part

(1)    Nothing in this Part applies to or affects liabilities of the transferring company, or of an officer or employee of the transferring company, for:

(a)    any breach of trust; or

(b)    any other misfeasance or nonfeasance; or

(c)    any exercise of, or failure to exercise, any discretion.

(2)    Nothing in this Part affects any rights of the transferring company, or of an officer or employee of the transferring company, to indemnity in respect of such liabilities.

601WCA. Certificates evidencing operation of Act etc.

(1)    An authorised ASIC officer, by signed writing, may certify that a specified asset or liability has become an asset or liability of the receiving company under this Part.

(2)    For all purposes and in all proceedings, a certificate under subsection (1) is prima facie evidence of the matters certified.

601WCB. Certificates in relation to land and interests in land

If:

(a)    the receiving company becomes, under this Part, the owner of land, or of an interest in land, that is situated in a State or Territory; and

(b)    there is lodged with the Registrar of Titles or other appropriate officer of the State or Territory in which the land is situated a certificate that:

   (i)    is signed by an authorised ASIC officer; and

(ii)    identifies the land or interest; and

(iii)    states that the receiving company has, under this Part, become the owner of that land or interest;

the officer with whom the certificate is lodged may:

(c)    register the matter in the same manner as dealings in land or interests in land of that kind are registered; and

(d)    deal with, and give effect to, the certificate.

601WCC. Certificates in relation to other assets

(1)    If:

(a)    an asset (other than land or an interest in land) becomes, under this Part, an asset of the receiving company; and

(b)    there is lodged with the person or authority who has, under a law of the Commonwealth, a State or a Territory, responsibility for keeping a register in respect of assets of that kind a certificate that:

(i)    is signed by an authorised ASIC officer; and

(ii)    identifies the asset; and

(iii)    states that the asset has, under this Part, become an asset of the receiving company;

that person or authority may:

(c)    register the matter in the same manner as transactions in relation to assets of that kind are registered; and

(d)    deal with, and give effect to, the certificate.

(2)    This section does not affect the operation of:

(a)    other provisions of this Act; or

(b)    if the regulations prescribe provisions of one or more other Acts--those provisions of those Acts.

601WCD. Documents purporting to be certificates

A document purporting to be a certificate given under this Division is, unless the contrary is established, taken to be such a certificate and to have been properly given.

601WCE. Construction of references to transferring company

From when a certificate of transfer comes into force, in any instrument of any kind, a reference to the transferring company, in relation to assets or liabilities transferred under this Part, is taken to be a reference to the receiving company.

601WCF. Income or other distribution received by transferring company

The transferring company must promptly account to the receiving company for any income or other distribution received by the transferring company after a certificate of transfer comes into force, if the income or distribution arises from assets transferred to the receiving company under this Part.

Note:   Failure to comply with this section is an offence (see subsection 1311(1)).

601WCG. Access to books

The transferring company must, at the request of the receiving company, give the receiving company access to all books in its possession that relate to assets or liabilities transferred under this Part.

Note:    Failure to comply with this section is an offence (see subsection 1311(1)).

601WCH. Minister or ASIC may seek views of trustee company and its clients

For the purpose of deciding whether to exercise powers under this Part, the Minister or ASIC may seek the views of a trustee company or its clients in relation to the possible exercise of the powers.

601WDA. Transferring company required to contact certain persons

Notice of cancellation of licence

(1)    If the licence of a trustee company is cancelled, the trustee company must, as soon as practicable:

(a)    take all reasonable steps to contact the following persons and advise them of the cancellation of the licence:

(i)    all persons who the trustee company is aware have executed and lodged instruments, such as wills, that have not yet come into effect, but will potentially lead to estate assets and liabilities being held by the trustee company;

(ii)    all persons who the trustee company is aware have appointed the trustee company as trustee or to some other capacity; and

(b) publish notice of the cancellation of the licence.

Note:    Failure to comply with this subsection is an offence (see subsection 1311(1)).

Notice of compulsory transfer determination

(2)    If a certificate of transfer for a compulsory transfer determination comes into force, the transferring company must, as soon as practicable, take all reasonable steps to contact the persons referred to in subsection (1) and advise them of the transfer of estate assets and liabilities.

Note:    Failure to comply with this subsection is an offence (see subsection 1311(1)).

Notice of Voluntary Transfer Determination

(3)    If a certificate of transfer for a Voluntary Transfer Determination comes into force, the transferring company must, as soon as practicable, publish notice of the transfer of estate assets and liabilities.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1)).”

21. Section 34A of the Trustee Companies Act 1964 NSW (relied upon by Perpetual Trustee Company Limited to explain the course of events in its acquisition of The Trust Company) is in the following terms (with emphasis added):

“34A Transfer determinations

(1) This section applies if:

(a) the Australian Securities and Investments Commission ("ASIC" ) makes a determination under section 601WBA of the Corporations Act 2001 of the Commonwealth that there is to be a transfer of estate assets and liabilities from a specified trustee company (the

"transferring company" ) to another licensed trustee company (the

"receiving company" ), and

(b) ASIC issues a certificate of transfer under section 601WBG of that Act for the transfer, and

(c) either the transferring company or the receiving company (or both) is registered in New South Wales.

Note : Section 601WBA of the Corporations Act 2001 of the Commonwealth enables ASIC to make a transfer determination if:

(a) ASIC has cancelled the licence of the transferring company (in which case the determination is called a "compulsory transfer determination" ), or

(b) the transferring company has applied for such a determination (in which case the determination is called a "Voluntary Transfer Determination" ).

(2) When the certificate of transfer comes into force, the receiving company is taken to be the successor in law in relation to estate assets and liabilities of the transferring company, to the extent of the transfer.

Note : Section 601WBG of the Corporations Act 2001 of the Commonwealth requires the certificate of transfer to state when it is to come into force.

(3) Without limiting subsection (2):

(a) if the transfer is a total transfer-all of the assets and liabilities of the transferring company become assets and liabilities of the receiving company (without the need for any further conveyance, transfer, assignment or assurance), and

(b) if the transfer is a partial transfer-the assets and liabilities listed as referred to in section 601WBG (2) (c) of the Corporations Act 2001 of the Commonwealth of the transferring company become assets and liabilities of the receiving company (without the need for any further conveyance, transfer, assignment or assurance), and

(c) to the extent of the transfer, the duties, obligations, immunities, rights and privileges applying to the transferring company apply to the receiving company, and

(d) if the certificate includes provisions of the kind referred to in section 601WBG (3) of the Corporations Act 2001 of the Commonwealth specifying:

(i) that particular things are to happen or are taken to be the case-those things are, by force of this section, taken to happen, or to be the case, in accordance with those provisions, and

(ii) a mechanism for determining things that are to happen or are taken to be the case-things determined in accordance with the mechanism are, by force of this section, taken to happen, or to be the case, as determined in accordance with that mechanism.

(4) The operation of this section is not to be regarded as:

(a) a breach of contract or confidence or otherwise as a civil wrong, or

(b) a breach of any instrument (including, without limitation, any provision prohibiting, restricting or regulating the assignment or transfer of assets or liabilities), or

(c) an event of default under any contract or other instrument, or

(d) giving rise to any remedy by a party to a contract or other instrument, or as causing or permitting the termination of, or exercise of rights under, any contract or other instrument.”

THE MANAGER’S PERSPECTIVE

22. Perpetual Trustee Company Limited (on behalf of itself and The Trust Company) relies upon sections 34A(2) and 34A(3)(c) of the Trustee Companies Act and section 601WBJ of the Corporations Act in support of a contention that, on and from 1 March 2015, it became the successor in law of The Trust Company and that, since that time, it must be taken, without more, to have been manager of each protected estate to which The Trust Company had earlier been appointed manager.

23. It is not necessary, on the applications for revocation of management orders made in these proceedings, to explore the correctness of this contention in all its dimensions. Suffice to say that I harbour substantial doubts about its correctness in the stark form in which it has been presented.

24. Nevertheless, I accept that the Perpetual Trustee Company Limited has proceeded, honestly and reasonably, upon an assumption that the legislation cited in support of the contention it has advanced has the effect for which it contends.

25. Attention needs to be given to a principled, workable solution to problems that have been identified.

ANALYSIS

26. The language of the Corporations Act (adopted by the Trustee Companies Act 1964) does not, in all respects, sit comfortably with its application to an estate under protected estate management.

26. In no ordinary sense is the property of a protected person “property” or a similar “right” of a protected estate manager. In no ordinary sense is property of a protected person “vested” in a protected estate manager or a “belonging” of the manager. In no ordinary sense does a protected estate manager (in his, her or its own name), by virtue of the office of a manager, have an interest in land owned by the protected person. The definitions of “asset”, “estate assets and liabilities” and “interest” in section 601WAA of the Corporations Act do not readily embrace a protected estate. In no ordinary sense can a change of protected estate manager, a change ordinarily effected by an order of the Court or NCAT, be comprehended by the words “transfer, conveyance or assignment” found in section 601WBI(1)(a).

27. A protected estate manager is not, without qualification, able to be included in the same class as a trustee, executor or administrator, examples specified in section 601WBJ. A protected estate manager must comply with a dynamic regulatory regime, governed by the NSW Trustee and Guardian Act, monitored by the NSW Trustee, and supervised by this Court. That regime does not apply to mere trustees, or to representatives of a deceased estate, as such.

28. In JJK v APK (1986) Aust Torts Reports 80-042 at 67,881, Powell J likened the office of a protected estate manager to that of a bailiff. H S Theobald, The Law Relating to Lunacy (London, 1924), at pages 47 and 50, is to the same effect. In GDR v EKR [2012] NSWSC 1543 [36], White J described the relationship between a protected person and the manager of his or her estate as that of principal and agent rather than trustee and beneficiary; a manager does not ordinarily, merely by appointment to the office of manager, acquire title to estate property under management (which generally remains in the protected person) but merely manages the estate.

29. Having reviewed the authorities, in Ability One Financial Management Pty Limited and Anor v JB by his tutor AB [2014] NSWSC 245 at [174], I concluded that it may be best to regard the office of a protected estate manager as unique, attracting the obligations of a fiduciary, taking colour from the terms of his, her or its appointment as manager, governed by the Court’s protective jurisdiction and informed by the nature, purpose and historical origins of that jurisdiction.

30. Not uncommonly, as in the proceedings presently before the Court, the bulk of a protected person’s estate may comprise financial investments, effected by a licensed trustee company as manager, consequent upon: (a) an award of compensation made in favour of the protected person in personal injury litigation; and (b) an order that the protected person’s compensation money be paid out of court, to the manager, for management as part of the protected estate. In such a case, the manager may be said, loosely, to receive, hold, and invest the protected person’s money as a trustee.

31. It is not altogether unnatural in such a case to think of a licensed trustee company, acting as a protected estate manager of an “investment portfolio”, in terms that assimilate the concepts of a trustee and a protected estate manager.

32. To adopt such an attitude of mind is, however, to succumb to a risk of losing sight of:

1. the distinctive nature of the office of a protected estate manager and the protective jurisdiction exercised by the Court;

2. imperatives of the regulatory regime for management of protected estates, under the supervision of the Court, monitored by the NSW Trustee; and

3. critically, the rights, and needs, of individual protected persons in whose interests, and for whose benefit, the Court’s protective jurisdiction is exercised.

34. The regulatory regime for which chapter 5D of the Corporations Act provides does not relieve a licensed trustee company which accepts an appointment as a protected estate manager under the NSW Trustee and Guardian Act (or under equivalent provisions of the Guardianship Act 1987 NSW) of an obligation to engage fully, and to comply with, the regulatory regime for which the NSW Trustee and Guardian Act provides.

35. The obligations to the Court of a protected estate manager intent upon ceasing to act in the office of manager or to “transfer” business to another entity cannot be discharged by so casual a procedure as a formal advertisement in the public notices section of the Sydney Morning Herald, or a formal letter posted to nobody in particular at the general registry of the Court, or a similar letter (again, to nobody in particular) posted to the office of the NSW Trustee, even if such steps satisfy the formal notice requirement of the Corporations Act, section 601WDA.

36. A protected estate manager remains in office, under the control of the Court, unless and until (at least) discharged by an order of the Court. A protected estate manager has fiduciary obligations, and an obligation to account as a fiduciary, that operate indefinitely. The circumstance that a manager might have purported to transfer its business to another entity, surrendered an Australian Financial Services Licence issued under the Corporations Act, or submitted to conditions on such a licence, does not of itself release the manager from the control of the Court (or entitle the manager to pass on its responsibilities to another entity), although each of these facts may provide an occasion for removal, and replacement, of the manager by the Court.

37. Nothing in chapter 5D of the Corporations Act displaces the Court’s protective jurisdiction.

38. Section 601SAA of the Corporations Act is in the following terms:

“Jurisdiction of courts not affected etc

601 SAA(1) [Inherent power or jurisdiction of courts]

Any inherent power or jurisdiction of courts in respect of the supervision of the performance of traditional trustee company services is not affected by anything in this Chapter.

601 SAA(2) [Control, removal or restraint from acting]

A licensed trustee company that is performing traditional trustee company services of a particular kind is subject in all respects to the same control and to removal or restraint from acting, and generally to the jurisdiction of courts, in the same manner as any other person who performs traditional trustee company services of that kind”.

39. It is not to be doubted that the work of protected estate management falls within the definitions of “traditional trustee company services” and “estate management functions” contained in section 601RAC of the Corporations Act.

40. An incident of the office of a protected estate manager is that a manager is bound to act in the interests, and for the benefit, of a person incapable of managing his or her own affairs: M v M [2013] NSWSC 1495 at [50]. Lacking an entitlement rising above the interests of the protected person, a manager is liable to be removed from office if and when it is in the interests, and for the benefit, of the protected person that that occur.

41. Where a corporation has been appointed to manage the estate of a protected person and there has been a substantial change in the ownership or management structure or mode of operation of the corporation, bearing upon the capacity of the corporation to manage the estate or the means by which the estate might be managed, a protected person and his or her family and carers can reasonably expect to be allowed an opportunity to consider for themselves whether the change is in the best interests, and for the benefit, of the protected person.

42. It is one thing for ASIC, at a “macro” level, to be satisfied about the desirability of making a Voluntary Transfer Determination. It may be altogether a different thing for individual affected persons viewing their particular circumstances, as they are entitled to do, from a “micro” perspective. Both perspectives need to be taken into account. A manager cannot assume that what is good for it is necessarily good for, or acceptable to, an individual protected person.

43. A voluntary transfer determination made by ASIC under the Corporations Act 2001 does not, and cannot, of itself displace an order made by this Court for ongoing management of a protected estate. It might provide a sound basis upon which the Court can, and should, make orders (under section 41 of the NSW Trustee and Guardian Act and section 47 of the Interpretation Act 1987 NSW) for “the transferring company” (as defined by sections 601 WAA(1) and 601WBA(1) of the Corporations Act) to be removed from the office of protected estate manager and for “the receiving company” (as defined by sections 601WAA(1) and 601WBA(1)) to be appointed to the office of manager in its stead. However, the Court’s jurisdiction cannot be, and has not been, displaced by a global, administrative determination by ASIC.

44. In expressing this view, I acknowledge that, under Part 5D.6 of the Corporations Act, upon ASIC’s issue of a “certificate of transfer” (pursuant to section 601WBG) “the receiving company becomes the successor in law of the transferring company in relation to estate assets and liabilities of the transferring company, to the extent of the transfer” (section 601WBI), and “any appointment or nomination of the transferring company to a particular capacity (for example, as trustee, executor or administrator) in relation to the transferred estate assets and liabilities is taken to be an appointment or nomination of the receiving company to that capacity in relation to those assets and liabilities” (section 601WBJ).

45. A protected estate management order appoints a “suitable person” (to use the language of section 41(1)(b) of the NSW Trustee and Guardian Act) to the office of manager, not as a trustee of the protected person’s property.

46. An order for the appointment of a protected estate manager is an order which has continuing, operative effect unless and until revoked. Its effect is not “one off” but continuous. A manager is subject to directions of the NSW Trustee under the NSW Trustee and Guardian Act, and to supervision by the Court in exercise of its jurisdiction under the Act and upon an exercise of inherent jurisdiction.

47. In a sense, as both protected estate and manager are under the ongoing supervision of the Court, a protected estate manager could reasonably be described as an “officer of the Court”. Be that so, or not, the Court is entitled to proceed on the basis that an order for the appointment of a manager continues in force unless and until revoked or, in the case of a natural person, terminated by death. The Court is entitled to proceed, and needs to be able to proceed, on the basis that its records are authoritative in their identification of a manager. The due administration of protected estates requires no less.

48. Part 5D.6 of the Corporations Act (including sections 601WBI and 601WBJ) is predicated upon an assumption that a “transferring company” has, by virtue of “an appointment”, a property interest in property the subject of a “transfer”. By its reference to “estate assets and liabilities” of a transferring company and its reference to the “capacity” of a “trustee, executor or administrator” it appears, principally, to have had in mind a licensed trustee company appointed to administer an estate as a trustee, or as a legal personal representative (executor or trustee) of a deceased person. This language does not sit comfortably with the office, rights and obligations of a protected estate manager.

49. The focus of ASIC in deciding whether or not to make a “transfer determination” is upon “macro” concepts, not the “micro” concepts that constitute the very essence of an exercise of protective jurisdiction.

50. The governing purpose of an exercise of protective jurisdiction by the Court is protection of the welfare and interests of the particular protected person concerned; any decision made affecting the welfare or interests of such a person must be made in a manner, and for a purpose, calculated to be in the best interests, and for the benefit, of that person: Holt v Protective Commissioner (1993) 31 NSWLR 27 at 238 and 241-242.

51. Before ASIC can make a “transfer determination”, sections 601WBA(2)(b) requires that it be satisfied, inter alia, that:

1. the transfer is in the interests of clients of the transferring company (when viewed as a group); and

2. unless the receiving company is a “Public Trustee” such as the NSW Trustee – the transfer is in the interests of clients of the receiving company (when viewed as a group).

52. This language does not sit comfortably with the nature and operation of the Court’s protective jurisdiction, even allowing for an awkward, contemporary usage of the term “client”. An exercise of protective jurisdiction must be viewed from the perspective of each individual person in need of protection, as an individual not merely as an unidentified member of a “group”.

53. That the Corporations Act is not unmindful of the perspective of individual “clients” is apparent from section 601WDA. Subsection (3) of that section provides that “[if] a certificate of transfer for a voluntary transfer determination comes into force, the transferring company must, as soon as practicable, publish notice of the transfer of estate assets and liabilities.” Nevertheless, that provision falls short of what is required (in terms of notification of affected persons) if the licence of a trustee company is cancelled or a compulsory transfer determination comes into force.

54. The due administration of protected estates in NSW requires something more of a licensed trustee company (operating within the administrative procedures for which Part 5D.6 of the Corporations Act provides) than a mere publication of notice of the transfer of estate assets and liabilities, assuming (as one might) that such a transfer has operative effect vis-a-vis property of a protected person.

55. No protected estate manager has a legal entitlement to be, or to remain, manager of a particular protected estate: Holt v Protective Commissioner (1993) 31 NSWLR 227 at 237-238; M v M [2013] NSWSC 1495 at [50]; Ability One Financial Management Pty Limited and Anor v JB by his tutor AB [2014] NSWSC 245 at [151]-[153]. Each protected person is entitled to due consideration in the ordinary course of management of an estate.

56. A licensed trustee company intent upon invoking, or relying upon, Part 5D.6 of the Corporations Act is under an obligation, attaching to the office of protected estate manager, to consult with the NSW Trustee (and, if need be, to obtain directions from the Court) to ensure that affected persons are given an opportunity, as may be necessary or appropriate, to enable them (or somebody duly representing them) to apply for relief consequential upon an ASIC order, made or proposed. An individual protected person, his or her family and carers may not be content to be subjected to ASIC’s “group” assessment of the protected person’s interests, or to a commercial agreement between licensed trustee companies to which the protected person is in no sense a party.

CONCLUSION

57. I am satisfied that each plaintiff is now a person capable of managing his own affairs, and that revocation orders should be made under section 86 of the NSW Trustee and Guardian Act, together with remedial orders to address what I find to be an irregularity in the procedure by which Perpetual Trustee Company Limited came to assume management of the plaintiff’s protected estate (that is, without an appointment by the Court).

58. In the course of considering the plaintiffs’ applications for revocation orders in the subject proceedings, I sought (and obtained) the assistance of the NSW Trustee and Perpetual Trustee Company Limited. In doing so, I invited Perpetual Trustee Company Limited to liaise with the NSW Trustee as to whether (and, if so, in what respects) supplementary orders should be sought in respect of protected estates, other than those immediately affected by these proceedings, to ensure that any other, comparable irregularities have been, or can be, appropriately addressed.

59. I am satisfied that The Trust Company and Perpetual Trustee Company Limited have at all times acted honestly and reasonably (albeit, in my assessment, mistakenly). Nothing in this judgment is intended to suggest otherwise.

60. In all the circumstances, I propose to accede to the application of Perpetual Trustee Company Limited (on behalf of itself and The Trust Company) that (upon an exercise of the jurisdiction described in C v W (No. 2) [2016] NSWSC 945 at [22]-[47]) they be excused from any breaches of fiduciary duty arising only from their acting upon an assumption that a voluntary transfer determination of ASIC was, of itself, sufficient justification for Perpetual Trustee Company to assume management of a protected estate to the exclusion of The Trustee Company without a confirmatory order of the Court (or NCAT) upon an exercise of protective jurisdiction.

61. I anticipate that, as a result of experience of these proceedings and consultations involving the NSW Trustee, it may be both necessary and appropriate to make similar orders, and orders confirmatory of the identify of the manager, in other protected estates managed by Perpetual Trustee Company Limited.

62. I will deal with any application for such orders when made.

63. To the extent that Perpetual Trustee Company Limited may presently have other protected estates under its management without the sanction of an express order appointing it as manager, it will continue, pending the making of remedial orders, holding property under management as a constructive trustee on terms similar to those upon which it would hold the property if possessed of a formal appointment as manager. In that context, as in performance of the functions of a protected estate manager, it should act upon directions given by the NSW Trustee, subject only to orders of the Court. Property of a protected person does not cease to be governed by the NSW Trustee and Guardian Act, or to be subject to the jurisdiction of the Court, merely because it happens to be under the management, in fact, of a person not duly appointed for that purpose.

ORDERS

64. In the meantime, in each set of proceedings I make, inter alia, orders to the following effect:

1. ORDER that the NSW Trustee would be justified in supervision of management of the protected estate of the plaintiff on the basis of an assumption that:

1. Perpetual Trustee Company Limited was on 1 March 2015 appointed manager of the estate of the plaintiff subject to the orders and directions of the NSW Trustee; and

2. Perpetual Trustee Company Limited, in that capacity, was entitled to reasonable remuneration for management of the estate.

2. DECLARE, pursuant to section 86(1)(a) of the NSW Trustee and Guardian Act, that the plaintiff is capable of managing his affairs.

3. ORDER, pursuant to section 86(1)(a) of the NSW Trustee and Guardian Act, that the declaration earlier made that the plaintiff is a person who is incapable of managing his affairs be revoked.

4. ORDER, pursuant to section 86(1)(b) of the NSW Trustee and Guardian Act, that orders earlier made for the estate of the plaintiff to be subject to protected estate management be revoked.

5. DECLARE that, subject to these orders, any entitlement or authority that The Trust Company or Perpetual Trustee Company Limited might have had to manage the protected estate of the plaintiff does not subsist beyond the time at which these orders take effect.

6. ORDER, pursuant to section 86(1)(c) of the NSW Trustee and Guardian Act, that the estate of the plaintiff be released from control of The Trust Company Limited and Perpetual Trustee Company Limited jointly and severally.

7. ORDER, pursuant to section 86(1)(c) NSW Trustee and Guardian Act, that Perpetual Trustee Company take such steps as may be necessary or expedient to transfer management of the estate of the plaintiff to the plaintiff.

8. ORDER, pursuant to section 86(1)(c) of the NSW Trustee and Guardian Act, that within 28 days of these orders taking the effect or such other time as may be appointed by the NSW Trustee, Perpetual Trustee Company Limited lodge with the NSW Trustee such accounts as the NSW Trustee may in writing require from it in relation to management of the estate of the plaintiff.

2. ORDER, pursuant to rule 36.4 of the Uniform Civil Procedure Rules 2005 NSW and sections 64 and 81(1)(c) of the NSW Trustee Act that these orders take effect on 16 January 2017.

3. ORDER that Perpetual Trustee Company Limited pay the plaintiff’s and the NSW Trustee’s costs of and incidental to these proceedings.

4. ORDER that The Trust Company and Perpetual Trustee Company Limited jointly and severally be excused from any breach of fiduciary duty arising only from: (a) their taking, receiving or retaining remuneration from the estate of the plaintiff on or after the acquisition of The Trust Company by Perpetual Trustee Company Limited; or (b) the management of the protected estate of the plaintiff by Perpetual Trustee Company Limited purportedly pursuant to the voluntary transfer determination made by ASIC under Part 5D.6 of the Corporations Act 2001 Cth with effect from 1 March 2015.

5. ORDER that the solicitor for the plaintiff, on or before 23 December 2016, serve on each of Perpetual Trustee Company Limited and the NSW Trustee a copy of these orders.

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Amendments

23 December 2016 - Paragraph [16] - typographical corrections

Decision last updated: 23 December 2016