Re McL
[2001] NSWSC 280
•3 April 2001
CITATION: Re McL [2001] NSWSC 280 CURRENT JURISDICTION: Equity Division
Protective ListFILE NUMBER(S): SC 20/2001 HEARING DATE(S): 03/04/01 JUDGMENT DATE:
3 April 2001PARTIES :
The names of the parties are suppressed in cases in the Protective ListJUDGMENT OF: Young J
COUNSEL : The proceedings were heard in Chambers without representation SOLICITORS: CATCHWORDS: MENTAL HEALTH [4]- Managers- Security- How provided. LEGISLATION CITED: Protected Estates Act 1983, ss 25, 63(2) and 79
Supreme Court Rules Part 76 rule 13CASES CITED: Re L [2000] NSWSC 721 DECISION: See para 19
THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
PROTECTIVE LIST
YOUNG J
TUESDAY 3 APRIL 2001
20/2001 - RE McL
JUDGMENT
1 HIS HONOUR: The evidence shows that Ms McL is, because of her involvement in a car accident, now incapable of managing her affairs and I have made a declaration to this effect.
2 The reason why it is necessary to give a short judgment in this matter is because of the fact that the incapable person’s husband C McL, is to be appointed manager.
3 In Re L [2000] NSWSC 721, I set out the basic procedure for applicants who were seeking a private manager. In essence, those steps were that the manager should show that he or she or it was well aware of the basal problems in administering the estate and had given some attention to what needed to be done.
4 In the majority of these cases, the incapable person will have been injured as a result of someone else’s negligence and will be receiving a verdict usually over a million dollars. However, a collateral effect of that verdict will be that the incapable person will be ineligible to receive social security payments for quite a period of time. It is usually necessary for the private manager to make himself or herself aware of this state and work out a draft scheme as to how the fund will generate sufficient income to look after the needs of the incapable person during that non-entitlement period. If the case was one where the District Court was given full details of the sort of care that the plaintiff in the District Court required, and the case proceeded in the District Court to verdict, normally the incapable person should receive those benefits. It is, of course, otherwise if the case was compromised or there was a deduction for contributory negligence.
5 The Court does not require full details of the proposal. It is for the manager to manage, and the Court to supervise. At this stage, what the Court requires is evidence that the manager has put his or her mind to the problems involved. Of course, each case will raise discrete problems.
6 It is thus of little value to the Court to have a thick document that has been spewed from the word processor of some bank, insurance company or trustee company, setting out all the possibilities for investment loaded with disclaimers and mainly directed at tax effective investments.
7 Once the order is made, the manager needs to give security.
8 Traditionally, security was given by a bond from an insurance company. However, more recently, insurance companies have shown that they wish to vacate this market.
9 According to Part 76 rule 13 of the Supreme Court Rules, the usual order consequent upon declaring a person incapable of managing his or her affairs includes an order that the manager give security to the satisfaction of the Protective Commissioner.
10 There is some confusion in the Protected Estates Act 1983 as to the position of the Protective Commissioner. Some of his functions are administrative (see eg under s 25) and some of his functions are as delegate of the Court, vide s 30, and see ss 63(2) and 79. Particularly in view of the proposal that review of the Protective Commissioner’s administrative functions should pass to the Administrative Decisions Tribunal, it is necessary to ensure as far as one can that when the Court refers something to be done by the Protective Commissioner or the Deputy Registrar involved in the Protective List, that that is done as the Court’s delegate.
11 It is inexpedient in an ex parte application to consider on what other occasions the Protective Commissioner acts as the delegate of the Court rather than an administrative official given his own power independently of the Court under the Protected Estates Act 1983. However, one clear case which has been the subject of decision, though not a reasoned decision, is where a person seeks the Protective Commissioner’s leave to act as solicitor for an incapable person in proceedings before the Court. Traditionally, such leave is given by a delegate of the Court and under the present regime, by the Protective Commissioner as delegate of the Court.
12 Accordingly, the appropriate order for giving security should be made as “giving security to the satisfaction of the Court” so that it 100% clear that when the Protective Commissioner or the Deputy Registrar make the appropriate order that it is the Court’s order made by its delegate.
13 This is also necessary because with the phasing out of insurance bonds, it is more likely than not that the security will have to change from time to time.
14 The Court endeavours as much as possible not to freeze the money of the incapable person, but to allow it to earn income at the best possible rate.
15 Accordingly, satisfactory security is often an undertaking by a solicitor that that solicitor will hold the deeds of the incapable person’s property in the solicitor’s strongroom and not permit any dealing with such deeds without the consent of the Protective Commissioner. The incapable person can then live in his or her home and can change homes from time to time.
16 There is a little danger in this in that incapable persons are often prevailed upon to be involved with extravagant transactions with their property, but at least no mortgage by deposited title deeds or otherwise can take place.
17 If the incapable person has a capital sum invested, then the security may well be a similar undertaking in respect of the title documents to that capital sum.
18 If there cannot be such an arrangement with the incapable person’s title deeds to land or capital and a bond from a bank or insurance company is impracticable also, then there may have to be a deposit of cash. If cash is deposited with the Protective Commissioner it will need to go into his common fund. The rates of income from the common fund may not be as great as could be obtained on the open market in a relatively secure investment. It may, accordingly, be advisable for managers to obtain some quotations before lodging a cash sum.
19 In short, the security to be provided will need to be tailor-made to each case. It must give the incapable person security against the manager, but at the same time not freeze assets unnecessarily.
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