VW v Protective Commissioner (GD)

[2007] NSWADTAP 16

Appeal Panel - Internal

CITATION:	VW v Protective Commissioner (GD) [2007] NSWADTAP 16
PARTIES:	APPELLANT VW RESPONDENT Protective Commissioner
FILE NUMBER:	069051
HEARING DATES:	21 November 2006, 19 December 2006 and 12 March 2007
SUBMISSIONS CLOSED:	12 March 2007
DATE OF DECISION:	2 April 2007
BEFORE:	O'Connor K - DCJ (President); Britton A - Deputy President; Thomson B - Non Judicial Member
CATCHWORDS:	Protected person - beneficiary of family trust - sale of personal asset to fund care and other needs - objection by son - availability of funds from family trust - Protected Estates Act - best interests - appeal dismissed
MATTER FOR DECISION:	Principal matter
FILE NUMBER UNDER APPEAL:	063066
DATE OF DECISION UNDER APPEAL:	04/02/2007
LEGISLATION CITED:	Anti-Discrimination Act 1977 Protected Estates Act 1989
CASES CITED:	VW v Protective Commissioner [2006] NSWADT 230 Lloyd v Veterinary Surgeons Investigating Committee (2005) 64 NSWLR 245
REPRESENTATION:	APPELLANT In person RESPONDENT T Tunbridge, solicitor
ORDERS:	Appeal dismissed. Decision under appeal affirmed

1 Mrs A is a protected person whose financial affairs are being managed by the Protective Commissioner under a financial management order of the Supreme Court made in 2003. She has advanced dementia, but is physically well. She has lived at home until recently, and been cared for by her husband, Dr A.

2 The dispute giving rise to this appeal relates to the Protective Commissioner’s decision to sell Mrs A’s major personal asset, a property at Palm Beach (when last valued in 2005 estimated to be worth $2.7m). Under the terms of her will, Mrs A’s son, VW, the appellant, is the beneficiary of that property.

3 It is clear that, when she was able to do so, Mrs A expressed the following wishes about her future care needs and the retention of her personal assets:

(i) that she would like to be cared for at her home in Vaucluse (owned jointly by Dr A and her)

(ii) that she did not want to sell Palm Beach as she would like it to pass to VW.

4 To date, Mrs A’s financial needs have been met partly by the family trust (the Trust) and partly from her personal estate.

5 The Trust was established by Mrs A in 1981, and most if not all of its initial funds were supplied by her. The beneficiaries of the Trust are Mrs A, her husband Dr A, their two sons, VY and VW and the three children of VW. The Trust has substantial real estate assets, presently with a value in the order of $15 million. The portfolio is made up of a number of landmark properties (including a major commercial and residential complex in Bellevue Hill, a row of three shops in Rose Bay, a home in Vaucluse occupied by VW and his family rent-free, a flat at Bondi Junction occupied by the other son rent-free, and a large parcel of land in Cannington, Western Australia). In recent months, a property at Moss Vale has been sold (for $1.7m). Only Bellevue Hill and Rose Bay are income producing. In the case of the Bellevue Hill property, substantial expenditure is needed on maintenance and improvements. As a consequence the Trust is capital rich and income poor.

6 The Trustee is a family company and the named directors of that company are Mrs A, Dr A and VW. At present the following persons perform these roles: VW; Mr Paterson, an accountant appointed as alternate director to Mrs A by the Protective Commissioner; and Mr Heinrich, a solicitor, as alternate director to Dr A. These three persons, therefore, have effective responsibility for making critical decisions in relation to the management of the Trust. Importantly, so far as this case is concerned, the directors decide the level and timing of support to be provided to Mrs A as a beneficiary of the Trust.

7 Mrs A’s personal estate has two major unencumbered assets that stand apart from the Trust: the house at Palm Beach, already mentioned, and an account within a private superannuation fund which, as at 30 June 2006, was worth $415,000.

8 The Protective Commissioner reports that since taking over responsibility for Mrs A’s financial affairs, it has encountered difficulty in raising either from the Trust or from Mrs A’s sole income producing asset (the superannuation fund) sufficient income to meet, what the Commissioner regards, as Mrs A’s reasonable needs in relation to care and a personal allowance.

9 The Protective Commissioner decided in November 2005 that it would be necessary, in order to ensure that there were adequate funds available to meet Mrs A’s present and possible future care needs and a personal allowance, to sell the Palm Beach property.

10 VW opposes this course of action. He applied for internal review. The review confirmed the decision (internal review determination dated 25 January 2006). On 23 February 2006 VW applied under s 28 of the Protected Estates Act 1983 to the Tribunal for review of the decision. The Tribunal affirmed the Protective Commissioner’s decision: VW v Protective Commissioner [2006] NSWADT 230 (3 August 2006).

Tribunal’s Reasons

11 As to Mrs A’s care needs and financial needs as they stood at the time the matter was before it, the Tribunal said:

‘5 Mrs A is being looked after in her home by Dr A with the help of a carer from Dial-An-Angel, who is employed for four hours a day during the week. The Protective Commissioner is paying Dr A $500 a week to cover Mrs A’s expenses as well as $1,190 a week for the services of Dial-An-Angel. Mrs A has previously said that she wants to remain in her own home for as long as possible and only move to a nursing home as a last resort. If Mrs A’s health deteriorates, or Dr A is unable to continue to look after her, one option is for full-time carers to be employed to look after Mrs A in her home. The Protective Commissioner estimates that Mrs A’s expenses would then increase to more than $5,000 per week for 24 hour care with an additional amount of $10,000 necessary to modify the home to permit a live-in carer to be accommodated.

6 The last resort, if there were insufficient funds to provide in-home care, would be for Mrs A to move to a nursing home. That would require payment of an admission bond of between $275,000 and $400,000 as well as annual costs of approximately $120,000. Dr A said that he has funds from the sale of his surgery which could be used if Mrs A urgently needs to go into a nursing home and funds are not available from any other source. He added that he does not have sufficient funds to pay for Mrs A’s care in a nursing home indefinitely. VW says that there is no need for his mother to go into a nursing home because he and his wife would be able to look after her if Dr A was unable to do so. Although I accept that VW is willing to look after his mother in his home, Dr A says that he would not allow his wife to live with VW because he feels she would not receive as much attention as she does at the moment.

7 I am satisfied that Mrs A’s welfare would be best served by her remaining in her own home and having full-time carers if Dr A is unable to look after her. That situation may change depending on Mrs A’s health and other needs and Dr A’s attitude to Mrs A living with VW. Consideration of what is in Mrs A’s financial interests depends on her views and her financial position.’

12 The Tribunal gave the following summary of Mrs A’s financial resources:

‘Mrs A’s assets and income

11 Apart from her beneficial interest under the Trust, Mrs A’s assets comprise the matrimonial home jointly owned with her husband (valued at $2,000,000) and the Palm Beach property (valued at $2,700,000). Mrs A is also entitled to an allocated pension from a private Superannuation Fund. The balance in the Superannuation Fund is $370,717.00. Three redemptions have been made from the Fund, one of $16,665.00 in June 2004, one of $30,759.00 in July 2005 and another of $38,028.00 in December 2005. As of 19 July 2006 there was only $322.90 in Mrs A’s account held by the Protective Commissioner. That amount has since been boosted to $50,210.97 following the payment of a deposit for the sale of the Moss Vale property, one of the Trust properties. Mrs A’s income in the last 12 months has been $89,316.38.

Mrs A’s current expenditure

12 Mrs A’s current fortnightly expenses are as follows:

Protective Commissioner fees $ 125.00

Living allowance $1,000.00

­Dial an Angel: $2,380.00

Total $3,505.00

Mrs A’s debts and potential liabilities

13 Mrs A’s liabilities are:

$138,990 for legal costs owing to Dr A pursuant to a Supreme Court Order on 18/12/03;

$38,832 for legal costs owing to Dr A pursuant to Supreme Court Order of 12/9/05; and

$32,000 (approximately) for legal costs owing to the Protective Commissioner pursuant to Supreme Court Order of 12/9/05.

14 In addition, Dr A has made a claim to the Protective Commissioner for $375,000 to reimburse him for the gratuitous care he has provided to Mrs A in the past. He has also claimed an ongoing amount of $70,000 a year for carer’s wages. The Protective Commissioner has said that no decision would be taken with respect to meeting those claims unless and until funds are available and Mrs A’s needs are met as a priority from such funds. Dr A also has a claim in the Supreme Court against Mrs A’s estate in the sum of $875,000 plus interest. That claim relates to the sale of the Moss Vale property by Dr and Mrs A to the Trustee company.’

13 The Tribunal continued:

‘Options to meet expenses

15 Two options the Protective Commissioner has to meet these expenses are to use income or assets distributed to Mrs A by the Trustee company together with any available superannuation payments, or to sell the Palm Beach property. The Protective Commissioner has considered renting the Palm Beach property as a source of income. A leasing report suggests that it would not be viable to rent the Palm Beach property because of the high cost of repairing the property and maintaining it in a rentable condition. I accept that assessment and have not considered rental of the Palm Beach property as an option.

The family trust

16 Mr Paterson, the independent director of the trustee company, explained in correspondence with the Protective Commissioner that the trust has “very serious cash flow problems” which will “. . . improve over time as the Trust reaps the benefit of the work that has been done, and continues to be done, to improve the return on its investments.” Mr Paterson’s draft plan includes selling three trust properties, the Moss Vale property, the Carrington land in Western Australia and the family vault. Contracts have recently been exchanged on the Moss Vale property for a sum of $1,670,000. The purchaser has paid a deposit of $83,750 and a few days after the hearing, the trustee company paid $50,000 to the Protective Commissioner on behalf of Mrs A. Final settlement on the Moss Vale property is scheduled to be in five weeks’ time. The balance of the purchase price is $1,620,000. Prior to the sale of the Moss Vale property, only two distributions had been made to Mrs A from the trust: one of $1,000.00 on 11 February 2004 and one of $20,000.00 in April 2006. Neither the Carrington land, nor the family vault has been sold.

17 The draft plan proposes that the proceeds of sale of these properties would be applied to pay debts and liabilities including outstanding legal costs owed by various trust beneficiaries and re-imbursement of Dr A’s claim for past care if approved by the Protective Commissioner ($375,000). The plan also includes a payment of $70,000 to Mrs A in the 2005/2006 financial year and $144,000 the following year. The $70,000 has been paid, although not all of it in the 2005/2006 financial year. The draft plan also set aside $326,000 as a contingency capital sum for the future care of Mrs A. Mr Paterson advised that a more exact “contingency amount” cannot be determined until after the three properties have been sold and the final costs of the building works on the Rose Bay retail properties and the property in Bellevue Hill is known.

18 Payments to Mrs A from the trust are at the discretion of the trustee company. There are competing claims from other beneficiaries and for the repayment of loans, but Mr Paterson has indicated a willingness to provide for Mrs A’s needs and pay her debts in accordance with the draft plan.

14 As can be seen the Trust provided very little support to Mrs A until recently.

The Appeal

15 On 31 August 2006 VW appealed. An appeal may be made in relation to a ‘question of law’, and, with the leave of the Appeal Panel, may extend to the merits: Administrative Decisions Tribunal Act 1997 (ADT Act), ss 112, 113. VW is a litigant in person, and completed the notice of appeal. He claimed that ‘there are many findings of fact where there is no evidence to support the finding’. He sought leave for the appeal to be extended to the merits.

16 It is not necessary that an error of law be demonstrated before consideration can be given to extending the appeal to the merits: Lloyd v Veterinary Surgeons Investigating Committee (2005) 64 NSWLR 245. The Tribunal’s discretion to extend to the merits is unqualified.

17 The task of the Tribunal when engaged in the merits review of administrative decisions is ‘to decide what the correct and preferable decision is having regard to the material then before it’ (ADT Act, s 63). The ultimate question therefore for an Appeal Panel is whether it remains the case, having had regard to the criticisms of the Tribunal’s decision raised by an appellant and taking account of any further relevant material, whether the decision made by the Tribunal remains the correct and preferable one.

18 We have not, on this occasion, divided the appeal strictly into an appeal on points of law and deferred for later consideration the question of an extension of the appeal to the merits. While usually it is not desirable for an Appeal Panel to take on the role committed by the ADT Act to the trial level of the Tribunal, the situation that came before the Appeal Panel was an evolving one, and circumstances have continued to change while the matter has been before the Appeal Panel. We considered it appropriate on this occasion to proceed in a different way to the usual, in the hope that an outcome might be achieved that more closely reflected Mrs A’s known wishes. By virtue of the constitution provisions that govern appeals, the Appeal Panel had the advantage of the inclusion of a non-judicial member, Mr Thomson, an actuary in private practice, who has substantial experience in the management of estates and trusts.

19 Notice of Appeal. In the notice of appeal VW criticised the Tribunal’s statement as to the income earned by the superannuation fund. His objection was not, in reality, a fact-finding objection. He accepted that the annual income from the fund was $33,000 or thereabouts. His real point was that the Protective Commissioner, and the Tribunal as substitute administrator, should have considered the possibility of using the capital in the fund as a way of meeting Mrs A’s financial needs in the medium term.

20 He disputed the relevance of the Tribunal’s references to Dr A’s claim against the estate in the amount of $875,000. He said that as at 30 August 2006 there were no proceedings in the Supreme Court against Mrs A.

21 He noted a change of circumstance. The sale of the Moss Vale property had been completed and he said that the proceeds will commence to be distributed as per Mr Paterson’s plan. He said that ‘now funds are available via the Trust’ and ‘it is not the time to sell Mrs A property’ [sic].

22 VW claims that the Tribunal and the Protective Commissioner have relied uncritically on information provided by his father, Dr A. He says:

‘Dr A has a huge financial interest in advising the OPC incorrectly and the OPC needs to verify facts before moving forward and making any decisions which in this case they have not verified the facts.’ [sic]

23 He referred to the Tribunal’s statement at paragraph [6] of its reasons: ‘Dr A says that he would not allow his wife to live with VW because he feels she would not receive as much attention as she does at the moment.’ He says in reply that:

‘The whole decision of Mrs A care should not be based on a heavily medicated 84 year old mans feeling who has a huge financial interest in keeping her at home.’

24 VW then referred to the fact that Dr A had applied for a guardianship order early in 2006 but the Guardianship Tribunal had decided at that stage not to make an order, and, according to VW, adjourned the application for six months to observe Dr A’s ongoing health condition.

25 VW criticised the Tribunal’s decision at paragraph [15] for assuming that Palm Beach cannot be retained and rented out. He criticised the Protective Commissioner for continuing to maintain two unused cars belonging to Mrs A rather than selling them to generate funds.

26 He also said that up until January 2005 all expenses for Mrs A were ‘met by the Trust’. He said: ‘The amount is approaching $250,000’.

Conduct of the Appeal

27 The usual directions for the filing of submissions were given, and the appeal was set down to be heard on 21 November 2006.

28 At this hearing, the Panel expressed the provisional view that the only way Mrs A’s two known wishes (to be cared for at home, and to retain the Palm Beach property) could be met is for the Trust to supply much more substantial funding and on a more reliable basis than it had done to date.

29 The Appeal Panel noted that VW in his capacity as a Trustee of the family Trust had a substantial say in obtaining the outcome he was seeking via this appeal. In that capacity it would be open to him to propose a strategy which avoided the need to sell Palm Beach, and made available sufficient income to meet his mother’s present and future care needs.

30 As noted above, the membership of the Appeal Panel included a non-judicial member with relevant expertise, Mr Bruce Thomson. He expressed the provisional view that the Trust was so wealthy that it could easily afford to keep Mrs A in a way which reflected the well-to-do lifestyle she would have been used to. He noted that it was usual for trusts of this kind to have increased demands made on them as beneficiaries got older and required support in respect of special care needs. With an appropriate management strategy the Trust could, he felt, easily meet Mrs A’s needs. Her debts could be cleared, an amount set aside for a nursing home bond to be called upon if needed, and in the meantime, if 24-hour care at home was needed, the cost (usually put at around $200,000-$250,000 per annum). He noted that the total amount did not involve a significant proportion of the Trust assets.

31 The Appeal Panel observed that if the assets were held in liquid form and all funds were utilised to earn income, and assuming as a base figure $15m, the Trust could reasonably expect to earn from secure investments an amount of the order of $1 million per annum. This amount would easily meet the costs required for Mrs A, and continue to meet such other costs as maintenance of various Trust properties, allowances for the beneficiaries and the private school fees for VW’s three children.

32 The Panel asked the Trust to re-examine its investment plan so that it had greater liquidity, and was therefore in a better position to respond in a timely fashion to any increased need for financial support that Mrs A might need to meet, for example, the costs of additional nursing care or unforeseen medical expenses. The Panel noted, as recorded in VW’s notice of appeal, that the Trust had had a substantial inflow of funds ($1.7m) since the matter came before the Tribunal as a result of the sale of the Moss Vale property.

33 The Trustees were invited to attend a directions hearing of the Appeal Panel. On 27 November 2006 a directions hearing was conducted by the President on behalf of the Appeal Panel, attended by Mr Tunbridge, solicitor, Office of Protective Commissioner, and the three directors of the Trust or their representatives. Mr Paterson and VW were present, as was Mr Matthews, a law partner of Mr Heinrich, on behalf of Mr Heinrich.

34 On behalf of the Appeal Panel, the President exercised the power given by s 102 of the ADT Act, and referred the matter to mediation. VW agreed, in his capacity as a director of the Trust, for the filing of up to date statements from the Trust in relation to the expenses and costs it is meeting or intends to meet in future in respect of Mrs A’s needs; and Mr Matthews agreed to give a statement of the costs being met directly by Dr A on behalf of his wife. The directions stated that:

‘The purpose of mediation would be to ascertain whether a plan can be agreed between the Protective Commissioner and the Trust which avoids the necessity to sell the Palm Beach property in the near future.’

35 The mediation was undertaken by a tribunal mediator, Ms Antonios. It was unsuccessful. The matter returned to the full Appeal Panel on 19 December 2006. On that occasion the Tribunal heard submissions from VW and from Mr Tunbridge as to the future course of the matter.

36 On that occasion the Appeal Panel pressed on VW the view that apparently there were only two potential sources of funds that might stave off the need to sell Palm Beach. The main source was the Trust. The other source, the Appeal Panel accepted, was, as noted by VW in his notice of appeal, Mrs A’s personal superannuation fund. The Appeal Panel also pressed on VW that Mrs A’s liabilities went beyond the immediate costs of her care. The liabilities extended to meeting the judgment debts that Mrs A’s estate had incurred as result of various Supreme Court proceedings. The Appeal Panel explained that there would need to be some substantial amount paid out in the short term to assist in meeting those liabilities.

37 This hearing resulted in the following orders and directions:

‘ Interim Order:

Decision to sell the Palm Beach property is stayed until further order of the Appeal Panel subject to payment of $130,000 to the Office of Protective Commissioner not later than 22 December 2006.

Directions:

1. Appellant to file and serve by 9 February 2007 a statement signed by all Trustees which provides for the following matters:

(a) a plan for the prompt discharge of the $236,000 debt;

(b) evidence of a bank facility to provide for payment of a nursing home bond if and when requested by the Office of Protective Commissioner;

(c) a plan for regular monthly payments sufficient to meet Mrs A’s current needs as set out at items 3.2 plus 3.3 (as annualised) of MFI 3 (MFI 3 is the Statement filed by the Respondent on 5 December 2006 and dated 4 December 2006 (attached));

(d) a plan as to how the Trust will be able to meet Mrs A’s future needs by regular monthly payments if her care needs increase (MFI 3, items 3.4 plus 3.2 less the second dot point of 3.2);

(e) undertakings by the Trust to make payments for personal expenses incurred by Dr A in respect of Mrs A’s care and the expenses connected with the rates and maintenance of the Palm Beach property.

2. Respondent to file and serve submissions or other evidence in reply by 2 March 2006.

3. Relist the matter on 12 March 2007 at 2.00pm.

4. Liberty to apply to both parties.’

38 The Trust filed the following reply on 9 February 2007:

‘Response: to Direction from 19th of December.

A

[Mrs A’s] debts should be met from her half a million dollar superannuation, which will be completely tax-free in the near future.

B

Please find inclosed [sic] requested evidence re Nursing Home Bond being meet [sic] by the Trust.

C

Annualised figures for 3.2 and 3.3 work out at $92,000 plus possibly 3 hours a day. As shown in previous evidence $202,000 will be paid by the Trust up till 30/06/07.

D

It is not possibly [sic] for the Trust to predict the future care needs increases for [Mrs A]. I believe it is important to note [Dr A] has been stating from 2001 that [Mrs A] required 24/7 care in numerous affidavits to the Supreme Court while in the same affidavits he swore he left Mum alone while he attended work (thus was not providing that care). In fact Mum was hospitalised after a fall while out walking her dog during this period of needing 24/7 care claimed by my father.

E

The Trust has agreed to meet the Palm Beach expenses.

Yours in faith [VW]’

[ATTACHMENT]

[A] FAMILY TRUST – Statement furnished by the directors of [The Company], the Trustee of the [A] Family Trust, at the request of [VW], for filing with the Administrative Decisions Tribunal Appeal Panel in matter No. 069051 – VW v Protective Commissioner:

the Trustee has no plan for the immediate payment of $236,000 to provide for prompt discharge of the debt. The Office of the Protective Commissioner (OPC) will have available to it after 1 July 2007 tax free Superannuation moneys due to [Mrs A] that are well in excess of the sum required to discharge the debt. If the OPC chooses not to discharge the debt from the Superannuation moneys, the Trustee will, as is set out in the Management Plan submitted to the OPC on 20/12/05, provide $180,000 (being the amount advised to the Trustee by the OPC as the quantum of the debt) toward discharge of the debt on completion of the sale of vacant land owned by the Trust at Cannington in W.A. On the next review of the Management Plan the Trustee will consider increasing the amount that it will provide up to $236,000. At this time the Trustee is not in a position to give any clear indication as to when the Cannington land can be put on the market however it is working vigorously toward this end.

The Trustee has arranged for funds of up to $300,000 to be made available for a nursing home bond, if and when required, for [Mrs A]. See attached letter dated 19/01/07 from the Trust’s Accountants, V.J. Ryan & Co. These funds will be made available as a loan to [Mrs A], such loan to be repaid on the death of [Mrs A] from her Estate.

The Trustee is not in a position to fully respond to this item as the OPC have not quantified item 3.3 of MFI 3. Limited to item 3.2 the Trustee paid an amount of $130,000 to the OPC before 22 December, 2006 and is currently paying the sum of $6,000 per month to the OPC. The Trustee will review the quantum of the current monthly payments to the OPC for the care of [Mrs A] as soon as financial figures for the year ended 30 June, 2007 are available and a Budget for the year ended 30 June, 2008 has been formulated. The Trustee will use its best endeavours to ensure that the 2008 budget is formulated in July 2007.

The Trustee has no plan at this stage to provide for what is a purely hypothetical situation other than to say that it is using its best endeavours to achieve the placing of the vacant land at Cannington in W.A., which was valued at $1,500,000 in October 2005, on the market. It should be noted that the Trustee has recently been advised by the valuer that an almost adjoining and smaller parcel of land has recently been sold for $3,300,000.

Pending sale of the land at Cannington in W.A. the Trustee is not in a position to undertake to make payments for personal expenses incurred by [Dr A] in respect of [Mrs A’s] care. The Trustee does however undertake to pay the expenses connected with rates and maintenance of the Palm Beach property up to an amount of $20,600 in the year ending 30/06/07 and anticipates being in a position to pay at least the same amount in the year ending 30 June 2008.

The Trustee takes the opportunity to make the following observations:

as is detailed in the Management Plan submitted to the OPC on 20/12/05; the Trust was in a parlous state at the time in July 2005 when the current directors assumed responsibility. Valuable commercial properties had been allowed to fall into a state of gross disrepair, poor management over a number of preceding years had resulted in rental revenue being foregone due to leases not being renewed and market rentals not being sought. Significant fire and other safety issues had also not been addressed with the resultant very real risk of one or more of the major commercial property assets of the Trust being declared unsafe with the very real risk of tenants being required to vacate with consequent further significant losses of rental revenue.

the current directors of the Trustee have, over the past 17 months, taken very significant steps to address the large number of problems that beset the Trust; as a result of past poor management; and as a consequence have markedly improved the Cash Flow position of the Trust as well as enhancing the value of the Trust’s assets. It is a direct result of the work done by the current directors since July 2005 that have seen funds start to flow to the OPC for the benefit of [Mrs A]. For some time prior to July 2005, due to the parlous state of the Trust, no funds whatsoever were available for the direct benefit of [Mrs A]. Direct payments to the OPC for the benefit of [Mrs A] in the year ended 30/06/06 and the year ending 30/06/07 were/will be:

Year ended 30/06/06 – $70,434 (includes $50,000 in arrears paid in July 2006)

Year ended 30/06/07 – $202,000 (includes repayment of a $130,000 loan by [Mrs A] to the Trust)

it would be irresponsible of the Trustee to depart from its orderly restoration of the fortunes of the Trust. The Trustee is endeavouring to act as a prudent man of business in its administration of the Trust (in terms of the Trust Deed) in the best interests of all of the beneficiaries. [Mrs A] is one of seven beneficiaries. Much has been achieved by the current directors in a relatively short period of time toward overcoming the many problems that beset the Trust. A bank loan was obtained to fund major repairs to income producing properties, a major non-income producing property was sold to re-pay the bank loan, leases were renewed, rentals increased, insurances were updated and Financial Accounts have been independently audited and long outstanding income tax returns filed.

Trustee of the [A] Family Trust

(G.D. Paterson) Director

(R.K. Heinrich) (Alternate Director for [Dr A)

(VW) (Director)

5 February 2007’

39 The Protective Commissioner lodged submissions in reply on 8 March 2007. The submissions dealt in detail with VW’s response (in effect, one made on behalf of the Trust), and explained why the Protective Commissioner considered it was inadequate as a future plan.

40 The Appeal Panel reconvened on 12 March 2007. As it happened there had been a further important development in relation to Mrs A’s situation, and the submissions addressed that.

Change in Mrs A’s Care Circumstances

41 On 5 March 2007, seven days before the Appeal Panel’s final hearing, Dr A had a fall at home. He was taken into care at a psychogeriatric facility at St Vincent’s Hospital. As Mrs A had lost her carer, VW arranged for her to be taken into care on a respite basis at a nursing home, located in Elizabeth Bay.

42 The Appeal Panel reconvened on 12 March 2007. Following news of Dr A’s fall and hospitalisation, the Protective Commissioner arranged for Mary Morrow, Authorised Visitor, to visit the A home, and prepared a report. The report dated 8 March 2007 is in evidence. Ms Morrow consulted Mrs A’s Dial-an-Angel carer, Mrs A’s son VY and the Waverley Aged Care Assessment Team. She also examined file material including the Tribunal’s previous decision, and had regard to a previous report made by her, dated 25 July 2005. Ms Morrow was aware that Mrs A had expressed the wish that any care be provided to her in her own home. Ms Morrow supported this as a practical option for Mrs A’s needs.

43 She noted in the report that Mrs A remains physically well and is fully ambulant, but that she is ‘severely demented and has not the ability to participate in meaningful social relationships’. In her view, Mrs A requires 24-hour care and assistance with all tasks of daily living. She noted that to date Dr A had done a significant portion of the caring, particularly direct care and that he continued to administer her medication. She noted that Dial-an-Angel provides seven hours care per day, a recent increase from four hours per day.

44 Her assessment is that Dr A, given his age, level of fragility and his recent fall is not in a position to provide 24 hour care. She noted that Dr A and Mrs A had lived together in the family home for more than 50 years. Ms Morrow expressed concern that more had not been done to improve Mrs A’s home care situation in the period since she submitted her last report in 2005. It was her view at that time that a much-increased level of supported home care, not dependant on Dr A was needed. She commented: ‘No doubt the ongoing concerns and disputes regarding costs may have also impeded the provision of care.’

45 In her view it remains desirable that the home care option be pursued. To that end there are specific improvements needed to the family home. Ms Morrow made the following recommendations:

– that suitable bathroom facilities be installed on the ground floor of the Vaucluse house [the family home]

– that Dr and Mrs A’s bedroom be relocated to the ground floor

– that the house be thoroughly cleaned and all maintenance and repairs to the house be undertaken

– that Mrs A be provided with 24-hour professional care and additional housekeeping support

– that Mrs A be regularly, perhaps monthly, reviewed by an independent GP.

46 The last is a recommendation directed to having Mrs A’s condition assessed by someone other than Dr A’s long-time medical practice partner.

47 A few days after the Appeal Panel hearing, without any directions that further submissions be filed, VW sent to the Appeal Panel a document making further submissions. The Protective Commissioner has a copy of the document, but preferred (we think understandably) not to make any further submissions. One of the matters that VW challenges in that document is the business assumption of the Protective Commissioner that any financial plan should be premised on a life expectancy for Mrs A of around nine years. He submitted material suggesting, that given her condition, it was 3.9 years.

48 The best resolution of this case would be to have the Trust fully fund Mrs A’s needs in accordance with the financial management plan established by the Protective Commissioner, having regard in particular to a current assessment of Mrs A’s care needs. This would achieve the dual objective of providing sufficient funds to meet Mrs A’s needs while at the same time preserving the Palm Beach property which she wished to bequeath to her son.

49 To date, the Protective Commissioner has been of the view that the financial management plan should be one that affords Mrs A with whatever level of care is needed by her, including if necessary full-time home care. The plan also provides for an allowance to enable Mrs A to enjoy items of a personal nature (such as days out, visits to the shops, visits to hairdressers and the like). We agree with the Protective Commissioner that these remain appropriate objectives. They are endorsed by the Morrow report.

50 The events of 5 March 2007 led to Mrs A being placed in a nursing home. The arrangement is an interim one. It may be that, even if Dr A is unable to provide the support he has in the past for his wife at home, it would still be possible and appropriate for Mrs A to be returned home and be cared for there.

51 VW disputes that such a step would be appropriate. At the Appeal Panel’s hearing on 12 March 2007 he stated emphatically, as the de facto carer following his father’s hospitalisation, that his mother should remain at the Elizabeth Bay nursing home on a permanent basis. He did not see any virtue in returning her to a home environment, and referred to some of the advantages of care in a nursing home environment such as companionship for his mother from women of a similar age and the array of medical and care skills readily available in such an environment.

52 This was not the opinion of the one source of an independent appraisal, that of Ms Morrow.

53 We can only speculate on what the future care needs of Mrs A will be and what they will cost. They will be determined by a number of factors including her mental and physical health and that of her husband and the availability of appropriate care and treatment. It is apparent that Mrs A is at an age where her health is unlikely to improve and she may well need recourse to additional medical services, some of which might not be covered by insurance. Any decisions about her future needs should be determined by reference to her ‘best interests’ and should not, as far as practical, be constrained by financial considerations.

54 The home care option is plainly much more expensive than the nursing home option. As a substantial beneficiary of the Trust, VW has an apparent conflict of interest in making the choice, as he is seeking to do at present, as between these two options.

55 VW did, however, acknowledge at hearing that he saw it as desirable that an independent guardian be appointed. He referred to the Guardianship Tribunal proceedings in April 2006 where such an application had been considered and rejected. The Tribunal was, we understand, happy to have Dr A continue as his wife’s primary carer without any intervention on its part. It may be, given the recent changes in Mrs A’s situation, the question of the desirability of an independent guardian being appointed should be revisited. The Protective Commissioner should give consideration to an application being made to the Guardianship Tribunal.

56 In our view, VW has a dominant influence in the affairs of the Trust. The directors appear reluctant or unable to make more liquid the Trust assets, and accept the possibility that the asset base may need to be reduced in order to support the special needs of Mrs A and Dr A at their advanced stages of life – Mrs A is 80 years old, Dr A is 85 years old. If the Trust were to commit to the requested level of support for Mrs A, and simply create a substantial fund which could be administered by the Protective Commissioner, there would be no need to sell Palm Beach.

57 The Trust’s response to the Tribunal’s enquiry as to its capacity to respond to Mrs A’s needs has been set out. In our view, it is a reply that reflects an unco-operative view of what is appropriate by way of support to Mrs A. In its response to this Panel it stated:

‘The Trustee has no plan at this stage to provide for what is a purely hypothetical situation other than to say that it is using its best endeavours to achieve the placing of the vacant land at Cannington in W.A., which was valued at $1,500,000 in October 2005, on the market.’

58 It is unclear to us why the Trustees have concluded that the Trust cannot guarantee that it would be able to fund what is referred to as a ‘purely hypothetical situation’. But this is not the issue we are called to determine. The key issues seem to us to be, first, is it reasonable that the Protective Commissioner has available at call an amount of several hundred thousand dollars, to enable it to meet the costs of Mrs A’s future care and support in the medium term; and second, can a fund of this kind be created without recourse to the sale of the Palm Beach property.

59 While it is obviously highly desirable that the Trust continue to contribute to the upkeep of Mrs A, we are satisfied, after the various efforts made by the Appeal Panel in this case to achieve a more constructive relationship between the Trustees and the Protective Commissioner, that the Trust can not be regarded as a reliable and unproblematic source of funds. While a number of the circumstances have changed since the decision of the Tribunal, and there has been some progress in the Trust providing support to Mrs A, the circumstances that were before the Tribunal have not changed to an extent which justifies interference with the Tribunal’s decision or that of the Protective Commissioner.

60 Consequently, we are satisfied that the Tribunal below made the correct and preferable decision when it upheld the Protective Commissioner’s decision to sell Palm Beach.

61 As matters stand as at today (and pending disposal of Palm Beach), there is one personal asset of Mrs A which is available for use by the Protective Commissioner, the superannuation fund. There was some discussion in the case as to whether the capital of the fund should be accessed, especially after 1 July 2007 when changes to income tax law come into effect which have made withdrawals from superannuation funds non-taxable. The Protective Commissioner’s view has been that the fund should be preserved and only the income used, now approximately $40,000 per annum. If this were the protected person’s only asset or potential source of income that would be, we accept, the proper and prudent approach. But that is not the position here. As we understand the Trust’s position it is prepared to contribute an amount of $6000 per month.

62 These two sources will not meet future needs if home care is the best option. Nor will they settle the outstanding debts (albeit some are disputed by VW) and provide a financial buffer for any unexpected expenses.

63 The Protective Commissioner should be armed with the power to sell. Mrs A is entitled to have an old age that is as enjoyable as possible and consistent with the lifestyle she has enjoyed.

Order

Appeal dismissed. Decision under appeal affirmed.