SPM
[2017] QCAT 75
•1 February 2017
CITATION: | SPM [2017] QCAT 75 |
PARTIES: | SPM |
APPLICATION NUMBER: | GAA9378-16 |
MATTER TYPE: | Guardianship and administration matters for adults |
HEARING DATE: | On the papers |
HEARD AT: | Brisbane |
DECISION OF: | Senior Member Endicott |
DELIVERED ON: | 1 February 2017 |
DELIVERED AT: | Brisbane |
ORDERS MADE: | 1. RLP as the appointed administrator for SPM is not authorised to enter the conflict transaction being: the payment to RC, RT, and RH of the sum of $30,000. 2. RLP must file in the Tribunal by 4:00 pm on 15 March 2017 evidence that funds have been paid to restore the financial position of SPM. |
CATCHWORDS: | GUARDIANS, COMMITTEES, ADMINISTRATORS, RECEIVERS AND MANAGERS – where a guardian and administrator appointed for an adult –where the adult cannot make complex decisions – where gifting of $30,000 made by the administrator – whether administrator should be authorised to make the gifts Guardianship and Administration Act 2000 (Qld) s 35, s 54(1), and schedule 4 |
| 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 (Qld) (QCAT Act).
REASONS FOR DECISION
The Tribunal appointed RLP as administrator for SPM on 22 September 2015 for all financial matters. The Tribunal also appointed RLP as guardian for SPM on 22 September 2015 to make decisions about accommodation, health care and with whom SPM has contact.
Prior to his appointment as the administrator for SPM, RLP filed in the Tribunal a financial management plan dated 28 June 2016. In that plan, RLP set out the assets of SPM and foreshadowed the decisions that would need to be made to manage the financial resources of SPM. He did not disclose any intention to make a gift of a substantial part of the SPM’s financial resources to his family.
RLP submitted an account by administrator form with one of the Tribunal’s examiners on 12 August 2016 for the period from 22 September 2015 to 30 June 2016. RLP revealed in that document that gifts of $10,000 had been made in February 2016 to each of the adult’s nephews (who are RLP’s sons), RAT, RH, and RC, during that period.
The Tribunal initiated an application for authorisation of the gifts RLP had made totalling $30,000 from the funds of SPM. RLP gave evidence that he had obtained advice from a financial planner in July 2015 who had recommended that RLP enter into two major outlays to minimise the cost of SPM’s aged care while leaving her with a cash glow to meet ongoing expenses. The advice recommended that RLP pay the accommodation deposit from the sale proceeds of SPM’s real property and then purchase a funeral bond of $11,800 and make a gift of $10,000. RLP gave evidence that he decided against purchasing a funeral bond.
RLP stated that the sale price of the real property was some $61,887 in excess of the sale price that had been originally estimated. RLP stated that he decided it was prudent to gift up to the Centrelink allowance of $30,000 for a five-year period. RLP gave evidence that he had discussed this proposal with SPM who agreed and who had suggested that he “take it”. RLP stated that he had told SPM that this would not be appropriate and she had told him to “give it to the boys then”. By this comment, RLP stated that SPM had referred to her three nephews who are the sons of RLP.
RLP stated that he made the gifts on the basis that they were within the bounds of the financial advice he had received and would leave ample funds for ongoing cash flow and emergencies. RLP stated that he disclosed the gifting to Centrelink. RLP admitted that he should have read more closely the information pack given to him by the Tribunal about his responsibilities as an administrator. RLP acknowledged that he had not made any enquiries with the Tribunal before making the gifts and he stated that he had erred in failing to consult the Tribunal. RLP submitted that he had acted responsibly, reasonably, ethically and in the best financial interests of SPM in her current circumstances.
The Tribunal cannot agree with that conclusion expressed by RLP. An administrator is obliged to exercise power for an adult with impaired capacity honestly and with reasonable diligence to protect the adult’s interests.[1] RLP conceded that he had read the information provided by the Tribunal about his obligations as administrator but states that he regrets not reading the information more closely. He should have understood that his responsibility as an administrator was to secure and maintain the financial resources of SPM.
[1]Guardianship and Administration Act 2000 (Qld) s 35.
Gifting funds will directly reduce the financial resources of an adult; gifting will not generally secure and maintain the financial resources of an adult. That said, there may be circumstances when gifting does play a strategic role in maintaining the financial resources of an adult. RLP received financial advice that gifting of $10,000 might be appropriate as a strategy to reduce the assets of SPM so that her aged care fees might be lower than her assets would otherwise warrant. However, RLP did not act in accordance with that advice nor did he seek revised advice once the extent of surplus cash was known after the sale of SPM’s real property. RLP followed a strategy of his own devising. More importantly, he did not give any consideration about whether gifting of substantial funds, whether $10,000 or $30,000, would need authorisation of the Tribunal.
He did not consider the requirements on him imposed by the law that place limits on gifting. Those limits are set out in the Guardianship and Administration Act 2000 (Qld) (GAA) as follows:
54 Gifts
(1) Unless the tribunal orders otherwise, an administrator for an adult may give away the adult's property only if—
(a) the gift is—
(i) a gift or donation of the nature the adult made when the adult had capacity; or
(ii) a gift or donation of the nature the adult might reasonably be expected to make; and
(b) the gift's value is not more than what is reasonable having regard to all the circumstances and, in particular, the adult's financial circumstances.
RLP has not disclosed evidence that SPM had made substantial monetary gifts at a time she had decision-making capacity. RLP has not submitted that SPM might reasonably have been expected to make gifts of substantial funds to her family to reduce her assets for aged care assessment purposes. Indeed, if hypothetically, SPM had obtained the same financial advice as had RLP, it might be reasonable to conclude that she might accept that advice and purchase a funeral bond and make a gift of up to $10,000 as part of a strategy outlined by the financial planner. However, the gifts made by the administrator fell outside that advice and the factual circumstances had changed by the time the gifting was made resulting in the advice being effectively superseded.
Evidence that SPM had told RLP to make the gifts to his sons does not satisfy the requirement in s 54(1)(a)(ii). The Tribunal had found in September 2015 that SPM had impaired capacity to make financial decisions as a pre-requisite to appointing RLP as administrator to make those decisions for SPM. The GAA defines “impaired capacity” as meaning that the adult does not have capacity for the matter[2]. It follows that a finding of impaired capacity means that SPM cannot understand the nature and consequences of decisions about making gifts of substantial amounts when she has ongoing living costs to meet, including significant aged care fees, and when the calculation of those fees are subject to a range of complex requirements.
[2]Ibid Schedule 4.
Even if the evidence could satisfy the requirements of s 54(1)(a) of the GAA, the evidence does not satisfy the requirements of s 54(1)(b). The gift amounting to $30,000 was contrary to the financial advice obtained by RLP. There is no evidence that making a gift of $30,000 actually resulted in any benefit to SPM’s financial circumstances. It appears from the account by administrator dated 12 August 2016 that SPM had about $68,000 in cash assets by August 2016, despite the gifting. RLP had stated that his decision was aimed at reducing SPM’s aged care fees impacted by the asset threshold in the residential care means test for aged care.
However, there is no evidence that RLP’s actions actually reduced SPM’s aged care fees. Information available to the public reveals that the asset threshold before additional aged care fees are incurred is well under $68,000. An inference can be reasonably drawn that RLP’s gifts of $10,000 to each of his sons failed to achieve the objective of reducing the aged care fees for SPM. In such circumstances, the value of the gift is more than what is reasonable having regard to all the circumstances and, in particular, to SPM’s financial circumstances.
The Tribunal is satisfied for the reasons set out that the gifting of $30,000 by RLP was not authorised by s 54 of the GAA. The Tribunal has discretion to authorise gifting that would otherwise be prohibited by the GAA.[3] However, the evidence provided by RLP does not convince the Tribunal that any such authorisation should be given. RLP did not discharge his statutory obligations; he failed to consult the Tribunal and he departed from the financial advice he had engaged with the result that his own sons were advantaged while the resources of SPM were reduced.
[3]Ibid, s 54(1).
The principle behind prohibiting gifts by an administrator from the funds of the adult with impaired decision-making capacity arises from the fiduciary relationship between the administrator and the adult. A fiduciary should not benefit from decisions made on behalf of his principal. That principle can be overtaken by legislation so that when the making of a gift accords with the statutory limits in s 54 of the GAA, then a gift can be lawfully made even if the administrator gains a benefit.
When a gift falls outside the statutory limits in s 54, a gift made by an administrator to a family member gives rise to a conflict between the duty of the administrator to act only in the interests of his principal and the interests of the administrator to gain a benefit for himself or his family. That conflict cannot be resolved by the administrator. Only the Tribunal can resolve the conflict under s 54 of the GAA by authorising the gift.
The Tribunal is not compelled to authorise a gift merely because the gift accords with Centrelink requirements. Centrelink generally will deem the amount of funds gifted away as being still part of a person’s assets for the purpose of assessing pension entitlements or aged care fees. Exceptions relate to gifts of $10,000 per year or not more than $30,000 over five years.[4] According to the experience of the Tribunal, it is a fallacy encountered at least several times a year that some administrators are under the impression that gifts made in accordance with the Centrelink exemption are also in some way exempt from the requirements of the GAA. Nothing could be further from the truth.
[4]Social Security Act 1991 (Cth), ss 1123-1124 and 1126AA and 1126AB.
A gift made under the Centrelink exemption is an unauthorised gift unless the gift complies with s 54 of the GAA. If the gift does not comply with s 54, then an express authorisation must be sought from QCAT before the gift is made. Unauthorised gifts are in breach of the GAA and will result in consequences to an administrator. Those consequences would include a requirement to restore the funds to the adult or removal of the administrator from that role on the basis that the administrator is no longer competent to carry out the duties of administrator.
RLP stated in his evidence to the Tribunal that he would compensate SPM by repaying the $30,000 from his own funds. That is appropriate. The Tribunal declines to authorise the gifts made by the administrator and directs him to restore the funds to SPM.
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