VM and Y - [2006] WASAT 245

JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL

STREAM: HUMAN RIGHTS

ACT: GUARDIANSHIP AND ADMINISTRATION ACT 1990 (WA)

CITATION: VM and Y [2006] WASAT 245

MEMBER: MS J TOOHEY (SENIOR MEMBER)
MS F CHILD (MEMBER)
MR E LEIPOLDT (SENIOR SESSIONAL MEMBER)

HEARD: 15 AUGUST 2006

DELIVERED : 21 AUGUST 2006

FILE NO/S: GAA 415 of 2006
GAA 565 of 2006
GAA 566 of 2006
GAA 1140 of 2006

BETWEEN: VM
Applicant
AND
Y
Proposed Represented Person
P AND M
Parties

Catchwords:

Guardianship – Administration – Intervention in Enduring Power of Attorney – Capacity at date of hearing – Capacity to execute Enduring Power of Attorney – Capacity to execute Deed of Gift - Conduct of executor of husband's will – Conflict of interest – Investigation by administrator in the best interests of the proposed represented person – Donees of Enduring Power of Attorney directed not to exercise powers during the period of the investigation

Legislation:

Guardianship and Administration Act 1990 (WA) s 109

Result:

Administrator appointed; other applications dismissed

Category: B

Representation:

Counsel:

Applicant:     Self-represented
Proposed Represented Person    :    Mr Prime
Parties:     Mr Cuerdon

Solicitors:

Applicant:     Self-represented
Proposed Represented Person    :    McCallum Donovan Sweeney
Parties:     Michael Paterson and Associates

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

Nil

Case(s) also cited:

Nil

REASONS FOR DECISION OF THE TRIBUNAL:

Summary of Tribunal's decision

The applicant asked the Tribunal to appoint an administrator for her mother, Y, and to intervene in an Enduring Power of Attorney granted by Y to the applicant's brothers, P and M. The applicant believed that her brothers' conduct before and since their father's death had been in their own interests rather than their mother's and, as a result, her estate, which the applicant said should have been substantial, was reduced. In particular, the applicant cited the failure of her brother, P, as executor of their father's estate, to transfer to Y two parcels of land left by her husband. She also questioned her mother's capacity to execute a Deed of Gift by which she transferred to P and M her interests in the family business.
The applicant also asked the Tribunal to appoint a guardian for her mother because of conflict between herself and P about arrangements to visit her mother.
The Tribunal was satisfied that Y no longer had capacity to manage her financial affairs at the time of the hearing. It could not be satisfied, on the medical evidence, that she lacked capacity to execute the Enduring Power of Attorney in favour of her sons. It made no finding as to her capacity some time later to execute the Deed of Gift.
At the time of the hearing, as a consequence of the executor's failure to transfer to Y the land left by her husband, and having gifted to P and M all of her interests in the family business, Y owned only her pension and $5000 in the bank.
The Tribunal decided that an independent investigation of her estate was in Y's best interests and appointed the Public Trustee for that purpose. Because of Y's express wishes that her sons manage her financial affairs, it decided not to revoke the Enduring Power of Attorney but directed P and M not to use it for any purpose, except in connection with the transfer of the land to Y which P and M undertook to do forthwith. The Public Trustee was appointed for three months at the end of which the order would be reviewed in light of the Public Trustee's report on the outcome, or progress, of the investigation.

Introduction

These proceedings concern four applications in respect of the applicant's mother, whom we refer to here as Y. These written reasons are in the same terms as reasons delivered orally on 21 August 2006 but with amendments necessary to remove any information that might identify the person whom the application concerns, or other parties.
The applications are:
(i)for the appointment of an administrator for Y;
(ii)for an order that the donees of an Enduring Power of Attorney (EPA) made by Y file and serve a copy of all records and accounts kept by them of their dealings as donees;
(iii)for an order that such records and accounts be audited by an auditor appointed by the Tribunal, and the auditor's report be provided to the Tribunal and the applicant; and
(iv)for the appointment of a guardian for Y.
The first three applications arise from the applicant's assertion that Y's estate is at risk because of the conduct of her brothers, P and M, before and since their father's death in January 2004. We will deal with these three applications together. The application for guardianship arises because of conflict between the applicant and P about arrangements for her and her daughters to visit Y.

Background

Y is an elderly woman whose husband, J, died in early 2004. There are five daughters and two sons of the marriage.
During his lifetime, J built up substantial assets, principally through the purchase of land. During the 1970s, he and his sons, P and M, formed a partnership known as AA. A company known as BB was subsequently incorporated for purposes including subdividing and selling the land that J had acquired. According to papers before us, over the course of 20 years or so from the 1980s, some $20 million was realised from sale of the properties and other assets. The money was used to support the family and was re-invested in the subdivision and other family business interests.
In the early 1980s, a company named SS Pty Ltd was formed. P and M were, and still are, directors. Some years later J also became a director. Over the years, J and his sons also had interests in other family businesses.
J's property was at all times in his name only: there appears never to have been any property in Y's name. By all accounts, Y has never had any interest in the family businesses or any of the family's financial dealings. She entrusted all financial matters to her husband and sons.
Under the terms of J's will, all of his property passed to his wife and, if she pre-deceased him, to P and M in equal shares. No provision was made for their daughters.
According to the Statement of Assets and Liabilities filed in the Supreme Court by P as executor of J's estate, with the application for a grant of probate, J's estate at the time of his death comprised two lots of land valued at $400 000 and interests in the family businesses. Those interests comprised shares in SS Pty Ltd which had carried forward substantial losses, giving the shares a nil realisable value. There was also a loan account in the same company with a nominal value of $6.165 million, and a one-third share of a net loan account in favour of the company BB with a nominal value of $9635.87; both were stated to have a nil realisable value. Finally, there was a one-third share of a net loan account in the company, IT Pty Ltd, which trades as PA, in favour of BB valued at $12 303.87. P and M were, and still are, directors of IT Pty Ltd. After payment of debts and funeral expenses, J's estate had a net value of $404 180.52. Probate was granted on 4 October 2005.

The applications for the appointment of an administrator and for intervention in the EPA

The applicant says that Y is no longer capable of managing her financial affairs. By the applicant's reckoning, their mother should now be a wealthy woman and not dependent, as she is, on Centrelink benefits. It appears to the applicant that her brothers have received the benefit of substantial funds held by their father during his lifetime but neither she nor her sisters know how, or under what circumstances, that occurred. The applicant believes that their brothers may not have accounted for monies or property to which her mother is entitled.
The applicant says her brothers' interests conflict with those of their mother and that an independent administrator is needed to inquire into, and determine, the property to which their mother may be entitled from her husband's estate, and then to administer that property in her best interests.

Is Y capable of making reasonable judgments about any or all of her estate?

We have before us a number of medical reports concerning Y's capacity to make decisions. The reports give rise to questions as to her capacity over the past two years, in particular in May 2004 when she executed the EPA in favour of her sons, and again in November 2004 when she executed a Deed of Gift (Deed) which concerned her interests in SS Pty Ltd. That Deed purported to formalise an oral agreement reached in March 2004.
The medical reports are:
(i)reports from July 2004 and August 2004 from Dr C, geriatric registrar, and Dr H, physician, to Dr T following an assessment at the Memory Clinic of the Rehabilitation and Aged Care Unit of Joondalup Hospital. The first report states that Y had progressively worsening memory loss over the previous 12 months and in particular in the previous six months since her husband died; she had no insight into her memory loss; she could not say what her current bank balance was; she had loss of executive functioning and a Mini Mental State Examination result of 19/30;
(ii)a report dated 13 March 2006 from Dr R who, at the time, had known Y for one year but was not her regular general practitioner; Dr R finds she has a mild cognitive impairment which was progressive and which he first recognised in May 2005. In his view, Y was capable at the time of the report of making decisions that a guardian might make, and of executing an EPA, but incapable of making financial decisions;
(iii)a report dated 14 March 2006 from Dr T, Y's regular general practitioner at the time, who had known her for over two years. Dr T reports that a diagnosis of progressive cognitive impairment, likely to be of the Alzheimer's type, was made in July 2004; he first recognised the impairment maybe 12 months prior to July 2004. In his view, Y was not capable at that time of either guardianship or administration related decisions and he was not sure if she could execute an EPA;
(iv)reports dated 1 April 2006 from Dr M and 10 April 2006 from Dr P. Dr M, who was not Y's general practitioner and had seen her twice, described his overall clinical finding as "not suggestive of dementia". Dr P states simply that Y is "fit to make her finacial [sic] decisions";
(v)report dated 8 August 2006 from Dr D, consultant psychiatrist, who finds Y's history "suggestive of insidious onset, gradually progressive cognitive decline of about two years duration". In his view, Y's ability to execute an EPA is now compromised; she can manage simple financial tasks such as small purchases at supermarkets but is incapable of reasonable decisions in relation to complex financial matters and she is not capable of understanding the nature and extent of her estate.
We are satisfied, on the evidence before us, that Y is no longer capable of making reasonable decisions regarding her estate. While she may be able to manage small, routine matters, she no longer has the capacity to understand, and make decisions about, her estate as it came to her from her husband or how it has been managed since. In reaching this finding, we prefer the reports of Drs C and H, T and R, as well as Dr D, to those of Drs M and P, whose contact with Y has been limited and whose reports give no detail of capacity assessments conducted.
It was submitted for P and M that the Tribunal cannot go behind the grant of probate by the Supreme Court which found their father's estate worth approximately $400 000 at the time of his death. We accept that contention. However, it became apparent from the oral evidence at the hearing that the Statement of Assets and Liabilities did not fully reflect J's estate at the time. The executor failed to disclose debts owed by J to SS Pty Ltd and to the partnership. It is arguable that he should also have disclosed that one of the properties that passed under the will was subject to a mortgage by way of a guarantee.
Dealings with Y's estate as it came to her from her husband indicate that the executor, P, has frequently been in a position of conflict of interest as between himself and his mother and that his interests have prevailed.
Turning first to the land left to Y by her husband. There are two parcels, referred to here by their lot numbers. Lot 179, on which Y's home stands, is unencumbered. Adjacent is Lot 178 which is vacant and subject to a mortgage in favour of BankWest granted by J in late 2003 to guarantee a loan of $160 000 to IT Pty Ltd, of which P and M are the directors. P and M have been repaying that loan but, as repayments have been made, they have from time to time been drawn down again. We are told that the amount owing has never been more than the original $160 000. The amount currently owing is $160 000.
Despite the grant of probate on 4 October 2005, at the date of the hearing, both lots were still in J's name. No adequate explanation has been offered for the failure to transfer them into Y's name other than that it was a misunderstanding on the part of her sons' solicitors.
By the Deed, Y purported to "forgive" debts owed to her husband by SS Pty Ltd and she transferred to P and M in equal shares her husband's 3 680 000 shares in the same company.
We have made no finding as to Y's legal capacity to execute the Deed. However, even allowing that she was capable, circumstances surrounding its execution raise questions about that transaction.
At the time she signed the Deed, Y was in hospital for some seven to ten days. It is unlikely she was mentally alert. She trusted her sons implicitly and was reliant on them, especially on P, who was her direct carer. She had never shown any interest in, or real understanding of, the family businesses and the transaction was, by any measure, complex and would require explanation. It appears not to have been contemplated that Y might need independent advice about the Deed from solicitors other than those acting for her sons and who appear to have drawn up the Deed on their instructions.
P has told the Tribunal that it was only because the company accounts had just been finalised, and the Deed could therefore be signed, that he and M approached their mother in hospital to sign the Deed. However, there does not appear to have been any urgency to its signing.
As a result of signing the Deed, and as a consequence of the failure of the executor to transfer the two lots of property into her name, Y has no legal interest in any property other than her pension and approximately $5000 in the bank.
P, as both executor of his father's estate, and a director of SS Pty Ltd, has stood in a position of conflict in which his own interests have apparently prevailed. In particular, the Deed purported to formalise an oral agreement that, in effect, sought to do what P and M had asked the family's accountants to do, namely to transfer the shares directly to them, bypassing J's will.
It is not clear how Y could "forgive" a debt owed by her husband to SS Pty Ltd, but it was apparently to her benefit because that liability had passed to her on his death. On the other hand, any benefit was somewhat illusory because it was P's evidence that there was no intention at any time to call in the debt.
In transferring the shares, Y was apparently giving away something worthless. But the shares had value, or at least potential value, to P and M. We have been given a very detailed submission from both about the family businesses which they say have suffered substantial losses over the years, explaining their father's small estate at his death. The same submission states that SS Pty Ltd is likely to improve over the next five years or so. If that is so, then it may be that the company can meet some or all of its liabilities and, if the value of the shares is restored, they could be of some value within the next few years. By virtue of the Deed, that interest now belongs to Y's sons.
Y says she wants her sons to continue to manage her financial affairs as they have always done and she does not want, or need, anyone else involved. This is apparently consistent with how she has entrusted her affairs to her husband and sons all her married life. It has been apparently of no concern to her, if in fact she has ever realised, that no property, not even her house, is in her name.
We are bound to take Y's wishes into account. However, we are also bound to make her best interests our primary concern.

Is Y in need of an administrator

Both P and M say they have not acted in pursuance of their powers as donees of the EPA; as a result, there are no records and accounts of any dealings. In any event, it follows, from the Tribunal's finding that Y is no longer capable of making financial decisions, that they would now be bound to reply on the EPA if they are to do anything on her behalf concerning her financial affairs.
P and M have undertaken to transfer both lots into their mother's name forthwith; Lot 178 would be subject to the mortgage in favour of BankWest. The Tribunal accepts that undertaking. It is possible that Y would need to sign documents in relation to the transfers. If so, either the donees or an administrator would have to sign on her behalf.
Y's immediate financial needs appear limited to dealing with her pension and making small purchases. These needs appear catered for: P is a joint signatory to her bank account and her nominee for Centrelink purposes. We have not considered the state of Y's bank accounts or any need for accountability by P in relation to them, but in practical terms, these arrangements may be able to continue without the need for the donees to exercise their powers or for the appointment of an administrator.
Once the undertaking to transfer the property into her name is effected, Y will own her house and the encumbered land next door. Her estate will need some management, if only to pay rates and other bills from time to time.
Y's sons, as donees of her EPA, could perform these functions. However, we are not satisfied, in light of their dealings with her estate since their father's death, that this would be in her best interests. Once those dealings have been investigated (for the reasons below, we will appoint an administrator to carry out an investigation), it may be that, on review of our orders, we will decide that they should manage her estate pursuant to the EPA. In the meantime, it would be open to them to further mortgage the properties on her behalf if they chose to do so. That is not to say that they would do so, but the intermingling of her financial interests with theirs, and their failure to recognise the conflict of interests they have been in, means that her estate is at present in need of more protection than would be afforded by the EPA.
Y's needs have clearly always been modest, and her daughter, P, and son, P, care for her full-time. The applicant has not suggested that her brother has done anything but care for their mother. But it cannot be assumed that this situation will continue. Y is elderly. Her medical and care needs will almost certainly increase. Even with the best efforts of her children, the need to modify her home or find nursing home or hostel care cannot be discounted. Although there is no suggestion that her children would not do everything they could to meet her needs, at present her estate is so reduced that she could be entirely dependent on them for assistance. If, for any reason, they could not afford it, she could be left without.
It is not for the Tribunal to go behind the grant of probate. However, it is clear that J's estate was not fully reflected in that application. Further, the conduct of P, as executor of his father’s estate and therefore bound to carry out the terms of his will, has not been without self-interest.

It is our view that an investigation into Y's estate since her husband's death and, in particular, into the conduct of the executor, is in her best interests.
Y's sons say they will cooperate fully with any investigation by an administrator into their mother's estate and we have no reason to doubt them. They concede that, if an appointment is made, neither of them could perform that function. However, they say, the applicant has her own interests at heart because she stands to benefit from any increase in their mother's estate. They say the applicant, rather than Y's estate, should meet the costs of any investigation. We do not accept that argument. Even if the applicant stands to gain from an investigation that does not mean that an investigation is not also in Y's best interests.
The Public Advocate's investigation has already gathered a large amount of information about J's and Y's estates which will reduce the cost of an investigation. With the cooperation of P and M, any further information required should be readily obtainable by the administrator. We will order that all documents and submissions filed with the Tribunal for the purposes of this application be provided to the administrator including the medical reports and the report of the Public Advocate.
The investigation must be by an independent administrator. We appoint the Public Trustee for that purpose. We have considered the extent of the powers needed by the Public Trustee. We cannot confer plenary powers if limited powers would meet Y's needs. We accept that the Public Trustee will need plenary powers in order to have access to information and to make any inquiries on Y's behalf. On a practical day to day level, only the management of Y's pension will be affected by the appointment, but we do not believe that will make any appreciable difference to her.
We will make the appointment for three months. The order will be reviewed at that time and the Public Trustee will be directed to report to the Tribunal at that time the outcome, or progress, of the investigation. With the information already gathered by the Public Advocate and the cooperation of P and M, we would expect that an investigation could be substantially, if not fully, completed in that time.
Taking into account Y's express wishes that her sons continue to manage her affairs, we do not propose at this time to revoke the EPA or to make the orders sought in respect of it. However, other than for the purposes of signing documents relating to the transfer of the properties into Y's name, we do not consider it appropriate for the donees to exercise their powers during the time of the investigation. We will make a direction to that effect.

Application for the appointment of a guardian

The applicant asks the Tribunal to appoint a guardian for her mother for the purposes of ensuring contact between herself and her daughter and Y. It is evident that on at least one occasion, one of her daughters has been unable to visit her grandmother because of conflict with P. We make no finding about any conflict.
The applicant, after consulting one of her sisters, has agreed that the family should try to work this conflict out between themselves. In light of this, we dismiss the application for guardianship.

Conclusion

We recognise that these applications have caused a degree of conflict, especially between the applicant and P. We have heard Y say that she does not want any conflict between her children. The children say they want to cooperate but there is clearly some reluctance on P's part. No one doubts his devotion to his mother. We hope that all parties will cooperate in the investigation and in the continued care of Y to reduce the conflict and ensure her relationships with all her children are preserved.

Orders

The Tribunal orders that:
1.The Public Trustee of 565 Hay Street, Perth, Western Australia is appointed limited administrator of the estate of Y with the powers and duties of a plenary administrator save and except for the purpose of executing any documents concerning the transfer of the properties known as Lot 178 and Lot 179 to Y.
2.The Public Trustee is directed to inquire into, and report to the Tribunal, on the following matters:
(i)any assets or liabilities of J at the time of his death omitted from the Statement of Assets and Liabilities filed with the application for the grant of probate;
(ii)the transactions pursuant to the Deed signed on 24 November 2004 including the current and likely future value of the shares transferred by Y pursuant to the Deed;
(iii)the extent to which P, as executor of his father’s estate, has carried out his father’s wishes and whether he has acted in the best interests of his mother as beneficiary.
3.All documents submitted to the Tribunal for the purposes of these applications are to be provided to the Public Trustee including all medical reports and the report of the Public Advocate.
4.P and M, as donees of the enduring power of attorney made by Y on 24 May 2004, are directed not to exercise their powers as donees for any purpose save and except for the purposes of transferring the properties known as Lots 178 and 179 to Y.
5.P and M are to report to the Tribunal no later than 21 days from the date of this order as to their undertaking to transfer the properties.
6.The applications for orders under s 190 of the Act are dismissed.
7.The application for the appointment of a guardian is dismissed.
8.The order appointing the Public Trustee administrator will be reviewed on 21 November 2006 at which time the Public Trustee is to report to the Tribunal the outcome, or progress, of his investigation.

I certify that this and the preceding [50] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
___________________________________
MS J TOOHEY, SENIOR MEMBER