Y
[2007] WASAT 106
•10 MAY 2007
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
STREAM: HUMAN RIGHTS
ACT: GUARDIANSHIP AND ADMINISTRATION ACT 1990 (WA)
CITATION: Y [2007] WASAT 106
MEMBER: MS J TOOHEY (SENIOR MEMBER)
MS D DEAN (MEMBER)
DR E LEIPOLDT (SENIOR SESSIONAL MEMBER)
HEARD: 24 JANUARY AND 2 MARCH 2007
DELIVERED : 10 MAY 2007
FILE NO/S: GAA 2011 of 2006
IN THE MATTER
OF REVIEW OF
AN ORDER
BETWEEN :Y
Catchwords:
Administration Public Trustee investigation into estate Further time required for investigation Conflict of interest Donees of Enduring Power of Attorney directed not to act on powers during period of the appointment
Legislation:
Guardianship and Administration Act 1990 (WA), s 4(2)(a), s 4(2)(c), s 64, s 89
Result:
Appointment of the Public Trustee confirmed
Category: B
Representation:
Counsel:
Represented Person : Mr Prime
Parties P and M : Mr Cuerdon
Solicitors:
Represented Person : McCallum Donovan Sweeney
Parties P and M : Michael Paterson and Associates
Case(s) referred to in decision(s):
VM and Y [2006] WASAT 245
REASONS FOR DECISION OF THE TRIBUNAL:
Summary of Tribunal's decision
On 21 August 2006 the Tribunal appointed the Public Trustee administrator for Y, an elderly woman whose husband had built up a large estate over his lifetime; by the time of her husband's death, his estate was apparently almost exhausted. Y's daughters believed their brothers, to whom their mother had entrusted all her financial dealings, and one of whom was the executor of their father's will, had acted to their own benefit rather than to their mother's. The Public Trustee was directed to inquire into the estate and report to the Tribunal. The Tribunal directed Y's sons not to act pursuant to an enduring power of attorney she had made in their favour, pending the outcome of the investigation.
The Public Trustee subsequently reported to the Tribunal that, in his view, one of Y's sons, if not both, had not acted in Y's best interests; however, further time was needed to consider whether legal action should be pursued on her behalf to recover any property.
The Tribunal was mindful that the continued appointment of the Public Trustee would be at a cost to Y's estate; also that her clear wish had been that her sons manage her financial affairs. It appointed the Public Trustee for a further period to determine whether legal action should be pursued and again directed Y's sons not to act pursuant to the EPA during the period of the appointment.
Background
These proceedings concern a review of orders made by the Tribunal on 21 August 2006 appointing the Public Trustee plenary administrator for Y, and related orders. The background to the making of the orders is set out in the Tribunal's written reasons delivered on 21 August 2006: VM and Y [2006] WASAT 245.
Y's husband had amassed a substantial estate including through businesses he operated with his two sons, P and M. However, by the time he died in 2004, his estate was apparently almost depleted.
One of Y's daughters asked the Tribunal to appoint an administrator to investigate her brothers' business dealings with their father and the conduct of her brother, P, as executor of their father's estate. She also sought to have set aside a Deed of Gift made by Y after her husband's death in her sons' favour set aside, and an enduring power of attorney (EPA) by which Y had appointed her sons her attorney revoked.
The Tribunal appointed the Public Trustee plenary administrator for Y save for the purpose of transferring into her name certain property left by her husband. It directed the Public Trustee to enquire into, and report to the Tribunal on, Y's husband's assets and liabilities at the time of his death; certain transactions pursuant to the Deed of Gift executed by Y in her sons' favour after her husband's death; and the extent to which P, as executor of her husband's estate, had acted in the best interests of Y as beneficiary of that estate.
The Tribunal accepted it had been Y's wish that her sons manage her affairs. It therefore decided to await the outcome of the Public Trustee's investigation before deciding whether to revoke the EPA. It directed Y's sons not to act on the EPA in the meantime, other than for the limited purpose of transferring into her name the property which P had failed to transfer to her in his capacity as executor of his father's will. Those properties have since been transferred into Y's name.
The orders were to be reviewed by the Tribunal by 21 November 2007 but were adjourned at the request of Y's sons. The review hearing was conducted on 24 January 2007. Following the hearing, parties were allowed time to make further written submissions.
Y's capacity to manage her financial affairs
It is not in dispute that Y remains incapable of managing her financial affairs. Although the medical reports about her capacity are now somewhat out of date, it was evident at the first hearing (see VM and Y [2006] WASAT 245 at [17] to [19]) that she was suffering from dementia at that time and that her condition was progressive. Nothing in the evidence before us now suggests any change in her condition. We find that Y remains unable to manage her financial affairs within the meaning of s 64 of the Guardianship and Administration Act 1990 (WA) (the Act).
Need for an administrator
It is evident that Y still needs someone to manage her Centrelink pension, pay her bills and do the general day to day matters that any person must do in order to manage their financial affairs.
Section 4(2)(c) of the Act provides that an administration order shall not be made if the need of the person in respect of whom an order is sought could be met by other means less restrictive of that person's freedom of decision and action.
The EPA by which Y granted her sons power of attorney could, in principle, operate as a less restrictive means of meeting her needs than the appointment of an administrator. Although an EPA and an administration order confer similar powers and authority, an EPA is designed to be less formal and is, by its nature, less restrictive: it enables a donor to decide in advance who will manage their financial affairs rather than have an administrator appointed by the Tribunal; it can come into effect immediately, while the donor is still capable, or only on a declaration of incapacity; it can be revoked at will while the donor is capable and another made in its place; and there is no formal accountability mechanism.
The mere fact that a person has executed an EPA, even if their clear preference was for this less formal means of managing their financial affairs, does not mean that it should stand in preference to an administration order. The Tribunal's primary concern must be Y's best interests: s 4(2)(a).
The Public Trustee's investigation
The Tribunal appointed the Public Trustee administrator for Y and directed him to inquire into, and report to the Tribunal on the following:
(i)whether any assets or liabilities of Y's husband at the time of his death had been omitted by the executor from the Statement of Assets and Liabilities filed with the application for a grant of probate;
(ii)the transactions pursuant to the Deed of Gift executed by Y, including the current and likely future value of shares transferred by Y pursuant to the Deed; and
(iii)the extent to which P, as executor of his father's estate, had carried out his father's wishes and whether he had acted in the best interests of his mother as beneficiary of that estate.
The Public Trustee has provided the Tribunal with a written report of his inquiries. His report on each matter is summarised as follows:
(i)in determining whether the assets and liabilities of Y's husband were fully disclosed, the Public Trustee relies largely on those who have knowledge of the estate, and he could not attest to the accuracy of the Statement of Assets and Liabilities; he has not been provided with sufficient information to make such a determination; the Executor failed to declare a contingent liability for an encumbrance of $139 000 over one of the properties left to Y by her husband;
(ii)the Deed of Gift contained complex financial matters including the transfer by Y of shares in family companies and the forgiving of large debts, detailed in the Public Trustee's report; however, neither the Public Trustee nor Y had the funds to investigate fully their current of likely future value;
(iii)in the Public Trustee's opinion, P had not acted in Y's best interests as beneficiary of her husband's estate; her husband's will evidenced a clear wish to bequeath to Y his entire estate; the effect of various transactions including pursuant to the Deed of Gift was, potentially, to benefit her sons rather than Y.
At the start of the hearing, the Public Trustee's officer advised the Tribunal that, taking into account Y's current assets and the costs and risks associated with any legal action to recover any property owing to her, no action would be taken to pursue recovery.
Following an adjournment, however, the Public Trustee's officer advised the Tribunal that it had come to his attention that the properties left to Y by her husband were likely worth considerably more than originally estimated by the Public Trustee; in those circumstances, it might be not such a risk to Y's estate to consider legal action; the Public Trustee would need to consider this further and would know within six months whether or not any action would be taken.
The Public Trustee also informed the Tribunal that the likely substantial increase in value of Y's properties might affect her Centrelink pension; it might mean she is no longer entitled to a pension and, possibly, even owes money to Centrelink; and someone would need to continue to deal with Centrelink on her behalf over the coming months.
Following the hearing, the Tribunal received submissions with supporting information from one of Y's daughters, claiming that the value of the two properties now transferred into Y's name is far greater than claimed by P or M. P and M dispute their sister's claim.
It is not necessary for the Tribunal to determine the value of the properties: the Public Trustee is already alert to the disputed value and has the authority, as administrator, to take whatever steps he considers necessary to determine their value.
Reasons for decision
The Tribunal considers it to be in Y's best interests that the Public Trustee consider further whether legal action should be taken on her behalf. It is possible that any legal action would ultimately be of minimal benefit to Y. As her sons are the sole beneficiaries of her will, they would ultimately be the beneficiaries of any increase in her estate. However, we are satisfied, on the evidence before us, that Y always intended her daughters be looked after. It may be that her daughters would seek to challenge her will and, if that were to happen, her estate at the time of her death should reflect what she is actually entitled to.
Clearly neither P nor M can be the people to consider, or pursue, action against themselves. In the Tribunal's view, Y's interests are best served by confirming the appointment of the Public Trustee as plenary administrator for a further period of six months from the date of the hearing to allow the Public Trustee to decide if action should be pursued on Y's behalf and to manage her pension, pay her bills and deal with Centrelink. At the end of that period it should be clear whether or not the Public Trustee needs to be appointed for a further period in order to pursue legal action.
If no legal action is to be pursued, Y will still need someone with authority to manage her pension (including any possible overpayment) and pay her bills. That could either be an administrator or one or both of Y's sons acting pursuant to the EPA.
In the meantime there is the matter of the loan by P and M's company (referred to at [22], [35] and [37] of the Tribunal's earlier decision) which is secured by way of a mortgage over what is now Y's property. At the date of the review hearing the loan stood at approximately $140 000. The loan affects Y's interest in the land insofar as it is drawn down from time to time and Y's equity in the property is affected to the extent of the loan. P and M may wish to consider whether there is another way of meeting their obligations under the loan that does not put them in a conflict of interest. If that were possible, it would be open to the Tribunal to consider allowing the EPA to resume operating.
In reaching this decision the Tribunal is mindful that it is desirable to minimise the cost to Y of the appointment of the Public Trustee. We hope that P and M may find their way to resolving any conflict of interest so that they can continue to manage the estate as indeed we understand P has been doing for some time without any dispute by other members of the family.
Finally, since the hearing, the solicitors for P and M have advised the Tribunal that P and M are content for an order to be made setting aside the terms of the Deed of Gift and they suggest the Tribunal make an order in those terms.
Orders
The orders under review are revoked and the following orders substituted for them:
(i)The Public Trustee of 565 Hay Street, Perth, Western Australia, is appointed plenary administrator for Y with all the powers and duties conferred by the Act.
(ii)P and M are directed not to exercise their powers as donees of the enduring power of attorney made by Y on 24 May 2004 during the period of this order.
(iii)The Deed of Gift made by Y on 24 November 2004 is set aside.
(iv)These orders are to be reviewed by 24 July 2007.
I certify that this and the preceding [28] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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MS J TOOHEY, SENIOR MEMBER
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