TCAR
[2017] QCAT 101
•23 March 2017
CITATION: | TCAR [2017] QCAT 101 | |
PARTIES: | TCAR | |
APPLICATION NUMBER: | GAA9677-16; GAA9678-16; and GAA12348-16 | |
MATTER TYPE: | Guardianship and administration matters for adults | |
HEARING DATE: | 8 February 2017 and 30 November 2016 | |
HEARD AT: | Cairns | |
DECISION OF: | Member Johnston | |
DELIVERED ON: | 23 March 2017 | |
DELIVERED AT: | Brisbane | |
ORDERS MADE: | The Tribunal makes the following Orders: 1. MG is to instruct her solicitor to take all steps necessary to transfer the property situated at CAIRNS back into TCAR’s sole name. 2. MG is to advise the Tribunal when the appointment with the lawyer has been made as soon as possible and advise the Tribunal of the name of the solicitor and the timeframe to comply with the above direction. 3. MG is to provide a copy of the title search showing the property having been returned to the sole name of TCAR. 4. The Tribunal declares that TCAR did not have capacity to make complex financial decisions as at 4 November 2015. 5. The Tribunal dismisses the application by HD for the appointment of administrator. | |
CATCHWORDS: | Duties of attorney to avoid conflict situations | |
APPEARANCES: | ||
| Day 1: 30 November 2016 RO – social worker Day 2: 6 February 2017 TCAR – adult | ||
REPRESENTATIVES: | |
TCAR : | BLUE LAWYER Barrister instructed by WHITE LAWYER of the firm FSBM |
REASONS FOR DECISION
Background
TCAR lost her husband due to illness on 22 June 2015 and moved next door to live with her daughter MG and her son-in-law MH. On 10 April 2014, TCAR had appointed MG as her Enduring Power of Attorney.
On 4 November 2015, TCAR instructed RED LAWYER of Farrelly’s lawyers to transfer her property (CAIRNS; “the Property”) to MG and MH. The solicitor convinced her to transfer half of her interest to MG and MH as joint tenants with TCAR to hold half the interest and MG and MH one quarter each. The Tribunal will refer to this as the property transaction.
A search of the title shows TCAR as a joint tenant with MG and MH in one-third shares each. This does not even accord with the solicitor’s instructions.
The Public Guardian received a reference in relation to TCAR’s affairs and started an investigation. They were uncertain about TCAR’s capacity to enter into the property transaction. The Public Guardian accordingly lodged an application for a declaration of TCAR’s capacity to enter into the property transaction and brought an application for directions in the event that the Tribunal found that TCAR did not have capacity in relation to property transaction.
HD brought an application seeking the appointment of herself and her brother TG as administrators for TCAR.
The first issue for the Tribunal is whether TCAR had capacity to enter into the property transaction.
Did TCAR have capacity to enter into the property transaction on 4 November 2015?
Oral evidence
TCAR
When questioned by the Tribunal TCAR was unable to explain her financial situation. She was unable to set out her reasons for transferring her home to her daughter and son-in-law. She constantly turned to her daughter MG for reassurance and guidance. She stated that she wanted to leave her house to MG and MH. TCAR was unable to tell the Tribunal what income she received by way of pension or what amount she held in her savings account.
MG - daughter
MG told the Tribunal that her mother was not the same person as she was a year ago. Her mother had capacity at that time to transfer the house into the joint names of herself and her partner MH. Her mother had lowered her alcohol consumption, had a good diet and was connected to a range of services.
TG - son
He was of the view that his mother did not have capacity to enter into the property transaction. TG referred to the Report of Dr Sainsbury of 11 August 2015 in which the doctor indicated that TCAR did not have capacity to enter into complex decisions. Dr Sainsbury states that TCAR’s Alzheimer’s dementia was progressive and severe.
TG referred to Dr Sainsbury’s report of 1 July 2016 in which the doctor says that TCAR was able to make complex decisions but not able to make complex financial decisions.
TG referred to Dr Sainsbury’s report of 18 August 2015, which the Doctor states that TCAR has a mild dementia and that the Doctor did not discuss the property transaction with TCAR.
TG contended that his mother did not have capacity to enter into the property transaction that she was highly vulnerable to pressure and influence.
TG told the Tribunal that his father had managed the family finances when he was alive.
TG told the Tribunal that he was not disputing the Enduring Power of Attorney and was happy with the level of care that was being provided to his mother by his sister MG and her partner MH.
TG pointed out that his mother now only owns one third of the house when she should have owned at least a half.
TG told of the Tribunal that he did not believe that his mother had capacity to enter into the property transaction and that the property should be transferred back into his mother’s name and the Public Trustee of Queensland be appointed as administrator. Her assets should not be given away as they would be needed for her future needs.
HD - daughter
HD told the Tribunal that with her mother there was a three-year history of fluctuating cognitive functioning. Her mother was extremely vulnerable to undue influence. The evidence of Dr Sainsbury as at 11 August 2015 was that her mother had an impairment that was progressive and severe. Dr Sainsbury states that her mother was not able to make complex financial decisions. She was aware of her mother’s poor short-term memory and her need to be prompted with the activities of daily living. Her mother could not name her three brothers. Her father Noel managed the finances and legal matters for her mother.
HD was of the view that her mother had been influenced by her sister into the property transaction. HD stated that her mother was living with MG and MH and depended on their support and goodwill. This made her vulnerable to undue influence on a daily basis.
HD told the Tribunal that her mother would not have gifted two thirds of her home to MG and MH if she had capacity. HD told the Tribunal that she was unemployed and in difficult financial circumstances and that, her mother would have dealt with the children equally.
HD pointed out to the Tribunal that her mother had looked to MG for reaffirmation and support.
SJ – friend of MA
She was of the view that TCAR did not show any depth of understanding of her financial affairs at the time of the hearing (of 30 November 2016) but that at the time of the property transaction it was a joint decision of the legal and medical team that she had capacity to enter into the property transaction. Dr Strivens and Dr Sainsbury whereof the view that TCAR had capacity to enter into the property transaction. This verification was addressed by the legal team and TCAR agreed to transfer part of her property to MG and MH. TCAR acted on the basis of legal advice from the solicitor. There is credible evidence from the medical team that TCAR had capacity.
MG and MH are providing care and support. TCAR trusts and feel secure with them.
Mark Phillips - Senior Investigator for the Public Guardian
Mr Phillips told the Tribunal that his office could not conclude that TCAR did not have capacity because of conflicting medical evidence. He said that at the time of the property transfer - 4 November 2015 - there was a presumption that TCAR had capacity. However because her daughter MG her attorney was one of the beneficiaries there was a presumption of undue influence in relation to the property transfer. The powers under the Enduring Power of Attorney started immediately and that is why there is an issue. This is why the solicitor recognised it as an issue.
The Medical Reports provide no evidence of TCAR’s capacity as on 4 November 2015. What medical evidence is available to the Tribunal? The closest is that of Doctor Strivens the geriatrician and Dr Sainsbury TCAR’s GP. These reports are relevant as they were three months prior to the property transaction. Dr Sainsbury in August 2015 says in relation to the level of impairment is that TCAR is experiencing significant problems. TCAR requires assistance with her daily living and bill paying. The concept of capacity for matters such as a transfer and the implications of the property transaction particularly a part transfer raise serious questions.
The focus of the Tribunal must be on the nature and effect of the transaction and take into account the ramification for TCAR’s overall circumstances. There are also questions about the solicitor judging TCAR’s capacity for the property transaction.
Dr Sainsbury in a subsequent report indicates an improvement. Dr Sainsbury is making an educated guess in August and acknowledging a significant improvement with the medication Aricept. Does that establish that TCAR had capacity on the day to provide instructions? The solicitor took a detailed file note of the steps taken. The solicitor has seen TCAR on several occasions. On this occasion, she saw TCAR just once, in relation to what was a significant change in direction. In the solicitor’s file note, the solicitor recognises undue influence as a factor. There is an implied factor that the solicitor assured herself that the transaction was not affected by undue influence by the steps that she took for example TCAR was seen on her own and she took instructions directly from TCAR and without MG the attorney being present. TCAR was apparently quite adamant that the transfer of the property take place straightaway.
The solicitor had to explain to TCAR that she would no longer own house and that TCAR would need to be fully aware of that situation.
TCAR asked the solicitor what she recommended and the solicitor recommended taking on joint ownership. There does not appear on the file note to be any exploration of TCAR’s understanding of the matter other than the issue of whether TCAR was being unduly influenced or not. What were the implications on her pension and the ability to deal with her future needs?
The Public Guardian is concerned about whether TCAR had capacity to understand the nature and effect of the transaction. The Public Guardian was of the view that there were sufficient grounds for the application to QCAT. The property transaction was done very quickly and the evidence shows that TCAR’s capacity was fluctuating. There was only one appointment and the question is whether that was enough in the circumstances where TCAR has been diagnosed with Alzheimer’s dementia and has shown fluctuating capacity. He is of the view that there was a need for more than one appointment given the nature of the transaction.
The solicitor went through the process but more detail in relation to the responses would have been helpful. The Public Guardian is of the view overall that there are some grounds of concern. There is no medical evidence on the date of the transfer. There is evidence prior and after. There is a detailed note from the solicitor. There is a presumption of capacity.
In relation to the issue of undue influence, it is noted that an independent solicitor was used; and the attorney was not present when instructions were given.
Mark Phillips told the Tribunal that he remains concerned. The evidence of MH is that TCAR’s functions better in the afternoon. Based on TCAR’s responses to the Tribunal, the need for prompting and the lack of knowledge of the detail in relation to her finances raise significant doubts.
MG pointed out to Mr Phillips that TCAR’s solicitor notes 13 times that TCAR does not want to transfer the property to TG and HD. Mr Phillips stated that an intention does not show an understanding of the nature and effect transaction. It has not been shown that TCAR understood the implications of the advice of the solicitor. There is also this issue. If the solicitor had flagged issues such as the effect on her pension of the gift or the effect of the gift on her entry into the nursing home system TCAR might have been given the opportunity to seek financial advice on the possible effects of the property transaction before actually undertaking the transaction itself.
TG
TG told the Tribunal that the house was 90% of his mother’s assets and that there was no reason for her to leave the bulk of assets to MG and MH. It was always his understanding that his mother intended leaving her estate equally to all her children.
Dr Strivens - TCAR’s Geriatrician
Dr Strivens saw TCAR in August 2015. He undertook some cognitive tests that revealed some cognitive deficits and a Mini Mental State Score of 23/30. He classified TCAR as having a mild Alzheimer’s disease with short-term memory problems and needing assistance with complex executive functioning. He looked at her testamentary capacity and while she was affected by grief because of the passing of her husband had a reasonable awareness of her assets. Dr Strivens was of the view in relation to complex matters that TCAR would need assistance but she did have testamentary capacity i.e. the capacity to make a will.
Dr Striven confirmed that testamentary capacity was not the same as capacity for financial matters, which he said, was time specific. He stated that TCAR’s capacity has fluctuated with treatment and she did show declines in her cognitive abilities. She had incorporated external memory aids help her with her short-term memory problems and her Mini Mental State examination scores moved up to 25/30 however her short-term memory was still low one out of three.
When the doctor saw TCAR in October 2015, her cognitive functioning had deteriorated. Her memory had declined and she was a little bit worse over the 12-month period.
The property transaction on 4 November 2015 was three months after he had seen her. The doctor told the Tribunal that he would have serious misgivings if TCAR made a decision in relation to her finances not to consider all her family equally. Dr Strivens’ told the Tribunal that TCAR made it clear to him that she had no issues with the care that MG and MH were providing but equally she had no issues or concerns with other children TG and HD. There was absolutely no suggestion that she was intending to transfer the majority of the estate to one of her children.
Dr Strivens told the Tribunal that if TCAR attempted to benefit one of her children over the other children that would raise a red flag for him.
Dr Strivens told the Tribunal that he when he first saw TCAR she was showing signs of significant grief and when he saw her last month her mood was worse.
Dr Strivens said he would agree with Dr Sainsbury’s comments that TCAR did not have capacity for complex financial matters. TCAR could make simple lifestyle and health decisions.
The doctor told the Tribunal that it was difficult to assess TCAR’s capacity based on variations in her Mini Mental State examination scores. He told the Tribunal that someone could score 30/ 30 but not have capacity. The decision about capacity depends on its complexity. Therefore, the question was whether TCAR understand the nature and effect of the decision to enter into the property transaction?
Between August and February, there was the intervention of the medication Aricept. The impact of the medication does not affect the progressive nature of the illness. The impression is that she was showing improvement with her attention and concentration. This however overlaps with the period when she was experiencing low mood, grief and depression.
There was no capacity assessment to do the property transaction.
The side effects of Aricept are confusion, impaired thinking, and irrationality. In the first two months, there was a great gain.
Dr Strivens confirmed that TCAR had testamentary capacity. He did not look at TCAR’s capacity to undertake more complex decisions and the property transaction would be a more complex financial decision. The issue for him was that TCAR has had significant problems with her memory and would need to be assisted and guided in relation to more complex decision-making. TCAR’s had a general understanding what was expected to make a will but it would be a red flag for him if she were asked to make a more complex decision. The property transaction would be a more complex decision.
The doctor was aware that TCAR wanted to make a will. He was of the view that making a will was not a complex financial matter. TCAR had capacity to make a will. The doctor repeated that making a will does not translate into making complex financial decisions.
Dr Strivens told the Tribunal that because of her cognitive deficits TCAR was vulnerable to undue influence. He was not aware and did not see any such pressure in this matter.
Day 2 – 8 February 2017
WHITE LAWYER
WHITE LAWYER told the Tribunal that it was clear after interviewing TCAR that she does not have capacity to relate to what happened in relation to the property transaction. She indicated that she had looked at the material from QCAT and made enquiries of Dr Strivens’ and Dr Sainsbury. She had attempted to talk to RED LAWYER who was now in PNG. She had engaged in lengthy conversation with TG and HD and with MG and MH.
WHITE LAWYER visited the home of MG and MH and it was clear that TCAR was well cared for and wished to remain with MG and MH. TCAR also indicated that she still wanted her house to go to MG and MH.
The property transaction was to transfer a half share of the property to MG and MH by way of gift (see TMR 91 and annexure 17 50:50) i.e. TCAR 2 shares, MG, and MH one share each.
WHITE LAWYER told the Tribunal that TCAR had testamentary capacity based on the affidavit of RED LAWYER and the reports of Dr Strivens.
The adult had capacity to execute an Enduring Power of Attorney’s on 10 April 2014 and capacity to execute wills on 3 December 2015 and on 12 June 2016 and retains social capacity to decide where she lives and whom she lives with. Her intention is to live with MG and MH. The Enduring Power of Attorney should remain in place unless there has been financial abuse. It is in TCAR’s best interests to be looked after by MG and MH. In relation to HD’s application, which talked about the appointment of an administrator, TCAR prefers the existing arrangements to the Public Trustee of Queensland.
The property transaction is not a conflict transaction because TCAR is still on the title.
WHITE LAWYER submitted that there was no evidence to establish that TCAR had been unduly influenced in relation to wills or the property transaction.
Mark Phillips
The Public Guardian was concerned that TCAR had realigned 90% of her assets and that if TCAR did not have capacity for the property transaction should be set aside.
BLUE LAWYER
BLUE LAWYER told the Tribunal in relation to the argument of undue influence that:
1.the solicitor RED LAWYER had been engaged to look after TN’s estate;
2.she had given TCAR advice in relation to her will;
3.provided instructions in relation to property transaction;
4.made a second will for TCAR;
5.RED LAWYER had correctly applied the Lexon protocols in obtaining instructions;
6.the advice which had been provided was independent;
7.the solicitor had made sure that TCAR was not subject to undue influence;
8.Dr Strivens’ was of the view that there was no undue influence.
In relation to TCAR’s capacity, Dr Strivens the geriatrician and Dr Sainsbury TCAR’s GP had assessed TCAR as having testamentary capacity. Does TCAR have capacity to do the property transaction, as this is a concern of the Public Guardian? Was the property transaction a complex financial matter or does it fit within part of testamentary capacity. If the property transaction was a complex financial matter than TCAR did not have the capacity to enter into transaction.
BLUE LAWYER submitted that the purpose of the transaction was to affect her will and falls within her testamentary capacity.
The Tribunal told BLUE LAWYER that Dr Strivens had indicated the capacity for the property transaction was at a higher level than testamentary capacity and a transaction which favours one child over the others would raise a red flag. The Tribunal asked BLUE LAWYER what had Dr Strivens said to his instructing solicitor. Counsel indicated that Dr Strivens had said that the transfer of property was a complex financial matter in the same way that managing a share portfolio or entering into a contract to construct a home might be.
BLUE LAWYER submitted that the property transaction was putting in place TCAR’s wishes.
BLUE LAWYER submitted that the decision in relation to TCAR’s capacity was a question of law be determined based on the evidence of Dr Strivens and the other material.
Mark Phillips
The effect of the transaction is quite profound – it is clear that the solicitor did not discuss this with TCAR’s to ensure that she understood this. The solicitor at the highest discussion at paragraph 16 of RED LAWYER’s affidavit talked about the assets by size of a pie. The solicitor did not discuss with TCAR her future needs and requirements. There is no evidence to show that this was raised or identified. What would be the effect on TCAR’s Social Security payments? How would this affect TCAR if she needed to pay a bond issue if she was seeking a nursing home payment? What if TCAR’s care needs increase significantly and she needs access to funds for services or special equipment?
BLUE LAWYER told the Tribunal that he would agree with the Member that the solicitor should have raised questions about TCAR’s future needs including the payment of the bond if she needed nursing home care.
The question of TCAR’s future needs and the effect of the Assets and Income Test and the payment of accommodation bonds are complex issues. The property transaction clearly has major consequences in relation to TCAR’s financial affairs. This was clearly not raised by the solicitor. The solicitor did not adequately assessed TCAR’s understanding of the complexity of the transaction on her financial affairs and her future needs. The lack of recognition of these issues raises serious issues as to whether TCAR’s gave any consideration to these matters, which go to whether she had capacity. The Public Guardian has concerns about TCAR’s understanding of the complexity of the issues. The effect on her Social Security payments and the effect the alienation of assets on Aged Care assessments are complex issues.
TG
On page, 4 Dr Sainsbury’s report of 11 August 2015 he says that TCAR had no capacity to manage her financial affairs and was “unable to make decisions”. The doctor ticks the box for not even decisions about simple financial affairs. Dr Strivens on 18 August 2015 assesses TCAR with a score of 23/30 on her MMSE and with a mild dementia syndrome consistent with Alzheimer’s dementia with greater than three years history of fluctuating and progressive cognitive functional deficits
On 22 June 2016, Dr Strivens wrote that his mother “required assistance with instrumental activities of daily living, such as bill paying and meal preparation”.
On 1 July 2016, Dr Sainsbury writes under Financial Affairs in relation to TCAR’s capacity that she “Retains-testamentary capacity as per Dr Strivens” and ticks the box for simple Financial Affairs. He states that TCAR would have testamentary capacity as at 4 November 2015.
He refers to paragraph 10 of RED LAWYER’s affidavit where she says that HD was well off. The evidence of HD is that she is struggling and this is at odds with TCAR’s evidence.
He refers to paragraph 18 says that “TG had got into his head that he could make decisions for me and wants to take control over me and my house” and says that he had no such control.
He makes several references through material to support his argument that his mother was acting irrationally and that these were all indicators that she did not have capacity.
MG
MG provided a report from Tony Salinovich & Associates, which provided a reconciliation of bank deposits and withdrawals for the period 30 October 2015 to 30 May 2016, and she addressed the use of TCAR’s funds and answered questions in relation to particular transactions.
Mark Phillips
The role of the Public Guardian is to protect adults with impaired capacity. The property transaction needed to be clarified. The situation here is that a property transaction - a gift has taken place whereby the attorney and the attorney’s partner have benefited.
The definition of capacity is in three parts. The first is freely and voluntarily. The second is the ability to understand the nature and effect of the decision. The evidence is contained in the file note of the solicitor. It is clear that it was the wish of the adult was for the transaction take place. There are however concerns about process in place. Dr Sainsbury the GP was concerned and Dr Strivens the geriatrician indicated that he had concerns about TCAR’s ability to make complex decisions. The particular part of capacity, which is of concern, is understands the nature and effect of transferring a significant asset was not discussed. The effect of the transaction was not raised. This leads to concerns as to whether TCAR understood consequences of that decision whether she had the cognitive ability to understand.
His opinion from reading file note is that it was a rushed process the day before TCAR was travelling. There is no indication of what questions were asked except for estate planning. This leaves a big question mark. TCAR’s has been diagnosed with Alzheimer’s dementia. She has three years of fluctuating capacity. This raises concerns about whether TCAR had full awareness of the nature and effect property transaction.
The Public Guardian requests Directions as per its application. TCAR might have sought financial advice if the solicitor had talked about the impact of the transaction on her future financial affairs. How might this have affected pension. How much might this affect the payment of a bond? The effect of Dr Strivens’ evidence and lack of rigorous questioning leave this is a difficult issue.
BLUE LAWYER
BLUE LAWYER told the Tribunal that whatever happens in the future MG and MH are there to look after TCAR.
Discussion of the evidence
This matter turns on whether TCAR had capacity at the time of the property transaction namely 4 November 2015 to enter into the property transaction. What is being asked is whether TCAR had the capacity to understand the relevant information; the capacity to evaluate the character of the situation and possible consequences; and the capacity to handle the information rationally. The capacity to understand relevant information emphasises the importance of the adult’s comprehension of the information related to the issue at hand. Obviously, this predisposes the disclosure of relevant information regarding her financial affairs. With regard to this standard, it is necessary to distinguish between the mere capacity to understand information, and actual understanding. Merely having the capacity to understand is not sufficient consideration for actual understanding. An individual may have the intellectual capabilities to understand information, but nonetheless may misunderstand information as a result of selective attention, wishful thinking or deficits in the handling of information. The focus in this standard is on cognitive capabilities that are needed to understand information in the context of her financial affairs. The capacity to evaluate the character of the situation and the possible consequences differs from the mere ability to understand information in the abstract, by requiring that an adult is able to apply the information to her own personal situation. It requires adult’s recognition that information given to them about their financial affairs is significant and applicable to their own circumstances.
This means that the capacity to express a choice is only part of demonstrating that a person has capacity to understand the nature and effect of the decision that they are being asked to make.
Eight cognitive functions are supposed to be necessary in order to think rationally:
1.seeking information;
2.thinking in terms of consequences;
3.comparative thinking;
4.complex thinking;
5.generating consequences;
6.weighing consequences;
7.transitive thinking;
8.thinking in terms of chances.
The Tribunal is of the view looking at these cognitive functions that TCAR did not have capacity to undertake a property transaction.
The Tribunal was of the view that for TCAR to have shown capacity, she would have needed to demonstrate that she had sought information about the impact of her decision and was aware of the consequences including the impact on her future financial circumstances. The evidence is that RED LAWYER’s was concerned by TCAR’s proposal to transfer the whole of her property interest to MG and MH and felt compelled to offer a different alternative.
The Tribunal was of the view that TCAR would needed to have demonstrated that she was thinking in terms of the consequences. There is no evidence before the tribunal to demonstrate that TCAR had turned mind to her future financial needs.
The Tribunal was of the view that RED LAWYER’s did not question TCAR’s understanding of the transaction. She was more concerned that TCAR was not being unduly influenced. The Tribunal is of the view that TCAR’s proposal to transfer the whole of the house the substantial part of her property pie by way of gift to her attorney and the attorney’s partner should have raised serious concerns by the nature of the transaction; the substantial part of TCAR’s assets that were involved; and her ability to meet her future financial needs.
What is the nature of the transaction - it transfers a substantial amount of the adult’s finances by way of gift to her daughter and son-in-law. This is a major decision and deals with most of the adult’s estate. It is clearly an important decision.
What are the consequences of the decision on TCAR’s financial affairs? TCAR is on a pension and has some savings. How does the transfer affect her ability to meet future needs? There are no figures into RED LAWYER’s file note so it is difficult to see how this has been addressed. What will be the effect on her ability to pay a bond if she needs to go into a nursing home? TCAR is a frail elderly woman - surely, this should have been addressed by RED LAWYER, as this is a foreseeable need for someone in TCAR’s position. BLUE LAWYER concedes that they should have been addressed.
Mr Phillips points out that providing information on possible effects on the future needs that TCAR might have decided to seek independent financial advice.
The Guardianship and Administration Act in section 5 states that the capacity of an adult might differ according to the complexity of the decision to be made. The Tribunal accepts the evidence of Dr Striven that the property transaction required a higher-level capacity than testamentary capacity. The Tribunal notes Dr Strivens’ concerns with TCAR favouring one of her children over her other children. The Tribunal accepts the Public Guardians submission that the transaction raises serious issues about how this affects TCAR’s future financial affairs.
The Tribunal is of the view that TCAR had not sought advice on these consequences from the solicitor, as she had not turned her mind to these issues. This again goes to capacity to understand the nature and effect of the transaction.
The Tribunal is of the view that the property transaction is a complex financial affair. The Tribunal comes up to this position on the basis of the following factors:
1.Dr Strivens’ evidence that the transfer of property was a complex financial matter;
2.the transaction purported transfer a substantial part of TCAR’s assets – a major decision any adult’s life;
3.there is no evidence that TCAR turned her mind to her future needs or demonstrated an understanding of the impact this transaction would have on the future needs;
4.the transaction raised complex legal issues regarding the gifting of property by the principal to the attorney and potential conflict transactions.
The Tribunal also accepts the evidence of TG and HD that their father was responsible for financial and legal decisions during his life and that TCAR had relied upon him to manage the family finances. She did not have a background in managing finances so was likely to be reliant on her attorney for guidance and support in relation to financial matters.
The Tribunal also notes that BLUE LAWYER the separate representative for the adult conceded in the hearing that if the Tribunal found the property transaction to be a complex matter that his client did not have capacity for the transaction.
The role of the solicitor
A solicitor has a responsibility for protecting the interests of TCAR. The starting point in relation to that role is being satisfied that TCAR had capacity to give her instructions in relation to her property matters. The evidence before the Tribunal is that it was necessary to seek Dr Strivens the geriatrician’s advice in relation to TCAR’s testamentary capacity. The geriatrician highlighted that TCAR has had a dementia condition but had testamentary capacity. This put the solicitor on notice that there were issues in relation to TCAR’s health that could affect her decision-making ability. When TCAR approached the solicitor, instructing her to transfer the whole of the interest in the real property this should have rang alarm bells. This is on the face of it a conflict transaction, which conflicts between the interests of the attorney and the interests of the principal. This transaction breaches section 88 of the Powers of Attorney Act as an inappropriate transaction by way of gift in relation to the principal’s financial circumstances. The proposal alienates most of TCARs finances. This is a major transaction did TCAR have capacity to understand the nature and effect of what she was doing.
The second issue that arises out of this discussion is where in the file note does RED LAWYER hold a discussion with TCAR about the impact of the transaction on her future financial needs. An elderly person will need to turn their minds to the intricacies of the nursing home system and payment bonds. The effect of alienating or gifting a substantial part of your estate will affect the Centrelink assessment of her assets when it comes to formulating a bond. The gift will be treated as a transaction to remove the adult’s assets from her name to avoid paying a bond. This alone could raise serious consequences in relation to TCAR’s future financial affairs.
The Tribunal is not satisfied on the evidence that the solicitor tested TCAR about both her understanding of the transaction on her financial affairs and the effect or possible consequences in relation to her future financial affairs.
The Tribunal also noted that there is no outline of the adult’s assets on file note. The Tribunal would expect that the first step in such a situation is to outline the adult’s assets. This is helpful in several different ways for example it highlights the extent of the transaction on the adult’s financial affairs and the resources that are left to meet future needs of the adult.
The Tribunal is of the view that where an elderly woman gives these instructions that questions need to be asked about the impact of the transaction on her future financial affairs. It may have even been necessary for her to refer TCAR away for independent financial advice. TCAR’s actions clearly could affect her future financial affairs. They most certainly could have an impact on her seeking a nursing home placement and paying a bond.
The Tribunal is concerned where a solicitor accepts instructions from an adult with fluctuating capacity to gift a substantial part of her assets to one of her children that she be interviewed on more than one occasion and that the report of the treating geriatrician be sought in relation to her capacity to understand the nature and effect of the transaction.
There is no indication that the solicitor tested TCAR about her understanding of the effect of the transaction on the financial affairs or the effect or possible consequences of the effect in relation to her future financial affairs. The fact is that there are complex consequences for the elderly who alienate their assets or give their assets away. The Tribunal agrees with the Public Guardian that these are matters that needed to be addressed by the solicitor.
What do the solicitor do to address these concerns? She chose to accept the instructions and offered a compromise, which TCAR readily accepted. The issue for the Tribunal is whether TCAR understood the compromise. The concerns are being raised by the Tribunal above have not been addressed.
Does the purported gift of TCAR’s property one third to MG and one third to MH impugn section 88 of the Powers of Attorney Act 1998?
The issue for the Tribunal is that TCAR did not have capacity for complex financial decisions. Her attorney, MG, had been appointed to make those decisions. The Tribunal is of the view that MG was responsible for protecting TCAR. The Tribunal is satisfied in these circumstances that accepting a gift is a conflict of interest.
The Tribunal is of the view that the property transaction effectively breaches section 88 of the Powers of Attorney Act 1998. The Attorney knew that TCAR was attending the solicitor’s office to instruct the solicitor to transfer by way of gift the whole or part of her interest in the property. Section 88 provides that an attorney may not give away the principal’s property unless … (b) the gift is a donation of the nature that the principal made while the principal had capacity or that the principal might reasonably be expected to make; and the gifts value is not more than what is reasonable having regard to all the circumstances and, in particular the principal’s financial circumstances.
The Tribunal’s view is that the attorney could not accept the gift in these circumstances.
There is no evidence before the Tribunal of TCAR making payments to MG and MH. The property transaction represents a substantial portion of TCAR’s assets and cannot be considered reasonably to be an appropriate gift in the principal’s financial circumstances. This is particularly the case as far as it concerns uncertainty in relation to the principal’s future financial needs.
The Tribunal notes that the registration certificate shows MG with one share and MH with one share and TCAR with one share, which does not accord with RED LAWYER’ instructions and nothing has been undertaken since that time to rectify the mistake. Who is actively protecting TCAR’s interests? There would appear to be no one actively protecting TCAR’s interests at this point in time.
The Attorney had responsibility for making financial decisions for the adult. She was the person charged with protecting the adult’s financial interests. A property transaction, which sees TCAR transfer two thirds of her major asset by way of gift to the attorney and the attorney’s partner, clearly impugns the legislation.
The Tribunal is of the view in relation to TCAR’s capacity that she did not have capacity to authorise the property transaction. The Tribunal is of the view that the transaction was a conflict transaction because it clearly created a conflict between the attorney’s personal interests and that of her partner and the interests of the principal.
The Tribunal does not accept BLUE LAWYER’s argument that section 87(3) of the Act protects the attorney in the circumstances of this case. This is a clear case with the Attorney and her partner stood to gain financially. In this regard, the attorney’s interests clearly conflicted with the interests of the adult.
Where an elderly adult moves in and lives with an attorney and sometime after that the adult expresses a wish to transfer her interest in her principal asset to the attorney this will always raise suspicions. How can an attorney except a gift in these circumstances. This is surely a conflict between the interests of the adult and the interests of the attorney. There is no way that a prudent person looking at TCAR’s financial affairs would condone such a transfer by way of gift. The appropriate approach in these matters is to approach the Tribunal for the approval of a conflict transaction. The Tribunal can take into account all relevant circumstances and give legal weight to the conflict transaction if it is satisfied that it is appropriate and in the adult’s best interests.
The role of the attorney
When an adult appoints an attorney to act on her behalf and the attorney accepts the appointment, this creates a legal relationship between the principal and the attorney. This requires the attorney to act in the principal’s best interests. The attorney is required to put the principal or adult’s interest in front of their own and not to enter into conflict transactions.
The Powers of Attorney Act 1998 require an attorney to act honestly and with reasonable diligence. The evidence in this matter is that the Enduring document came into effect immediately and that TCAR’s capacity was fluctuating. She was being assisted with activities of daily living and with bill paying. TCAR clearly needed support in relation to her financial affairs, which is why she appointed her daughter as her attorney. When it became clear that TCAR wanted to transfer property to the attorney the attorney shall have:
1.sought Dr Strivens’ advice;
2.obtained information about the impact of such a decision on her future needs which might have required financial planning advice;
3.considered whether that was reasonable and appropriate in relation to TCAR’s financial circumstances;
4.applied to the Tribunal for approval of the conflict transaction.
The Tribunal is of the view that there are complex consequences for adults who gift their assets. The attorney needed to be mindful of those complexities in looking at what was in TCAR’s best interests.
The Tribunal is of the view that TCAR had not sought information in relation to these consequences and that both the attorney and the solicitor should have turned their mind to those issues. The solicitor for example could have recommended to TCAR that she receive independent financial advice before entering the transaction. The attorney could obtained independent financial advice before the meeting with the solicitor.
What directions should the Tribunal issue in this matter?
The Tribunal is of the view that the property transaction should be reversed, as TCAR did not have capacity to enter into the transaction. The Tribunal is further of the view that the transaction was a conflict transaction breaching the provisions of section 87 of the Power of Attorney Act, that the gifts impugned section 88 of the Power of Attorney Act in that it was not reasonable to accept a gift of that nature given TCAR’s financial circumstances.
TCAR appointed the Attorney at a time when she had capacity to decide who should make decisions for her when she was incapable. This is a big factor in the Tribunal’s decision-making about who should make financial decisions for TCAR. The Attorney has addressed concerns about her management of TCAR’s day-to-day finances to the satisfaction of the Tribunal and the parties. There are no concerns regarding the day-to-day management of TCAR’s finances. The attorney remains preferred by TCAR as her financial decision maker. Mr TG made it clear to the Tribunal that he was happy with the care and support MG and MH were providing to his mother. Finally, TCAR has chosen to live with MG and MH so it is convenient for them to support TCAR with her day-to-day finances and bill paying. The Tribunal was of the view that the most appropriate person, in all circumstances was the attorney subject to the attorney addressing the concerns of the Tribunal by reversing the property transaction and putting the property back in TCAR’s name. The Tribunal will issue directions to the attorney to address the property transaction.
The Tribunal makes the following directions:
1.MG is to instruct her solicitor to take all steps necessary to transfer the property situated at CAIRNS back into TCAR’s sole name.
2.MG is to advise the Tribunal when the appointment with the lawyer has been made as soon as possible and advise the Tribunal of the name of the solicitor and the timeframe to comply with the above direction.
3.MG is to provide a copy of the title search showing the property having been returned to the sole name of TCAR.
The Tribunal declares that TCAR did not have capacity to make complex financial decisions as at 4 November 2015.
The decision to transfer half or two thirds of the property to MG and MH was a complex financial matter.
The Tribunal dismisses the application for the appointment of an administrator by HD.
The Tribunal is aware that TCAR has made a Will on the basis that this property has been transferred to MG and MH. The Tribunal highly recommends that a mediation take place between MG, MH, TG and HD to resolve future estate issues.
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