NSW Civil and Administrative Tribunal New South Wales Medium Neutral Citation: OND [2024] NSWCATGD 5 Hearing dates: 19 March 2024 Date of orders: 19 March 2024 Decision date: 19 March 2024 Jurisdiction: Guardianship Division Before: D Jay, Senior Member (Legal) Dr M A Martin, Senior Member (Professional) K Laurence, General Member (Community) Decision: The application to appoint a financial manager is dismissed after hearing. Catchwords: FINANCIAL MANAGEMENT – application for a financial management order – 93-year-old subject person diagnosed with Alzheimer's Dementia – subject person owns substantial assets – subject person incapable of managing their own affairs – existing enduring power of attorney operating in subject person's best interests – no need to appoint a financial manager – no order made – application dismissed Legislation Cited: None cited. Cases Cited: CJ v AKJ [2015] NSWSC 498 P v NSW Trustee and Guardian [2015] NSWSC 579 Texts Cited: None cited. Category: Principal judgment Parties: 001: Financial Management Application OND (the person) TND (applicant) KZD (attorney) EAD (attorney) CYT (attorney) NSW Trustee and Guardian Representation: Counsel: B Haines, Counsel for TND instructed by G Ge Solicitors: L Gidley and R Medcalf, Solicitors for the attorneys File Number(s): NCAT 2023/00336765 Publication restriction: Decisions of the Guardianship Division of the Civil and Administrative Tribunal have been anonymised to remove any information that may identify any person involved in the Tribunal's proceedings: Civil and Administrative Tribunal Act 2013 (NSW), s 65. REASONS FOR DECISION FINANCIAL MANAGEMENT APPLICATION Background 1. OND is 93 years old and resides in privately rented accommodation. She formerly lived in her own home in Sydney's lower north shore. That home has now been sold. 2. OND's son is TND. Her husband passed away in 2019. She has five grandchildren – CYT, EAD, Ms Z, Ms Y and KZD. 3. On 12 November 2020 OND executed an Enduring Power of Attorney appointing EAD, CYT and KZD as her joint and several attorneys (the EPOA). The EPOA operated once the attorneys accepted their appointments. CYT accepted her appointment on 11 January 2023 and KZD and EAD accepted their appointments on 12 November 2020. 4. On 23 October 2023 TND submitted an application to appoint a financial manager. By his application TND expresses concern that his mother's very valuable home at [Address removed for publication.] (Property AB) was sold at an undervalue. The substance of the application developed from the time it was filed to the time of the hearing to, first, focus on an allegedly identified shortfall in funds from his mother's estate and, secondly, there being a number of allegedly serious anomalies in the conduct of the attorneys. 5. At the end of these Reasons for Decision are lists of the parties to the application and the witnesses who attended the hearing. [Appendix removed for publication.] What did the Tribunal have to decide? 1. The questions to be considered by the Tribunal are: * Is OND incapable of managing her affairs? * Is there a need for another person to manage OND's affairs and is it in her best interests for a financial management order to be made? * If so, who should be appointed financial manager? Is OND incapable of managing her affairs? 1. OND participated in the hearing by audio-visual link. She was in the presence of Rebecca Medcalf, solicitor. She acknowledged her son, TND, but did not appear to understand more than a superficial discussion of the proceedings. 2. There were a several medical reports provided to the Tribunal. 3. The report of Dr X, Geriatrician, dated 5 October 2022 noted that she observed a marked decline in OND's cognition since September 2020. OND achieved a score of 14/30 on an MMSE cognitive screening test (down from 20/30 in September 2020). Dr X recommended that the "enduring guardianship" be activated. We accepted Dr X's findings based on her knowledge and experience. 4. We pause here to note that there was no application to review the making of or the operation of the EPOA. 5. We considered and adopted the contents of the report of Dr W dated 23 November 2023. Dr W is OND's General Practitioner and was also the General Practitioner for her husband, Mr V, until he passed away in 2019. He diagnosed OND with Alzheimer's Dementia of "advanced severity". OND also has non-cognitive impairments including ischaemic heart disease, reflux and incontinence. Dr W supported OND receiving full time care. He expressed the opinion that OND is not capable of managing her financial affairs. Dr W gave lay evidence to the effect that the care she receives in the home is "exemplary". 6. The test for determining a person's capability to manage his or her affairs has been described as follows (P v NSW Trustee and Guardian [2015] NSWSC 579, [307]–[308]): "Is a person reasonably able to manage his or her own affairs in a reasonably competent fashion, without the intervention of a [financial manager] charged with a duty to protect his or her welfare and interests? … [A] focus for attention is whether the person is able to deal with (making and implementing decisions about) his or her own affairs (person and property, capital and income) in a reasonable, rational and orderly way, with due regard to his or her present and prospective wants and needs, and those of family and friends, without undue risk of neglect, abuse or exploitation." 1. In considering whether the person is "able" in this sense, consideration may be given to: * past and present experience as a predictor of the future course of events; * support systems available to the person; and * the extent to which the person, placed as he or she is, can be relied upon to make sound judgments about his or her welfare and interests: see Lindsay J in CJ v AKJ [2015] NSWSC 498, at [38], and P v NSW Trustee and Guardian [2015] NSWSC 579, at [309]. 1. OND's assets are substantial. She is elderly and has advanced dementia. No person (or legal representative) contended that OND is now capable of managing her financial affairs. 2. We were satisfied that OND is incapable of managing her financial affairs. Is there a need for a financial management order? 1. By the Financial Management Application (the FM Application) TND states that he acted as his mother's Power of Attorney until he was incarcerated on 17 March 2016. TND was released from custody in the days immediately prior to the hearing and attended the hearing in person with his legal representatives. TND stated in the FM Application that it became increasingly difficult to contact his mother from prison in October 2019 and his last contact with her was on about 5 November 2020. OND's Estate and Personal Circumstances 1. EAD provided a statement dated 26 February 2024. His evidence as to OND's estate, which we accepted, was to the following effect: 1. OND's account balances as at 14 February 2024 were: 1. Transaction account ***145: $5,925.78. 2. Card transaction account ***866: $8,243.53. 3. Main savings account ***288: $1,929,237.65 (balance of 10% deposit payable pursuant to contract for sale of Property AB). 4. Investment XY: $2,026,047.37. 1. After the death of Mr V, EAD assisted OND to manage her financial affairs at OND's direction. That involved payment of regular bills, paying OND's personal carers, buying groceries and assisting with the maintenance and repairs at Property AB. 2. EAD did not act as an attorney under the EPOA until his sister, CYT, accepted her appointment on 11 January 2023. 3. Property AB sustained significant damage to the roof and balcony in 2022. The Local Council sent a letter to OND expressing concerns about the state of her property including a request to remove asbestos from the property. OND moved to a new property while the repairs were being effected. The repairs cost $87,916.40. EAD's evidence is that the new property is on a single level and more suitable to the requirements of an elderly person. After discussions with OND, the attorneys decided to sell Property AB. Real Estate Agents were engaged and they recommended selling off market. A "soft market sounding process" identified several potential buyers. An offer of $18,000,000 was made on 23 July 2023. After further negotiations the sale price was increased to $18,500,000. A 5% deposit was paid with the other 5% payable on 2 February 2024. 4. OND has two full time carers living with her full time that operate on rotating shifts. Her current carers have worked with OND for about four years. They are paid $2,500 per week together and in cash. That arrangement is more financially effective for OND as a similar arrangement through a carer agency would cost approximately $2,000 per day. 5. We asked OND about managing her finances and she said she does it herself (the evidence did not reflect that). She told us she likes where she is living at the moment, which we accepted. The Financial Management Application 1. TND attended the hearing in person. He gave only brief oral evidence (deferring to the submissions of his counsel) that he was concerned his children were "gambling with risky investments" (referring to Investment XY) and he was also concerned as to how the remaining proceeds of sale will be invested. We accepted that those concerns were genuinely held by him but, for the reasons given below, we do not hold the same concerns. 2. TND became aware that his mother's house was sold for $18,500,000 when he read an article in the newspaper in mid-September 2023. He contended in his statement dated 23 October 2023 that the property was sold at undervalue for two reasons: 1. It was larger than a nearby property at Property AB that sold for $16,000,000; and 2. "Sometime before Dad died" he told me that he got an offer of $20,000,000 "but declined to sell for that price". 1. TND expressed concern that the sale was "shrouded in secrecy". In the Applicant's Written Submissions dated 8 March 2024, the contention that the property was sold at an undervalue was not pressed and instead the concern is that the sale proceeds would be depleted "without her full knowledge and consent". It is trite to observe that a person who is elderly and has developed moderately advanced dementia to the point that her Geriatrician recommends that the EPOA be activated is not dealing with her estate with full knowledge and consent. She is reliant on the judgment of her attorneys. The Applicant did not provide valuation evidence for Property AB. 2. We were provided with several statements regarding the estate of Mr V. CYT and EAD were the executors of Mr V's Will. Probate of his Will was granted in April 2020. The Inventory of Property showed most of the assets were jointly owned with OND and comprised: Description Particulars of other joint owner Estimated of known value Property AB OND of [Address removed for publication.] E $15,000,000 Bank OND of [Address removed for publication.] $125,635.47 Acc: *** 7145 Bank OND of [Address removed for publication.] $2,908,634.23 Acc: *** 6288 TOTAL E $18,034,269.70 1. The evidence and submissions from the Applicant go to the difficulties that TND experienced in contacting his mother after the death of his father. We accepted that TND has not spoken to his mother for an extended period and his last contact with her was on 5 November 2020. TND did not lodge an application to appoint a guardian seeking an access function. His inability to contact his mother had limited significance in the financial management application. 2. Bede Haines of Counsel appeared for TND at the hearing. He handed up supplementary submissions at the commencement of the hearing (the Supplementary Submissions). The attorneys did not attend the hearing in person, although their legal representative Ms Gidley did, so they did not have access to the Supplementary Submissions. As the Supplementary Submissions were the basis of Mr Haines' oral submissions, we focus on them rather than the Applicant's Written Submissions dated 8 March 2024 that were prepared by IEN Legal. 3. The Supplementary Submissions propound two contentions: 1. That OND's attorneys "appear unable" to account for $270,000 of her money; and 2. A series of issues or anomalies exist which, in their totality, support the appointment of a financial manager. 1. The Failure to Account argument is based on the Applicant's best guess as to what OND's assets were in October 2019 and by then comparing total estimated receipts with total estimated expenditure since that time. We say "best guess" not in a pejorative sense but because it is based on a measure estimation and speculation where not all of the actual receipts and expenditure were in evidence. 2. The Applicant contends that on 14 October 2019 OND's cash at bank was $3,062,000 comprising the joint property inventory identified in Mr V's Probate plus a bank account for $5,000 and a benefit from Mr V's estate of $23,000 less estimated estate expenses of $33,000. The estate expenses are estimated based on the 1/12 share TND received (being $6,000) and an amount for a car that was not included in the inventory. Then the applicant estimated a further income of $2,003,000 calculated by assuming interest of 1.5% on account ***288 plus other amounts referred to by EAD in his two statements. 3. The expenses involve taking evidence from EAD's statements, some extrapolation from the very limited bank statements in evidence from OND (for a 4.5-month period in 2023) and some assumptions about discounts for inflation and the tax treatment of other assets. We do not set out the calculations in full but give by way of example some of the workings proposed by the Applicant: 1. Between October 2019 and March 2024, OND's carers were paid $500,000 calculated as follows: * As at 30 November 2023, the two carers were being paid a total of $2,500 cash between them; * On the basis that carers were engaged from October 2019, their weekly payments would have been less than $2,500 between them; * Assume an average per week amount of $2,236 per week across the period. 1. Utilities expenses of $25,000 based on quarterly expenses (based on the 4.5-month bank statement period between 16 June 2023 and 1 November 2023) of $977.14 and applying a 25% discount for inflation, $20,000 for household entertainment (monthly expense of $449 less 14% discount), household expenses of $78,000 assuming monthly expenses of $1,978 (from the 4.5-month period for account ***145) less a 23.5% discount. 2. The total estimated expenses are $825,000. The alleged "shortfall" is $270,000. 3. We accept that the attorneys did not act in reliance on the EPOA until January 2023. That is significant as prior to that date OND managed her own finances either independently or with the informal assistance of EAD. Contrary to the submissions that there is "no evidence concerning how the finances have been managed since 14 October 2019" there is evidence of how some of the funds have been expended and invested (payment of personal carers, the Investment XY, payment for repairs etc). Indeed, the Applicant's submissions as to how the expenses are calculated is based, primarily, on the evidence of EAD. 4. In our view, we cannot accept as conclusive or reasonably persuasive that there is a shortfall of $270,000. The figure is arrived at by assuming there were no other significant expenses between October 2019 and November 2023 (say for repairs to Property AB), that for the expenses identified they are consistent over the course of the four years (despite only having access to bank statements for a 4.5-month period), that OND did not indulge in personal discretionary spending (such as for white goods or medicines or clothes or holidays or restaurant meals) or that there were no other substantial payments made. We simply do not know. EAD did confirm that there were expenses prior to January 2023 for plumbing, gardening and roof repairs. There were "water leak issues" which meant that the water bill paid on 1 August 2023 was unusually high ($927). EAD's evidence, which we accepted, was to the effect that Property AB was "falling apart". There was lots of mould and the swimming pool constantly leaked. The condition required funds to be expended. 5. Contrary to the submission made by the Applicant's counsel, there is no obligation on the attorneys to "explain a shortfall", especially when the shortfall is based on a mixture of speculation and extrapolation. Mr Haines' oral submissions fairly conceded that it was not clear to the Applicant how financial decisions were made before 11 January 2023 and there was a measure of reverse engineering involved in calculating any possible shortfall. The evidence satisfied us that OND was able to make decisions regarding her finances prior to October 2022. That is the date when Dr X formed the opinion that she was no longer able to do so. Prior to that, OND's expenditure was largely a matter for her discretion. 6. We accepted the submission of Ms Gidley that there were no transactions or withdrawals in the limited range of bank transactions that were colourable or sought to be impugned. For those reasons we are not satisfied there is an unexplained shortfall in OND's finances. 7. We next deal with the alleged anomalies. First, a considerable portion of OND's money has been invested in a managed investment scheme, "antithetical to OND's conservative approach to finance". The Applicant submits that Investment XY is with a private company (not attracting the protections of a bank) with concomitant risks and may have been made at a time when CYT was an employee of the investments company. CYT was asked questions on this topic. Her evidence was measured and responsive and based on her personal knowledge and experience. She was an impressive witness and we accepted her evidence which was to the following effect: 1. Investment XY was made in May 2023. At that time, she was not an employee of the investments company. She received no benefit personally as a result of the funds being invested with the investments company. 2. The investment is in first mortgages. It is considered low risk. The fund has "never lost a dollar before interest". 3. Redemptions can be made quarterly. 4. There was $500,000 in a term deposit but the Investment XY performance was so strong those funds were later invested with the investments company. The 5% deposit of $925,000 was invested with the investments company. 5. CYT discussed the proposed investment with OND but OND did not offer a view. 6. CYT believes Investment XY is not outside OND's investment profile. 1. In our view, Investment XY is not antithetical to a conservative approach to finance and does not represent an anomaly. 2. Secondly, the alleged underuse of term deposits. OND is elderly and so it is reasonable to expect that investments would reflect a conservative investment profile. We accept, however, that Investment XY proved to be both conservative and more productive than term deposits. In those circumstances, the discretion of the attorneys to not rely more on term deposits is adequately explained. 3. Thirdly, selling Property AB off market. Again, there was a discretion in the attorneys, based on the advice from the real estate agent retained, as to whether to sell the property off market or at auction. A property that is offered for sale with a price guide of $18,000,000 will have a reasonably small class of buyers. It was reasonable in our view to rely on the advice of the real estate agent to approach known persons who had the funds sufficient to pay that amount and who were known to be interested purchasers in the area. The decision to sell off market was reasonable in the circumstances. 4. Fourthly, attorneys not considering themselves attorneys until 11 January 2023. In our view, this matter is not controversial. CYT did not accept her appointment until 11 January 2023. Dr X formed the view that the EPOA should be activated in October 2022. Prior to that financial decisions were made with the informal assistance of EAD. That was a reasonable and sensible approach. When advised that OND could not make decisions for herself steps were taken for all attorneys to sign the EPOA and act in accordance with its terms. In our view, there is nothing questionable about that approach. 5. Fifthly, a payment of $19,227.69 from TND's accounts to a law firm which had prepared TND's will earlier that month. The submission is as follows; "There is no evidence to suggest that [OND] made this payment – she was not involved in retaining [the law firm]. If [EAD] authorised this payment, the basis upon which it was done requires consideration." 1. We have not had access to the transcript of the hearing but our notes indicate that no question was put to EAD on this topic. There was no evidence regarding how or why this payment was made and we do not make an adverse inference against EAD in the absence of that evidence. 2. In our view, the five matters identified as anomalies do not separately or together warrant the appointment of a financial manager. 3. OND made a decision to appoint her three grandchildren as her attorneys pursuant to the EPOA. Significant decisions have been made by her attorneys, including the sale of a very valuable home. In our view, the attorneys have acted diligently and in accordance with their obligations to OND. In those circumstances we are satisfied there is no need to appoint a financial manager to manage OND's affairs. 4. We are also not satisfied that it is in OND's best interests to make a financial management order. The attorneys have an excellent personal knowledge of OND's personal needs and medical circumstances. EAD has assisted OND formally and informally with her finances for more than four years. CYT brings abundant knowledge and experience in the financial investment space. In contrast the appointment of the NSW Trustee and Guardian brings with it significant additional annual costs and much less flexibility in decision making. It is in OND's best interest that the attorneys continue in their role. 5. The application is dismissed. ********** I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 24 May 2024