SG
[2007] WASAT 269
•17 OCTOBER 2007
| JURISDICTION | : | STATE ADMINISTRATIVE TRIBUNAL |
| STREAM | : HUMAN RIGHTS | ||
| ACT |
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| CITATION |
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| MEMBER |
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| HEARD |
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| DELIVERED |
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| FILE NO/S |
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| BETWEEN | : AB |
Applicant
SG
Represented Person
Catchwords:
Guardianship and administration - Administration - Capacity - Existing enduring power of attorney - Need for independent administration of the estate - Public Trustee appointed plenary administrator
Legislation:
Guardianship and Administration Act 1990 (WA), s 3, s 4(2), s 4(2)(c),
s 4(2)(f), s 17, s 64, s 68, s 104, s 107(1)(a), s 107(1)(b), s 107(1)(c), s 108(1a),
Sch 1(12)
State Administrative Tribunal Act 2004 (WA), s 78
[2007] WASAT 269
Result:
Public trustee appointed administrator
Category: B
Representation:
Counsel:
| Applicant | : | Mr E Tan |
| Represented Person | : | Mr Jones |
Solicitors:
| Applicant | : | Robertson Hayles Lawyers |
| Represented Person | : | Joanne Match & Associates Barristers & |
Solicitors
Case(s) referred to in decision(s):
Edna May Collins by her next friend Glenys Lesley Laraine Poletti v May
[2000] WASC 29
[2007] WASAT 269
REASONS FOR DECISION OF THE TRIBUNAL:
Summary of Tribunal's decision
1 The State Administrative Tribunal appointed the Public Trustee as
the plenary administrator of the estate of a 79-year-old man who suffered
cognitive impairment following a brain aneurysm in 2005.2 His daughter applied for the appointment of the Public Trustee as
administrator of his estate and asserted that the management of her father's affairs since his illness had been to his detriment and to the benefit of his spouse. In particular, she alleged that large sums had been transferred from accounts in her father's sole name into joint accounts with his spouse following what the daughter alleged was a loss of capacity. In addition, over $3 000 000 had been transferred to the spouse's son. This transaction followed advice to the couple from their accountant about their taxation obligations as Australian residents. Such a transfer was said to be both out of character for the man and evidence of his incapacity.
3 The Tribunal found that based on all of the medical evidence
regarding the effects of his illness in 2005, the man was a person for whom an administrator could be appointed in that he was unable by reason of his disability to make reasonable judgments about his estate.
4 The Tribunal found that he was in need of an administrator of his
estate. The Tribunal accepted the submission from counsel for the man and his spouse that his capacity and the need for an administrator of his estate should be seen in the context of the size and complexity of the estate to be managed. The Tribunal did not accept that the estate was so simple that all aspects could be managed by the man's spouse without the need for an order. The Tribunal determined that, considered in its entirety, there was a large estate to be managed and the decisions that would be required for its management were now beyond the man because of his disability and as such there was a need for formal management of his estate.
5 The Tribunal determined that an existing enduring power of attorney
executed by the man in November 2006 was not an effective or appropriate means of managing his estate. His spouse, who he had married in August 2006 following a long-term relationship, was the donee of the power and maintained that she had not acted on it. The Tribunal heard that other informal means had been used to manage aspects of the estate.
[2007] WASAT 269
6 The Tribunal was not satisfied that the less formal arrangements for
financial management of his affairs said to be in place were operating in
the man's best interests.7 Although the enduring power of attorney executed in
November 2006 had not been acted on, it was revoked by the Tribunal. Based on the medical evidence, the Tribunal concluded that the capacity of the man at the time of the execution of the enduring power of attorney was in doubt and the attorney (his spouse) was now in a position of conflict of interest in relation to the man's interests. This meant that the enduring power of attorney could not operate as a less restrictive alternative to the making of an administration order.
8 The Tribunal accepted the submissions of the applicant, and of the
Public Advocate, that an independent administrator should be appointed to act on the man's behalf and appointed the Public Trustee as the administrator of the estate.
Background and application
9 These reasons relate to the determination of an application to the
State Administrative Tribunal by the daughter (the applicant) of SG (the represented person) under the Guardianship and Administration Act 1990 (WA) (GA Act).
10 These written reasons are provided pursuant to s 78 of the State Administrative Tribunal Act 2004 (WA) (SAT Act) at the request of both the solicitor for the represented person and his spouse, and the solicitors now acting for the spouse.
11 Orders for the appointment of an administrator were made on the day
of the hearing and brief oral reasons were delivered at that time. These expanded written reasons are anonymised and some identifying information has been removed, consistent with the requirements of the GA Act (see s 17 Sch 1(12)) and the practice of the Tribunal in respect of applications made under that Act.
12 The applicant daughter applied to the Tribunal for the appointment of
the Public Trustee as administrator for the estate of the represented person. The application was filed with the Tribunal on 9 January 2007. The matter was first heard on 19 June 2007 and adjourned for further information to be provided to the Tribunal. Following the final hearing on 7 August 2007, the Public Trustee was appointed plenary administrator of the estate of the represented person for a period of two years.
[2007] WASAT 269
13 SG, the represented person, is a man of 79 years. He is a highly
educated professional who is a resident of Australia, and who has
substantial property and business interests in another country.14 The Tribunal heard that in October 2005 the represented person
suffered a brain aneurysm which required surgery. Prior to that illness he
was engaged in the practice of his profession and travelled frequently.
The represented person married his spouse (spouse) in August 2006 following a long-term relationship with her, which it is agreed between the parties dates at least from the late 1980s. The applicant and the extended family were not advised that the marriage had taken place and learnt for the first time the couple had married in the course of the hearing of the application before the Tribunal.
16 The represented person divorced his former wife, the mother of the
applicant, in 1998 but it is agreed that he maintained regular, often daily,
telephone contact with her until after his operation in October 2005.17 The represented person executed an enduring power of attorney
appointing his spouse as donee in November 2006. The document was witnessed by a solicitor and a civil marriage celebrant. That solicitor now represents the represented person and his spouse in this proceeding.
18 The represented person has one daughter, the applicant, from his
previous marriage and a number of grandchildren and a great-grandchild.
His extended family lives largely in the overseas country.19 In the course of the application, the Tribunal heard evidence
regarding the represented person's financial and property arrangements,
both as regards his former spouse and with his current spouse.20 The applicant asserts that since his illness, the funds of the
represented person held in his own name in a bank account in an overseas country were transferred into joint accounts with his spouse held in Australia and in addition, over $3 000 000 was transferred from accounts in his name and that of his spouse to a third person for the purposes of minimising their taxation liability. In the course of the hearing of the application, the third person was identified as the son of the spouse.
21 The applicant asserts that following surgery for his brain aneurysm
that the regular contact with her and the daily telephone contact with her mother ceased. There is apparent agreement about this aspect of the
[2007] WASAT 269
evidence, as the spouse agrees that this was because the represented
person could not remember the telephone numbers. (T:57 19 June 2007)22 The applicant states that in May 2006 maintenance payments in place
since 1998, to the represented person's former spouse and his grandchildren, also ceased. Following this, the former spouse instituted maintenance and property proceedings in the overseas country.
23 The applicant alleges that the represented person is no longer capable
of managing his financial affairs. She also alleges that her access to him since his brain surgery on 7 October 2005 has been limited by his spouse and she believes that there has been a sale or transfer of properties benefiting the spouse at the expense of her father. The applicant alleges that the spouse's interests conflict with those of her father and that an independent administrator is required to manage his estate.
She proposes the appointment of the Public Trustee to manage his financial affairs.
The legislation and legal principles
25 Before the Tribunal can make an order appointing an administrator
for a person for whom an application is made, the Tribunal must be satisfied that the person is incapable by reason of a mental disability of making reasonable judgments in respect of matters relating to all, or any part, of his estate and is in need of an administrator of his estate (s 64(1)(a) and (b) of the GA Act).
26 Mental disability is defined in s 3 of the GA Act to include an
intellectual disability, a psychiatric condition, an acquired brain injury and
dementia.27 Section 64 is subject to s 4(2) of the GA Act which sets out the
principles which the Tribunal must observe in dealing with proceedings commenced under that Act. Those principles provide that the primary concern of the Tribunal must be the best interests of any represented person, or of a person in respect of whom an application is made; that every person shall be presumed to be capable of looking after his own health and safety; making reasonable judgments in respect of matters relating to his person; managing his own affairs; and making reasonable judgments in respect of matters relating to his estate, until the contrary is proved to the satisfaction of the Tribunal. These principles also include that an administration order (or a guardianship order) should not be made if the needs of the person in respect of whom an application for such an
[2007] WASAT 269
order is made, could, in the opinion of the Tribunal, be met by means less restrictive of the person's freedom of decision and action. Any order made should be in terms that impose the least restrictions possible in the circumstances on the person's freedom of decision and action. In considering any matter, the Tribunal is bound to consider the wishes of the person as expressed or gathered from the person's previous actions.
The enduring power of attorney executed by the represented person is relevant to the determination of this application.
29 Section 104 of the GA Act provides for the creation of an enduring
power of attorney. To be effective as an enduring power of attorney the instrument must comply with the statutory requirements (see s 104(1) and (2)).
30 On acceptance of the role, a donee of an enduring power of attorney
is obliged to exercise her powers as attorney with reasonable diligence to protect the interests of the donor (s 107(1)(a)), to keep records and accounts of dealings and transactions made under the power (s 107(1)(b)) and that donee cannot renounce the power during any period of legal incapacity of the donor (s 107(1)(c)).
31 To capably execute an enduring power of attorney a donor must be
capable of understanding that instrument. The legal principles regarding capacity to execute instruments are set out in the case referred to by counsel for the represented person and his spouse, Edna May Collins by her next friend Glenys Lesley Laraine Poletti v May [2000] WASC 29 (Collins v May). At [58], Owen J refers to the requisite capacity for the execution of an instrument:
"The extent or degree of unsoundness of mind that must be established depends on the nature of the transaction under scrutiny. In Gibbons v Wright (... 1955) 91 CLR 423 the Court said at 438:
'The principle which the case supports, and for which Boughton v Knight; Jenkins v Morris; Birkin v Wing and Estate of Park may also be cited, appears to us to be that the mental capacity required by the law in respect of any instrument is relative to the particular transaction which is being effected by means of the instrument, and may be described as the capacity to understand the nature of the transaction when it is explained. As Hodson L.J. remarked in the last-mentioned case, "one cannot
[2007] WASAT 269
consider soundness of mind in the air, so to speak, but only in relation to the facts and the subject-matter of the particular case".
Ordinarily the nature of the transaction means in this connection the broad operation, the "general purport" of the instrument; but in some cases it may mean the effect of a wider transaction which the instrument is a means of carrying out: Manches v Trimborn.'"
32 The Tribunal does not have the power to make declarations about the
validity of an enduring power of attorney. However, the circumstances surrounding the execution of an enduring power of attorney may be considered by the Tribunal when determining whether the enduring power of attorney is a less restrictive alternative for the management of the represented person's estate than the making of an administration order.
33 When the Tribunal makes an administration order, and the operation
of an enduring power of attorney would be inconsistent with the functions of the administrator, the Tribunal must revoke the power or vary it to remove the inconsistency (s 108(1a)).
Discussion of the evidence
Is the represented person incapable of making reasonable judgments about any or all of his estate?
34 There are a number of medical reports and correspondence from
medical practitioners and other professionals concerning the represented person before the Tribunal. The Tribunal also heard evidence from the represented person's accountant who had known him for over 20 years, and from a work colleague of over 30 years.
35 The professional reports are as follows:
36 A report, dated 19 May 2006, from Ms S, a clinical psychologist, of
an assessment of the cognitive functioning of the represented person notes
that:"[C]ognitive changes reported by [the spouse] include her husband having difficulty remembering recent events, repetitive questioning, regularly misplacing items and word finding difficulty. Some disinhibition in speech has been noted. [The spouse] first noted obvious changes after her husband's operation in October 2005 but admitted gradual changes were
[2007] WASAT 269
apparent before then. [The represented person] is not considered to have any insight into his change in capacity. [The spouse] described her husband as a 'proud man' who was denying both physical and mental changes."
37 The report provides assessment results from testing of the
represented person including CAMCOG-R (Cambridge Cognitive Exam) of 60/105 (the "cut off" score for dementia being 79 out of 105.) In the Folstein's Mini-Mental State Examination (MMSE), the represented person scored 18/30.
The conclusion of the report is:
"There are some relative strengths which remain intact on this assessment commensurate with [the represented person]'s estimated average level of pre-morbid intelligence. However, there are significant deficits in his ability to recall new learning, in his organisation and recall of visuo-spatial information and in his processing speed. There are also significant losses in verbal fluency and executive function evident relative to pre-morbid estimates.
[The represented person] is still managing daily activities without difficulty at home and is attending a local day centre once [per] week. The profile reflects mild to moderate cognitive impairment and represents a significant decline relative to premorbid functioning. [The represented person]'s scores are currently well-below the cut off score for a dementia and significantly below both age-cohort comparisons and education-cohort comparisons. The decline is consistent with a global pattern at this point in time.
It is recommended that a review be conducted in 12 months time to monitor [the represented person]'s condition, or earlier if a decline in cognition or functionality is noticed."
A review by another clinical psychologist, Ms E, on 21 May 2007 reports as follows:
"[The represented person]'s cognitive function has improved over the past twelve months, according to [the spouse]. [The spouse] reported that her husband is, however, easily distracted and has difficulty remembering recent events and some instructions, if given more than one instruction at a time."
[2007] WASAT 269
The report notes that the represented person:
"[N]o longer manages his finances or drives. [The spouse] manages the finances. [The represented person] does no future planning or thinking ahead. According to his wife, [the represented person] has no interest in socialising. He does however, respond appropriately to queries from associates in his [overseas business interest]. [The spouse] considers that her husband has no insight into the extent of his problems."
On testing, the reports of the CAMCOG-R were consistent with the 2006 result, however, the MMSE showed a decline to 14/30.
The conclusions of the report are that the represented person:
"[H]as some relative strengths which remain intact on this assessment commensurate with his estimated above average level of pre-morbid intelligence, scoring above the age cohort comparison on three CAMCOG-R subscales. However, there are significant deficits in his ability to recall new learning, in his orientation to time and place, in attention, recent memory, in his organisation and recall of visuo-spatial information and in his processing speed. There are also significant losses in verbal fluency and executive function evident relative to premorbid estimates.
The changes in memory ability and behaviour reported by [the represented person]'s family are considered to have been a sudden deterioration since his surgery for an aneurysm in October 2005. [The represented person] appears unaware of the extent of the memory changes that his family have noticed. Instrumental activities of daily living are considered by [the represented person] to be relatively unimpaired despite these deficits, however collateral information indicates otherwise. [The represented person] participates in no household chores, no longer drives or manages his finances, no longer reads or writes books, and does no future planning or organisation. He is attending a local day centre once week [sic]. The profile reflects moderate cognitive impairment and represents a significant decline relative to premorbid functioning. [The represented person]'s scores are currently well-below the cutoff score for a dementia and significantly below both age-cohort
[2007] WASAT 269
comparisons and education-cohort comparisons. The decline is
consistent with a global pattern at this point in time.No further review of [the represented person]'s cognitive functioning is required."
43 In his report, dated 23 January 2007, Dr G, a geriatrician, notes that
the represented person has a cognitive impairment "post subarachnoid haemorrhage in 2005". He states that he first recognised the impairment in October 2005 and describes it as static. He notes an "MMSE of 18" and "stable deficits". He refers to the report of the clinical psychologist produced in 2006. In response to the question, "Can the represented person make reasonable decisions now in relation to his financial affairs?" he notes "not formally assessed - probably not". The report further notes that the formal assessment was "not attended - 2006 (see letter)". This note refers to a letter, dated 21 February 2006, to the applicant's solicitors advising that the represented person had not attended an appointment made to assess his "testamentary capacity to give an enduring power of attorney". The report notes:
"On my previous assessments of [the represented person] including in-hospital, he made it extremely clear on many occasions that he does not wish to sign an Enduring Power of Attorney. Unless this has changed assessing his capacity to do so therefore seems of little value. If there are concerns from the family about a need to pursue a Guardianship & Administration Order [sic] to manage his affairs, then this obviously is a separate matter and would need specific assessment regarding that."
In a further report, dated 8 May 2007, from Dr G, of an assessment of the represented person conducted on 7 May 2007, it is stated that:
"I do not believe that [the represented person] has the capacity to make decisions about his estate and finances, and would very seriously doubt his capacity to make ongoing decisions about his medical care.
...
We had a fairly prolonged discussion about his estate and management of his affairs, and he great [sic] difficulty in answering these. He could not tell me who managed his banking currently in Australia, although I understand he has
[2007] WASAT 269
some involvement in this with the aid of his wife. He was
unable to tell me who paid the bills and how this was done.He was unable to tell me who owned his current property. When questioned about its approximate value, he estimated [AUD]$500 000; I understand that it was purchased less than 12 months ago for almost [AUD$2 000 000]. He was unable to tell me whether he owned other properties in Australia or overseas. In actual fact, I understand he owns [two] properties in [suburb] and a rental property in [suburb]. He also owns his office in [overseas] and [four] properties ... [overseas]. He was able to recall each of these when reminded of them. He was unable to tell me who owns any of the above properties: whether he owns them or whether there is joint ownership. He was unable to tell me who manages the properties ... [overseas] in his absence. I understand that he has a secretary who manages them and pays all of the bills; he was unable to tell me of this arrangement. I am not sure whether this is a formal or informal arrangement."
45 When the represented person was questioned by Dr G about the
guardianship and administration hearing the represented person's response
is reported as follows:"[H]is understanding is that his daughter is trying to get hold of his assets. In response to this, he replied, 'I don't like that. It's money I have earned.' He is convinced that he is able to manage his own affairs, although as stated above, he can give no specific details as to how this is currently done or how it might be done in the future.
...
Throughout the interview, he looked to his wife for assistance in answering almost every question; she was very compliant in keeping out of the conversation as much as possible, allowing us to demonstrate his inability to answer most of the above questions without her input."
46 The Tribunal also has a report from the represented person's general
practitioner Dr N, dated 14 February 2007. Dr N has treated the represented person since 5 October 2005 and reports that he arranged, at that time, an urgent neurological review following which the represented person was admitted to Sir Charles Gairdner Hospital for the treatment of
[2007] WASAT 269
a bleeding cerebral aneurysm which was subsequently treated surgically. Dr N's report notes that the represented person "suffered a significant pneumonia post-surgery". The report notes that the represented person had been assessed by Dr G to assess his recovery of mental function following the cerebral aneurysm. Dr N states that "Dr [G] would be in the best position to assess the [represented person's] cognitive function". He goes on to say:
"I performed a MMSE on [13 February 2007] on which he scored 19/30 which indicates that moderate cognitive impairment is present.
The report further notes that:
"Though there is some impairment in short-term memory, I believe that he is able to make reasoned judgments regarding his affairs. This statement is based on my discussions with him over many consultations over the last year. Further assessment of this could be obtained from Dr [G] at Sir Charles Gairdner Hospital if required".
48 In a further report, dated 20 February 2007, and produced for the
hearing, Dr N reports "short-term memory impairment" suffered by the represented person "following [a] bleeding cerebral aneurysm in October 2005". He states that he first recognised the impairment in October 2005 and that it is a "static" one. He notes further, "no further change in cognitive ability from this event is likely to occur". He considers that the represented person is capable in the spheres of personal health care, his living situation and his financial affairs. He makes the comment that "the above [observations] are based on my conversations with him and assessment of him".
49 There is also a report from Dr M, a hepatologist, who states he is
unable to comment in relation to the represented person's impairment of cognitive ability or mental function as "I have not tested cognitive ability or mental function". However, his report notes that he considers the represented person capable in the spheres of personal health care decision-making, decisions in relation to his living situation and his financial affairs, and of executing an enduring power of attorney.
50 In relation to the issue of capacity, the Tribunal also heard assertions
for the applicant that certain transactions and the behaviour of the represented person such as the purchase of properties in joint names, the cessation of a long-term arrangement for payments to his former spouse
[2007] WASAT 269
and grandchildren, and his involvement in a tax minimisation scheme were out of character and were evidence of his incapacity. The Tribunal also had written submissions and heard evidence from both the accountant of the represented person who had known the represented person for some 20 years and LA, a colleague from overseas who worked with him for over 30 years. The represented person and his spouse were not called to give direct evidence nor was the applicant.
51 The medical evidence before the Tribunal is not challenged. Counsel
for the represented person and the spouse does not seek to rely on the report of Dr N and concedes that Dr G's report "is the more persuasive as [the subject matter is] within his area of expertise". (T:9 hearing 19 June 2007.)
Is the represented person in need of an administrator?
Banking transactions
52 The need for an administrator is said by the applicant to arise
because she alleges that the represented person's estate has been
diminished since the onset of his illness in October 2005.53 The applicant asserts that the represented person had had bank
deposit accounts, in his name only, of many millions of dollars in another country (a different country from the one in which he holds property and motor vehicles) and that subsequent to his illness, these funds were transferred into joint names with the spouse and then transferred to a bank account in Western Australia also held jointly.
54 The applicant further asserts that prior to October 2005 the
represented person had kept bank accounts in Western Australia in his name only and that most of these accounts were transferred into joint accounts with the spouse after his illness.
55 Counsel for the represented person and the spouse submits that all
funds can be accounted for by way of a term deposit in joint names and through the establishment of an income tax minimisation arrangement by the transfer of funds to a non-resident. These equate to the overseas funds added to the sale of the spouse's property and the net sale proceeds of a property owned by the represented person.
56 Counsel for the represented person and his spouse submitted at the
hearing on 19 June 2007 that funds from the represented person and the spouse had been used to purchase their current residence, in June 2006,
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for $2 000 000 after first borrowing $1 000 000 from the spouse's
son-in-law, which was subsequently repaid.57 At the hearing on 7 August 2007 (second hearing), the solicitor for
the represented person and his spouse submitted bank statements (both from overseas and Australia) and settlement statements in respect of the sale of certain properties in Western Australia. They show for relevant transactions and accounts after October 2005 as follows:
Citibank bank deposit (Premium Account -now closed)
October 2005 in the name of represented person only
(bank statement dated 31 August 2006).
September 2006 appears to be transferred to joint US$776 853.50 account with spouse (based on bank statement dated
30 September 2006).November 2006 funds transferred to joint bank AUD$1 011 581.16 account in Western Australia (Bankwest Gold Cash Management) pursuant to a written authority, dated 10 November 2006, signed by the spouse and the represented person.
Citibank bank deposit (Unfixed Time Deposit-now closed)
October 2005 in the name of represented person only
(based on bank statement, dated 30 November 2006).
December 2006 transferred to joint bank account in AUD$58 595.60 Western Australia (Gold Cash Management account). Commonwealth Cash Management Call account (in the name of the represented person)
58 The Tribunal was told that rent from a property owned by the
represented person is paid into this account and monthly transfers totalling $9000 were made from this account until May 2006 to the former spouse, grandson and granddaughter.
59 Counsel for the represented person and the spouse submitted that the
authority for the transfers was cancelled in writing by the represented
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person in May 2006 and that this was understandable given the action by the former spouse in seeking a property settlement in another country. This is disputed by the applicant who states that property settlement action was only initiated after the cessation of the maintenance payments.
60 There have been regular withdrawals on the cash management
account since October 2005, including 4 November 2005 ($50 000), noted as a transfer to a joint term deposit and 25 November 2005 ($50 000), noted as "awaiting details".
61 Counsel for the represented person and the spouse states that it was
the represented person's custom to leave signed blank cheques for the spouse's use and this is how she operated the account during the period of his acute illness.
Westpac Cash Management account (now closed)
In the sole name of the represented person, closed in $15 998.20 April 2006 and transferred to joint bank account (to open
Deeming account in joint names)
Term Deposit (now closed)
In the sole name of the represented person (based on the $100 000 renewal certificate dated 28 April 2006) until transferred to
joint bank account in May 2006 (Deeming account)
Westpac Term Deposit sole name (now closed)
In the sole name of the represented person (based on renewal $550 000 certificate dated 5 June 2006) until transferred to joint bank
account in June 2006 (Deeming account)
Westpac Deeming account (joint)
Received Cash Management bank account funds (see above) $15 998.20 Received Term Deposit funds (see above) $100 000 Received Term Deposit funds (see above) $550 000 Paid part purchase of jointly owned residence $555 010.00 [2007] WASAT 269
Bankwest Gold Cash Management bank account (joint)
Established July 2006 with deposit from the spouse $11 000 Received net sale proceeds of represented person's $1 994 731.99 property Received Citibank funds (premium account) $1 011 581.16 Received Citibank funds (unfixed time deposit) $58 595.60 Received net sale proceeds of spouse's property $2 399 440.62 Paid MG, the son-in-law of the spouse, as part $610 000 repayment of loan of funds for the purchase of the
residencePaid to term deposit and then tax to minimisation $1 300 000 arrangement Paid to tax minimisation arrangement $2 399 440.62 Paid to Bankwest Gold Term Deposit (joint) $101 581.16 Paid to Bankwest Gold Term Deposit (joint) $80 000 Paid to Bankwest Gold Term Deposit (joint) $40 000 Bankwest Gold Term Deposit (joint)
62 The records show this joint account to have been in existence since
November 2000 with a then balance of $297 540.99. The most significant addition to the account since October 2005 is the deposit of the funds from the Citibank deposit premium account through the Gold Cash Management bank account. Withdrawals of $100 630 and $399 118.95 in June 2006 are not explained.
Bankwest Gold Cash Management account (spouse only)
This account shows the receipt of the net proceeds of sale of a property owned by the spouse.
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64 In July 2006, partial repayment of $400 000 is said to have been
made to MG (the son-in-law of the spouse) in respect of the loan of
$1 000 000 for the purchase of the jointly owned residence.
In July 2006, the account was closed and the balance of $11 000 transferred to the joint Gold Cash Management bank account.
Tax minimisation arrangement
66 The Tribunal heard that an income tax minimisation arrangement
was entered into by the represented person and his spouse on 14 December 2006 and is a bank term deposit, the capital value of which is $3 807 041.47 at 30 May 2007 (consisting of $3 699 440.62 invested plus net interest after withholding tax). The funds are held in the name of a son of the spouse who is a non-resident of Australia for income tax purposes.
67 The background to this arrangement is given by ME who has been
the represented person's income tax accountant (in Australia) since the mid 1980s. He states that he met with the represented person and the spouse in September 2006, after they had recently become Australian residents for income tax purposes and had suggested that they invest surplus funds in the name of a non-resident because of the considerable tax advantages to be gained. He states that he met the spouse for the first time at that meeting.
68 ME states that he understood there was potentially $3 000 000 to
$4 000 000 available to be invested because the represented person had
sold a property and the spouse was in the process of selling a property.69 ME said that he advised that the funds be invested in Australia
because the represented person and the spouse "wanted to keep the
monies accessible" (T:27 19 June 2007).70 When asked how the represented person and the spouse could retain
control over the invested funds, ME states that they would have to be sure that the person in whose name the funds were to be invested was someone that they could trust. He agrees that the investment could appear to be a gift and that it would be difficult for the represented person and the spouse to retrieve the funds if the non-resident claimed ownership.
71 When asked whether the income tax authorities would deem the
funds still to belong to the represented person and the spouse if it was under their effective control, ME states that this would depend on how "deeply [the tax authorities] would enquire" (T:28 19 June 2007).
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72 ME says that he advised the represented person and the spouse that
the investment was not without risk but that it was not an uncommon arrangement and ME states that the represented person asked him how to arrange the investment but that he did not have many questions or doubts about the advice itself.
73 At the second hearing, ME states that the income tax minimisation
arrangement had been available under the relevant income tax legislation for as long as he could recall. He estimated that the represented person and the spouse could save about $80 000 annually in income tax under the arrangement. The represented person had not needed to consider such an arrangement in the past because of his then non-resident status.
ME said the arrangement was not unlawful, but that if the Australian income tax authorities became aware of the transaction:
"They would probably seek to determine whose funds they were and I would imagine endeavour to suggest or determine that the income was correctly not the income of the person in whose name the funds were placed." (T:14 7 August 2007)
75 When asked what the response would be of the income tax
authorities if the true nature of the arrangement became known, ME stated
"they would probably want the tax" (T:14 7 August 2007).76 ME states that he was not party to the establishment of the
arrangement and did not know to what extent, if any, the represented
person retains control over the funds.77 Counsel for the applicant submits that the represented person has
been very careful in the past about the making of investments and how he dealt with his assets. It is submitted that the transaction is out of character for the represented person since it is a transfer of funds to a third party such that those funds might not be recoverable.
78 At the second hearing, counsel for the represented person and the
spouse submits that the funds in the income tax minimisation arrangement are, in fact, primarily those of the spouse. Reference is made to a document submitted by the spouse's solicitor which states the original payment of $1 300 000 consisted of $400 000 from the sale of a property owned by the spouse and $900 000 from the balance of the proceeds of sale of a property owned by the represented person. The balance of approximately $2 400 000 paid derived from the sale of another property owned by the spouse.
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With respect to the represented person's attitude to his taxation obligations, ME said:
"[The represented person's] main concern has been complying with Australian taxation requirements and - I mean, he's always looked after his own affairs here but I've assisted whenever he's sought advice." (T:26 19 June 2007)
80 LA, a colleague of over 30 years and partner of the represented
person in their professional practice in another country, when asked about the represented person's ongoing interest in the practice (she said that business was very slow and that the represented person does not run the office now) says:
"[The represented person said] 'No, I have no intention of closing the office. The office is my life.' He wants to continue with the office. I told him also there is the burden of taxes to be paid and he said, 'Well, you have to find some way because as a good citizen you have to pay your taxes'." (T:21 7 August 2007, emphasis added.)
81 At the second hearing, ME states that although the represented
person was very diligent in ensuring that he complied with Australian income tax requirements, ME did not view the income tax minimisation arrangement as being a change of approach by him.
Submissions on need for administrator
82 In response to the assertion of the need for an administrator, counsel
for the represented person and his spouse maintains that the arrangements for the management of the estate are relatively simple, that the financial transactions are not markedly different to that undertaken by the represented person prior to his illness and that the arrangements for the holding of property with his spouse are not substantially different to the arrangements in place prior to their marriage and with his former spouse.
83 The submission of counsel for the represented person and the spouse
is that the capacity of the represented person and the need for an administrator must be understood by reference to the range of financial affairs about which the represented person is required to make reasonable judgments. Counsel referred to Collins v May (above) to illustrate the point that capacity is assessed in the context of the nature of the estate and the transactions to be undertaken (T:40).
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84 The evidence shows that there have been significant transactions
undertaken in relation to the represented person's estate since his illness in
October 2005.85 However, the Tribunal has had some difficulty in marshalling the
evidence to enable it to be satisfied as to the nature, extent and purpose of the movements in the represented person's estate. The documentary evidence provided by way of bank statements and other material shows the transfer of funds, but no explanations are given for many transactions. There is dispute about some of the evidence but there is no dispute that the represented person owned two overseas deposits totalling approximately $1 000 000 which in late 2006 were closed and the funds transferred to a bank account in Western Australia jointly owned with his spouse.
86 The represented person owned two term deposits (in Australia)
totalling $650 000 which, in the middle of 2006, were transferred to a
bank account jointly owned with his spouse.87 The represented person sold a property held in his sole name and the
net proceeds of $2 000 000 were paid into bank account jointly owned
with his spouse.88 The spouse sold two properties, the net proceeds of one ($406 000)
being used to repay $400 000 of a loan of $1 000 000 for the purchase of the jointly owned residence. This occurred in July 2006. The net proceeds of the other property (about $2 400 000) were paid into a bank account jointly owned with the represented person in December 2006.
89 Further amounts in respect of the jointly owned residence were paid
from joint bank accounts; $555 000 in June 2006 and $610 000 in
September 2006, the latter amount being the final loan repayment.90 The funds used in the income tax minimisation arrangement
($1 300 000 and about $2 400 000) were paid from a jointly owned bank
account.91 At the time of the hearings, the estate of the represented person
appears to be jointly owned properties in Western Australia with his spouse, jointly owned bank accounts, a bank account in his own name with $6000 on deposit, an investment property in Western Australia, an unspecified interest in funds held in the tax minimisation arrangement and a business, commercial and residential properties and motor vehicles overseas.
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Findings about capacity and need for an order
92 In respect of the evidence relating to the capacity of the represented
person, we are satisfied, based on the medical evidence, that he is not capable of making reasonable judgments about any or all of his estate. In this regard, we rely on the evidence of Dr G, the geriatrician, and that of the clinical psychologists Ms E and Ms S who formally assessed the represented person's cognitive functioning. Each of these professionals has specialist experience in assessment of persons with cognitive impairments. We prefer this evidence to that of Dr N and Dr M where there is any inconsistency.
93 Although Dr N is the represented person's regular general
practitioner, he first met the represented person in October 2005 at the time of his acute illness and states that his opinion about the capacity of the represented person is based on conversations with him over the period. The results of the MMSE conducted by him in February 2007 showed "moderate cognitive impairment" in the represented person and Dr N defers to Dr G regarding assessment of the capacity of the represented person, saying that that Dr G is in "the best position to assess [the represented person's] cognitive function". Dr M did not assess the represented person's capacity.
94 In respect of the evidence of both the accountant, ME, and LA, the
work colleague, while each states they have known the represented person for many years and find no change in him following his illness, their contact with him has been infrequent and their opinions do not rebut the professional opinions based on formal assessment of the capacity of the represented person.
95 In making these findings regarding the represented person's
incapacity to make reasonable judgments about his estate, we rely on the medical evidence and the inferences which may be drawn from that evidence and not from the assertions that decisions said to have been made by the represented person in relation to his financial affairs are "out of character". Of course, these transactions will now be considered in the light of the medical evidence and the finding of incapacity but the decisions or transactions themselves are not in our view evidence of incapacity of the represented person. It is the case that a capable person is entitled to make decisions which others might consider unwise or out of character. The legislation provides that there is a presumption of capacity and this can only be rebutted by evidence to the contrary. In this case, the medical evidence has, in our view, rebutted that presumption.
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96 In respect of the need for an administrator, when considered in its
entirety we conclude that the represented person's estate is large and complex and that the decisions required for its management are now beyond him given his diagnosis of cognitive impairment and the consequences which flow from that diagnosis.
97 The transactions undertaken in respect of the estate from
October 2005 have included the transfer of funds from accounts in his sole name and the transfer of funds to a third person with apparent loss of control over those funds. The represented person now has one account in his name with only $6000 on deposit. The termination of arrangements on that account in place for many years for payments to his former spouse and grandchildren has led to legal action against him in another country.
98 Having found that it is more likely than not that the represented
person's cognitive impairment and incapacity to deal with his estate dates from October 2005, there is a doubt about his capacity to direct or consent to the significant transactions which have ultimately led to a diminution of his estate.
The spouse has been instrumental in, or a party to, these transactions.
Are there less restrictive means by which the represented person's estate can be managed such that an administration order is not required?
100 The submission of counsel for the represented person and his spouse
is that there is no need for an administrator since the spouse is managing all of the affairs of the represented person. Counsel does not in his submissions seek to rely on the existence of the enduring power of attorney executed in November 2006 by which the represented person appointed his spouse as donee.
101 When considering the need for an administrator the Tribunal is
bound to consider, as required by s 4(2)(c) of the GA Act, whether the needs of the represented person for financial management of his estate can be met by less restrictive means than the making of an administration order.
102 An enduring power of attorney may provide a less restrictive
alternative to the making of an administration order since it provides a lawful means by which the affairs of a person who has lost capacity may be managed.
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103 In relation to the existing arrangements for the management of the
represented person's estate, the Tribunal heard that both formal and informal arrangements are in place for the management of aspects of the represented person's estate both here and overseas. A signed authority was submitted to the Tribunal which relates to the management of the represented person's business interests in the overseas country and in oral evidence the Tribunal heard that specific authority has been given to lawyers acting in respect of proceedings in that country instituted by his former spouse.
104 The report of Dr G refers to an arrangement by which a secretary
pays accounts in respect of the business overseas. Other evidence from the spouse includes the operation of the represented person's Commonwealth Bank account through the presentation of previously signed blank cheques during the period of his acute illness. The applicant asserts that the spouse may have acted on the represented person's behalf in relation to bank transfers from the account since her name appears on the account. A letter, dated 24 February 2006, from the overseas bank acknowledges a request, dated 20 February 2006, by the represented person to include his spouse as power of attorney on the account.
105 In a letter dated 22 February 2007, in response to questions from the
Public Advocate regarding the operation of the enduring power of attorney, the spouse indicates that she had not acted on the enduring power of attorney. She maintains this position, through counsel, at the hearing.
106 In any event, both the applicant and the Public Advocate question
whether the represented person had the requisite capacity to execute the enduring power of attorney at the time of its execution in November 2006.
107 The evidence of Dr G, of 8 May 2007, is that the represented person
does not understand the nature and extent of his estate. As noted above, we accept the evidence of Dr G which is unchallenged and find that the represented person is now not capable of executing an enduring power of attorney.
108 The question of the represented person's capacity to execute an
enduring power of attorney in November 2006 must be considered in the
light of the available medical evidence at that time.109 The witnesses to the enduring power of attorney executed in
November 2006 are the solicitor who drew it up and a civil marriage celebrant, both qualified witnesses for the purposes of that document.
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110 Uncontested evidence before the Tribunal is that the represented
person had refused at earlier times (as evidenced by discussions with Dr G) to execute an enduring power of attorney and had not attended an interview to assess his capacity to do so in February 2006.
111 As noted above, direct evidence was not called regarding the
enduring power of attorney from the represented person or the spouse of the represented person. The reports of the clinical psychologists, Ms S and Ms E, and the report of Dr G all refer to recognition by the spouse of a deterioration in the represented person's functioning following surgery for his brain aneurysm, although Ms S notes that the spouse "admitted gradual changes were apparent before then". Issue is not taken with the contents of these reports.
112 The reports of Dr G (the specialist geriatrician) and Dr N (the
treating general practitioner) both refer to the represented person's impairment as recognised in October 2005 and although they reach different conclusions about the effect of the impairment on the represented person's capacity as a consequence, both say the condition is a static one.
113 Given the evidence of Dr G and the evidence of the clinical
psychologist's assessment conducted in May 2006, which reports "mild to moderate cognitive impairment, executive dysfunction and scores which were well below the cut off score for dementia", the Tribunal concludes that it is more likely than not that the represented person's condition and incapacity existed at the time of the execution of the enduring power of attorney in November 2006.
114 Because of this, we are not satisfied that it is in his best interests to
rely on the enduring power of attorney as a lawful less restrictive alternative to the management of his estate by an appointed administrator.
115 In respect of the transactions to transfer funds from his sole name to
their joint names and to her son for tax minimisation purposes, there is a question whether these transactions meet the requisite obligation to act with reasonable diligence to protect the interests of the donor required of a donee of a power.
116 We are not satisfied that the various informal arrangements by which
the represented person's estate has been managed meet his needs and we are satisfied that there is a need for an administration order to be made and that the enduring power of attorney should be revoked.
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Appointment of the administrator
The applicant proposes the appointment of the Public Trustee as the administrator of the estate of the represented person.
118 The submission of counsel for the represented person and his spouse
is that there is no need for an administrator since the spouse is managing all of the affairs of the represented person, but if a formal order is to be made, that the spouse should be appointed the administrator. In the alternative, it is proposed that the accountant of the represented person be appointed either alone or jointly with another independent chartered accountant.
119 The Public Advocate proposes that either the Public Trustee or a
trustee company be appointed providing independence for the management of the estate. The Public Advocate's argument is that an independent administrator should be appointed because of the conflict within the family and potential conflict of interest between the parties in respect of existing and potential legal proceedings.
120 In relation to the proposal for the appointment of the Public Trustee,
counsel for the represented person and his spouse submits that the reputation of the represented person would be better served if an accountant rather than the Public Trustee were appointed. Counsel submits that of the three options outlined, the accountant, the accountant jointly with another chartered accountant or the Public Trustee, the first option is the preferred option.
121 Counsel for the applicant submits that the Public Trustee is the
appropriate appointment because the Public Trustee's trust officers have expertise and independent accountants may not necessarily have this expertise or the same level of expertise. He opposes the appointment of the represented person's accountant because of the advice given to transfer the funds from the names of the represented person and his spouse to that of a third person. He submits that no agreement may be reached between the parties to identify an independent accountant. He submits that there is an urgent need to secure the estate because substantial funds of the represented person are held by a third person. This view is supported by the Public Advocate.
122 Section 68 of the GA Act directs the Tribunal in relation to who may
be appointed administrator. The Tribunal must consider whether the administrator will act in the best interests of the represented person and is otherwise suitable to act.
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123 The appointment of a trustee company is not available because of the
operation of s 68(2) of the GA Act. The will of the represented person, which is in evidence, does not appoint a trustee company as executor and no individual who would otherwise be appointed requests that appointment.
In determining the appropriate appointment we accept the submission that the Public Trustee's officers have the necessary expertise and that that office is able to provide a range of services for the proper administration of the estate of the represented person.
125 Having regard to s 4(2)(f) and s 68(3)(b) of the GA Act as to the
wishes of the represented person, a preference is expressed by counsel for the appointment of persons familiar to the represented person; either his spouse or his accountant of many years standing.
126 In respect of the proposal that the accountant be appointed, we
consider that this is not an appropriate appointment as the accountant advised in respect of the transaction where monies were placed in the hands of the third person to minimise the couple's taxation liability in Australia. Because of the incapacity of the represented person to direct or control this transaction his interest in these funds may be at risk. The accountant maintains that this is an appropriate arrangement. Based on the material before us, we understand that he also acts as the accountant for the former spouse of the represented person and for the current spouse of the represented person. We consider that acting for these clients puts him in a position where he could not be seen to act with sufficient independence in dealing with the affairs of the represented person. For the reasons given above, we consider that the spouse too could not act without conflict in relation to the interests of the represented person and so should not be appointed.
127 We consider, based on the positions taken and the level of conflict
between the parties, that it is unlikely that an agreement could soon be reached in relation to a proposal for the appointment of an independent chartered accountant. We consider that it is in the best interests of the represented person that the appointment be made and the orders made as soon as practicable, namely on the day of the final hearing having regard to the submissions from both the applicant and the Public Advocate that immediate steps may need to be taken to secure the estate.
128 We conclude that the Public Trustee is the appropriate appointment
in the best interests of the represented person. The Public Trustee is able
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to perform the functions required, has the necessary experience and in the administration of estates in the context of family conflict, his trust officers will be able to work with the spouse and family members, a need identified by counsel for the represented person and his spouse. Finally, the Public Trustee has the necessary independence required.
129 In relation to the duration of the order, we consider, based on the
medical evidence, that the represented person is unlikely to recover capacity to manage his own affairs. Given his health issues and the possibility that an alternate administrator may be found, once the issues of conflict are reduced or there is clarification of the extent of his estate, we consider it appropriate that the order should be made for a period of two years.
| Orders |
For these reasons, we made the following orders:
1. [The represented person] is declared to be:
(a) unable by reason of mental disability to make reasonable judgments in respect of matters relating to all of his estate; and (b) in need of an administrator of his estate 2. The Public Trustee of 565 Hay Street, Perth, Western Australia is appointed plenary administrator of the estate of the represented person with all the powers and duties conferred by the Guardianship and Administration Act 1990 (WA).
3. The administrator is directed to ascertain the nature and extent of, and dealings with, the estate of the represented person between 1 October 2005 and the date of this order and to take whatever action he considers appropriate and in the best interests of the represented person.
4. The enduring power of attorney, dated 10 November 2006, by which the [represented person] appointed [the spouse] to be his attorney be revoked.
5. This order is to be reviewed by 7 August 2009.
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I certify that this and the preceding [130] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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MS F CHILD, MEMBER
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