Starkey and Starkey

FAMILY COURT OF AUSTRALIA

STARKEY & STARKEY

[2008] FamCA 962

FAMILY LAW – APPLICATION IN A CASE – Appointment of Case Guardians in financial matter – Application to remove Case Guardians – Alleged breach of duties - Dismissed

Family Law Act 1975 (Cth)

Protective Estates Act 1983 (NSW)

Holt v Protective Commissioner (1993) 31 NSWLR 227
K and K [2002] FamCA 1150

APPLICANT:

Ms Starkey

RESPONDENT:

Mr Starkey

by his Case Guardians
Mr T & Mr C

FILE NUMBER:

LEC

245

2007

DATE DELIVERED:

12 November 2008

PLACE DELIVERED:

Brisbane

PLACE HEARD:

Brisbane

JUDGMENT OF:

Murphy J

HEARING DATE:

16 October 2008

WRITTEN SUBMISSIONS:

Respondent: 22/10/2008

Applicant in Reply: 23/10/2008

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr Burridge

SOLICITOR FOR THE APPLICANT:

Somerville Laundry Lomax

SOLICITOR FOR THE RESPONDENT:

Mr Cowley/
Mr Cameron of Counsel
Stone & Partners

Orders

The Application in a Case filed by the Wife on 25 August 2008 be dismissed.
Any submissions by either party seeking an order as to costs other than that each party’s costs be reserved to the trial, be submitted in writing by email to my associate within 14 days from the date of these orders.
In default of any written submissions being received by that day, the question of the costs of each party of an incidental to this application be reserved to the trial of the substantive proceedings between the parties.

IT IS NOTED that publication of this judgment under the pseudonym Starkey & Starkey is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER: LEC 245 of 2007

MS STARKEY

Applicant

And

MR STARKEY

Respondent
By his Case Guardians Mr T & Mr C

REASONS FOR JUDGMENT

The wife submits, in her Application in a Case filed on 25 August 2008, that the respondent husband’s case guardians be removed, alleging that they are in breach of their obligations to the husband, the court and herself. The wife contends that they should be replaced by an appointment made by the Attorney-General.
The husband and wife were married in 1959. For many years, they ran in partnership a company in northern New South Wales. Sadly, the husband’s incapacity resulting from advanced Parkinson’s Disease has resulted in him being admitted to a nursing home last year.
On 27 March 2007, the husband appointed two long-time friends, the respondents to the instant application, as his attorneys and conferred various powers upon them in and about his affairs as a result, including the power to commence proceedings in this court.
Proceedings seeking relief pursuant to s 79 of the Family Law Act in which the company will, apparently, be a major asset, were filed by the husband’s attorneys on 18 April 2007.
On 4 June 2007 Mr D Starkey, the parties’ adult son, applied to the Guardianship Tribunal NSW for the appointment of a guardian and financial manager in respect of his father. On 10 October 2007 he also applied to review the appointments of the attorneys made by his father on 27 March 2007.
On 23 October 2007 the Guardianship Tribunal made an interim financial arrangement order. The full hearing of the application took place on 22 February 2008, at which the husband, the wife, Mr D Starkey, the respondents (and others) gave evidence. Final orders confirming the respondents as financial managers for the husband were made.
On 29 November 2007, approximately one month after the interim orders were made by the Tribunal, orders were made in this court appointing the respondents as case guardians. Further orders were made, the effect of which was that the case guardians, standing in the husband’s stead, would manage the business, including the payment of specified monies, under specified conditions.
It was initially alleged by the wife that the case guardians had made seven withdrawals of money from the partnership business accounts in breach of that Order. Five payments were ultimately conceded to have been made within the terms of the orders. Attention was focussed on two withdrawals, one of $50,000 and one of $7,618.
These payments were made without giving the notice to the wife required by the Orders. So much is conceded by the respondents.
The wife asserts further, however, that these withdrawals were otherwise improper or unlawful.
The behaviour just described should, it is argued, activate the discretion of the Court to remove the case guardians. If successful in removing the case guardians, the wife seeks an Order that the court request the Attorney-General to appoint an appropriate case guardian in their stead.

The Orders And Alleged Impropriety

Orders made by this court on 29 November 20007 provide relevantly :
“4. Until 4.00pm on 7 December 2007 or earlier order:
c)The husband (by his Case Guardians) pay or cause to be paid all outgoings, invoices, accounts and debts properly due and payable by the business as and when they fall due, including but not limited to:
i)Employee’s wages;
ii)The cost of vehicle maintenance;
iii)The cost of complying with all necessary and reasonable contractual, statutory and governmental obligations howsoever arising not exceeding the sum of $5,000.00 in any one case;
iv)Upon giving to the wife 21 days notice in writing of the intentions so to do any such expenses exceeding the sum of $5,000.00.
d)The husband (by his Case Guardians) shall ensure that in the running of the business they comply with all statutory and legal requirements and that they shall keep all proper books and accounts and such other records (including Business Activity Statements) as may be necessary or required. They shall make available to the wife at her expense such books, accounts, records and documents as she may reasonably require….”
e)The wife is hereby restrained from doing, causing or permitting to be done either by herself, her servants or agents any of the following acts or things:
i)Taking any step in the management or attempted management of the business;
ii)…”
The wife alleges in written submissions made on her behalf that:
“… the payments of $7,618 and $50,000 said to be a loan between the husband and the partnership constituted by the husband and wife [were] a payment to one party, the husband. Such payments clearly contravene the amounts permitted to be paid to the husband and wife and frustrate the tenor of the powers conferred by the orders of 29 November 2007. Those amounts were paid without any notice to the wife. In doing so, the case managers have acted improperly and unlawfully in the sense of failing to comply with the orders. The money paid to the husband exclusively puts in issue their bona fides and objectivity particularly as they did so without notice.”
The payments referred to are deposed to by the case guardians in an affidavit filed on 16 October 2008 in response to the wife’s application. In broad terms, it is alleged that the partnership had contracted to purchase a vehicle and the husband had drawn down funds from his superannuation fund to effect the purchase. As a result, they assert the partnership was indebted to the husband.
They depose to frequent discussions with an officer of the Office of the Protective Commissioner NSW (“OPC”) and assert that, primarily acting on his “advice” or, in effect, with his imprimatur, they repaid $50,000 to the husband and included an interest component of $7618, calculated by reference to a rate again discussed and agreed with the officer from the OPC.
The reference to the OPC is reflective of the case guardians holding office as the financial managers of the husband by order of the Guardianship Tribunal earlier referred to. The Protected Estates Act 1983 (NSW), provides, in effect, for the supervision and control of financial managers so appointed. Section 30 has particular relevance. The dual role of the case guardians will be discussed further below.
The reference to the “objectivity” of the case guardians in the submissions of the wife quoted earlier is taken further in other written submissions made by the wife:
“The orders of 29 November 2007 confirm their role as case guardians but also, in effect, confer on the case guardians trustee responsibilities to run the business.”
“At common law courts exercised a supervisor role in relation to trust and quasi-trust relationships. Next friends or case guardians stand in such a relationship with the person they represent”.
In oral submissions, Mr Burridge, counsel for the wife, asserted that the obligations under the orders earlier set out “place case guardians in a fiduciary-type position with respect to the parties’ joint funds”.
The submissions call into question the position of case guardians and their relationship with the property of the parties pending trial. Here, the case guardians also hold a position in relation to the husband and his estate by reason of the application of State law. It is necessary to look briefly at each of those aspects.

The Respondents’ Positions As Financial Managers

As noted earlier, the Guardianship Tribunal NSW made orders after a hearing. The reasons for decision of that Tribunal and its Orders were before me in evidence and were not objected to.
The Office of the Public Guardian requested a Dr G from the T Mental Health Centre to prepare a report for it. That report was introduced into evidence by the wife in the proceedings before me.
That report includes the following :
“11.I feel it would be in [the husband’s] best interests if his affairs are managed by someone who could have cordial relations with all the members of his family. As indicated by [the husband] it is of utmost importance for him to see his family as cohesive and also that he was not dragged in the courts. There is a thought that his family and close friends can just be the family and friends and his affairs are managed by the independent bodies. It would be the win-win situation if the Guardianship Tribunal could look into the possibility of this happening.
12.Last but not the least, it is also important to work on the mediation and bringing family together and not get priority to separation and property settlement as this is causing a great deal of pain to [the husband]. He is the luckiest person to have a big family (mother, sister, wife, sons, daughter and grandchildren) and two wonderful caring friends who are still involved in his care. It is just a matter of resolving a few things and making it right for him.”
Notwithstanding the views (or hopes) of Dr G, evidence before the Tribunal revealed significant intra-familial conflict and dispute with, it seems, Mr D Starkey included on one side and another adult son, Mr R Starkey, included on the other.
It is to be recalled that the application before the Tribunal was an application by Mr D Starkey that he or his sister together with his mother should be his father’s financial manager. That application was rejected. The Tribunal determined that:
“. . . unfortunately the history of conflict within the [Starkey] family is so entrenched that it would further and detrimentally interfere with the family relationships if one or more of the [Starkey] family were appointed to the role of guardians. Significant effort and possibly professional external assistance will be required to achieve Mr [Starkey’s] vision for family harmony.”
The Tribunal also considered whether the husband was a person “not capable of managing his affairs” and was in need of another person to do so. The Tribunal decided that the husband was unable to undertake financial decisions on his own including :-
“Primarily the financial decisions relating to the operation of the […] business; management of property assets; conduct of the Family Law proceedings; and the application of resources for [the husband’s] care needs.”
As noted earlier, the form of the current application made by the wife to this court concedes the necessity for the husband to have a case guardian.
That the current application has a significant antecedent history of conflict is exemplified by the Tribunal recording that:
“[Mr D Starkey] recommended in his statement that “. . .disciplinary action including but not limited to the criminal prosecution of Allan Cowley [the case guardians’ solicitor]; […], […], [..., a manager at the husband’s nursing home]; [Mr C, one of the case guardians]; [Mr R Starkey, his brother] and [Mr T, the other case guardian] for crime in the State of New South Wales . . .”.
It is also exemplified by the wife’s solicitor telling the Tribunal on her behalf that:
“[the case guardians] should not continue in the role of financial management . . . because she perceives the turmoil in her life has been caused by the Family Law proceedings and the proceedings are being perpetuated by the case guardians . . .; to appoint them as financial mangers would create a conflict of interest.”
Mr R Starkey told the Tribunal that since the case guardians had taken up their role as financial managers :-
“. . . the positions of [the case guardians] have not been recognised by mum and [D Starkey] and they have gone out of their way to make life difficult for both of them.”
The evidence, and some findings, of the Tribunal are not recorded in these reasons for the purpose of preferring one piece of evidence over another nor the veracity or credibility of one party over another. Nor is either recorded for the purpose of adopting any findings of the Tribunal for the purposes of the decision here. Rather, that evidence is recorded for three primary purposes:
a)First, it is a matter of considerable significance, as it seems to me, that a Tribunal, charged with statutory responsibilities in respect of persons in need of protection, has determined to appoint the two people who are the case guardians in proceedings in this court;
b)Secondly, those matters are recorded to point out what seems to me to be a very important piece of factual context to the instant application, namely that issues with respect to the suitability or otherwise of the current case guardians have been live for some time in another Tribunal;
c)Thirdly, it seems to me to be relevant to the instant application to observe that the application for removal here has echoes in assertions made by the wife (and Mr D Starkey) in the Tribunal.
By reason of the order for financial management, the same two men who are the case guardians for the husband in this court have a number of statutory responsibilities under State law.
Their responsibilities are monitored by the State statutory framework that provides for their appointment and oversees the management of affairs of a person in need of protection. That is emphasised by Directions and Authorities issued by the OPC pursuant to s 30 of the Protective Estates Act 1983 (NSW). That section empowers the Protective Commissioner to issue directions and authorities to a financial manager so as to enable them to manage the protected person’s estate. It also, of course, provides a mechanism for the oversight of those responsibilities.
The Directions and Authorities issued by the OPC on 10 March 2008 are in evidence before me as an Exhibit to the affidavit of Mr C filed 16 October 2008. Included among those Directions and Authorities is a specific prohibition on dealing with the estate except as approved prior by the Protective Commissioner (Clause 9). The case guardians are permitted to:
“. . . continue property settlement proceedings on behalf of the protected person in the Family Court of Australia and in order to facilitate this to :-
(i)retain lawyers to conduct the proceedings to conclusion and to pay their reasonable costs;
(ii)act, if necessary, as case guardian for the protected person in the proceedings;
(iii)enter into settlement negotiations if so advised and, subject to the approval of the court, appear at the hearing of the proceedings, to compromise same on such terms as the manager may consider reasonable and proper if so advised by their lawyers.” (Clause 8(b))
In the context of the current dispute, Clause 3 takes on some importance. It provides:
“3 Expenditure
Taking into consideration the protected person’s financial resources, a manager is authorised to pay all properly incurred expenses as follows :
(a)all reasonable living costs, including accommodation, care and medical expenses;
(b)all minor expenses incidental to the management of the estate;
(c)all income and property taxes;
. . .
NOTE In the case of joint liabilities the manager is authorised to pay the protected person’s proportional share only.” [bold type in original]
No application has been made to the Guardianship Tribunal, nor correspondence directed to the Protective Commissioner, in respect of what is said in these proceedings to be improper behaviour by the case guardians.
It is important to observe that, even if the instant application is acceded to, absent any further steps being taken with respect to the State orders, the financial affairs of the husband will continue to be conducted by his financial managers pursuant to the state orders and the Directions and Authorities. They will continue to have the specific obligations referred to and they will continue to be overseen by the Protective Commissioner.
Equally, the orders made by this court empowering the case guardians to do certain acts on behalf of the husband and placing restrictions otherwise on them (and the wife) are not, and do not purport to be, orders which govern the functions of those two men as financial managers of the husband. They are in my view properly seen as orders made, in effect for the husband, to run the business (in effect to the exclusion of the wife and others) pending a s 79 hearing or resolution between the parties.
The orders made by the court are personal to these particular case guardians. The applicant concedes that the husband is in need of a case guardian. The orders with respect to the running of the business pending trial would lapse with the removal of the case guardians. The (separate) obligations of the case guardians as financial managers with respect to the same business, would, however, continue.

The Respondents’ Positions As Case Guardians

Procedural orders were made by this court on 17 July 2008 which are designed to place this matter on track for a hearing of the s 79 application. In particular, those orders contemplate, subject to compliance with other orders, this matter being listed in a callover before me on 30 January 2009 with a view to being heard within the approximately six week period between mid-February and the end of March 2009.
The parties also consented today to directions, which, subject to matters relating to valuation, should see the matter stay on track for that mooted callover and a trial date within the mooted time frame.
Rule 6.10(1) of the Family Law Rules 2004 provides:
“A person may apply for the appointment, replacement or removal of a case guardian of a party.”
In Kannis and Kannis [2002] FamCA 1150 the Full Court looked at the removal of next friends (as case guardians were previously known) in the context of an appeal where it was asserted that the trial judge ought to have removed a next friend during the course of the trial.
The Full Court noted that removal “might be necessary in some circumstances . . . as a matter of logic such a course might seem necessary where the Next Friend is clearly neglecting or damaging the interests of the party.” The Full Court went on to say :-
71.The power granted under [the then] Rule 18 is a discretionary power to be exercised either on the application of the Next Friend or in circumstances where the court considers it appropriate the person be removed as Next Friend.
72.. . . the fact that the Next Friend for the husband stood to gain if his father obtained a more favourable result than that sought by the wife could not be seen as a reason to remove him. Indeed to the contrary. There was some communality of interest between the Next Friend and his father. The fact that the Next Friend proved to be an unreliable witness would not be enough to make it appropriate to remove him.
73.Further, even if his Honour had considered such a course, there was strong arguments against doing so. It would involve delay and costs for both parties. And it would amount to an interference in the running of the husband’s case by those who there was no reason to suggest did not have his interest at heart. There was no allegation that the Next Friend had deliberately acted against the father’s interests, merely that in the exercise of his judgment he had made mistakes which have had the effect of damaging those interests. While there may or may not have been bad faith towards the court there was none towards the husband. It would have been mere second guessing by Chief Judge Holden to interfere in the running of the husband’s case by replacing the next friend.
74.In summary whilst we are unable to set out the circumstances in which it might be appropriate for a court to remove a guardian ad litem or Next Friend of its own motion, nothing has been put to us in this case which would indicate to us why Chief Judge Holden should have done so nor why would it be appropriate to set aside the entire verdict and send the matter back for retrial. The only issue upon which it could properly be said that the behaviour of the Next Friend impinged on the proceedings was the issue of non-disclosure. There were ample other matters readily conceded or clearly open to the trial judge about that issue which would enable the findings to stand independently of any criticism of the Next Friend.

Counsel for the wife helpfully provided extracts from the “English White Practice” (relevantly Order 80 Rules 2 and 3) together with a copy of the decision of the Court of Appeal in New South Wales (Kirby P, Sheller JA and Windeyer A-JA) in Holt v Protective Commissioner (1993) 31 NSWLR 227.
Annotations to the former refer to decisions indicating removal in what might loosely be described as “conflict of interest situations” or where a guardian is acting improperly. In the latter respect, the annotations record:
“a person seeking to remove a parent or next friend and substitute some other person must establish that the parent is not acting properly in the interests of his or her child as his next friend …” [emphasis added]
In Holt (a case, it is to be noted, dealing with the appointment of a person as the manager of an estate pursuant to State legislation, not the appointment or removal of a next friend/case guardian) the court said, in effect, that the classes of cases in which the manager of an estate might be removed are not closed but clearly include “demonstrated incompetence or impropriety on the part of the installed manager”.
In Cains, B, Australian Civil Procedure, 6^th ed, Thomson Lawbook Co., Sydney, 2005, at 274, the learned author says (again in respect of next friends of infants):
“The office of next friend is designed to protect the infant. A next friend must conduct the proceedings so that the infant’s interests are paramount. There is a presumption that an infant cannot assert rights or form a judgment. Hence the need for a next friend to act on the infant’s behalf … The next friend conducts the proceeding. [citations omitted, emphasis added]”.
In my view, there is nothing in principle different to the position of a case guardian appointed under this court’s Rules in respect of a person with a disability from that of the next friend of an infant. In my view, similar principles should apply to each.
In particular, the case guardians act in the stead of the husband and conduct the proceedings. When bound by orders they incur personal obligations, but they do so as, in effect, the husband. So when, as here, orders permit and proscribe behaviour in and about the running of a business previously run by the husband and wife, they stand in the shoes of the husband in and about the performance of the orders although they are personally bound by the orders.
The primary obligation of the case guardians is to act in the interests of the husband. That being so, it may be that, in doing so, they may, from time to time, act in ways contrary to the interests of the wife. No doubt any such actions taken on behalf of the husband may, as it were, count against the husband (through the case guardians) in terms of any ultimate findings or orders in the substantive proceedings.
Counsel for the wife submitted that, in so far as the orders made by this court are concerned, the case guardians stand in a position similar to that of a fiduciary or trustee in respect of the parties’ joint funds and owe fiduciary duties to both parties.
Even if that it is correct, about which I express no concluded view, and even if the conduct of the case guardians can be described as “improper or unlawful” it does not in my view follow that the remedy (or part of any remedy) is the removal of them as case guardians.
In respect of the alleged impropriety or illegality, it is clear that the payments were made without notice. That may involve sanction in proceedings that seek sanction as their remedy. It may involve consequences in the substantive s 79 proceedings when regard is had to the use of the money. But, in my view, it does not amount to the sort of impropriety that, ipso facto, warrants removal.
Non-compliance with the order to the extent established may be and, as it seems to me probably should be, a factor taken into account in the exercise of a discretion to remove, but no more than that.
The primary task of the case guardians is to act for the husband as if the husband in and about the proceedings. Their primary responsibility in and about the conduct of the proceedings, including in respect of orders made within the proceedings, is to act in the husband’s interests.
In my view, that proposition clearly emerges from the texts and authorities to which I have earlier referred.
Rule 6.11(1) of the Family Law Rules 2004 provides:
“If in the opinion of the court a suitable person is not available for appointment as a case guardian of a person with a disability, the court may request that the Attorney-General nominate in writing a person to be a case guardian.”
There is no evidence before the court of the practical steps required to be effected by the wife to have, as she seeks, a person so appointed or, more importantly, the likely time frame that any such appointment might involve.
It is also conceded by counsel for the wife that the Attorney-General may well determine that persons appointed as financial managers after a process of investigation, and a hearing, by the relevant NSW Tribunal ought, despite removal by this court, re-appoint the current case guardians.

The Exercise Of The Discretion To Remove

It is accepted that the exercise of the power to remove is discretionary. No legislative or regulatory provision provide criteria for the exercise of that discretion.
The facts about which there is no dispute in this application (or facts which, for the purpose of the application cannot seriously be challenged) provide important pointers to the exercise of the discretion. They include:
·By its terms, the application concedes that, as a result of the husband’s current incapacities, a case guardian is necessary for him;
·   The case guardians were appointed about eleven months ago and have acted as such since;
·   No specific alternative case guardian is proposed by the wife;
·   The court has no evidence as to how long an appointment by the Attorney-General might take. Nor does the court have any evidence as to the process employed by the Attorney-General and the person or persons who may be appointed;
·   It is conceded by counsel for the wife that, given the appointment of the case guardians as “financial managers” for the husband pursuant to State legislation, the process leading to that appointment and the continued monitoring of that appointment by the OPC, that the Attorney-General might even re-appoint those same people as case guardians despite their having been removed by this court;
·   In any event, there is no evidence to suggest that the appointment of an alternative case guardian is likely to take place before the likely trial date;
·   As a result, it is possible to infer that the preparation of the husband’s case for trial will almost certainly be delayed and the trial itself will almost certainly be delayed;
·   As is effectively conceded by counsel for the wife, it is very likely that additional costs will be incurred by the husband or, more accurately, his estate, as a result of any alternative appointment;
·   Significant costs have already been incurred by and on behalf of the current case guardians;
·   The husband indicated to the NSW Tribunal that he had faith in the current case guardians as his financial managers;
·   There is significant intra-family dispute and the current proceedings have echoes in earlier applications brought by Mr D Starkey in the Tribunal and dismissed by that body.
This is not an application to remove these gentlemen as financial managers pursuant to the State legislation.
There is no application before this court to rescind or modify the specific orders relating to how the husband (through the agency of the case guardians) ought conduct any aspect of the financial affairs of the husband, including the running of the business.
There is no allegation that the case guardians are conducting the s 79 case improperly or otherwise contrary to the interests of the husband save that in breaching the order by failing to give notice he has, through them, acted improperly. I take that into account as a factor in the exercise of my discretion.

Conclusion

Weighing all of the factors to which I have made reference, I am not persuaded that the case guardians should be removed.
I will order that the application of the wife be dismissed.
Given that the issues connected with this application may have some relevance to, or bearing upon, the ultimate determination of the substantive application, I propose to reserve the question of each party’s costs to the hearing of that substantive application (which will be heard by me).
The issue of costs was not the subject of argument by either party at the hearing. If either or both parties seek to be further heard in opposition to the course I have indicated I will take in respect of costs, I will receive written submissions which must be delivered within 14 days of the publication of these reasons.
Should no written submissions be received by 4.00pm on that day, the order for costs will be as I have indicated.

I certify that the preceding sixty-nine (69) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Murphy.

Associate:

Date: 12 November 20008

[2008] FamCA 962

12 November 2008

Key Legal Topics

Areas of Law

Family Law

Civil Procedure

Legal Concepts

Costs

Jurisdiction