Court of Appeal
New South Wales
Case Title: RL v NSW Trustee and Guardian Medium Neutral Citation: [2012] NSWCA 39 Hearing Date(s): 13 December 2011 Decision Date: 19 March 2012 Jurisdiction: Before: Campbell JA at [1]
Young JA at [189]
Sackville AJA at [197]Decision: (1) Appeal allowed.
(2) In lieu of the answer given in the court below to question 2 in the amended summons, substitute the answer: "The Court declines to answer this question."
(3) Revoke the declaration numbered 5 in the court below.
(4) Replace Order 7 in the court below with:
7. The income from the Sale Fund is to be retained in the Sale Fund, and the question of entitlement to the income is to await further determination by the NSW Trustee or the Court.
(5) Add to the orders made in the court below:
9. Without prejudice to how the moneys spent pursuant to this order are ultimately borne between the net proceeds of sale of the shares in Ansell Limited, interest that accrues on those net proceeds and other money that makes up the Other Funds, until further order of the court or further direction of the NSW Trustee moneys that are spent for PBL's benefit or on PBL's care or for the management of PBL's estate are to be paid from the Other Funds other than so much of the Other Funds as represents net proceeds of sale of shares in Ansell Limited and interest that accrues on those net proceeds.
10. Orders 6, 7 and 9 are in substitution for previous directions of the NSW Trustee concerning the setting aside of a separate fund from the proceeds of sale of the Darlinghurst garage of PBL and the manner in which that fund should be used.
(6) RL's costs of the appeal on the indemnity basis to be paid from the estate of PBL other than the Sale Fund and so much of the Other Funds as represents the net proceeds of sale of shares in Ansell Limited.
[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]Catchwords: MENTAL HEALTH - management and administration of property - garage on separate certificate of title bequeathed to neighbour in will - testatrix subsequently subject to a management order - garage sold with home unit by manager - where NSW Trustee and Guardian has made an order under s 83 NSW Trustee and Guardianship Act 2009 for the investing of the proceeds from the sale of a specific bequest in a separate fund - merely accounting device to hold in separate fund, as moneys are available for protected person on exhaustion of general pool of funds…
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- Case
- [2012] NSWCA 39
- Decision Date
CaseChat Overview and Summary
The court was required to determine whether the disposal of the specifically bequeathed garage by the manager adeemed the bequest. It also considered whether the NSW Trustee had the power to order the separate investment of the proceeds from the sale of the devised asset and, if so, whether such an action was appropriate. Furthermore, the court examined the principles governing the management of protected estates, particularly the balance between the maintenance of the protected person and the preservation of specific bequests.
The court held that the disposal of the garage by the manager, effected with the proper authority of the NSW Trustee and in the best interests of the protected person, did adeem the specific bequest. The court found that the NSW Trustee possessed the power under the *NSW Trustee and Guardianship Act 2009* to order the separate investment of proceeds from a devised asset, and that this action was consistent with the legislative intent and proper principles of managing protected estates. The reasoning emphasised that the primary consideration in managing a protected estate is the maintenance of the protected person, with secondary regard given to the preservation of bequests. To the extent that the protected person is properly maintained, specific bequests or their proceeds should be preserved. The court also noted that it was not appropriate to join parties who would be affected by a judicial opinion on the disposal of a specific bequest after the hearing had concluded, meaning the decision would not bind those parties.
The appeal was allowed, and several orders were made. The court declined to answer a specific question posed in the court below and revoked a declaration. New orders were substituted regarding the retention of income from a "Sale Fund" and the manner in which moneys spent for PBL's benefit or on PBL's care were to be paid from other funds. These new orders replaced previous directions concerning the setting aside of a separate fund from the proceeds of the garage sale. Finally, the appellant's costs of the appeal were ordered to be paid from PBL's estate, excluding certain specified funds.
Orders
Orders of the court
(1) Appeal allowed.
(2) In lieu of the answer given in the court below to question 2 in the amended summons, substitute the answer: "The Court declines to answer this question."
(3) Revoke the declaration numbered 5 in the court below.
(4) Replace Order 7 in the court below with:
7. The income from the Sale Fund is to be retained in the Sale Fund, and the question of entitlement to the income is to await further determination by the NSW Trustee or the Court.
(5) Add to the orders made in the court below:
9. Without prejudice to how the moneys spent pursuant to this order are ultimately borne between the net proceeds of sale of the shares in Ansell Limited, interest that accrues on those net proceeds and other money that makes up the Other Funds, until further order of the court or further direction of the NSW Trustee moneys that are spent for PBL's benefit or on PBL's care or for the management of PBL's estate are to be paid from the Other Funds other than so much of the Other Funds as represents net proceeds of sale of shares in Ansell Limited and interest that accrues on those net proceeds.
10. Orders 6, 7 and 9 are in substitution for previous directions of the NSW Trustee concerning the setting aside of a separate fund from the proceeds of sale of the Darlinghurst garage of PBL and the manner in which that fund should be used.
(6) RL's costs of the appeal on the indemnity basis to be paid from the estate of PBL other than the Sale Fund and so much of the Other Funds as represents the net proceeds of sale of shares in Ansell Limited.
[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Full text does not contain this section.
Ratio Decidendi
Legal Principle Established
One justification for this practice is that it is consistent with the order of application of assets in a deceased estate. If an expense had been incurred for the maintenance of an incapable person but that expense had not been paid at the time of his or her death, the order of application of assets under s 46C and the Third Schedule of the Probate and Administration Act 1898 would require the expense to be paid out of the residuary estate before it was paid from any asset that was the subject of a specific gift. It is consistent that the burden should fall in the same way if the expense is paid during the lifetime of the incapable person. Indeed, it would be anomalous if where the burden of an expense fell depended on the chance of whether the manager of the incapable person's estate was fast or slow in paying bills for expenses. These views are consistent with the decision of Hodgson J (as his Honour was then) in Christensen v McKnight (NSWSC, Hodgson J, 2 March 1995, unreported). I mention it because it appears to be the only NSW case that considers s 83 of the 2009 Act or any of its predecessors. There, a lady made a specific devise of certain real estate in her last will before becoming incapable. After she became incapable, a management plan was drawn up authorising the sale of that real estate to pay certain of her debts. Contracts were exchanged before she died, but were not completed by the time of her death. Some of the debts were paid prior to her death out of the deposit. There was a contest between the specific devisees and the residuary beneficiaries of the lady's estate concerning the manner in which s 48 Protected Estates Act would affect the sale proceeds, when ultimately received. Hodgson J said, at 10-11: "In my view, s 48(5) does not introduce a general discretion into the operation of s 48(1), but only gives some flexibility to the means of putting it into effect. I accept that s 48(1) only operates so long as 'surplus money' arising from a sale to which it applies is identifiable as such. In my view, the word 'surplus' indicates that the section only applies to the net proceeds of any such sale, and only to so much of these as remain identifiable at the date of death. Here, so much of the deposit as was used prior to the death of the deceased to pay debts would not be affected by s 48, nor would any other part of the deposit which was applied so as to lose its character as proceeds of sale. However, the balance of the purchase money received after the death of the deceased could not be considered as other than money arising from the sale, and in my view, could not be affected by the management plan devised before the deceased's death. In my view, therefore, at least the balance of the purchase money, less any expenses of the sale which were deducted from it and less any debts which were secured on the property, would be surplus proceeds of sale within s 48(1); and in my view, that section would be effective to produce the result that that money be treated as representing 114 Rosedale Road for the purposes of giving effect to the will."