ACF v NSW Trustee & Guardian [2012] NSWADT 97

Administrative Decisions Tribunal New South Wales Medium Neutral Citation: ACF v NSW Trustee & Guardian [2012] NSWADT 97 Hearing dates: 22 August 2011 Decision date: 22 May 2012 Jurisdiction: General Division Before: J Millar, Judicial Member Decision: The decision under review is affirmed. Catchwords: Protected Estates - Sale of house to meet debt. Legislation Cited: Guardianship Act 1987 Administrative Decisions Tribunal Act 1997 Category: Principal judgment Parties: ACF, ACG and ACH (Applicants) NSW Trustee & Guardian (Respondent) Representation: Counsel K Stern (Applicants) N Harvey (Applicants) C Phang for NSW Trustee & Guardian (Respondent) File Number(s): 113094 Publication restriction: Section 126 of the Administrative Decisions Tribunal Act 1997 applies.

REasons for decision 1General Division (J Millar, Judicial Member): the General Division of the Tribunal presently has before it an Application filed 11 April 2011 for review of a decision made by NSW Trustee & Guardian on 17 February 2011, which was affirmed on 29 March 2011 following an internal review by Ms Elaine Tamblyn, Assistant Director, Client Services Branch, NSW Trustee & Guardian.

HISTORY 2The Application for Review filed on 11 April 2011 with the Tribunal is apparently signed by ACH and said to be on behalf of ACF and ACG. ACH is the son of ACF and ACG who are his father and mother respectively. ACH and his parents lived in their family home until ACF and ACG were placed in an aged care facility. 3On 21 May 2010 the Guardianship Tribunal made an order committing management of ACF's affairs to the NSW Trustee & Guardian and appointed the Public Guardian as his Guardian to make decisions with respect to accommodation, health care, medical and dental treatment and services. The order committing management of ACF's affairs to the NSW Trustee & Guardian was confirmed on 20 August 2010. Since ACF and ACG moved into the aged care facility, their son, ACH, has remained resident in the family home at West Pennant Hills. APPLICANT'S CASE 4The Applicant stated his grounds for seeking a review of the decision of the NSW Trustee & Guardian in his Application as follows. 5He asserted that the Trustee was in error in its decision in that it failed to have regard to the expressed wishes of his parents as stated in their Wills, Statement of Wishes and Powers of Attorney. He argued that it was unnecessary for the property to be sold to finance the care of his parents as their pensions and other income were sufficient to cover their care costs for the future. 6Further, he argued that the Trustee had failed to take into account the use which could be made of the proceeds of sale of his father's motor vehicle which had been sold by the Trustee. The Trustee had also failed to take into account a medical report from ACH's treating medical practitioner to the effect that his medical condition would be harmed if he were to be deprived of occupation of his parents' home. 7ACH gave evidence to the Tribunal, as summarised below, in support of his Application for Review. THE RESPONDENT'S CASE 8The Respondent noted in the original decision that ACF did not want his property to be sold although he conceded that he would not be able to return to live in it. All of the evidence appears to be consistent with the view that ACF cannot return to live in the property. Similarly, his wife ACG is also unable to return to live in the home and accordingly ACH is the only member of the family currently residing in the property. The Respondent argued in support of its decision for the following reasons. 9A reverse mortgage was secured on the title of the property in relation to a debt of $75,248. It was a condition of that mortgage that the property would have to be sold within six months of it being vacated by the owners. As the owners of the property had vacated it more than six months ago the sale of the property was now required in order to observe the covenants of the mortgage. 10Further, there is a MasterCard debt of some $28,800 which is required to be paid but there are no funds in the protected estate to pay it. Accordingly, the only source of funds is the proceeds of sale of the home. 11Further, the Respondent relied in support of its decision upon the fact that ACF was a non-concessional resident of the aged care facility and was required to meet an accommodation charge of $28.72 per day in addition to the basic fee rate. If the property was not sold ACF would need to find additional income in order to meet his aged care costs, credit card repayments and other personal needs as his income was presently insufficient to do so although the Pentagon Managed Investments of ACF and ACG provided income of $10,000 to each of them, this income is expected to be exhausted within five years. 12There is the further difficulty that Centrelink benefits for ACF and ACG will be reduced after two years following vacation of the home since it will be classed as an asset which could be used for their support. 13Although the Respondent says that it has taken into consideration ACH's current circumstances, including the length of time in which he has lived at the property and his other personal circumstances, the decision which has been made is one which is in the best interests of ACF whose affairs are under management. 14In the internal review of the original decision, the Review Officer, Ms Elaine Tamblyn, affirmed the original decision. The reasons for decision of Ms Tamblyn also deal with the matter is put on behalf of ACH in the letter from his advocate dated 23 November 2010. In particular the Review Officer took into account the personal circumstances of ACH as set out in her Reasons for Decision dated 29 March 2011. Ms Tamblyn noted that ACH's parents had signed documents each year informing the mortgagee of the property that they were the only permanent residents in the property, although this appears to be incorrect in view of the fact that ACH has been living with his parents for at least five years at the address where he currently lives. The Review Officer noted that consideration would be given to assisting ACH with accommodation once the sale of the property had been finalised but that until proceeds of sale were available there were no funds to assist ACH with regard to alternative accommodation. 15The Review Officer conceded that ACH's parents would like him to remain living at the property however it was noted that while he continues to enjoy sole occupation of the property he is not meeting all of the outgoings on the property and it provides no benefit to his parents. Indeed, it is a drain on their Estate as the Estate is required to meet the expenses of the property. 16A further matter referred to by the Review Officer concerns the reverse mortgage which is it said does not permit ACH to continue to occupy the premises on an ongoing basis. The Respondent had been informed that the mortgagee would proceed to sell the property if the reverse mortgage cannot be paid out. There appeared to be no funds available to pay out the debt secured by the mortgage. Accordingly the Review Officer affirmed the decision under review upon the basis that when regard is had to the best interests of ACF and ACG the sale of the property was the outcome which would ensure their financial security into the future. REASONS 17ACH gave oral evidence to the Tribunal at the hearing. He informed the Tribunal that he works for the Australian Diabetes Council and earns $30,000 per annum. He says that he has lived in the property since October 2005 and prior to that lived with his parents at Cheltenham in their previous home. He has always lived with his parents. He said that the home is a three-bedroom home. He occupies the property with three dogs. He said that he visits his father every few weeks. He visits his mother on occasion every few weeks although he finds it depressing if he visits her. He feels there is no quality of life for them in their current circumstances. 18ACH told the Tribunal that he does not pay rent to occupy the property or rates. However he says that he pays electricity, water and telephone expenses. He indicated that he would be prepared to contribute to the rates. He said that he has a $20,000 loan from the Bank and at the present time he has some car expenses. He has never paid rent to his parents during that time he has lived in their home. If he were to be located away from the area where he presently lives this may restrict the visits he can make to his parents which will have a detrimental effect on their welfare. He says that when he visits his father, his father asks him how the house is going and that his father is anxious to have his son continue to live there. 19ACH also gave evidence that he is a diabetic, has eye damage especially in his left eye and low blood glucose levels. Accordingly he has a number of health problems which would make it difficult for him to relocate to alternative accommodation. 20ACF told the Tribunal that he wants his son, ACH, to keep living in the property although he does not know whether it is financially or humanly possible. He has no objection to his son having dogs at the home. 21Submissions were made to the Tribunal by Ms Stern for the Applicant and Ms Phang for the Respondent. Essentially Ms Stern argued that the decision under review should be set aside with a recommendation that the Respondent consider and investigate whether the reverse mortgage could be refinanced or some variation in its terms negotiated with a view to avoiding a mortgagee sale. She also submitted that there had been no consideration of the alternative ways in which the shortfall of expenses over income which may eventuate could be dealt with such that the sale of the home could be avoided. She referred to the possibility of letting out rooms in the property. She referred to the evidence to the effect that the Bank to whom a credit card debt is owed may consider alternative payment options. The proceeds which had been received from the sale of a car in the amount of $12,566 could be applied to payment of debts. She made submissions concerning ACF's income as against the outgoing required for his care and the income received from the Pentagon investment to demonstrate that there is a small excess of income over expenditure at the present time. Accordingly, that was not a reason for the home to be sold. 22Ms Phang considered that the decision under review should be upheld for the reasons advanced by the Review Officer. Ms Phang referred to the fact that the reverse mortgage had been chosen by ACF and ACG as a method they apparently found acceptable for organising their finances on the understanding that after six months of leaving the home the debt would have to be repaid. She referred to the fact that their Wills made no reference to the particular property but simply the whole Estate and accordingly, it could not be said that it was intended that ACH would receive the particular property from the Estates of his parents in which he presently resides as distinct from the whole Estate itself. 23Ms Phang argued that with the expenses to be met in relation to the property, if it is not sold the Estate would not have capacity to continue to meet expenses for the property when it does not receive any income. 24At the conclusion of the hearing it became apparent that it was of some significance to consider the terms of the reverse mortgage and accordingly the Tribunal requested that a copy of the mortgage be provided for the Tribunal's consideration. Subsequent to the hearing a copy of the mortgage no AB905921F was received together with the relevant registered memorandum. Each of the parties then made submissions concerning the effect of the mortgage. Ms Nerida Harvey, solicitor, made submissions on behalf of the Applicant noting that clause 7.6 of the memorandum keeps alive the possibility of negotiation with the mortgage provider as to the terms of the mortgage. She referred to the fact that the Borrower Warranty included in the s.58 documents provided to the Tribunal, made reference to the fact that ACH was living with his parents at their home and applications for loans also referred to the fact that three people were permanently living at the property. 25Ms Phang made a submission in writing on 31 August 2011 in relation to the mortgage. She noted that the contract between ACH's parents and the Perpetual Trustee Company Ltd was contained in document C5 in the s.58 documents. She noted that the Equity Tap Borrower Warranty recorded that the loan is repayable six months after the borrowers (or survivor of them where there is more than one) dies or moves to long-term aged care. Ms Phang referred to the fact that it is common ground in the proceedings that ACH's parents moved to long-term aged care more than six months ago. As repayment of the mortgage debt has not occurred then the mortgagors are in default of the mortgage and accordingly the mortgagee is entitled to proceed to exercise its powers on default including sale. 26In the Tribunal's view the reasons given by the Review Officer in support of the decision which was made by the Respondent are sound and treat as a priority the best interests of ACF and ACG. It is clear from the evidence that ACH continues to reside in the property and pays nothing for his occupation of the property. The costs of maintaining the property come from the Estates of his parents. The property itself generates no benefit to anyone other than ACH who is in employment earning an income of some $30,000 per annum. The information available to the Respondent referred to in the Review Office's Reasons for Decision is to the effect that the rental value of the property could be $600 per week. ACH is not in a financial position to pay anything like this sum to continue to occupy the property. He has not demonstrated a willingness to pay for the significant costs of maintaining the property including rates, insurance and all other outgoings. 27There is the further difficulty that the Centrelink income of ACH's parents will be affected when the time is reached that they have been out of the home in aged care accommodation for two years. This will then cause difficulty for them in meeting their ongoing care expenses and personal needs. 28The further matter to be considered is that it appears that the parents of ACH are in default as mortgagors under the mortgage and that the mortgagee could exercise its power of sale upon taking the appropriate steps leading to that result. This may cause the property to be sold for less than its true market value if it were not to be marketed by the Respondent on behalf of ACF and ACG. Again, this is not in the best interests of ACH's parents. 29The Tribunal takes into account the fact that ACH has become accustomed to living in the property and has lived with his parents for many years. While his welfare and interests may be regarded as a relevant consideration, the paramount interest in this matter must be to ensure that the Estate of ACF is managed in the best interests of ACF. Given the financial circumstances of the Estate at the present time, it is the Tribunal's view that the property should be sold to enable the debts to be paid and the funds left over, after meeting the expenses of sale and other debts, may be invested to provide an income stream to meet the expenses of ACF. In the Tribunal's view this is the correct and preferable decision. 30This decision is not intended to restrict the Respondent in any way in considering the needs of aCH for alternative accommodation to the extent that provision can be made in that regard consistent with the best interests of his parents. No doubt, the welfare of ACF may be adversely affected if he became aware of and distressed by ACH having to leave the family home and having difficulty in finding alternative accommodation. The Tribunal expresses no view on this matter as it is a factor, but only a factor, to be taken into account by the Respondent in reaching the decisions it makes in the management of the estate of ACF. DECISION 31The decision under review is affirmed.