XO v Protective Commissioner
[2006] NSWADT 322
•10/11/2006
CITATION: XO v Protective Commissioner [2006] NSWADT 322 DIVISION: General Division PARTIES: APPLICANT
XO
RESPONDENT
Protective CommissionerFILE NUMBER: 063265 HEARING DATES: 19/10/06, 03/11/06 SUBMISSIONS CLOSED: 11/03/2006
DATE OF DECISION:
11/10/2006BEFORE: Hennessy N - Magistrate (Deputy President) CATCHWORDS: Protected Estates Act - Protective Commissioner - powers as to property - Protective Commissioner - powers as to property MATTER FOR DECISION: Principal matter LEGISLATION CITED: Administrative Decisions Tribunal Act 1997
Guardianship Act 1987CASES CITED: MB v Protective Commissioner [2000] NSWSC 717Re R [2000] NSWSC 886The Protective Commissioner v "D" & Ors [2004] NSWCA 216 REPRESENTATION: APPLICANT
RESPONDENT
In person
C Phang, solicitorORDERS: 1. The decision of the Protective Commissioner to decline to enter a loan by way of a second mortgage with Rivwest Finance Pty Ltd on behalf of XO is set aside; 2. In substitution for that decision a decision is made to enter a loan by way of a second mortgage with Rivwest Finance Pty Ltd on XO’s behalf.
Section 126 provides
(1A) This section applies only to the following:
(a) proceedings in the Community Services Division of the Tribunal,
(b) appeals to an Appeal Panel from a decision made by the Tribunal in the Community Services Division,
- (b1) proceedings in relation to an external appeal made under section 67A of the Guardianship Act 1987 or section 21A of the Protected Estates Act 1983,
(b2) proceedings in relation to a reviewable decision made under the Guardianship Act 1987 or the Protected Estates Act 1983
(c) such other proceedings (or class or classes of proceedings) as may be prescribed by the regulations for the purposes of this section.
(1) A person must not, except with the consent of the Tribunal, publish or broadcast the name of any person:
(a) who appears as a witness before the Tribunal in any proceedings, or
(b) to whom any proceedings before the Tribunal relate, or
(c) who is mentioned or otherwise involved in any proceedings before the Tribunal,
whether before or after the proceedings are disposed of.
Maximum penalty: 10 penalty units or imprisonment for 12 months, or both.
(2) This section does not prohibit the publication or broadcasting of an official report of the proceedings that includes the name of any person the publication or broadcasting of which would otherwise be prohibited by this section.
(3) For the purposes of this section, a reference to the name of a person includes a reference to any information, picture or other material that identifies the person or is likely to lead to the identification of the person.
REASONS FOR DECISION
Introduction
1 XO is a man in his mid 50s whose leg was badly broken in a work related accident. When in hospital he suffered a pulmonary embolism which led to brain damage and subsequent cognitive defects. XO’s case manager applied to the Guardianship Tribunal for a financial management order because, she said, he was behaving irrationally and wasting his money gambling. The Guardianship Tribunal made a financial management order and appointed the Protective Commissioner as XO’s financial manager. The Tribunal also made a guardianship order appointing the Public Guardian to make decisions about accommodation, health care, medical and dental consent and the services to which XO should have access.
2 XO is married and has three children. Neither he nor his wife is employed and XO receives a disability pension. XO’s wife said she has income of $500 per week. They jointly own a property worth approximately $380,000. That is XO’s only asset. After the accident at work, XO moved out of home. There was very little evidence about the reasons XO moved out, but it appears to have been because of his behaviour as a result of the brain injury rather than because of a break down in the marital relationship. During that time XO and his wife found it very difficult to cope financially. One of their teenage children has cancer and, although she is in remission, requires ongoing treatment which puts a strain on their budget. XO is due to move back into home so that he and his wife can pool their resources and save on the rent that XO is paying by living separately from his wife.
3 XO and his wife are in arrears with their mortgage repayments and, on 30 October 2006, the St George Bank advised that unless the amount of $2,378.39 was paid within 31 days, proceedings would be commenced to take possession of the property. Prior to that happening, XO and his wife approached MIA Financial Services for financial advice. Ms Gonzo, the principal of MIA, arranged for a loan of $50,000, by way of a second mortgage, from Rivwest Finance Limited. The terms of the loan are that the money would be used to pay the arrears on the mortgage, 2 years of mortgage repayments and 2 years of interest on the $50,000 together with other sundry debts. No repayments would be required on the loan for 2 years.
4 It is anticipated that XO will receive a lump sum by way of workers compensation next year and that that would be sufficient to pay out the loan. The 2 year period of grace was designed to give XO and his wife some breathing space to pay medical and other expenses relating to their daughter’s illness as well as other debts. If XO does not receive a lump sum for workers compensation, then the $61,000.00 ($50,000 principal plus $11,000 interest) would become due. According to Ms Gonzo, XO and his wife would then have to negotiate with Rivwest to repay the loan over a period of 15 or 20 years as well as continuing to pay the mortgage repayments of some $700 a month, to St George Bank.
The decision under review
5 The Protective Commissioner decided not to agree to the loan from Rivwest Finance Ltd by way of a second mortgage. The Tribunal’s role is to decide what the preferable decision is having regard to any relevant factual material and any the applicable law: Administrative Decisions Tribunal Act 1997 (ADT Act), s 63. When undertaking this task the Tribunal may exercise all of the functions that are vested in the Protective Commissioner. The Tribunal may affirm, vary, or set aside the Protective Commissioner’s decision. If the decision is set aside the Tribunal may substitute its own decision for that of the Protective Commissioner, or it may remit the matter to the Protective Commissioner together with any directions or recommendations that it chooses to make.
Principles on which a decision should be made
6 In order to determine whether the Protective Commissioner has made the correct and preferable decision I need to identify the legislative or other basis on which such decisions should be made. Under s 24(1)(a) of the Protected Estates Act 1983, the Protective Commissioner has power to exercise all functions necessary and incidental to the management and care of the protected person’s estate. Those functions include mortgaging the person’s real property: s 24(2)(f). Under s 28(1)(c), the Protective Commissioner may apply XO’s money to certain purposes including the maintenance of his spouse or any dependent child. The Protected Estates Act does not stipulate any matters which the Protective Commissioner is required to take into account when he exercises his functions under s 24 or s 28. A guide as to the relevant factors may be found in Supreme Court decisions dealing with associated issues and from the Protective Commissioner’s own guidelines.
7 In The Protective Commissioner v "D" & Ors [2004] NSWCA 216 the Court of Appeal decided that the Protective Commissioner has power under the Protected Estates Act to make payment for past gratuitous care out of the estate of the protected person. In the course of the reasons McColl JA (Mason P and Giles JA agreeing) said at [173] that:
- The manager stands in the shoes of a person who is unable to manage his/her affairs by virtue of circumstances beyond his/her control. The manager exercises a protective and benevolent function, protective in the sense that the manager’s task is to ensure the estate is managed in a manner to secure the protected person’s estate for that person’s continued maintenance. In this respect the 1983 Act and its predecessors reflected the "parental and protective" jurisdiction historically exercised by the Crown both in exercise of its prerogative and pursuant to the Prerogative Statutes.
9 Similarly, the Supreme Court sometimes examines decisions of the Protective Commissioner in the context of an application to remove him as the manager of a protected person’s estate. That happened in MB v Protective Commissioner [2000] NSWSC 717 when Hodgson CJ decided to remove the Protective Commissioner as the protected person’s financial manager. Hodgson CJ characterised the issue as whether it was in the protected person’s interests to remove the Protective Commissioner as manager and to substitute the Perpetual Trustee Co Ltd. Again, this case is not authority for the proposition that the principle to be applied when the Protective Commissioner makes decisions in relation to a person’s estate is a simple "best interests" test.
10 The Protective Commissioner’s role is to manage XO’s estate in such a way as to allow his wants and needs to be met to the greatest extent that is reasonably possible. The tension between the person’s needs and wants and the available resources was expressed by the Court of Appeal in The Protective Commissioner v "D" & Ors [2004] NSWCA 216 as "securing the protected person’s estate for that person’s continued maintenance." But factors other than the protected person’s needs and wants are also relevant. The entitlement of carers to payment for past gratuitous care is one example. Another is the needs and wants of the protected person’s spouse and dependent children.
11 In previous cases, the Protective Commissioner has submitted that the relevant considerations when making a decision include:
- a) the client's own views;
b) the client's immediate and long term needs;
c) the financial resources available;
d) requests, plans and objectives of any Guardian of the person;
e) the client's previous, current and hoped-for lifestyle;
f) the client's family commitments or obligations;
g) arrangements made by the client when they were able to manage their affairs themselves; and
h) views of the client and their family, and rights and views of probable beneficiaries after the person's death.
13 XO’s views. XO was fervently of the view that the loan should go ahead.
14 XO’s immediate and long term needs. XO’s needs include accommodation, food and health care. There was no evidence about his life expectancy or his possible future needs.
15 The financial resources available. The main reason the Protective Commissioner refused to agree to the loan was that he considered that there were insufficient financial resources available to repay it. The Protective Commissioner’s reasoning was that there was no guarantee that XO would receive a workers compensation pay out. In that case, in two years’ time, he would not be able to afford to pay both the monthly mortgage payments to St George and the $61,000 to Rivwest. XO’s solicitors in the workers compensation matter told the Protective Commissioner that XO has a small claim for weekly benefits and a claim for “whole person impairment” for the injury to his leg and for associated brain injury. The workers compensation insurers have denied liability and XO’s solicitors said that some of the medical reports were still outstanding and that the matter would not be resolved until 2007. They were unable to estimate the amount which XO would receive if his claim were successful.
16 Requests, plans and objectives of the Public Guardian. At the same time as appointing the Protective Commissioner to manage XO’s financial affairs, the Guardianship Tribunal also appointed the Public Guardian to make decisions about his accommodation, health care, medical and dental consent and the services to which he should have access. I understand that pursuant to the accommodation function, the Public Guardian has agreed to XO moving back into the family home. That will mean that XO no longer has to pay rent.
17 XO’s current and hoped-for lifestyle. Prior to the accident at work, XO was living at home with his wife and family. Now that he is unemployed, his lifestyle and that of his family has diminished accordingly.
18 XO’s family commitments or obligations. XO and his wife are joint owners of the property in which they live. They are therefore jointly liable for the mortgage repayments. In addition, XO has an obligation to maintain his dependent children, in particular his daughter who requires medical treatment.
19 Views of family members. It is the view of XO’s wife that the loan should be approved so that they can repay debts and meet ongoing expenses for their daughter’s medical treatment until such time as the workers compensation payment is received.
20 St George’s attitude to second mortgage. There is one other matter which was relevant to the Protective Commissioner’s decision, but which is no longer relevant. At the time the Protective Commissioner made his decision, St George said that it would not permit a second mortgage or any loan which used the property as security. The Bank has since decided not to object to the proposed loan from Rivwest provided that the conditions of the first mortgage are observed at all times. On the basis of the correspondence headed “Consent to Rivwest Finance Limited to Register a subsequent mortgage over (the property)” I am satisfied that St George no longer objects to the second mortgage. Consequently, that is not a barrier to the loan going ahead.
Conclusion
21 I am not satisfied that the decision under review was the correct and preferable decision having regard to the facts of this case and the relevant law. XO and his wife are in a difficult financial position. They have a daughter who requires ongoing medical treatment. Understandably, they do not want to lose their house and are anticipating that the $50,000 loan will tie them over until XO receives a workers compensation payout. According to XO’s workers compensation solicitors, the major component of any pay out will be the compensation for the brain injury and liability is being strongly contested. There is certainly no guarantee that XO will receive any workers compensation or that if he is compensated then it will be sufficient to cover the loan. Nevertheless, by pursuing the claim, his solicitors have presumably taken the view that it has reasonable prospects of success.
22 The worst case scenario if the loan is approved is that XO will receive nothing by way of workers compensation in the next 2 years and he will be liable to re-pay the $50,000 plus interest as well as the monthly mortgage repayments to St George. Ms Gonzo from MIA Financial Services anticipates that if this happened, then XO and his wife would have to repay the loan over a period of 15 or 20 years as well as continuing to pay the monthly mortgage repayments to St George Bank. Again, the worst case scenario is that XO and his wife will not be able to afford these repayments and will have to sell the house. At that stage, the Protective Commissioner estimates that $93,000 will still be owing on the mortgage and XO and his wife will have an additional debt of approximately $61,000, being the $50,000 loan plus interest.
23 At the moment, there is $115,000 owing on the mortgage to St George Bank. In round figures, assuming that the valuation of the property provided by the Protective Commissioner of $380,000 is accurate, XO and his wife have approximately $265,000 of equity in their home ($380,000 minus $115,000). Based on the worst case scenario, in 2 years time, assuming there is no change to the value of their home, they will have $226,000 ($380,000 minus $154,000 ie $93,00 plus $61,000) of equity in their home and they will have to sell it to pay their debts. In round figures, they will be $39,000 worse off, but will have lived in the home for 2 years without having made any mortgage payments. It is arguable that entering into the loan will not secure XO’s estate for his continued maintenance because it will put him into further debt which he may not be able to repay.
24 However, if the loan is not approved, the home will be sold and XO and his family will have to rent alternative accommodation. His debts will remain unpaid and his daughter may not receive the treatment that has been recommended for her. Although XO and his family may be $38,000 worse off in two years’ time, there is a reasonable chance that XO will receive a lump sum by way of workers compensation. In that case, there is a strong chance that they will be able to repay the loan, continue living in their home and meet their expenses. In my view, taking all the relevant matters into account, the loan should be approved.
Orders
- 1. The decision of the Protective Commissioner to decline to enter a loan by way of a second mortgage with Rivwest Finance Pty Ltd on behalf of XO is set aside.
2. In substitution for that decision a decision is made to enter a loan by way of a second mortgage with Rivwest Finance Pty Ltd on XO’s behalf.
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