Re PJB
[2011] NSWSC 313
•15 April 2011
Supreme Court
New South Wales
Medium Neutral Citation: The Application of DJB; Re PJB [2011] NSWSC 313 Hearing dates: 17 March 2011 Decision date: 15 April 2011 Jurisdiction: Equity Division - Protective List Before: Hallen AsJ Decision: 1. Order that the notice of motion is dismissed.
2. Make no order as to the applicant's costs of the notice of motion.
3. The Respondent's costs of the notice of motion, calculated on the indemnity basis, should be paid out of PJB's estate.
Catchwords: Notice of Motion seeking documents relating to management of financial affairs of the protected person by the protected person's guardian Legislation Cited: Civil Procedure Act 2005
Family Provision Act 1982
Guardianship and Protected Estates Legislation Amendment Act 2002 (NSW)
NSW Trustee and Guardian Act 2009
Protected Estates Act 1983
Protected Estates Regulations 1995
Supreme Court Rules (Amendment No 413) 2008Cases Cited: ES,Re [1984] 3 NSWLR 341
Estate of Orre, Re (NSWSC, Powell J 19 December 1991, unreported
Darling, In re (1888) LR 39 Ch D 208
Freeman, In re [1927] 1 Ch 479
Harris v Knight (1890) 15 PD 170
M v K (NSWSC, Powell J, 24 April 1989, unreported)
Will of Sir Robert Lucas-Tooth, In the (1932) 50 WN (NSW) 86
WM, In re (1903) 3 SR 552Texts Cited: Government Gazette No 54 of 28 February 2003
Young Croft Smith, On Equity Law Book Co. (2009)Category: Principal judgment Parties: DJB (Applicant)
Perpetual Trustee Company Limited as financial manager for PJB (Plaintiff)Representation: Counsel:
Mr J Trebeck (Applicant)
Mr L Ellison SC (Plaintiff)
Solicitors:
Mooney & Kennedy Solicitors (Applicant)
TressCox Lawyers (Plaintiff)
File Number(s): P59/1987 P72/1994 Publication restriction: Order prohibiting the publication, or disclosure of the name of the parties, or any details from within the court file, or from the evidence in the proceedings, that either identifies, or tends to identify the protected person.
Judgment
HIS HONOUR: Having regard to the legal status of the Defendant as a protected person, at the outset, I make an order prohibiting the publication, or disclosure of the name of the parties, or any details from within the court file, or from the evidence in the proceedings, that either identifies, or tends to identify him. I have assigned, to the protected person, the initials "PJB": s 72 of the Civil Procedure Act 2005.
By Notice of Motion filed 26 November 2010, DJB, as guardian of PJB, seeks various documents from Perpetual Trustee Company Limited ("Perpetual"), those documents "relating to the management of the financial affairs of PJB".
By an amended Notice of Motion (filed pursuant to leave granted) on 17 January 2011, the relief sought by DJB against Perpetual is said to be pursuant to s 64 of the NSW Trustee and Guardian Act 2009 .
PJB was severely injured in a motor vehicle crash in 1986.
In 1987, an order was made appointing the Protective Commissioner the financial manager of PJB's estate.
On 23 August 2000, the Protective Commissioner was removed as the financial manager and Perpetual was appointed, without security, under the order and direction of the Court, in its stead. At the same time, the Court made orders, it gave to Perpetual, directions and authorisations which included:
"(3) ...
THE COURT DIRECTS AND AUTHORISES Perpetual Trustee Company Limited -
...
(i) to file accounts annually in accordance with the requirements of Supreme Court Rules Part 76, Rule 32 and to pay the fees for the filing, examining and passing of such accounts in accordance with the Protected Estates Act 1983 and the Protected Estate Regulation 1995;
(j) to employ a solicitor when appropriate to carry out any necessary legal work in connection with the management of PJB and to pay the reasonable costs and disbursements of that solicitor;
...
(l) to pay to [PJB's mother] the sum of $700-00 per week being $237-00 for reimbursement of care with the balance of $463-00 being reimbursement for expenses incurred on behalf of PJB;
(m) to reimburse [PJB's mother] for -
(i) all reasonable expenses paid for her exclusively for and on behalf of PJB;
(ii) one half of the reasonable household expenses incurred by [PJB's mother], in the event that such expenses exceeded $463-00 per week;
THE COURT ORDERS that the Protective Commissioner of New South Wales not exercise any of the powers, functions or jurisdiction of the Court conferred on him by S.30(1)(a) and (b) of the Protected Estates Act 1983 except in respect of passing accounts in accordance with the Supreme Court Rules Part 76, Rule 32, in respect of the estate of PJB without the leave of the Court."
The affidavit of Shamal Dass, on behalf of Perpetual, which was not the subject of challenge, states that "annual accounts have been filed with the Office of the Protective Commissioner NSW (OPC) now the Office of NSW Trustee & Guardian (NSWT&G). The accounts have been approved annually by OPC and NSW T & G respectively".
That affidavit went on to disclose that "[A]ll invoices submitted to [Perpetual] for payment are referred by the [Private Client Adviser] to the trust manager for the account who then considers the technical aspect of payment, that is whether the payment is appropriate and whether it may be paid from the income or capital account of the fund".
Mr Dass also confirmed that, from 2000 until her death, a transaction summary of PJB's accounts was provided, monthly, to PJB's mother
PJB's mother died on 14 May 2007. Without a formal order having been made, she had acted, for many years, as PJB's guardian.
On 17 November 2008, JHB, as executor named therein, was granted probate of the Will of PJB's mother.
On 21 June 2007, the Guardianship Tribunal made a limited Guardianship Order appointing, as PJB's guardian, his son, DJB.
On 18 June 2008, the Guardianship Tribunal confirmed, and varied, the orders appointing DJB as PJB's guardian.
The orders made by the Guardianship Tribunal included:
"3. This is an order for continuing guardianship for a period of 5 years from the date of this order or until the Tribunal varies, suspends or revokes the order at an earlier date on request or at its own initiative.
4. This order is an order for limited guardianship giving the guardian custody of Mr PJB to the extent necessary to carry out the functions referred to below.
5. The guardian shall have the following functions in relation to Mr PJB:
(a) Accommodation
To determine where Mr PJB may reside.
(b) Health Care
To determine what health care and major minor medical and dental treatment Mr PJB may receive.
(c) Medical and Dental Consent
Where Mr PJB is not capable of giving a valid consent to his own treatment, to make substitute decisions on his behalf about medical or dental treatment proposed for him by others under the provisions of Part 5 of the Guardianship Act.
(d) Services
To make decisions on his behalf concerning major services to which he should have access."
On 29 July 2010, the Supreme Court made orders (by consent) in Family Provision Act 1982 proceedings commenced on behalf of PJB, in which a family provision order had been sought out of the estate of his mother. The effect of those orders was to reduce the share of the mother's estate received by JHB and, accordingly, to increase the share passing to PJB. The orders made resulted in PJB's mother's Will being altered :
"3. Subject to clause 4 hereof I give my whole estate to my son PJB.
4. (a) I give JHB a legacy of $400,000;
(b) I give to DJB a legacy of $30,000;
(c) I charge the property at ... Castlecrag with the payment of the legacy in (a) and (b) herein.
...
7. Note the agreement by the parties the payment in 6 when effected will discharge all liability howsoever arising of the Plaintiff and the Deceased and her estate to the Defendant in his personal and representative capacity including any liability for costs (howsoever arising), wages, out of pockets or other expenses or disbursements."
In the proceedings for the family provision order, there was filed on behalf of PJB, and relied upon, a document entitled "Schedule of Contributions to Castlecrag by [PJB]". This document was prepared by Perpetual for the purpose of demonstrating that PJB had contributed substantial sums to the building up of his mother's estate. Included in the Schedule were most of the expenses the Applicant wishes to investigate further.
Since the amended Notice of Motion was filed, a Portfolio Statement for the year ended 30 June 2007 was ordered to be, and has been, produced to DJB. However, he seeks further documents, the production of which is resisted by Perpetual.
The documents sought now are:
"(a) Portfolio statements from 1 July 2002 to 30 June 2006;
(b) All quotations, invoices, supporting documents, file notes and any other documents which Perpetual relied upon in making the payments specified in Annexure E at page 47-49 of Exhibit "PDK1" to the Affidavit of Peter David Kennedy sworn 26 November 2010;
(c) All quotations, invoices, supporting documents, file notes and any other documents which Perpetual relied upon in making the payment of the following reimbursements to:
(i) PJB's mother, on behalf of personal and household expenses paid on behalf PJB made on 23 December 2002 in the sum of $8,426.85;
(ii) PJB's mother, (being) reimbursement cost of sundry household and personal expenses paid on behalf of PJB made on 30 September 2003 in the sum of $10,682.66;
(iii) PJB's mother (as a) remittance, being part reimbursement cost of sundry household and personal expenses paid on behalf of PJB for the months of April to June 2004 made on 27 July 2004 in the sum of $20,000; and
(iv) PJB's mother (as a) remittance, being reimbursement of balance of sundry household and personal expenses paid on behalf of PJB for the months of April to June 2004 made on 4 August 2004 in the sum of $36,292."
The question to be determined in this application is whether Perpetual, as manager of the estate of PJB, should be required to produce, to DJB, those documents as they relate to payments made by Perpetual, on behalf of PJB.
It is submitted that further investigation is required by DJB either because of the nature of the documents, or the quantum of the payments, or the identity of the persons to whom payments were made, and/or because of the circumstances of the payment.
Submissions
Counsel for DJB, the Applicant on the amended Notice of Motion, submits, broadly, that the general nature of the description of various amounts that have been paid out of PJB's estate to PJB's mother and to JHB should be investigated, and that there is reasonable concern regarding the legitimacy of a number of those payments. Specifically, in relation to payments made to JHB, it is submitted that he held a position of influence over PJB's mother, and that payments to him also deserve investigation.
It was not submitted that the application was one involving principles that would be applicable in an application for preliminary discovery: see, for example, Andrews Advertising Pty Ltd v David Andrews [2011] NSWSC 244.
Whilst acknowledging the Court's supervisory power, Perpetual resists the production of documents upon the grounds that PJB's resources should not be wasted by having to, as it were, revisit the exercise of discretion of the financial manager, and/or by being required to produce documents about events that occurred so long ago and in circumstances where accounts, disclosing payments made, have already been audited and approved by the Office of the Protective Commissioner.
Perpetual submits that merely because a modest sum has been charged for the audit (a matter raised in reply by counsel for DJB) does not mean that the audit by the Office of the Protective Commissioner was not properly conducted.
In answer to the allegation of the undue influence of JHB, it is said that this is speculation on the part of DJB and that even if undue influence could be proved, which is unlikely, there is no evidence to suggest that any judgment obtained on behalf of PJB against JHB would, or could, be satisfied by him.
Perpetual also relies upon the fact that Schedule of Contributions was relied on in the proceedings seeking a family provision order. DJB was aware of the Schedule at that time and made no submissions to Perpetual that its contents were, or may be, subject to challenge. He should not be permitted to do so now.
The Statutory Framework
The Protected Estates Act 1983 commenced on 5 August 1985: s 2(2), Government Gazette No 112 of 2 August 1985, p 3923. It was amended by the Guardianship and Protected Estates Legislation Amendment Act 2002 (NSW), which commenced on 28 February 2003: s 2 and Government Gazette No 54 of 28 February 2003 p 3505.
The NSW Trustee and Guardian Act was assented to on 26 June 2009 and commenced on 1 July 2009. It replaced the former Act. The savings and transitional provisions of that Act provide that anything done prior to the commencement of that Act under a corresponding provision of the former Act is taken to be done under the new Act. Similarly, anything done by the Protective Commissioner, is taken to have been done by the NSW Trustee (Schedule 1, clauses 4 and 5).
The parties agree that the notice of motion must be considered in the light of the NSW Trustee and Guardian Act .
Section 64 of the NSW Trustee and Guardian Act provides:
"(1) The Supreme Court ... may make such orders as it thinks fit in relation to the administration and management of the estates of managed persons.
(2) The Supreme Court ... may also make such orders as it thinks fit in connection with authorising, directing and enforcing the exercise of the functions of managers under this Act.
(3) The Supreme Court may also make such orders as it thinks fit in connection with supervising the exercise of the functions of managers under this Act.
(4) An order by the NSW Trustee is subject to the regulations or to any direction by the Supreme Court or to any order of the Guardianship Tribunal (in the case of a person under guardianship)."
Consideration
The basic principle to be applied in determining any question arising for determination in the protective jurisdiction of the Court is that the question must be determined solely by reference to the interests of the particular protected person, the Court's overriding duty being to see that that his, or her, estate is so managed as to serve his, or her, best interests (see, for example, In re Darling (1888) 39 Ch D 208, 211 per Cotton CJ; In re Freeman [1927] 1 Ch 479, 489 per Sargant LJ; In re WM (1903) 3 SR 552, 555 per AH Simpson CJ in Eq; Re ES [1984] 3 NSWLR 341, 343; M v K (NSWSC, Powell J, 24 April 1989, unreported)).
There was no dispute that the Court has power to make orders directing a financial manager to provide documents to a person with an interest to seek those documents, where, to do so, benefited, or was likely to benefit the protected person.
There was, initially, a question whether DJB had an "interest" to bring the proceedings. It is not necessary to attempt to define the word "interest" in this context. In any event, to try to do so would prove difficult.
Even though DJB is the guardian, and not the current financial manager of PJB, he was acknowledged to be a person with a relevant "interest" to seek the documents. DJB appears to be the only person, other than PJB himself, who would be sufficiently interested to make the application on PJB's behalf. He is, after all, PJB's son.
Clearly, PJB, if capable, could try to show possible wastage of his property, or propriety, rights, or to damage to his economic interests, sufficient to enable him to have made the application. Perpetual's decision not to challenge DJB's standing was a proper and sensible one.
I have given careful consideration to the submissions made on behalf of the Applicant, but unfortunately, I do not accept them as providing a basis for the relief claimed.
In this case, it must not be forgotten that one of the directions made by the Court when appointing Perpetual, was that Perpetual "file accounts annually in accordance with the requirements of Supreme Court Rules, Part 76 rule 32, and to pay fees for the filing, examining and passing of such accounts in accordance with the Protected Estates Act 1983 and the Protected Estates Regulations 1995".
By the Supreme Court Rules (Amendment No 413) 2008, Part 76 was repealed. Prior to its repeal, Part 76 rule 32 provided:
"32 Filing and passing accounts
(1) Unless the Court otherwise orders, the manager must file in the registry an account of the manager's receipts and payments and a statement of the financial position of the estate being administered:
(a) within 1 month after the expiration of 12 months from the date of the order appointing the manager and of every subsequent period of 12 months, and within 1 month after the manager's discharge, or
(b) at such other time or times, in respect of such other period or periods, as the Commissioner may direct in a particular case.
(2) An account and statement under this rule must be in such form and be filed in such manner as the Commissioner determines from time to time and must be verified by affidavit in a form required by the Commissioner.
(3) The manager must, at the request of the Commissioner, take out an appointment to vouch and pass the manager's account before the Commissioner or another officer of the Court authorised by the Commissioner for the purpose.
(4) For the purpose of vouching the account, the manager must furnish whatever may be required and the Commissioner or other authorised officer may at any time require the production of and inspect any books or accounts kept by the manager in relation to the estate being administered."
Generally speaking, the rule, as can be seen, required proper accounts to be filed, which accounts showed all receipts as well as payments, supported, when required, by vouchers. The accounts had to be verified by affidavit as well.
As to the meaning of "passing accounts", I refer to In the Will of Sir Robert Lucas-Tooth (1932) 50 WN (NSW) 86, Harvey J stated (albeit in the context of an executor):
"In effect, this appears to me to raise once again the question which I decided in the matter of this estate... I then held, and I see no reason to hold otherwise now, that the Registrar in passing a trustee's account has jurisdiction to disallow on the disbursement side any amount which he considers not to be properly chargeable by the trustee against the estate, and it appears to me to be immaterial whether he considers the payment to be wholly unwarranted or to be only excessive. That decision applies equally to all items of disbursement appearing in the account, and therefore, to any amount paid to the trustee's solicitor for costs. If the Registrar is bound to consider the propriety of the payments, it seems to me to follow that he must be entitled, where the payment is of an itemised bill, to scrutinise the items by way of moderation, and it has always been the practice to do so.
I think it is quite clear that the disallowance of an item by the Registrar does not determine the liability of the executor or trustee to repay the money to the estate any more than the allowance of the item determines the right of payment in his favour. In fact, the passing of accounts is practically an ex parte official audit. The Registrar of Probate has to vouch accounts, but he has, as I have held, a further duty similar to that of an auditor: -
'An auditor... should not be satisfied merely by 'vouchers' apparently formal and regular but is justified and bound to go further than that and by fear and reasonable examination of the vouchers to see that they are not among the payments so made of payments which are not authorised by the duty of the authority, or contrary to the duty of the authority, or in any other way illegal or improper.'
It may be that the Registrar's certificate should be framed in a somewhat different form, where the executor refuses, as he legally may, to refund to an estate amounts which are disallowed by the Registrar. As a rule, that position does not arise, but where it does, the certificate should state the exact balance as shown by the executor's or trustee's accounts with a special reference to the items disallowed. This will have two results: -
As the items are disallowed in the accounts, an executor will not get the protection afforded by ss 3 of s 85, there will be no prima facie evidence of the correctness of the payment. Secondly, it is on the Registrar's certificate that the commission is based, and if the executor does not refund to the estate the amount disallowed, the court may take that fact into consideration in the allowance of his commission."
Thus, the term "passing accounts" necessarily to involves an inquiry into the accuracy of the accounts.
The applicant seeks to be provided with documents so that he can, in effect, argue falsification. "A falsification alleges that a matter has wrongly been inserted, such as an allegation that an amount has been wrongly, or improperly paid": Young Croft Smith, On Equity Law Book Co. (2009) at [16.1360]. It seems to me, in the circumstances of this case as set out above, that I should not enable him to do this some years after the event following the filing of accounts, and their examination and approval.
The Applicant submitted that "it may not be inferred from the quantum of the fees involved for those years that Perpetual's accounts were examined with any rigour".
To the extent that it is necessary to consider what, in fact, occurred in relation to the passing of the accounts, there is no evidence other than what has been stated above. There is simply no evidence that either the Protective Commissioner, or the financial manager, breached his, or its, statutory obligations in regard to the filing, examination and the passing of the accounts. I do not accept the applicant's submission.
In any event, I have regard to what was said in Harris v Knight (1890) 15 PD 170, at 179, in which Lindley LJ observed:
"The maxim, 'omnia praesumuntur rite esse acta', is an expression, in a short form, of a reasonable probability, and of the propriety in point of law of acting on such a probability. The maxim expresses an inference which may reasonably be drawn when an intention to do some formal act is established; when the evidence is consistent with that intention having been carried into effect in a proper way; but where the actual observance of all due formalities can only be inferred as a matter of probability."
However, even if what was required to be done by Perpetual and the Protective Commissioner pursuant to the Supreme Court Rules was not as extensive as an "official audit", or "akin to an audit" ( Re Estate of Orre (NSWSC, Powell J 19 December 1991, unreported)), it is unlikely, because of the terms of the rule with which compliance was required, that it involved less than seeing that sums entered on the disbursement side of the accounts had, in fact, been disbursed, and that proper vouchers, or receipts, had been produced. After all, an examination was required.
In addition, it seems to me that what the Applicant was really saying was that there were payments made out of PJB's estate, of which he was aware, which may have but had not been, made wrongfully and that he was entitled to inspect original documents to satisfy his "legitimate concerns". Counsel for the applicant candidly acknowledged this.
As was submitted in writing (Para 4(b) of the Applicant's submissions):
"If an irregularity is discovered, this fact would be in the interests of the managed person, as moneys wrongly paid may be able to be recovered."
In an earlier letter dated 21 February 2011, addressed to the lawyers for Perpetual, it was stated that:
"The applicant requires production of the documents...to ensure that those reimbursements and payments were made for the benefit of his father in accordance with the Orders made in the Protective Division of the Supreme Court of New South Wales...".
Unfortunately, in my view that is not enough. In the circumstances outlined above, where accounts have already been filed, examined and passed by the financial manager of the protected person, to obtain the relief that the Applicant seeks, would require more than a suspicion that moneys were wrongly paid ("the shadow of JHB"), or that the Applicant desires, as it were, to have a kind of general discovery of documents that goes to that issue. The Applicant is not entitled, by the process taken in this case, to seek documents to discover whether or not there is a cause of action available.
There is another reason that an order for the production of the documents sought should not be made. Assuming that the suspicion of DJB is well founded, and leaving aside any question of a limitation period defence, a significant part of the moneys that may have been wrongly paid were paid to PJB's mother. PJB was, as a result of the proceedings brought under the Family Provision Act 1982, entitled to the whole of the mother's residuary estate. Accordingly, there would not be any point in endeavouring to recover from her estate, any moneys from her estate.
The amount that is alleged to have been paid to JHB totalled in the order of $60,000. Counsel for the Applicant acknowledged that the costs of any proceedings against JHB would exceed that amount with the prospects of success of that claim being far from certain. Even assuming that only the difference between indemnity costs and ordinary costs were risked (which is an assumption that could not really be made), the benefit to PJB would be reduced. The risk/benefit ratio would not permit the commencement of proceedings.
Perpetual raised the spectre of confidentiality being breached by permitting the inspection by DJB of documents relating to PJB. Whilst a relevant matter, it could be avoided by DJB providing (as he was prepared to do) with an undertaking to maintain confidentiality. I do not regard this submission with real favour, although I have, of course, considered it.
The extent to which Perpetual would have to allocate staff and other resources to retrieve the documents sought was raised. It was submitted that it would be entitled to debit PJB's estate for the costs of devoting resources for that purpose.
This was raised with the Applicant who stated, through counsel, that he was prepared to pay costs, up to $5,000, if that would result in an order being made. It is clear, that bearing in mind the nature of the documents that are sought, and the fact that they will have been stored, will result in costs greater than that amount being incurred.
Finally, having relied upon the Schedule in the proceedings for a family provision order, I do not think that PJB, and therefore, DHB, should now be entitled to put payments shown thereon as having wrongfully been paid.
Having considered the matter carefully, I do not think that it would be in the best interests of PJB for the orders sought by the Applicant to be made. Accordingly, I dismiss the notice of motion.
I have no doubt that the application was made bona fide. However, I am unable, even in those circumstances, to order that the Applicant should receive his costs out of PJB's estate. I make no order as to his costs of the notice of motion. Perpetual's costs of the notice of motion, calculated on the indemnity basis, should be paid out of PJB's estate.
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Decision last updated: 18 April 2011
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