CC v RAM [2012] NSWSC 1555

Supreme Court New South Wales

Medium Neutral Citation: CC v RAM [2012] NSWSC 1555 Hearing dates: Dealt with on the papers in chambers Decision date: 14 December 2012 Jurisdiction: Equity Division - Protective List Before: White J Decision: Refer to para [7] of judgment. Catchwords: GUARDIANSHIP - application that trustee company be appointed as financial manager of defendant - trustee company proposes to outsource investment of defendant's assets to another company - precise arrangement needs to be clarified before orders appointing manager can be made GUARDIANSHIP - applications to appoint trustee companies as financial managers of protected persons - usual practice should be for proposed manager and any proposed investment adviser for protected person to depose that their only reward will be their remuneration disclosed to the court and to provide an undertaking that any reward paid by a third party for investing the protected person's assets in a financial product will be accounted for to the protected person's estate Legislation Cited: NSW Trustee and Guardian Act 2009 (NSW) Cases Cited: GDR v EKR [2012] NSWSC 1543 Category: Principal judgment Parties: CC (Plaintiff) RAM (Defendant) Representation: Counsel: Solicitors: Beilby Poulden Costello (Plaintiff) File Number(s): 2012/348309

Judgment 1HIS HONOUR: This is an application for a declaration that the defendant is incapable of managing his affairs and for orders that his affairs be subject to management under the NSW Trustee and Guardian Act 2009 (NSW). The summons and supporting affidavits have been served on the defendant. I do not know what the defendant's attitude to the application is. If the defendant consents to the orders sought I should be provided with an affidavit, or a letter written by the defendant, advising that he consents to the orders. 2If the defendant does not consent to the orders sought, I will hear the defendant either orally, if he so wishes, or in writing. In either case the defendant should provide any medical evidence on which he wishes to rely. 3The summons seeks an order that Australian Executor Trustees Limited ("AET") be appointed as manager of the defendant's estate. Mr Mark McDonough, the Manager, Trust and Fiduciary Services at AET, deposes that: "4. In the event that AET is appointed manager, AET will engage ipac securities limited ('ipac') to provide advice in respect of, and manage, the investment of the estate. 5. The relationship between ipac and AET in respect of the management of the estate, assuming this Court makes the orders as sought, is as follows: a) AET will be appointed financial manager of the defendant's estate; b) AET will outsource the investment of the defendant's damages to ipac, subject to the investment strategy being, and remaining, in the defendant's best interests and complying, and continuing to comply, with the provisions of s 14C of the Trustee Act 1925 (NSW). c) AET will review and monitor the expenditure of the damages, meet with the defendant and his family in order to ensure his needs are being appropriately met, and coordinate care and other needs as required. 6. I have read ipac's letter of advice dated 27 September 2012. A copy of that advice is annexed to this affidavit and marked 'A'. 7. I have conducted appropriate investigations and am satisfied that ipac's proposed investment strategy in respect of the estate is in the defendant's best interests." 4It is not clear to me precisely what it is that ipac securities limited would do which would amount to the management of the investment of the defendant's damages. Where a person is appointed as manager of an incapable person pursuant to s 41(1)(b) of the NSW Trustee and Guardian Act, it is the person who is so appointed as manager who has the responsibility for the management of the estate. That person can seek the assistance of others, subject to complying with any order or direction of the NSW Trustee and Guardian or the Court, but the Act does not contemplate a delegation of management to third parties. The precise role that ipac would play in determining the assets in which the defendant's damages would be invested, and the role that AET would play in deciding upon or approving of investments, should be clarified. 5Although it has not hitherto been a requirement of applications for the appointment of a professional financial manager, from now on the proposed financial manager should provide an undertaking to the Court that any payment or other reward that might be paid to it by a third party as a result of the investment of the protected person's estate in a financial product will be accounted for to the protected person's estate. The same undertaking should be provided from an adviser retained by the financial manager who would itself owe fiduciary obligations to the protected person. If either a financial manager, or an adviser retained by a financial manager to act for a protected person, were to receive such a reward by investing in particular financial products for the protected person, they would be placed in a position of conflict between their duty to the protected person and their personal interest. Hitherto the Court has acted on the assumption that any such conflict would be disclosed on the application for the appointment of the financial manager. I have no reason to doubt that that assumption is justified. However, having had occasion to consider the question on a different application (GDR v EKR [2012] NSWSC 1543), I do not consider that it should remain a matter of assumption. 6The proposed financial manager and adviser should expressly state that their only reward will be by way of the remuneration disclosed to the Court. 7The plaintiff's solicitor, AET and ipac can provide the further evidence and, in the case of AET and ipac, the requested undertakings to my associate. If any affected party wishes to make submissions in relation to any of the matters raised in these interim reasons, arrangements should be made with my associate for the matter to be listed in court. 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: 14 December 2012