SY and MM - [2013] WASAT 68

JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL

STREAM: HUMAN RIGHTS

ACT: GUARDIANSHIP AND ADMINISTRATION ACT 1990 (WA)

CITATION: SY and MM [2013] WASAT 68

MEMBER: MR M ALLEN (SENIOR MEMBER)

HEARD: 19 JUNE, 7 AUGUST AND 26 OCTOBER 2012 LAST SUBMISSIONS FILED ON 19 NOVEMBER 2012

DELIVERED : 13 MAY 2013

FILE NO/S: GAA 1708 of 2012
GAA 1805 of 2012

BETWEEN: SY
Applicant
JM
Interested Party
AND
MM
Represented Person

Catchwords:

Guardianship and administration Application for administration order and orders in relation to an enduring power of attorney Property of proposed represented person transferred to donee of enduring power of attorney without consideration Use by donee of funds in bank account of proposed represented person for purposes unrelated to care of proposed represented person Consideration of whether proposed represented person has capacity to make reasonable judgments about her financial affairs and whether any incapacity is due to a mental disability Consideration of whether proposed represented person's financial affairs should be left in the hands of donee of the enduring power of attorney Mismanagement of proposed represented person's financial affairs by donee Appointment of Public Trustee as administrator Revocation of enduring power of attorney

Legislation:

Guardianship and Administration Act 1990 (WA), s 3, s 40, s 64, s 64(1), s 82, s 84, s 86, s 87, s 107(1), s 108, s 108(1), s 108(1a), s 109, s 109(1)(c)

Result:

Administration order made
Enduring power of attorney revoked

Summary of Tribunal's decision:

A representative of the nursing home in which the proposed represented person lived applied for an administration order and an order for the revocation of an enduring power of attorney by which the proposed represented person appointed her son as her attorney. The proposed represented person's accommodation fees at the nursing home and pharmacy accounts were substantially in arrears and the nursing home had concerns about whether the proposed represented person's financial affairs were being managed in her best interests.
Information provided to the Tribunal at several hearings revealed that the proposed represented person's home had been transferred to the son without consideration, that the proposed represented person's pension had been cancelled, and that the son had in several months spent over $200,000 that had been in the proposed represented person's bank account.
The Tribunal was satisfied that the proposed represented person was unable to make reasonable judgments about her financial affairs because of a mental disability (depression, anxiety and cognitive impairment) and needed an administrator to investigate and, if possible, unravel the transactions entered into by the son. The enduring power of attorney in favour of the son was not a less restrictive means of managing the proposed represented person's affairs and should be revoked.
The Tribunal appointed the Public Trustee as the proposed represented person's plenary administrator and revoked the enduring power of attorney.
The administration order is to be reviewed in two years.

Category: B

Representation:

Counsel:

Applicant:     N/A
Interested Party             :     Ms M Speering (hearing on 7 August 2012 only)
Represented Person       :     N/A

Solicitors:

Applicant:     N/A
Interested Party             :     Culshaw Miller Lawyers
Represented Person       :     N/A

Case(s) referred to in decision(s):

FS [2007] WASAT 202

REASONS FOR DECISION OF THE TRIBUNAL:

Background

These proceedings concern Mrs MM (Mrs M) who, at the time the applications concerning her were made, was 83 years of age. Prior to December 2010 Mrs M lived at home with her husband (AM) and her son, JM, who had lived with his parents since approximately January 2010. In December 2010 AM died and in January 2011 Mrs M took up residence in a nursing home, where she has resided ever since.
In May 2012 SY, on behalf of the nursing home, made an application for the appointment of an administrator to manage Mrs M's financial affairs, pursuant to s 40 and s 64 of the Guardianship and Administration Act 1990 (WA) (GA Act), and also for an order under s 109(1)(c) of the GA Act for revocation of an enduring power of attorney (EPA) made by Mrs M on 9 December 2010 (shortly before the death of AM) in which she appointed JM as her sole attorney.
The applications referred to fees payable to the nursing home being over $10,600 in arrears, and to payments due to the pharmacy for Mrs M's medication not paid since January 2012, putting Mrs M at risk of being transferred to hospital if the pharmacy declined to supply required medication.
The applications referred to JM and GT (although no contact details were provided for GT) as being children of Mrs M, but at a hearing held on 19 June 2012 it became apparent that Mrs M had three other children (five in total) and the hearing was adjourned to enable notice to be given to the children other than JM.
A further hearing was held on 7 August 2012 and a final hearing held on 26 October 2012 at the nursing home so that Mrs M could give oral evidence.

Principles to be applied by the Tribunal

Relevantly, the principles to be applied by the Tribunal when determining matters under the GA Act can be summarised as follows:
a)Mrs M is to be presumed to be capable of making reasonable judgments about her financial affairs unless the Tribunal is satisfied to the contrary.
b)An administration order should not be made unless there are no less restrictive means of meeting Mrs M's needs and any order should be in terms that are least restrictive of any decisionmaking capacity she may have.
c)As far as possible the Tribunal must take into account the wishes and views of Mrs M, to the extent that she is capable of expressing them, or they may be inferred from previous expressions or actions.
d)The Tribunal must have as its primary concern Mrs M's best interests.

Mrs M's capacity to make reasonable judgments about her financial affairs

To be able to make an administration order concerning Mrs M the Tribunal must be satisfied that she is unable, by reason of a mental disability, to make reasonable judgments about all or part of her estate: s 64(1) of the GA Act. An examination of that question requires an understanding of what Mrs M's estate currently consists of, or might consist of, and for that purpose it is necessary to understand what has happened in relation to her financial affairs since the death of AM in December 2010.
On AM's death Mrs M became, by survivorship, the sole proprietor of the former matrimonial home, which was said to be worth approximately $1.2 million. An application for Mrs M to become the registered proprietor was lodged at Landgate in August 2011, at the same time as a transfer was lodged transferring the whole of Mrs M's interest in the property to her son, JM. That transfer had been signed in January 2011 but not presented for stamping until June 2011. The consideration for the transfer was expressed to be 'natural love and affection' but it appears from the amount of stamp duty assessed, plus penalty duties for late lodgement, that the property was valued at approximately $1.2 million.
Mrs M was the sole beneficiary under AM's Will, and in March 2011 various funds from AM's estate were paid to Mrs M's bank account (which had been opened shortly before AM's death). In late March 2011 the bank account had a credit balance of $216,714, the bulk of which ($200,000) was the proceeds from a term deposit account that had been part of AM's estate. Only JM had authority to operate that account. By midDecember 2011 that account had been reduced to $8 and since that time has had a small debit or credit balance. Included in the amounts paid from the account by JM was an amount of $60,000 said to have been loaned by JM to a person named PL, and an amount of $58,500 paid as stamp duty on the transfer of the house to JM.
Until approximately August 2011 Mrs M had been in receipt of a part pension, having regard to her asset position up until that time. However, at that time the pension ceased it seems because Centrelink became aware that the former matrimonial home had been disposed of by way of a gift and, in the usual way, had treated the value of the gift as an ongoing asset of Mrs M. Since that time she has received no pension and it appears unlikely that she would qualify for one for some years.
As can be seen from the above, Mrs M's financial position has changed dramatically since early 2011. From being a person owning a valuable home, with a pension and more than $200,000 in the bank, she has become a person with no assets and no income. What she may have is one or more causes of action against JM for his involvement in the transactions described above, possible causes of action against other persons, and she may have some future entitlement to a pension.
One other possible asset should be mentioned. JM told the Tribunal that shortly before his death AM had told him that money was also held in the trust account of a law firm at which AM had previously worked (the principal of the firm being AM's brother). According to JM, AM provided no details of why the money was held or exactly how much was involved although a figure of $60,000 had been mentioned. According to JM, he raised this issue with his father's brother (who was also the executor of AM's will) but he was unable to get 'a straight answer' from his uncle. No reference is made to these possible trust monies in the statement of assets and liabilities attached to the application for probate for AM prepared by AM's brother, and AM's brother died in July 2011. At about that time JM approached the solicitors who had been appointed to manage the affairs of the law firm but was told that it would not be possible to trace any monies in question without knowing approximate amounts and dates of deposit. JM took the matter no further at that time.
Subsequently, after the commencement of these proceedings in the Tribunal, solicitors acting for JM approached the solicitors managing the affairs of the law firm and were able to establish that the ledger of the trust account of the firm referred to amounts being held in relation to the deceased estate of AM's deceased mother (who had died many years before) but that all funds had been paid out. Payments were recorded as having been made from the estate to, or for the benefit of, AM but appeared to have also been recorded as loans to the law firm or to AM's brother by AM. The last of such transactions appears to have occurred in July 2010. It also appears that the law firm has unpaid debts and that the deceased estate of AM's brother was insolvent. Whether further inquiries would reveal further information about the circumstances of any amounts that may be due to the estate of AM (which Mrs M would be entitled to) and whether or not any claims could be successfully made against any person remains unclear.
The following documentary evidence regarding Mrs M's decisionmaking capacity was provided to the Tribunal:
a)Dr K, a general practitioner who has known Mrs M since February 2011, provided a report dated 10 May 2012 to the effect that Mrs M had a mild to moderate impairment of her cognitive functions, had depression of moderate severity and had withdrawn from most interests in life. She was fully dependent on others and had a current mini mental state examination (MMSE) score of 17/30. Dr K commented that Mrs M had some general understanding of her situation but not a full understanding. She appeared to be unaware of her financial situation and the problems that had arisen in the nursing home.
b)Ms B (the Acting Director of Nursing at the nursing home) provided a report dated 15 May 2012 to the effect that Mrs M would not be able to make daytoday budgeting decisions, and that she became very anxious at times, constantly requiring reassurance and could be disoriented to time. Depending on her anxiety levels her conversation could be disjointed and repetitive.
c)Dr P, a general practitioner who had known Mrs M for more than three years but who last saw her in October 2010, provided a report dated 27 July 2012 to the effect that when last seen Mrs M had no impairment of her cognitive abilities and she showed no signs of memory problems or problems with understanding. No mental status testing had been undertaken because there was no need to do so.
d)Dr M, a consultant at the memory clinic attached to the Sir Charles Gairdner Hospital, provided a report to Dr K dated 22 October 2012, referring to an assessment undertaken on 18 October 2012. Dr M reported that it was evident that Mrs M had some cognitive impairment at that assessment, scoring 20/30 on an MMSE test. She was able to explain to Dr M that she had relied on AM for the management of all financial matters and now relied on JM. She explained that she had no assets and no cash in the bank, and that she had 'changed the title' of her home to her son but could not say when that had happened. She could not explain the financial arrangements involved in her move to the nursing home or the cost of the nursing home care. Mrs M knew about the stopping of her pension but could not understand the reason for that. Although Mrs M suffers from anxiety and depression, that appeared to be relatively well controlled. Dr M concluded that, based on the assessment on 18 October 2012, Mrs M did not have the capacity to manage her own finances at that time.
e)Ms B provided an updated report dated 28 September 2012 in which she noted Mrs M can be emotionally labile and confused regarding time, but is oriented with person and place. Anxiety was said to be the biggest issue. Ms B expressed the opinion that Mrs M is not capable of making decisions on budgeting or planning financial matters.
The oral evidence given to the Tribunal regarding Mrs M's understanding of her financial affairs and her ability to make decisions or judgments about them can be summarised as follows:
a)JM said he thought Mrs M was lucid. He kept her informed about financial matters but not in any detail. She would be aware if prompted that her pension had been stopped, that the house had been transferred to him, and that the $200,000 had gone from the bank account but these were all matters that were 'not relevant enough' for her to remember independently. JM said that when he told Mrs M that the pension had stopped she had said words to the effect that 'I don't care I don't want it'. JM also said Mrs M was aware that the nursing home fees had been in arrears, and she thought the reason for this was that he had lost his employment in early 2011 and could not make the payments.
b)CM, who is a brother of AM, said he visited Mrs M regularly. CM said that she is an anxious person who had never spoken of, or been involved in any financial matters. She had always relied totally on AM and then JM.
c)GT, a son of Mrs M, said he saw Mrs M at least weekly. He saw nothing wrong with her ability to answer questions and she is well able to express her views.
d)PM, another son of Mrs M, said Mrs M had never had any interest in financial matters, being reliant on AM. He said she might understand information given to her but she had no interest in it at all because she always had others to deal with such matters. She had never been involved in making decisions about financial matters and he thought she was incapable of making decisions by herself.
e)LT, another son, agreed with the assessment by the others. He said his mother had been happy getting small amounts of money from AM for minor items, but AM handled everything of any significance.
f)Mr C, a representative of the Public Advocate, interviewed Mrs M at the Tribunal's request and reported that his impression was that Mrs M had never been aware of the full extent of her financial position and never had any interest or involvement in, or worried about, her affairs. Mr C said Mrs M had been aware of the house being transferred, and was clear she wanted JM to have it. She did not appear to be aware of what assets her husband had or that she had on his death (such as bank accounts). She consistently said she had no reason to worry about money as JM provided everything. She did not seem to fully appreciate she had lost her pension or the significance of the transfer of the property on it. Mr C said that he could not determine fully whether Mrs M did not have an appreciation of her affairs or whether she had a greater appreciation than she was willing to concede but that she was in some way 'masking' that knowledge in a desire not to comment adversely about how her affairs had been managed by JM.
g)Ms W, who is the Director of Nursing at the nursing home, said that Mrs M was aware of the Tribunal's proceedings and was extremely anxious about them. Her main concern is that she is very reliant on JM to meet all her needs and she feels JM is doing the right thing by her. Mrs M is fully dependent on highlevel nursing care and her main comment to Ms W is that she 'would just like everything to go away and be like they were'. Ms W said that at the time of her interview with Mr C, Mrs M had said she wanted to do 'the right thing' and did not want to 'get anybody into trouble'. Ms W said Mrs M had some cognitive impairment and she had never shown any understanding or awareness of her financial position because, as Mrs M had said, her husband did it all and she had never had to bother with such matters.
As noted above, a final hearing was convened at the nursing home to enable Mrs M to give evidence. The main points of that evidence are summarised below:
a)Mrs M said she did not understand anything about her financial affairs as her husband had provided everything. If she wanted anything he would go and buy it for her.
b)She did not know what assets her husband had at the time of his death. When prompted, she said it might be true that there was quite a lot of money in the bank account but she 'wouldn't know'. She knew of her bank account but did not worry about it because JM was going to operate it. She said she would not be surprised to learn there was about $220,000 in that account and she would not be shocked to learn it was now all gone. Her only explanation as to where that money had gone was that JM had 'paid bills'.
c)When prompted, Mrs M said she knew stamp duty had to be paid on the transfer of the houses to JM. She expected he would have paid that from his own money.
d)Mrs M said she did not know a woman named PL. PL was not a friend of hers or her late husband although it was possible her husband knew her. Her husband had never told her of a desire to loan money to PL. She said she would not be surprised if JM used her money to make a loan to PL, but she was not aware of that happening and was not worried about it.
e)Mrs M was aware her pension had stopped but was not aware of the reason, and said JM had not told her any reason but then said perhaps JM had told her and she could not now remember.
g)Mrs M said she did not have memory problems but could not say accurately how long she had lived at the nursing home.
As was observed in FS [2007] WASAT 202, the ability of a person to make 'reasonable judgments' is to be assessed in relation to his or her actual estate, but the test of whether or not the person can make such a judgment involves an objective assessment of whether the person can engage in a particular mental or cognitive process. This process involves knowledge, understanding and evaluation: at [106] [109] per Barker J. The process requires the capacity to know and understand matters about which decisions need to be made, to appreciate the nature and extent of the issues, and to evaluate and make a reasonable judgment about such matters.

I have concluded, and find, that Mrs M cannot make reasonable judgments now about her estate, or what her estate might now consist of, for the following reasons:
a)Mrs M has never known, or understood, nor has she ever had any interest in knowing about, her financial affairs. She has never been involved in managing those affairs, before or after AM's death.
b)She did not understand what her financial affairs consisted of at the time of AM's death and, although she is now aware all her assets and pension have gone, she does not fully understand why that has happened, nor the involvement of JM in that, or the consequences for her future security. In this respect I consider that Mrs M is not, as Mr C suggested might be the case, masking a greater knowledge of her affairs.
c)In my view, Mrs M could not now weigh up, and choose between, alternative courses of action in relation to her financial affairs. This is so, in my view, because she has never had to do so in the past and does not understand what is involved. Secondly, and, in my view, more importantly, any choices she might make regarding her affairs would involve making judgments about the role of JM and how he has managed her affairs and I am satisfied Mrs M could not realistically evaluate JM's role because she has, as no one disputed, complete trust in him and is heavily reliant on him, and gets anxious when he is not around.
The question that then arises is whether there is any causal connection between Mrs M's inability to make reasonable judgments about her financial affairs and any mental disability from which she may suffer as required by s 64(1) of the GA Act.
I am satisfied that, currently, Mrs M does suffer from a mental disability as defined in s 3 of the GA Act. I accept the reports of Dr K, Dr M and Ms B, and the oral evidence of Ms W, regarding Mrs M's depression and anxiety, and of her cognitive impairment. I prefer that evidence to Dr P's report because that report speaks of a time (October 2010) prior to the death of AM and Mrs M's residency in the nursing home. The opinions that Mrs M suffers from a degree of cognitive impairment is supported by the results of the MMSE tests referred to in the reports of Dr K and Dr M. In reaching this conclusion I have also placed weight on the report of Dr K to the effect that Mrs M had withdrawn from most interests in life, and the evidence of Ms W regarding Mrs M's high anxiety levels and reliance on JM. Both these aspects were apparent when I took oral evidence from Mrs M at the last hearing.
There is, in my view, the required causal connection between that mental disability and Mrs M's inability to make reasonable judgments. It seemed apparent to me from observing Mrs M and listening to her oral evidence that the combined effects of the death of her husband, the consequential increased reliance on JM, and the depression and anxiety that appears to have developed since Dr P last saw her in October 2010, had caused her to be even less interested in what her affairs consisted of, how they had been managed, and what might now be required to deal with them. Memory issues and cognitive impairment will have also played a part in this.
I am satisfied, therefore, that Mrs M is a person for whom an administration order could be made because she is unable, by reason of a mental disability, to make reasonable judgments regarding all of her financial affairs.

Does Mrs M 'need' an administrator?

In the light of Mrs M's circumstances, as described above, there is a need for someone (who cannot be Mrs M herself) to examine and deal with at least the following aspects of Mrs M's affairs:
a)Whether the transfer of the house to JM for no consideration was appropriate and whether it occurred in circumstances in which Mrs M could be said to have given informed consent to it. There was, at the various hearings, different versions presented by JM and Mrs M's other children regarding what AM's wishes were regarding the future of the house.
b)Whether action should be taken against JM on behalf of Mrs M in relation to amounts taken from Mrs M's bank account. In this regard it is not clear whether the $60,000 loaned to PL was by JM in his own right or whether he was in some way acting as an agent for Mrs M. JM submitted a copy of a statutory declaration made by him on 5 April 2011 (the purpose of which is not clear) in which he refers to him 'advancing' $60,000 to PL to assist her to buy a house, with no obligation to pay interest or repay principal, unless PL sold the property.
c)Whether, in the light of her circumstances, Mrs M may have some entitlement to a pension.
d)Whether any funds should or can be recovered from the estate of AM's brother or any other related source.
An administration order should not be made if Mrs M's needs can be met in any less formal ways. Ordinarily, the existence of a valid EPA may well constitute such an alternative. In my view this is not a case where that alternative is possible.
As the donee of Mrs M's EPA, JM is under an obligation to exercise his powers as attorney with reasonable diligence to protect the interests of Mrs M, and to keep and preserve accurate records and accounts of all dealings and transactions made under the EPA: s 107(1) of the GA Act. On the evidence before me I have reason to believe that JM's handling of his mother's financial affairs since the death of AM has not protected her interests and the EPA has not operated in her best interests.
Accordingly, it would not be appropriate or in Mrs M's best interests to permit JM to be in control of Mrs M's financial affairs under the EPA or otherwise. No other means of meeting Mrs M's needs were identified by any of the parties and I am satisfied that the only feasible means of meeting Mrs M's needs is to appoint an administrator.

Who should be appointed as administrator?

For the reasons set out above, JM would not be a suitable person to administer Mrs M's financial affairs. In addition, the evidence establishes that, as well as spending over $200,000 from his mother's bank account, JM has also spent in a relatively short time a large amount of money he has borrowed from a bank under a line of credit secured by his interest in Mrs M's former property. The main task of the administrator will be to investigate and, if possible, unravel JM's mismanagement of his mother's affairs and JM would have an obvious, and insurmountable, conflict of interest.
None of Mrs M's other children sought to be appointed as her administrator. It follows, therefore, that there is no alternative to the appointment of the Public Trustee as administrator. The Public Trustee will require plenary powers to investigate Mrs M's affairs and to take such action as may be required.

Should the EPA be revoked?

One of the applications made to the Tribunal sought an order revoking the EPA under s 109(1)(c) of the GA Act. Such an application can be made by a person who has, in the Tribunal's opinion, a proper interest in the matter. The nursing home, on whose behalf SY made the application, had an economic interest in Mrs M's EPA because her accommodation fees were in arrears. More importantly, I am satisfied that the nursing home personnel had a legitimate concern that Mrs M's financial affairs may not have been conducted in her best interests. On both grounds I consider that SY had a proper interest sufficient to enable him to make a s 109 application.
However, and in any event, GA Act s 108(1) and s 108(1a) authorise the Tribunal to revoke an EPA when an administration order is made and require such revocation or variation of the EPA if the continued operation of the EPA would be inconsistent with the functions of the administrator.
Because of the conclusions I have reached regarding Mrs M's need for an administrator with plenary powers, and because of the conclusions I have reached regarding JM's management of his mother's affairs, I consider that the EPA should not continue to operate while the administration order is in force. Even if, at some future time, the Public Trustee's involvement were to be no longer needed and some scope existed for JM to play a role in the management of Mrs M's affairs, it is my view that any such role could not be via an EPA. Rather, such a role would need to be played, in my view, as an administrator with all the obligations and responsibilities as such under the GA Act, including the obligation to present periodic accounts to the Public Trustee for examination: s 82 of the GA Act.
Accordingly, I consider that the EPA should be revoked. That revocation should be ordered under s 108 of the GA Act rather that s 109.

Mrs M's views and wishes

In reaching the above conclusions I have not overlooked the principle referred to in [6] above that as far as possible the Tribunal must take into account Mrs M's views and wishes.
It is apparent that Mrs M relies on JM to manage her affairs, has complete trust in him, and does not wish to see that change. Those views must be, and have been, accorded considerable weight by me in determining the issues in these proceedings. However, two points need to be made:
a)Taking a person's views and wishes into account does not mean those views and wishes must dictate the outcome of a case especially if the Tribunal is satisfied, as in the case here, that the person's wishes are for an outcome that the Tribunal considers not appropriate.
b)There is another principle that must be applied that the Tribunal must have Mrs M's best interests as its primary concern. This means that Mrs M's best interests must prevail over her wishes if the two things are in conflict. In my view, leaving Mrs M's financial affairs in JM's hands at the present time would not be in Mrs M's best interests and this case is an example of a situation where the represented person's views and wishes, although important and to be given weight, must defer to the person's best interests.

When should the orders be reviewed?

The orders proposed to be made can be reviewed at any time on application by Mrs M or the Public Trustee (under s 86 of the GA Act) or on application by another person to whom the Tribunal grants leave (under s 87 of the GA Act). Nevertheless, s 84 of the GA Act requires the Tribunal to nominate a date for review of the orders in the absence of any such application.
The Public Trustee will require some time to investigate the various matters requiring attention in Mrs M's affairs. I consider a period of two years should be sufficient to undertake these investigations and to take any appropriate action and there should be a review at that time.

Orders

1.The Public Trustee of 553 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).
2.The enduring power of attorney dated 9 December 2010 by which [Mrs M] appointed [JM] as her attorney is revoked.
3.The application under s 109 of the Guardianship and Administration Act 1990 (WA) is dismissed.
4.The administration order should be reviewed by 13 May 2015.

I certify that this and the preceding [36] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
___________________________________
MR M ALLEN, SENIOR MEMBER