SDX (Administration)

[2009] TASGAB 14

GUARDIANSHIP AND ADMINISTRATION BOARD
HOBART      

SDX on the application of THE ROY FAGAN CENTRE

Neutral Citation: SDX (Administration) [2009] TASGAB 14

REASONS FOR DECISION

Anita Smith (President)

Administration – capacity to make reasonable judgments about the estate – appointment of an administrator – son and wife in positions of conflict of interest
Guardianship and Administration Act 1995s 51, 54

1. SDX is a 75 year old married man who has been diagnosed with Bi Polar Affective Disorder.  The Roy Fagan Centre made an application for the appointment of an administrator for him because staff there were concerned that his and his wife’s estate was at risk from some irrational and extravagant purchases he had made and unmanageable debts in the estate.  SDX was resident at the Roy Fagan Centre pursuant to a mental health order. 

2. In assessing an application for the appointment of an administrator, the Board must be satisfied that SDX is a person with a disability, that the disability renders him incapable of making reasonable judgments and that there is a need for the appointment of an administrator.  In selecting a person for appointment the Board must be satisfied that the proposed administrator is competent for the role and is not subject to any conflicts of interest in performing that role.

3. The application was heard on 15^th June 2009 at the Roy Fagan Centre.  The following persons attended, with their role in proceedings noted below:

   SDX – proposed represented person
   LX - proposed represented person’s wife and enduring guardian
   Mecthild Newman – LX’s advocate
   KX - proposed represented person’s son (by telephone)
   Dr Ratnagobal – Roy Fagan Centre Medical Officer
   Paul Plummer – Roy Fagan Centre Clinical Nurse Consultant
   MEA – alternative enduring guardian for SDX
   MM  - alternative enduring guardian for SDX
   Lee Perry  Investigation and Liaison Officer for the Board

Is SDX a person with a disability?

1. Dr Cheah completed a Health Care Professional Report which accompanied the application.  Dr Ratnagobal attended the hearing and gave evidence that SDX has bi polar affective disorder and had recently experienced a manic episode of that illness.  According to Dr Cheah the disability has only been evident for less than a year and this is SDX’s first manic episode.

2. The Board was satisfied on the basis of evidence from Dr Cheah and Dr Ratnagobal that SDX is a person with a disability within the meaning of the Act.

Is SDX incapable by reason of that disability of making reasonable judgments about his estate?

1. The evidence provided by the medical practitioners stated that SDX had grandiose plans with regards to his estate and had made extravagant purchases in order to implement these plans.  They also gave evidence about debts that SDX currently has which are not being appropriately serviced.  SDX spent a considerable time in the hearing explaining his financial plans. I will outline those plans as best I understand them:

2. SDX urgently wants to set up an internet business called ‘[business name]’ where by websites under this name will be established in each country to cover all of the languages in the world.  He stated that the [religious text] recorded 314 languages in the world.  The website would have 314 pages to represent each of these languages.  (It was hard to detect from this discussion whether it is SDX’s reporting of the [religious text] that is incorrect on this point, or the [religious text] itself, but I suspect that there may be close to 314 languages in Australia alone.) The websites would give away items that are freely available on the internet and from local hardware stores. 

3. SDX stated that his website will sell items from sites like amazon.com at 15% commission.  He gave the example that if 100 people purchased items from his website (via associate links from such sites) at $1000 each, this would make $100,000.00. (The Board had the strong impression that as he explained this, SDX was assuming all of these funds would be his profit, as opposed to the 15% commission on that amount.) He had recently purchased some computers to furnish this business.  The only reason, according to SDX, that this business had not been successful was that he had been hospitalised in the Psychiatric Intensive Care Unit against his will. 

4. SDX receives a Centrelink benefit.  He has $12,000.00 of debt on credit cards and store finance cards.  His strategy for paying these debts to meet minimum payments for each of them as they become due.  He called this ‘making credit work for you’.  When asked how he would pay debts once the interest free periods had expired, he stated that if he had been paying the monthly minimum payments, the debt would have been paid.  SDX did not appear to understand, even after it had been explained to him, that minimum monthly payments are not calculated for the extinguishment of the debt within the interest free period. He mentioned plans to make use of new ‘interest free’ credit arrangements to fund the debts if they become due, but denied that this was a process of using debt to pay debt.

5. KX gave evidence about taking instructions from his father when he was in Hobart recently to pay the fortnightly instalments on line.  He said that SDX’s understanding of his credit and debit balances was accurate and his instructions were sound.

6. In all of his explanations, SDX gave prolific extraneous details, but was unable to answer key questions in a manner that was understandable by persons in the room.  Ultimately three episodes from his history suggested very strongly to the Board that he was not making reasonable judgments about the debt management or the business potential.  Firstly, the fact that he has no previous experience in internet businesses or online commercial arrangements and intends to commence such an operation at the age of 75 years seems wildly ambitious.  Secondly, some time ago, Mr and Mrs SDX sold their home for $400,000.00 to SDX’s son, KX and his wife.  SDX decided to ‘leave in’ $100,000.00 to KX as advance rent.  Mr and Mrs SDX pay $100 per week in rent, meaning that he paid rent in advance until he reaches the age of 94.  Thirdly, with the balance proceeds of sale, Mr and Mrs SDX established a business selling sushi.  The business employed a single mother.  The business failed and, while the business was failing, the proceeds of sale were used to pay the income of the single mother.  Now Mrs SDX has $12,000.00 in a term deposit which is all that the couple have left from the sale of the house.  Despite this, neither Mr nor Mrs SDX saw themselves as being creditors to KX and neither saw recovery of the rent in advance as a means to extinguish the debts that they currently have. 

7. SDX presented himself as a financially talented person who had tapped into a simple and cost free way to make very large amounts of money from the internet.  SDX did not impress the Board as a person with business acumen or the ability to make the vast amounts of money from an internet business in the manner that he described.  He also did not impress the Board as having a realistic approach to managing his debt.  The medical opinion was that his financial plans are delusional and unrealistic and a symptom of his disability.  The transactional level of skill that KX described does not equate to the ability to make reasonable judgments. Mere knowledge of one’s accounts and their balances is not as important in this situation as having realistic plans for the future management of the estate.  The Board favoured the medical opinion and therefore found that SDX is not capable of making reasonable judgments.

   Is there a need for an administrator?

8. The need for the appointment of an administrator arises from the need to manage SDX’s debts and to prevent the accumulation of further debts in pursuit of his internet business plan.  To the same extent that SDX argued that he is capable of making reasonable financial judgments, SDX also argued that he needed no administrator. 

9. The Board was satisfied that an administrator is required to investigate and manage SDX’s debts, assist in meeting weekly liabilities and to recover part or all of the funds paid as rent in advance to KX and his wife.

   Nominations for the appointment of an administrator

10. Mrs SDX and KX both nominated themselves for appointment as an administrator.  They also argued that they could be appointed jointly as administrator. Mrs SDX and her advocate expressed deep concern about the effect that the Public Trustee’s fees would have on the household budget.  

11. Multiple or joint appointments or administrators are not specifically provided for in the Guardianship and Administration Act 1995.  Because there has been specific provision made for multiple appointments of guardians in section 22, the Board interprets that only single appointments of administrators are possible.  Therefore the Board did not entertain an application for a joint appointment of KX and Mrs SDX.

12. KX fails as a potential administrator because it appears that he is in debt to his father for advance rental, some of which may be recoverable.  Therefore if appointed administrator, his and his wife’s personal financial interests will conflict with those of his father and he is therefore ineligible pursuant to section 54(1)(d)(ii) of the Act. 

13. Mrs SDX was tearful for much of the hearing and there was evidence that she had been afraid to disobey SDX in certain bizarre instructions that he gave during his manic phase prior to hospitalisation.  In his report to the Board, the Board’s investigation and liaison officer described Mrs SDX as being overwhelmed by the financial pressures she faces, an observation that was strongly supported by the clinical nurse consultant and consistent with her demeanour in the hearing.  

14. Being an administrator in this case may mean taking legal action against SDX’s son.  An administrator who takes legal action against a step son would have to be a person with a very firm resolve and in any event, there would still be the possibility that there is a conflict of interests.  Because of her business history and her overwhelmed response to the couple’s financial circumstances, the Board was not satisfied that Mrs SDX  meets the tests in section 54(1)(d) of the Act.

15. There being no other suitable nominees, the Board appointed the Public Trustee to administer SDX’s estate.

    After hearing an application by the Roy Fagan Centre in respect of SDX of the Roy Fagan Centre, 54 Kalang Avenue, Lenah Valley (hereinafter called the ‘represented person’) the Board was satisfied that the represented person:

• is a person with a disability, and

• is unable by reason of the disability to make reasonable judgements in respect of his estate, and

• is in need of an administrator;

  THE BOARD ORDERS

1. That The Public Trustee be appointed as administrator of the estate of the represented person.

2. That the powers and duties of the administrator be those conferred by Division 4 of Part 7 of the Guardianship and Administration Act 1995.

3. That a review of the order be conducted after 12 months.

4. That the order remains in effect until 14 June 2012.

   Anita Smith

   PRESIDENT