RGA
[2012] QCAT 345
•16 July 2012
| CITATION: | RGA [2012] QCAT 345 |
| PARTIES: | RGA |
| APPLICATION NUMBER: | GAA4945-11 / GAA083-12 |
| MATTER TYPE: | Guardianship and administration matters for adults |
| HEARING DATE: | 25 June 2012 |
| HEARD AT: | Brisbane |
| DECISION OF: | Barbara Bayne, Presiding Member |
| DELIVERED ON: | 16 July 2012 |
| DELIVERED AT: | Brisbane |
ORDERS MADE: | 1. The Tribunal approves the actions of The Public Trustee of Queensland as attorney for RA under the Enduring Power of Attorney pursuant to section 147 of the Public Trustee Act 1978. 2. The Tribunal directs that The Public Trustee of Queensland implement the investment recommendations of RBS Morgans as set out in the Statement of Advice dated 24 November 2011. |
| CATCHWORDS: | PTQ as attorney under an enduring power of attorney – applications for directions – examination of the PTQ’s actions – PTQ directed to implement investment advice |
APPEARANCES and REPRESENTATION (if any):
This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (QCAT Act).
REASONS FOR DECISION
RA is aged 66 years of age and has been diagnosed with a moderate intellectual disability. He has a sister, BE, and a brother in law, BW.
Various health professional reports[1] provided to the Tribunal clearly support that although RA is able to make simple financial decisions, he is dependent on others for all complex financial decisions. BE and BW agreed with this contention. With a valuable estate as at 24 November 2011[2], the Tribunal is satisfied that RA is unable to manage his complex financial matters.
[1]These include reports from psychologists MR dated 30 March 2006 and JP dated 16 June 2011 and 20 June 2011.
[2] Annual Statement of Advice RBS Morgans.
The Public Trustee of Queensland had been managing RA’s financial matters since 22 April 1999 under a certificate of disability[3]. Under the transitional provisions of the Guardianship and Administration Act 2000, the PTQ became RA’s attorney under an Enduring Power of Attorney for financial matters[4] pursuant to section 147 of the Public Trustee Act 1978.
[3] See s 71 Public Trustee Act 1978.
[4] Section 147(2) Public Trustee Act 1978.
BE and BW monitor RA’s financial matters on an ongoing basis. For some years, as evidenced by copious correspondence, they have been expressing concerns about the PTQ as the financial decision maker. As a result of an application dated 29 July 2010 brought by BE and BW for an examination of PTQ’s actions, the Tribunal initiated, on 29 June 2011, an application for directions.
Directions were made at a hearing on 23 June 2011; the parties attended a compulsory conference on 25 August 2011. On 3 January 2012 the Tribunal received an application for directions from the PTQ and further directions were made at a hearing on 20 March 2012.
There is no application before the Tribunal, nor has there ever been, for the appointment of an administrator. BE and BW have made it quite clear that they wish the PTQ to continue as attorney. They are however adamant that the PTQ “must lift their game”.
At the hearing on 25 June 2012, the Tribunal relied particularly on the submission of the PTQ dated 3 April 2012 and that of BE and BW dated 18 April 2012. The Tribunal considered the major matters seemingly outstanding at that date.
Sale of Australian Equities
BE and BW have challenged the need to sell some of RA’s shares.
The evidence supports that RA has been classified as a conservative investor[5]. RA’s current portfolio reflects significant investments in equities, described in the Annual Statement of Advice dated 24 November 2011 commissioned by the PTQ from RBS Morgans as “an existing exposure of 83% in Australian Equities which we consider to be heavily overweighted for an investor with a conservative risk profile. The recommended investment range for this sector is 10-25%”.
[5] The SOA from RBS Morgans dated 24 November 2011 gives a definition.
[10]The financial advice from RBS Morgans recommends the sale of several of the Australian Equity holdings in order to reduce the equities exposure and allow RA’s portfolio to reflect a more appropriate asset allocation.
[11]The Tribunal considers that the PTQ, as an attorney, is bound by the relevant provisions of the Trusts Act 1973 (in particular, section 24) which encompasses the principles known as the prudent person rule[6]. The inquiry into the investment decision is one of process; that is to say, it is considered that the concept of prudence is a test of conduct, not of performance.
[6] See s 84(2) and (4) Powers of Attorney Act 1998.
[12]In this case, RA’s circumstances involve a rating as a conservative investor. In this regard, the PTQ was, in accordance with section 24(1), having regard to the needs and circumstances of the principal, RA. Having taken that rating into account, the advice of the financial planner was based on the need to adjust RA’s investments to accord with his rating. The advice appears to take all relevant considerations into account; it is thus considered to be prudent advice and consequently unwise for the attorney to ignore it.
Fees
[13]RA is currently charged fees by the PTQ, RBS Morgans and RBS Morgan’s Wealth+ Managed Portfolio Service; BE and BW are convinced that RA should not be responsible for all of these.
[14]Firstly, BE and BW consider that the PTQ’s fees (Personal Financial Management Fee and Asset Management Fee) are excessive and are not reasonable in the circumstances.
[15]Section 17 of the Public Trustee Act1978 empowers the PTQ to fix fees by way of Gazette Notice. It has done so and is therefore entitled to charge those fees. Further, Vincents Chartered Accountants in the ‘Examination of Accounts’ dated 27 July 2011 concludes that PTQ has charged in accordance with the relevant Gazette Notice.
[16]Section 17(3) of the Public Trustee Act 1978 provides that fees should be reasonable in the circumstances. It is a matter for the PTQ to ensure this is the case. There is no material before the Tribunal to suggest that the fees of the PTQ are not reasonable.
[17]Secondly, a financial planning fee is charged by RBS Morgans to prepare a Statement of Advice each year. This, charged at present at $370 per annum, is not contested by BE and BW.
[18]Thirdly, the PTQ has outsourced the management of RA’s direct share investment portfolio to RBS Morgan’s Wealth+ Managed Portfolio Service since 15 June 2006. Wealth +, a specialised administration service, charges fees for the ongoing monitoring and management of the portfolio, including the management of any corporate actions and the provision of consolidated reporting.
[19]BE and BW assert that the PTQ is delegating its responsibilities and it, rather than RA, should pay such fees.
[20]The Tribunal considered whether the outsourcing of such duties is an integral part of the duties of an attorney, particularly one who holds itself out to be a professional entity.
[21]Section 54 of the Trusts Act 1973 authorises trustees to employ agents. Section 8(5) of the Public Trustee Act1978 empowers the corporation to appoint agents and attorneys and to engage consultants. It is often the case that specialists are engaged by an attorney – to seek taxation or legal advice, to value and sell real estate, for example. There is a distinction to be drawn in a decision-maker outsourcing to seek particular specialist advice, and, as in this case, outsourcing the ‘hands-on’ management of a particular asset.
[22]In the circumstances of this case, it is not considered within the ambit of an attorney’s role (even a professional attorney) to manage the Adult’s direct share investment portfolio to the same degree of competence as the specialist service. The PTQ’s acceptance of the recommendation in this regard is consistent with maximising the efficient management of the portfolio. It is ultimately for RA’s benefit and is therefore not considered to be unreasonable.
[23]It is not sustainable to suggest that in such cases the attorney should pay the fees of the agent/specialist. In this context, it is not a “delegation by the PTQ of its duties” as BE and BW assert. In the circumstances of this case, the Tribunal determines that the fees of the specialist are properly payable from RA’s funds.
The PTQ Does Not Analyse the Advice of the Financial Planner
[24]Clearly a decision-maker must examine the advice it receives and satisfy itself that instructions have been properly interpreted and applied, and to satisfy itself that the advice is in the best interests of an adult. Simply because the PTQ elects to adopt the advice does not indicate that the advice has not been considered.
[25]It is likely that the majority of trust officers in the PTO are not licensed financial planners. However, if within the body of the advice there appears to be some compelling reason why the advice should not be followed, it lies on the decision-maker to seek clarification. If necessary, of course, it may be appropriate to seek the advice of another professional. Thereafter it is likely that an attorney who ignores professional advice does so at his or her own peril.
The Failure of the Financial Adviser (and the PTQ) to take BE and BW’s Investment Views into Account
[26]One of BE and BW’s significant concerns has been the failure, in their opinion, of the financial adviser (and the PTQ) to take their investment advice into account. For example, in 2007 they recommended (unsuccessfully) that 50% to 66% of RA’s funds in growth funds should be redeemed and reinvested in term deposits.
[27]The attorney must, of course, consult with relevant parties, and take into account their views. However, it is the attorney who is the decision-maker. It is the attorney who ultimately is accountable for decisions which have been made. An emphasis on fixed term deposits (which do not allow for capital growth or at least maintain the real value of the capital) may not comply with the PPR.
[28]The financial adviser specifically considered investment in term deposits at the time, but did not recommend this course of action for reasons outlined in the advice dated 24 November 2011. In short, the adviser did not consider such investments to be in the best interests of RA, and the Tribunal finds no basis to hold otherwise.
[29]The Tribunal is satisfied that the PTQ has demonstrated its willingness to consider BE and BW’s investment preferences and has provided these to RBS Morgans who has done likewise.
Consensus of Opinion
[30]In their letter to the PTQ dated 5 December 2011, BE and BW highlight that “no action is to be taken regarding the Review of Assets unless a consensus of opinion is reached or the matter is taken to the Tribunal by the PTQ...”
[31]Again, the attorney must consult with relevant parties, and take into account their views. However, again it is the attorney who is the decision-maker; it is the attorney who ultimately is accountable for decisions which have been made.
[32]The Tribunal considers it essential that the PTQ as attorney must be able to implement in a timely manner the financial advice provided from time to time by professional advisers.
Conclusions
[33]The Tribunal has considered the wealth of documentation on file.
[34]The Tribunal finds that the evidence before it supports that the PTQ is acting appropriately as attorney for RA.
[35]The Tribunal finds that the PTQ should implement the recommendations in the SOA dated 24 November 2011 as prepared by RBS Morgans.
[36]Under the circumstances, the Tribunal will direct that the PTQ do so.
[37]Orders are made accordingly.
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