Re X

[2016] NSWSC 275

Supreme Court

New South Wales

Medium Neutral Citation:	Re X [2016] NSWSC 275
Hearing dates:	8 March 2016
Date of orders:	17 March 2016
Decision date:	17 March 2016
Jurisdiction:	Equity - Protective List
Before:	Lindsay J
Decision:	Declaration, pursuant to s 41 of the NSW Trustee and Guardian Act 2009 NSW, that the plaintiff (a young adult) is incapable of managing her affairs, with consequential orders for management of her protected estate by her parents, including a direction designed to permit her, as a protected person, to self-manage personal finances in the ordinary course of daily life
Catchwords:	PROTECTIVE JURISDICTION – Financial management – Incapacity for self-management – Management of protected estate – Appointment of family members as managers   MENTAL HEALTH - Management and administration of property – Incapacity for self-management – Comparison of protected estate management and a private protective trust arrangement
Legislation Cited:	Civil Procedure Act 2005 NSW Corporations Act 2001 Cth) Court Suppression and Non-publication Orders Act 2010 NSW Guardianship Act 1987 NSW NSW Trustee and Guardian Act 2009 NSW Protected Estates Act 1982 NSW Succession Act 2006 NSW Trustee Companies Act 1964 NSW, Uniform Civil Procedure Rules 2005 NSW
Cases Cited:	A v A [2015] NSWSC 1778 at 35- 39 Ability One Financial Management Pty Ltd and Anor v JB by his tutor AB [2014) NSWSC 245 at [30]-[32] CJ v AKJ [2015] NSWSC 498 at [14]-[53], [27]-[34] Clay v Clay (2001) 202 CLR 410 at 428-430 and 432-433 Countess of Bective v Federal Commissioner of Taxation (1932) 47 CLR 417 at 420-423 David by her Tutor the Protective Commissioner v David (1993) 30 NSWLR 417 at 436E-437C GAU v GAV [2014] QCA 308 at [48] Gibbons v Wright (1954) 91 CLR 423 at 434-438 Holt v Protective Commissioner (1993) 31 NSWLR 227 at 238C-239B, 240D, 241B-F and 243P-F; 238D-F and 241G-242A JPT v DST [2014] NSWSC 1735 at [35] M v M [2013] NSWSC 1495 at 50 Marion’s case (1992) 175 CLR 218 at 258-259 Miller v Cameron (1936) 54 CLR 572 PB v BB [2013] NSWSC 1223 at [8] Perpetual Trustee Co. Limited v Fairlie-Cunninghame (1993) 32 NSWLR 377 Protective Commissioner v D (2004) 60 NSWLR 513 at 540-542, 543 and 544-545; JPT v DST [2014] NSWSC 1735 at [35] Quek v Beggs (1990) 5 BPR [97405] at 3-5 and 18 Re Eve [1986] 2 SCR 388 at 407-417; 31 DLR (4th) 1 at 14-21 Saunders v Vautier: CPT Custodian Pty Limited v Commissioner of State Revenue (Victoria) (2005) 224 CLR 98 at 1018-121 Secretary, Department of Health and Community Services v JWB and SMB (Marion’s case) (1992) 175 CLR 218 Wellesley v Duke of Beaufort (1827) 2 Russ 1 at 20; 38 ER 236 at 243 Wellesley v Wellesley (1828) 2Blins 124 at 131; 4 ER 1078 at 1081 X v Sydney Children’s Hospitals Specialty Network & Anor [2011] NSWSC 1272
Texts Cited:	HS Theobald, The Law Relating to Lunacy (Stevens & Sons, London, 1924), pages 380 and 382
Category:	Principal judgment
Parties:	Plaintiff: X, a person in need of protection
Representation:	Counsel: J H Stephenson (Plaintiff)   Solicitors: Clarke Kann Lawyers (Plaintiff)
File Number(s):	2015/00292483

Judgment

1. Under consideration in this judgment is a summons in which the plaintiff (a young woman aged 20 years, self-styled, in the summons, as “X”) primarily applies, with the active support of her parents, for a declaration that she is capable of managing her own affairs (so as to put her outside the protected estate management regime for which s 41 of the NSW Trustee and Guardian Act 2009 NSW provides), coupled with an order (under section 77 of the Civil Procedure Act 2005 NSW) that funds totalling approximately $1 million held in court, on her account, be paid out to her personally rather than to a protected estate manager.

2. Under the influence of her parents, she proposes to pay that money into a trust established by them, of which the trustee is a corporation controlled by them. Collectively, and with the benefit of medical advice, all three take the view that some form of protective mechanism, such as the trust, is necessary because the plaintiff is unable, without family assistance, to manage more property than is necessary for her day-to-day living.

3. In broad outline, the principal questions for the Court are: (a) whether the plaintiff is capable, or incapable, of managing her affairs within the meaning of section 41 of the NSW Trustee and Guardian Act 2009; and (b) if incapable, whether the Court should refrain from appointment of a protected estate manager in deference to the family’s preferred trust arrangement.

4. The funds in court represent personal injury compensation awarded to the plaintiff, in proceedings brought by her (through her father, acting as her tutor) against a hospital at which, as a baby, she was treated after a seizure, resulting in a degree of mental incapacity expected to afflict her throughout a life expected to be of a normal duration.

5. At the time of settlement of the common law proceedings the plaintiff was a minor and, as such, independently of any physical disability, a “person under legal incapacity” (within the meaning of CPA section 3(1) and the Uniform Civil Procedure Rules 2005 NSW, rule 7.13) required to carry on civil proceedings only through a tutor.

6. In compliance with CPA section 77, the hospital against which the plaintiff obtained a judgment for the payment of damages paid the compensation due to her into court to abide orders of the Court.

7. The plaintiff’s compensation money ($982,368.15) was paid into court on 20 December 2011, where it has remained (accruing interest) ever since.

8. Over the intervening four years or so the plaintiff and her parents appear to have worked towards a demonstration, in these proceedings, that, coming of age, completing her secondary education, making an entry into the workforce and managing her personal finances, the plaintiff can properly be characterised as a person “capable of managing her own affairs”.

9. The avowed object of the parents, if not the plaintiff, has been to avoid the state-administered regime (administered by the NSW Trustee under the supervision of the Court) for the protection of persons incapable of self-management.

10. The plaintiff’s parents are well-educated, independent people who have been traumatised by their daughter’s engagement with legal processes associated with the recovery of her personal injury compensation. The plaintiff’s father is a businessman. Her mother has trained as a doctor.

11. The family, including the plaintiff personally, recognise that the plaintiff has a disability, and that she is in need of protection; but their strong preference is to manage the plaintiff’s property through the private trust established (with a family company controlled by the parents as trustee) for that purpose.

12. The plaintiff and her parents are at one in presentation of her case. Their primary contention is that no protective orders should be made at all, leaving the plaintiff (under the supervision of her parents) to pay her compensation money to the trustee of the trust. Their alternative case, predicated upon an acceptance of a court ruling that the plaintiff is incapable of managing her affairs, is that the parents should be appointed managers of her protected estate.

13. In my assessment, the primary case is flawed; the alternative case, in current law and practice, is unexceptionally routine.

14. The plaintiff is a delightful young lady, blessed with a pleasant disposition and a warm expectation of a long and fulfilling life. She strikes me as a thoughtful young woman, intent upon doing her best with what life has to offer, recognising her limitations, and attempting to work within them, without being defined by them.

15. In 2014 she was awarded a Higher School Certificate, at the end of her secondary education, with creditable passes in courses that included English, Studies of Religion, Design and Technology, Visual Arts, and Community and Family Studies. In 2015 she completed a six month course in “Screen and Media” training conducted by the NSW Technical and Further Education Commission (TAFE).

16. In common with the experience of many conscientious young people, she has enjoyed a succession of part-time jobs. She presently has temporary, full-time employment, with her old school, as a kitchen assistant.

17. Under the close supervision of dedicated parents, in the broader context of a stable, loving family, she manages her own personal, day-to-day finances.

18. For all this, the plaintiff and her parents are conscious that she does suffer from a disability, a degree of mental incapacity, a legacy of the medical misadventure that culminated in her recovery of damages.

19. That she has insight into her limited capacity for self-management weighs in the balance, each way, upon a determination of whether she can be declared to be capable of managing her own affairs.

20. Her summons is supported by medical reports from two psychiatrists. One (Dr M) has treated her since at least 2006. The other (Dr K) has treated her since August 2008. Both met her in the context of the pendency of her proceedings for personal injury compensation. Both have reappraised her for these (Protective List) proceedings.

21. For the purpose of preparing a report for the present proceedings Dr M interviewed her late last year. His resultant report dated 8 December 2015 is sympathetic to the proposition that she can manage her own affairs “despite the fact that she continues to experience difficulties associated with her learning difficulty and psychiatric condition”.

22. Dr M recorded that, in his opinion, the plaintiff “demonstrated the ability to receive communications, express her will with respect to her property and affairs” and to provide instructions in relation to the current proceedings. He also recorded that, in his opinion, she “demonstrated the capacity to receive communications and express her will with respect to her property and affairs such that she is capable of giving informed consent to the funds [presently in court] being made the subject of a trust in respect of which she is a beneficiary”.

23. In his narrative leading to these expressions of opinion, Dr M recorded observations that included the following (edited to maintain her anonymity):

“[The plaintiff] was brought to the assessment by her mother, who remained in the waiting room until the end of the assessment. She was well-groomed and casually dressed. [She] established good eye contact and a good rapport. She spoke clearly and articulately with regard to her circumstances, despite her evident communication difficulties. Her affect (emotional responsiveness) was reactive to the issues explored. There was no evidence of overt distress. Her thoughts were well organised. There was no evidence of thought disorder. She was well-oriented in time, place and person. She had good insight into her circumstances. No abnormalities were evident on the mental state examination.

[The plaintiff] engaged in a thoughtful exploration of her life experience….

[The plaintiff] acknowledged the challenge transitioning from school to TAFE earlier this year. This had precipitated an exacerbation of her anxiety and depressive symptoms with regular panic attacks. In light of this, a Selective Serotonin Reuptake Inhibitor Anti-Depressant/Anti-Anxiety Agent was trialled. After one month, this was discontinued as it exacerbated these problems, which nevertheless resolved after several months. She continued to see [Dr K], consultant child, adolescent and family psychiatrist, on a monthly basis. She had also benefited from additional psychological treatment with a local psychologist [….] She continued to experience stress related to her interpersonal difficulties. She continued to rely on her imaginary friend, Annabelle. She spoke at length about Annabelle’s supportive role in her life.

[The plaintiff] resides at home with her parents. [Her mother] remained a stay-at-home mum. Her father […] continued to work [in his own business]. He had continued to experience health-related problems, including open-heart surgery in 2015. This had been a particularly stressful time for [the plaintiff] as it coincided with the submission of major works in Design and Technology and Visual Arts for the HSC. She also experienced technological difficulties with her computer, which amplified her distress…

[The plaintiff] provided a clear account of the outcome of her previous Court case. She explained that ‘the other side wanted an out-of-Court settlement’. The allocated funds (one million dollars) were now ‘taken care of by a company’. She understood that her parents wished to establish her own company… [She] liked this idea. She did not want strangers to continue to look after her money. She wanted people that she knew and trusted to look after her financial welfare.

Her capacity to manage her own financial affairs was explored in detail. [She] explained that she had gotten a lot better over the past two years, despite ‘not being a genius’ with financial affairs. She had learnt about bank accounts and managed her own finances. She was able to transfer funds, get money out and deposit her income. She was also learning about financial transactions in her work in [a] retail shop. She discussed realistically her desire to save money and spend limited quantities on clothes and other items. She continued to live at home and relied upon her parents for her day-to-day affairs.

[The plaintiff] had a clear understanding of the matters before the Supreme Court. She was clear about her wishes. She discussed her understanding of the plan to establish a family company. She explained that her parents and their accountant …, whom they trusted, would be responsible for looking after the money. This would enable it to be kept safe. She had been informed by her mother that the current organisation required ongoing fees to be paid to manage her funds. She and her Mum did not regard this to be necessary. Her older sister… and cousin … would also be available to supervise her funds when her parents were no longer capable. [She] was supportive of this plan and spoke of her positive relationship with both her sister and cousin… [She] was clear and comfortable in discussing these arrangements.

At the conclusion of the assessment, a discussion was held with [the plaintiff] and her mother …. [The mother] spoke of the stress of the previous Court proceedings and the family’s desire to resolve the current issues before the Supreme Court in a manner in which [the plaintiff’s] welfare would be prioritised and respected.”

24. I take the reference in the penultimate paragraph of these observations to “the current organisation” to be a reference to the NSW Trustee.

25. The family has proceeded upon an assumption that the plaintiff’s compensation money has been paid out of court to the NSW Trustee as a trustee for the plaintiff. The correct position is, rather, that the money remains “in court”, invested with the NSW Trustee as a court investment, pending an order for payment out to the plaintiff or on her account.

26. The Court could make an order for the money to be paid out to the NSW Trustee as manager of the plaintiff’s protected estate; but that is not presently on the cards. If a protected estate manager is to be appointed in the current context it will be the plaintiff’s parents, on a joint appointment as managers. In the ordinary course, the NSW Trustee will, in that event, monitor the parents’ management of the estate, in accordance with its functions under the NSW Trustee and Guardian Act, and it will be entitled to fees for the performance of that statutory function.

27. Dr K’s report dated 7 September 2015 travels much the same ground as Dr M’s report, and no less sympathetically, but in terms that require separate elaboration, again with editorial modification to maintain confidentiality.

28. Dr K’s report includes the following observations:

“6.    [The plaintiff] has a neurodevelopmental disorder associated with a metabolic/hypoxic brain injury during her first year of life.

7.    In practice what this means for [the plaintiff] is that she can have difficulties in social communication and social interaction and in managing relationships, and that she can have difficulties with flexibility of thinking and in the adaptation to difference or to change.

8.    Neuropsychological testing in 2009 by psychologists … showed that [the plaintiff] was strong in general intellectual functioning (low average to average intellectual skills), but had significant impairment in elements of executive functioning, including flexibility, adapting to change or unexpected events, problem-solving, learning from experience, moderating and managing impulsive thoughts and feelings, and mustering ‘reserve’ function when under stress.

9.    I note that this testing from 2009 remains current, as this neuropsychological testing is of background mental functioning, which does not usually alter significantly over time.

10.    What this means in practice is that with [the plaintiff’s] mix of strong general intellectual functioning and reasonable communication skills, [she] is able to ‘sit back’ and to understand and to make decisions about her life. But, in the ‘heat and light’ (my words) of day-to-day personal and relational stresses, she can struggle to manage her thoughts and feelings and to come to sensible decisions ‘in the moment’.

11    As [she] has matured, she has come to understand these things about herself. [She] in quite a developmentally appropriate way insists on making the broader decisions about her life herself, in a context where she can ‘sit back’ and consider the options and the pros and cons. But, she understands her own vulnerability under personal or relational stress and draws on others, in particular her mother but also other family members and trusted persons including at times myself, to assist and guide her in that setting. …

12.    In keeping with the above, I feel that [the plaintiff] is able to manage the broader decisions about her financial affairs, so long as she is allowed to ‘sit back’ and to receive proper financial advice, and in [her] case because of her moderate language difficulties I feel that it would be best if that advice was received in the context of a trusted adult other identified by herself, for example her mother or another relative or person who knows well.

13.    [She] has the intellectual capacities and knowledge of her own circumstances, wishes and intentions required to manage these decisions.

14.    But, I feel that [she] would be wise to put some protective mechanisms in place to ensure that she is always able to ‘sit back’ and make such decisions, and that her deficits in executive functioning under personal and relational stress do not leave her to make unconsidered or pressured decisions, which might not be in her interest.

15.    I have discussed the same with [her] alone and with her mother. I understand that [her] intention is to place her funds in a trust that requires the input and assent of trusted family members before big decisions are made about her spending, whilst releasing regular money so that she can be independent in day-to-day life and financial decision-making. When I spoke with [her] about these matters, she showed understanding of these matters and the decisions to be made.

16.    [Her] intention is that those persons who she chooses as signatories will respect her own wishes, and will be there to make sure that she is looking after herself and is protected from harm, not to take control of the minutiae of her life. In my view, the persons whom she has discussed choosing for those roles have demonstrated the appropriate attitude, in that regard….

17.    In my view, [the plaintiff] is able to receive communications and express her will with respect to her property and affairs. I also feel that she is capable of providing instructions in relation to the proposed application to the Supreme Court and of giving informed consent to the funds being made subject to trust.

18.    Whilst I have not been asked directly about this issue, I would add that in my time of relating to [the plaintiff’s mother] since 2008, with and without [the plaintiff], I have found [the mother] to be respectful of [the plaintiff] and to act in [the plaintiff’s] best interests without apparent ulterior motive, and I have not developed concerns in that regard. …”

29. Overly optimistic though they may be, the observations of Dr M and Dr K are broadly consistent with my own observations of the plaintiff and her parents when all three attended court on the hearing of the summons. Each of them had sworn an affidavit (or, in the case of the plaintiff, two) in support of the summons. Each addressed me from the bar table: the parents in the absence of the plaintiff, and the plaintiff in the absence of her parents.

30. Before any of them addressed me, I outlined to them collectively my impressions of the affidavit evidence; my concerns about legal aspects and practical implications of the family trust established; and a summary of how the protected estate management regime operates in theory and practice. I indicated to them, at that time, as I had to counsel on earlier occasions, that I would regard an appointment of the parents as managers of the plaintiff’s protected estate as falling within a routine exercise of the Court’s protective jurisdiction, but I harboured deep doubts about the proposed, alternative regime (the family’s preferred option) of the private trust.

31. In approaching the decisions required to be made by the Court, I have reminded myself of the following features of the jurisdiction to be exercised:

1. The Court’s protective jurisdiction is, generally, purposive in character, directed towards the care of those who are not able to take care of themselves: Secretary, Department of Health and Community Services v JWB and SMB (Marion’s case) (1992) 175 CLR 218 at 258-259, citing Re Eve [1986] 2 SCR 388 at 407-417; 31 DLR (4th) 1 at 14-21; Wellesley v Duke of Beaufort (1827) 2 Russ 1 at 20; 38 ER 236 at 243; and Wellesley v Wellesley (1828) 2 Blins 124 at 131; 4 ER 1078 at 1081,

2. In the context of the related statutory jurisdiction conferred on the Court by the NSW Trustee and Guardian Act, section 39 of the Act provides explicit recognition of the purposive character of the jurisdiction in a statement of “general principles” to be observed, commencing with a statement that “the welfare and interests” of a person in need of protection “should be given paramount consideration”.

3. Whether or not a person is “capable of managing his or her affairs” within the meaning of section 41 (and related provisions) of the NSW Trustee and Guardian Act is a question to be considered in the context of the particular person’s personal, subjective circumstances, including particular business to be transacted by him or her, and the purpose of the law served by an inquiry into his or her capacity: CJ v AKJ [2015] NSWSC 498 at [27]-[34] citing, inter alia, Gibbons v Wright (1954) 91 CLR 423 at 434-438.

4. Upon consideration of a person’s subjective circumstances, the availability of family or community support may tip the balance in favour of a finding that, with the benefit of that support, the person is capable of managing his or her affairs: CJ v AKJ [2015] NSWSC 498 at [54].

5. A finding that a person is not capable of managing his or her own affairs ordinarily leads to an appointment of a protected estate manager, but it does not necessarily carry that consequence. The Court retains a discretion: CJ v AKJ [2015] NSWSC 498 at [51]-[52] and [56].

6. If needed for the present and foreseeable future, protected estate management orders can be made despite an aspiration that, at some future time, they might cease to be necessary or of utility and might, on that account, be revoked: H v H [2015] NSWSC 837.

7. The jurisdiction the Court is called upon to exercise is not a “consent jurisdiction” in the sense that an order for the appointment, removal or replacement of a particular protected estate manager is made (or not made) merely because a party, or some other person, seeks particular orders, consents to them or acquiesces in them. The Court is bound to exercise an independent judgement because of the public interest element in decisions to be made and the possibility, if not the fact, that a person in need of protection lacks the mental capacity requisite to informed decision-making: M v M [2013] NSWSC 1495 at [50](a).

8. Any decision made affecting the welfare or interests of a person in need of protection 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 227 at 238D-F and 241G-242A; GAU v GAV [2014] QCA 308 at [48].

9. Care needs to be taken in all decision-making affecting a person in need of protection to focus on the facts of the particular case, preferably with due consultation with the person concerned, his or her family, and carers who may be well placed to inform the Court of his or her particular circumstances; and, in the choice of a manager, consultation of the welfare and interests of a protected person may favour appointment of a member of his or her family over the appointment of an institutional manager: Holt v Protective Commissioner (1993) 31 NSWLR 227 at 238C-239B, 240D, 241B-F and 243P-F.

10. Decisions need to be made in the context of a prudential management regime that can be administered, without strife in the simplest and least expensive way, in the interests of the person in need of protection: HS Theobald, The Law Relating to Lunacy (Stevens & Sons, London, 1924), page 382.

32. There was a time (principally, before Holt v Protective Commissioner (1993) 31 NSWLR 227) when the Protective Commissioner, the statutory predecessor of the NSW Trustee, was regarded as a manager of first resort for a million dollar estate. The options available to families afflicted by an incapacity for self-management in one of their number were generally, in practice, limited to the Protective Commissioner or (with the benefit of a regulatory regime governed by the Trustee Companies Act 1964 NSW, now overshadowed by chapter 5D of the Corporations Act 2001 Cth) a licensed trustee company. As explained in M v M [2013] NSWSC 1495 and Ability One Financial Management Pty Ltd and Anor v JB by his tutor AB [2014) NSWSC 245 at [30]-[32], the NSW Trustee now regards itself as the manager of last resort.

33. There was a time when the jurisdiction of the Court to appoint a protected estate manager was firmly associated, in the public mind at least, with its historical antecedents in the old Lunacy jurisdiction of the Lord Chancellor of England. Since enactment of the Protected Estates Act 1982 NSW, repealed and replaced by the NSW Trustee and Guardian Act 2009, and with the benefit of experience gained by everybody with management of protected estates under the auspices of the Guardianship Act 1987 NSW, there has been a growing consciousness that a declaration of incapacity for self-management should not, and does not, carry with it the stigma once associated with a finding of “lunacy”.

34. Modern focus is on capacity for self-management, not mental incapacity or mental illness. Many families have a member or friend who is, or has been, subject to a protected estate management regime. There is nothing exceptional about this in a society possessed of wealth, insight into a need for protective regimes and an appreciation of managed outcomes.

35. Of central significance is the functionality of management capacity of a person in need of protection, not (a) his or her status as a person who may, or may not, lack “mental capacity” or (b) particular reasons for an incapacity for self-management: David by her Tutor the Protective Commissioner v David (1993) 30 NSWLR 417 at 436E-437C; PB v BB [2013] NSWSC 1223 at [8]; CJ v AKJ [2015] NSWSC 498 at [14]-[53]. The fact that the plaintiff suffers a physical disability may underpin a finding of incapacity for self-management, but the primary focus of attention is on her want of functional capacity for management of her own affairs, not her disability.

36. There was a time when, once protected estate management orders were made, a protected person who sought revocation of those orders bore a heavy onus on an application for their revocation. That is not now the case. In all cases, the Court is obliged to apply an independent mind to the question of capacity or incapacity, without resort to presumptions that tie a person to a regulatory regime, conscious that there is a strong public interest element in protective proceedings and that they are not adversarial in character: A v A [2015] NSWSC 1778 at 35- 39.

37. There was a time when a protected estate manager, once appointed, was thought, for all practical purposes, to have an entitlement to retain the office of manager. Always a misconception of the true character of such an office, there is (within the framework of Holt v Protective Commissioner (1993) 31 NSWLR 227, the Guardianship Act 1987 and the NSW Trustee and Guardian Act 2009) no warrant now for any protected estate manager to be regarded as having a right to remain in that office: M v M [2013] NSWSC 1495 at 50; Ability One Financial Management Pty Ltd and Anor v JB by his tutor AB [2014] NSWSC 245.

38. An important shift in the decision-making paradigm governing decisions about (in)capacity for self-management was the enactment of a statutory statement of “general principles” (themselves informed by a liberal understanding of the Court’s inherent, protective jurisdiction) governing such decision making.

39. The paradigm statutory statement appeared, first, in the Guardianship Act 1987, section 4, where it remains. The Supreme Court and the NSW Trustee now have the benefit of a similar statement in the NSW Trustee and Guardian Act 2009, section 39. It is found in Chapter 4 of the Act, entitled “Management functions relating to persons incapable of managing their affairs”. Chapter 4 comprises sections 38-100 inclusive. It includes section 41, the legislative authority for the appointment of a protected estate manager in these proceedings.

40. So far as presently material, section 39 is in the following terms:

“39 General principles applicable to Chapter

It is the duty of everyone exercising functions under this Chapter with respect to protected persons… to observe the following principles:

(a) the welfare and interests of such persons should be given paramount consideration,

(b) the freedom of decision and freedom of action of such persons should be restricted as little as possible,

(c) such persons should be encouraged, as far as possible, to live a normal life in the community,

(d) the views of such persons in relation to the exercise of those functions should be taken into consideration,

(e) the importance of preserving the family relationships and the cultural and linguistic environments of such persons should be recognised,

(f) such persons should be encouraged, as far as possible, to be self-reliant in matters relating to their personal, domestic and financial affairs,

(g) such persons should be protected from neglect, abuse and exploitation.”

41. This statement of principles is not necessarily more flexible than principles governing a trust administered in accordance with general, equitable principles. Equity has a long tradition of purposive management of the person, and estate, of a person in need of protection. That tradition is illustrated, in judgments of the High Court of Australia, by cases such as Countess of Bective v Federal Commissioner of Taxation (1932) 47 CLR 417 at 420-423; Miller v Cameron (1936) 54 CLR 572 at 575, 579 at 575, 579 and 580-581; Marion’s case (1992) 175 CLR 218 at 258-259; and Clay v Clay (2001) 202 CLR 410 at 428-430 and 432-433. Equitable principles continue to inform an exercise of statutory protective jurisdiction conferred on the Court and NCAT.

42. Nevertheless, if things go wrong in management of the estate of a person in need of protection, there is greater scope for a practical, pragmatic but principled identification, and resolution, of problems upon an exercise of protective jurisdiction than can be had in general equity litigation.

43. That is because, in an ordinary equity case, practice and procedure is directed towards litigation whereas, in the administration of protective jurisdiction, practice and procedure is directed towards “administration without strife in the simplest and least expensive way”: HS Theobald, The Law Relating to Lunacy (1924), page 382.

44. Moreover, the legislative framework within which the State’s protective functions are presently administered contains, in statutory statements of “general principles” and procedures designed to accommodate them, a constant reminder to everybody involved in management of the affairs of a person in need of protection of the purposive, protective nature of a jurisdiction that treats the welfare and interests of the person in need of protection as paramount.

45. On the threshold question whether or not the plaintiff is “capable of managing her affairs” I am quite comfortable with a finding that, in her present circumstances and with an estate comprising liquid funds of approximately one million dollars, she is not capable of managing her own affairs. The medical evidence demonstrates the nature of her physical disability and her functional incapacity for independent management of her sizeable estate. Her physical limitations are manifest upon a personal engagement with her. Unqualified admiration for her determination to embrace a normal life cannot mask the objective reality of her condition. She needs protective care in management of her estate if she is to continue to thrive.

46. She can, and should, be personally engaged in all decision making affecting her interests; but, in my assessment, the evidence points firmly towards a current need for a protective regime for management of her estate, allowing her reasonable latitude in the management of her personal, day-to-day finances.

47. Steps taken by the plaintiff’s family in advancement of her welfare and interests provide corroborative confirmation of a finding of incapacity for self-management.

48. In conduct of her claim for personal injury compensation, her father (her tutor) sought, and obtained, orders under the Court Suppression and Non-publication Orders Act 2010 NSW designed to maintain her anonymity: X v Sydney Children’s Hospitals Specialty Network & Anor [2011] NSWSC 1272 (27 October 2011). She was, by this means, protected beyond the norm allowed to a plaintiff in civil litigation. Her youth does not, alone, explain the protective care thrown around her by the Court: [2011] NSWSC 1272 at [9]-[13] and [15]-[16].

49. Further, in contemplating her future, she and her family do not, even now, imagine that she can, or should be allowed to, have unrestricted access to, or autonomous control over, one million dollars. On the contrary, they propose that, for the remainder of her life (and beyond), her access to that money and any form of property into which it may evolve should be dependent upon others acting in the guise of a corporate trustee. By reason of her disability, she is vulnerable to exploitation.

50. The private trust arrangement advanced in these proceedings in support of a declaration of capacity for self-management, and in opposition to the appointment of a protected estate manager, is counter-productive on both limbs of the case advanced.

51. The family support advanced in aid of a declaration of capacity is not of a type that demonstrates that the plaintiff can manage her own affairs, or assists her to do so. On the contrary. It is predicated upon an assumption that she cannot manage her own affairs, and will never be able to do so. It anticipates that, under the influence of her parents, if court approval is obtained for payment of her compensation money to the trust, she will divest herself entirely, and forever, of her principal asset. It will, then, not be hers to manage.

52. Nor is the family support advanced in opposition to a protected estate manager of a type that advances the plaintiff’s interests. It contemplates that she will have, in the future, no control over her principal asset, and no practical means of ensuring that her voice is heard in decisions made about her welfare or interests. Her present confidence in her family may be well-placed; but there is no guarantee of its continuance when filtered through a corporate trustee administering a private trust, the very purpose of which is to take control of her principal asset out of her hands and to place it in the hands of her parents without regulatory supervision or safeguards.

53. Inevitably, in ongoing parental management of the affairs of a mentally impaired, adult child conflicts of interest, and conflicts between duty and interest, are bound to arise. As illustrated by Countess of Bective v Federal Commissioner of Taxation (1932) 47 CLR 417 at 420-423 and Clay v Clay (2001) 2002 CLR 410 at 428-430 and 432-433, courts are mindful of a need to judge these questions in the context of a necessity for management of the affairs of a person in need of protection. That said, the existence of a regulatory regime for the supervision of protected estate managers provides a means by which otherwise unacceptable conflicts impinging upon a fiduciary relationship can be minimised: Ability One Financial Management Pty Limited and Anor v JB by his Tutor AB [2014] NSWSC 245 at [143]-[190].

54. Despite the earnest entreaties of her parents, and her own embrace of their stated preference for a family trust, in my opinion it is not in her best interests that I approve the proposed trust arrangement as an alternative to protected estate management. In my opinion, and I so find, the plaintiff’s interests would be best served by protected estate management orders in which her parents serve as managers under the supervision of the NSW Trustee. That regime comes with safeguards (including rights of appeal, and the like, to the Civil and Administrative Tribunal of NSW (NCAT) and the Court from decisions of the NSW Trustee, or from decisions of a protected estate manager) in the legislation governing management of a protected estate.

55. The trust arrangement proposed by, and on behalf of, the plaintiff would mean that substantially the whole of the plaintiff’s property would be tied up, for the remainder of her life, in a trust over which there might be no effective, practical supervision. The plaintiff would be bound to submit to the control of her parents or whoever, in due course, might control the corporate trustee. Were the plaintiff to marry she would remain, via the trust, bound to her parents. Because her main property would be tied up in the trust, she would have no practical ability to dispose of her estate by a will. Management of her estate could not easily be adapted to her personal circumstances, from time to time, as may be required in the course of what might, hopefully, be a long life.

56. Although her parents do not seek remuneration (for themselves or the corporate trustee) in management of the plaintiff’s property, the trust deed they have put in place does contemplate the trustee being remunerated. Administration of a family trust, and a corporate trustee, are not without cost burdens even if the plaintiff’s parents, personally, disclaim an entitlement to fees or expenses.

57. Perceived advantages in management of the plaintiff’s affairs through a private family trust, rather than through the active involvement of family in management of a protected estate, seem to me to be a potentially counter-productive illusion. Any statutory fees payable to the NSW Trustee for its discharge of a monitoring function for supervision of the family’s management of the plaintiff’s protected estate seem to me, comparatively, a small price to pay for the greater flexibility, and safety, afforded to the plaintiff by protected estate management orders than could be had through the proposed trust arrangement.

41. I do not doubt that the plaintiff trusts her parents, and her broader family, implicitly. Nor do I doubt that the family has struggled, emotionally and intellectually, with how everybody might best advance the plaintiff’s welfare and interests.

42. Equally, I am confident that the plaintiff’s support for a trust arrangement is primarily an expression of the profound trust she has in her parents, not a fully informed, independent judgement about alternative scenarios.

43. On one view, the Court is requested, in these proceedings, to sanction a divestiture of the plaintiff’s principal asset which, absent the Court’s approval, could be liable to be set aside as having been procured by an exercise of undue influence upon the part of her parents, well-meaning though they are.

44. The potential for an application by the plaintiff to have any transaction associated with her payment of her compensation money to the family trust set aside would, on one view of the case, inure beyond the time when she ceases to live under her parents’ control: Quek v Beggs (1990) 5 BPR [97405] at 3-5 and 18. This might occur if, for example, the plaintiff were to marry, and to seek freedom from constraints of the trust deed. Viewed in this perspective, the proposed trust arrangement could, in time, become a litigation trap. In any event, the present proceedings do not lend themselves to an examination of these questions in detail.

45. With deep respect for their conscientious commitment to advancement of their daughter’s welfare, I cannot exclude the possibility that the parents’ judgement is too powerfully informed by an element of denial of her disability, coupled with a deep love for her; an equally deep need to stay, personally, in control of her life; an element of grief for lost opportunities inflicted on the family by a medical misadventure; a failure to appreciate the significance of making themselves, personally, potentially, ultimate beneficiaries of the trust; and, perhaps, a lack of insight into the possibility that, as this young woman finds her feet, she may come to resent close parental control of her life.

46. In a world in which risk management, and prudential planning, play an important role, all family members may need, in time, to step back a little from each other in order to remain truly close to one another. There is every possibility that the plaintiff will, one day, fly from the nest.

47. What is required, for the benefit of the plaintiff and in her best interests, is not a protective trust arrangement, incapable of adaptation to changing circumstances, but a protected estate management regime that can be adapted to meet all exigencies and, if the plaintiff’s circumstances change, may be brought to an end in an orderly way, no less mindful of a need to give paramount consideration to her welfare and interests.

48. Of a family who have wrestled with contingencies untold I ask, rhetorically, what might happen if, in the fullness of time, the plaintiff meets a young man, marries and seeks a life independent of her nuclear family, with a loved one she trusts no less (and, perhaps, more) than them? Or, rhetorically, what might happen if, against all expectations, there is a falling out between family members? No one can predict the future; but, if (as may well happen) either of these scenarios is a future that unfolds, the trust arrangement that is presently preferred could be an abiding source of irritation or worse, an albatross around every neck.

49. The trust established by the plaintiff’s parents contemplates that she might be survived by children, but makes no express provision (testamentary or otherwise) for a husband or partner. Upon her death, should she predecease her parents leaving no lineal descendants, her interest in property of the trust will pass to her parents.

50. The trust deed also provides for the plaintiff’s entitlement to any residence purchased by the trustee for her to be limited to “a personal right of occupation in respect of the property for as long as [the plaintiff] wishes during her lifetime.” The trustee has a right to sell any such residence, and to use the proceeds of a sale to acquire a substituted residence, provided that, in exercising its power, it acts to achieve “the sole purpose and ancillary purpose of the trust”.

51. The “sole purpose” of the trust is limited to “the reasonable care and accommodation” of the plaintiff. An “ancillary purpose” is one which is “necessary or desirable to achieve the sole purpose of the trust.”

52. A related provision of the trust deed provides that the trust “is established to provide care and accommodation to [the plaintiff] only” and that, in carrying out its responsibilities under the trust, the trustee is required, inter alia, to have regard to “the nature and severity of her condition” as well as her current and future needs, and to ensure that her interests take precedence over any contributor to the trust fund or any person with an interest or expectancy in the fund upon her death.

53. The lack of flexibility in the trust compares unfavourably with powers of the Court, or the NSW Trustee, to authorise a protected estate manager to make provision, not only for the plaintiff, but also for significant others in her life. The Court’s protective jurisdiction is “parental and protective. It exists for the benefit of [the protected person], but it takes a large and liberal view of what that benefit is, and will do on behalf of [a protected person] not only what may directly benefit him [or her], but what, if he [or her] were [capable of managing his or her own affairs], he [or she] would as a right minded and honourable [person] desire to do”: HS Theobald, The Law Relating to Lunacy (1924), page 380; Protective Commissioner v D (2004) NSWLR 513 at 540 [150].

54. The inherent jurisdiction extends to authorisation of a voluntary allowance or donation out of a protected estate, not limited to allowances for the maintenance or benefit of a protected person’s family, although family may be natural objects of beneficence: Protective Commissioner v D (2004) 60 NSWLR 513 at 540-542, 543 and 544-545; JPT v DST [2014] NSWSC 1735 at [35]. That jurisdiction is supplemented, and extended to the NSW Trustee, by the NSW Trustee and Guardian Act, section 65, so far as concerns making provision for the maintenance and benefit of a protected person’s family.

55. The pendency of protected estate management orders does not, of itself, preclude a protected person from making a will (Perpetual Trustee Co. Limited v Fairlie-Cunninghame (1993) 32 NSWLR 377) and, even if a protected person lacks testamentary capacity, the Court has jurisdiction, as it does with any person lacking testamentary capacity (under the Succession Act 2006 NSW, sections 18-26), to authorise the making of a will on his or her behalf. A will, once made, can be revoked or amended as required to meet changing circumstances.

56. If her compensation money is paid into the trust established by her parents, and held subject to the terms of the trust deed, the plaintiff will have forgone any entitlement to dispose of it by will even if, at some future time, the consensus is that she is, in all respects, capable of managing her own affairs.

57. Should she wish to put an end to the trust, the probability is that she could not do so because she could not be said to be the only person having an absolute, vested and indefeasible interest in the capital and income of the trust for the purpose of invoking the rule in Saunders v Vautier: CPT Custodian Pty Limited v Commissioner of State Revenue (Victoria) (2005) 224 CLR 98 at 118-121.

58. To allow the plaintiff, by contribution of her compensation money to the family trust, to step outside the regulatory regime for which the NSW Trustee and Guardian Act provides is presently an attractive option for the plaintiff’s parents and, under their influence, for the plaintiff herself. However, to allow that to occur would be to do none of them a favour when the comparative merits of the trust and protected estate management orders are examined in detail, judged against the criteria for which section 39 of the NSW Trustee and Guardian Act provides.

59. Appointment of the plaintiff’s parents as managers of her protected estate, and management of her estate as a protected estate, both prioritises and respects her welfare – preserving scope for greater independent living – in a way more flexible than can be achieved through the proposed protective trust. It also provides greater security for all family members in the event things go wrong.

60. It is always open to the plaintiff and her significant others (including any person appointed to manage her protected estate) to apply to the Court, or the NSW Trustee, for directions or a variation of the terms upon which the estate is managed. This is more generous to the plaintiff, and to her family, than what is on offer via the trust deed they prefer.

61. For these reasons, I have today made orders to the following effect:

1. DECLARE, pursuant to section 41(1)(a) the NSW Trustee and Guardian Act 2009 NSW, that the plaintiff is incapable of managing her affairs.

2. ORDER that the estate of the plaintiff be subject to management under the NSW Trustee and Guardian Act 2009.

3. ORDER that the parents of the plaintiff (hereinafter jointly described as “the Managers”) be appointed joint managers of the estate of the plaintiff subject to the orders and direction of the NSW Trustee.

4. ORDER, subject to further order, that on the death or discharge of the Managers, custody of the plaintiff’s estate continue to the other of the Managers.

5. ORDER that the Managers may not do anything in reliance on their appointment as managers of the estate of the plaintiff until the NSW Trustee has authorised them to assume management of the plaintiff’s estate.

6. ORDER, pursuant to section 68 of the NSW Trustee and Guardian Act, that the Managers give such, if any, security in respect of their management of the plaintiff’s estate as the NSW Trustee may determine to be appropriate.

7. ORDER that, subject to any further order of the Court or any order or direction of the NSW Trustee, all funds, including accrued interest, standing to the credit of the plaintiff in the personal injury compensation proceedings conducted by her father on her behalf be paid out to the NSW Trustee pending the NSW Trustee’s approval of a plan for management of the estate of the plaintiff by the Managers.

8. ORDER (pursuant to section 64 of the NSW Trustee and Guardian Act), subject to further orders of the Court and any order or direction of the NSW Trustee, that:

1. the plaintiff be at liberty personally to manage all income earned by her from her own personal exertions, and any accumulation of such income through saving; and

2. the Managers would be justified in allowing the plaintiff to maintain under her personal management a separate bank account funded (to the extent of $10,000 per year or such other amount as may be approved in writing, from time to time, by the NSW Trustee) from assets of her estate otherwise under the management of the Managers.

9. ORDER that the costs of these proceedings be paid out of the estate of the plaintiff on the indemnity basis.

10. ORDER that all parties (including the plaintiff and the Managers) be at liberty to apply as they may be advised.

11. ORDER that the solicitor for the plaintiff serve a copy of these orders, and these reasons for judgment published in support of the orders, on each of:

1. the plaintiff personally;

2. the Managers; and

3. the NSW Trustee.

12. ORDER that, at the time of service of a copy of these orders on the NSW Trustee, the solicitor for the plaintiff also serve on the NSW Trustee copies of the following documents:

1. the plaintiff’s summons, and amended summons;

2. the plaintiff’s written submissions;

3. the affidavits read in support of the amended summons; and

4. the transcript of the hearing of the proceedings.

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Decision last updated: 17 March 2016