Supreme Court New South Wales Medium Neutral Citation: SLJ v RTJ [2017] NSWSC 137 Hearing dates: 5 and 13 September and 11 October 2016, and consideration in chambers after receipt of a Report dated 24 November 2016 from the NSW Trustee Date of orders: 24 February 2017 Decision date: 24 February 2017 Jurisdiction: Equity - Protective List Before: Lindsay J Decision: Orders made for removal and replacement of a protected estate manager, incorporating orders made to confirm that an estate is subject to management under the NSW Trustee and Guardian Act 2009 NSW, reserving liberty to apply for accounting or remedial orders. Catchwords: GUARDIANSHIP — Protected person — Financial management — Change of manager — Order for discharge of private manager — Order for appointment of private manager — Principles governing a change of manager — Paramount consideration remains protection of welfare, and interests, of protected person — Prudential management requires flexibility, consultation with protected person and family, and respect for protected person's autonomy. PROTECTIVE JURISDICTION – Protected person – Irregularities in original financial management order – Failure to reference NSW Trustee and Guardian Act 2009 – No declaration of incapacity – No management order expressly pursuant to s41 of NSW Trustee and Guardian Act 2009 – No appointment of manager expressly pursuant to s41 of NSW Trustee and Guardian Act 2009 – Accountability of manager – Availability of remedial orders. Legislation Cited: Civil Procedure Act 2005 NSW Corporations Act 2001 Cth Corporations Regulations 2001 Cth Interpretation Act 1987 NSW Trustee and Guardian Act 2009 NSW Supreme Court Act 1970 NSW Cases Cited: Ability One Financial Management Pty Limited and Anor v JB by his tutor AB [2014] NSWSC 245 C v W (No. 2) [2016] NSWSC 945 M v M [2013) NSWSC 1495 MKH v JBH (No. 2) [2016] NSWSC 1103 MKH v JBH [2016] NSWSC 1031 Re LSC and GC [2016] NSWSC 1896 Re LSC and GC [2016] NSWSC 1896 Re Managed Estates Remuneration Orders [2014] NSWSC 383 (2 April 2014) Secretary, Department of Health and Community Services v JWB and SMB (Marion's Case) (1992) 175 CLR 218 Texts Cited: - Category: Principal judgment Parties: Plaintiff: Mother of defendant Defendant: Person ostensibly under protective management NSW Trustee: C Phang, Solicitor Representation: Solicitors: Plaintiff: Bourke Love File Number(s): 2016/00195883 Judgment INTRODUCTION 1. This judgment determines an application for the removal and replacement of a "manager" of the estate of a person in need of protection in circumstances in which the appointment of the manager (pursuant to section 41 of the NSW Trustee and Guardian Act 2009 NSW) was imperfectly expressed; the NSW Trustee was not given notice of the appointment (or management of the estate) by the Court, the manager or any interested person; and, accordingly, management of the estate was not, in a practical sense, brought under the supervision of the NSW Trustee until, following a change in the commercial identity of the manager, the mother of the person in need of protection applied to the Court for a change of manager. ORDERS MADE ON RECOVERY OF COMMON LAW COMPENSATION 1. In proceedings brought in the Common Law Division of the Court for the recovery of compensation for personal injuries, the following sequence of events occurred: 1. On 18 at November 2011 the Court, constituted by a judge, approved (pursuant to section 76 of the Civil Procedure Act 2005 NSW), and granted to the plaintiff (an incapable person, the defendant in the current proceedings, then represented by the current plaintiff as his tutor), a judgment (by way of settlement of a claim for damages) in the sum of $2,975,000, including funds management, plus costs as agreed or assessed, subject to adjustments, without expressly providing (as section 77(2) of the Act provides and these types of orders customarily do provide) for all money recovered on behalf of the incapable person to be paid into court. 2. On 13 December 2011 the insurer for the defendant in those proceedings (Allianz Australia Insurance Limited) paid into court, pursuant to that judgment, the sum of $2,972,515.95 cents. 3. On 31 January 2012 the Court, constituted by a registrar, made a notation and orders, inter alia, to the following effect: 1. NOTE that the plaintiff (the present defendant) is incapable of managing his affairs. 2. ORDER that ANZ Trustees Limited be appointed as manager of the estate of the plaintiff to act in relation thereto. 3. ORDER that the net proceeds of settlement of the proceedings held by the Court be paid, pursuant to section 77(4) of the Civil Procedure Act 2005, to ANZ Trustees Limited to manage the funds for the plaintiff. 1. On 13 February 2012 the Court paid out to ANZ Trustees Limited a sum of $2,987,549.10, representing the money paid into court plus accrued interest. 1. Those notations and orders are devoid of any express reference to the NSW Trustee and Guardian Act 2009. There was no order, such as that usually made, for the judgment sum to be paid into court pending the appointment of a manager under the Act in Protective List proceedings. There was no express declaration of incapacity of the type contemplated, and ordinarily made, to engage section 41(1) of the Act. There was no order, expressly made pursuant to section 41, that the incapable person's estate be subject to management under the Act. There was no express characterisation of "the manager" as a manager appointed under section 41. 2. A registrar appears not to have had power to make the orders made on 31 January 2012; but, the orders having been made, by virtue of section 121 of the Supreme Court Act 1970 NSW they have the effect of an order of the Court unless set aside or varied. There is no occasion to set them aside or to vary them; only, if anything, to confirm them. The defendant is and was at all material times in need of protective orders. 3. As a matter of construction, a fair inference from the form of the orders and the context in which they were made is that they were intended to be made under, and to engage, section 41 of the NSW Trustee and Guardian Act. I proceed upon that basis. 4. Confirmation of the correctness of this finding is that affidavits filed in the Common Law proceedings, in support of an application made for the orders made by the Registrar, included an affidavit sworn by an officer of ANZ Trustees Limited expressly deposing to the intention of the company, if appointed manager, to communicate with, and work under the supervision of, the NSW Trustee. 5. At some point, or points, between the end of the Common Law proceedings and the commencement of these Protective List proceedings, the State's administrative system for supervision of a protected estate broke down, essentially for a want of compliance with routine procedures and a failure to engage the NSW Trustee. THE CHANGING IDENTITY OF "THE MANAGER" 1. On 4 July 2014 ANZ Trustees Limited changed its name to Equity Trustees Wealth Services Limited and continued to manage the estate of the person in need of protection. The name change was effected in anticipation of a sale of all the shares in the company by ANZ Banking Group Limited to Equity Trustees Limited. In effect, having been a wholly owned subsidiary of ANZ Banking Group Limited, the company became a wholly owned subsidiary of Equity Trustees Limited. 2. Schedule 8AA of the Corporations Regulations 2001Cth identifies the company ("Equity Trustees") as a licensed trustee company regulated by chapter 5D of the Corporations Act 2001 Cth. THE PROTECTIVE LIST APPLICATION FOR A CHANGE OF MANAGER 1. By a summons filed on 28 June 2016 in the current proceedings, in the Protective List of the Equity Division of the Court, the mother of the person in need of protection (formerly his tutor in the Common Law proceedings) applied to the Court, as plaintiff, for orders under the NSW Trustee and Guardian Act to the effect, inter alia, that: 1. the defendant (the person in need of protection) be declared, pursuant to section 41(1)(a) of the Act, incapable of managing his affairs. 2. the estate of the defendant be ordered (pursuant to section 41(1)(a)) to be subject to management under the Act. 3. Ability One Financial Management Pty Limited be appointed, pursuant to section 41(1)(b) of the Act, as manager of the estate of the defendant subject to the orders and direction of the NSW Trustee. 1. The defendant was born in 1998 and is currently aged 18 years. Notwithstanding that he has attained the age of majority, he remains incapable of managing his own affairs and he requires the protection of a protected estate manager. 2. The NSW Trustee first learned of the defendant's estate on or about 14 April 2016 when, in anticipation of the filing of the plaintiff's summons seeking the appointment of Ability One Financial Management Pty Limited as manager, the solicitor for the plaintiff invited the NSW Trustee to prepare a report on the suitability of Ability One Financial Management Pty Limited as a prospective manager, such as that envisaged by paragraph 290(m) of Ability One Financial Management Pty Limited and Anor v JB by his tutor AB [2014] NSWSC 245. 3. The preparation of such a report by the NSW Trustee was impeded by Ability One Financial Management Pty Limited's perceived inability to prepare a plan of management for the estate (ordinarily required by the NSW Trustee) without access to records relating to the estate of the defendant and its management. 4. On 5 September 2016 I made an order that Equity Trustees produce to the Court an up-to-date statement of the assets and liabilities of the estate of the defendant under management, and all ledger account records relating to management of the estate since 31 January 2012. 5. Equity Trustees complied with that order in due time, and provided a copy of its documentation to the NSW Trustee for consideration. 6. On 13 September 2016 the documentation produced by Equity Trustees was provided to the plaintiff, the defendant and Ability One Financial Management Pty Limited for the purpose of the current proceedings including, in particular, the preparation in due course of a plan of management for submission to the NSW Trustee in aid of preparation of a report to the Court by the NSW Trustee. 7. When the proceedings were next before the Court for directions, on 11 October 2016, I formally noted that the NSW Trustee was then awaiting Ability One Financial Management Pty Limited's proposed plan of management, for the purpose of preparation of the NSW Trustee's report to the Court, and I ordered that the proceedings be referred to chambers for further consideration after the Court's receipt of the NSW Trustee's report. 8. The NSW Trustee's report dated 24 November 2016 was subsequently received by the Court, based upon a proposed plan of management dated 14 October 2016 prepared by Ability One Pty Limited for Ability One Financial Management Pty Limited in relation to the estate of the defendant. 9. Having addressed the plan of management, and ancillary topics, the NSW Trustee reported that it is not aware of any fact or circumstance which may reasonably ground an objection to the appointment of Ability One Financial Management Pty Limited as manager of the estate of the defendant. APPLICABLE PRINCIPLES 1. The principles governing the removal, and replacement, of a protected estate manager in the current regulatory system are summarised in M v M [2013] NSWSC 1495 at [50], supplemented by additional observations in Ability One Financial Management Pty Limited and Anor v JB by his tutor AB [2014] NSWSC 245 at [36]. 2. The Court's protective jurisdiction is not a "consent jurisdiction". An order for the appointment, removal or replacement of a protected estate manager is not to be made merely because a party, or some other person, seeks it, consents to it or acquiesces in it. The Court is bound to exercise an independent judgement, protective of the person in need of protection. 3. No person or entity (public or private) has a legal entitlement to be, or to remain, a manager of a particular protected estate. The protective purpose of the jurisdiction, with its focus on the welfare and interests of the protected person, precludes this. 4. Care needs to be taken in all decision making affecting a protected person to focus on the facts of the particular case, preferably with due consultation with the protected person, his or her family and carers who may be well placed to inform the Court of the protected person's particular circumstances. 5. Upon an exercise of jurisdiction under the NSW Trustee and Guardian Act, it is the duty of each decision-maker (as section 39 of the Act mandates) to observe the following principles: 1. the welfare and interests of the protected person should be given paramount consideration. 2. the freedom of decision and freedom of action of the protected person should be restricted as little as possible. 3. the protected person should be encouraged, as far as possible, to live a normal life in the community. 4. the views of the protected person in relation to the exercise of a power under the Act should be taken into consideration. 5. the importance of preserving the family relationships and cultural and linguistic environments of the protected person should be recognised. 6. the protected person should be encouraged, as far as possible, to be self-reliant in matters relating to his or her personal, domestic and financial affairs. 7. the protected person should be protected from neglect, abuse and exploitation. 1. These principles are consistent with, and reflective of, the inherent, protective jurisdiction of the Court, the nature and scope of which was explained by the High Court of Australia in Secretary, Department of Health and Community Services v JWB and SMB (Marion's Case) (1992) 175 CLR 218 at 258-259. 2. Where a corporation has been appointed to manage the estate of a protected person and there has been a substantial change in the ownership, management structure or mode of operation of the corporation, bearing upon the capacity of the corporation to manage the estate or the means by which the estate might be managed, a protected person and his or her family and carers can reasonably expect to be allowed an opportunity to consider for themselves whether the change is in the best interests, and for the benefit, of the protected person: Re LSC and GC [2016] NSWSC 1896 at [41]. CONSIDERATION 1. That principle applies to this case notwithstanding that, in this case, the formal corporate identity of "the manager" did not change; only its name, ownership and management structure, factors of substance. 2. In the circumstances of the present proceedings, having regard to the views of the plaintiff (the mother and sole carer of the defendant) communicated to the Court, and to the change in the ownership, control and management structure of "the manager", I am satisfied that the change of manager sought by the plaintiff, on behalf of the defendant, is for the benefit, and in the interests, of the defendant. 3. Having reflected on her experience of the new management regime, the plaintiff has, not unreasonably, sought a change of manager. In the absence of any compelling reason to decline her consequential application for a change of manager, it should be granted. To do otherwise would be to discount the principles for which section 39 of the NSW Trustee and Guardian Act provides, and the protective purpose for which the Court's inherent jurisdiction exists. So far as reasonably possible, a protected person, living in his or her community, should be accorded the respect of an autonomous individual. 4. It is not necessary to find misconduct on the part of a manager, or a breakdown in personal relationships, as a jurisdictional prerequisite for a change of manager. The plaintiff complains of dissatisfaction with the new management regime since "ANZ Trustees" became "Equity Trustees", and a breakdown in her relationship with the company's staff, but it is not necessary to do more than to note her complaint. PROCEDURAL IRREGULARITIES AND AVAILABILITY OF REMEDIES 1. Mindful of the irregular history of management of the defendant's estate, arising out of the orders made in 2012 in the Common Law proceedings, I propose to make formal orders confirmatory of the defendant's status as a "protected person" within the meaning of section 38 of the NSW Trustee and Guardian Act, and to reserve to all interested persons liberty to apply for such, if any, remedial orders as may be necessary to ensure that management of the defendant's protected estate hereafter proceeds in an orderly manner. 2. My attention has not been drawn to any financial irregularity in management of the defendant's estate; but procedural irregularities attending its management of the estate (beginning with the terms of its appointment as "manager" and subsequent failures to provide routine information to the NSW Trustee in the course of management of the estate) might, in due course, commend an application to the Court for remedial orders of the character of the order made in Re LSC and GC [2016] NSWSC 1896 at [64] as Order 11, in exercise of the jurisdiction described in C v W (No. 2) [2016] NSWSC 945 at [22]-[47]: that is, an order that Equity Trustees be excused from any breach of fiduciary duty arising only from: (a) its taking, receiving or retaining remuneration from the estate of the defendant in the course of management of his estate; or (b) its management of the estate of the defendant purportedly pursuant to orders made in the Common Law proceedings. OBSERVATIONS ABOUT PRACTICE 1. The history of these proceedings demonstrates that, although inconvenience might sometimes attach to procedures for the payment of compensation money into court pending the commencement of Protective List proceedings (and payment out only on notice to the NSW Trustee) following the conclusion of common law compensation proceedings, those procedures (outlined in MKH v JBH [2016] NSWSC 1031 and MKH v JBH (No. 2) [2016] NSWSC 1103) can be critically important to a proper engagement of the system of administration for which the NSW Trustee and Guardian Act provides. Experience teaches, as the present proceedings illustrate, that shortcuts are sometimes productive of problems unforeseen. Sometimes the slightly longer route is the shorter way home. ORDERS 1. I make orders to the following effect: 1. DECLARE, pursuant to section 41(1)(a) of the NSW Trustee and Guardian Act, that the defendant is incapable of managing his affairs. 2. ORDER, pursuant to section 41(1)(a) of the NSW Trustee and Guardian Act, that the estate of the defendant be subject to management under the Act. 3. ORDER, pursuant to section 41 of the NSW Trustee and Guardian Act and section 47 of the Interpretation Act 1987 NSW, that Equity Trustees Wealth Services Limited be removed from the office of manager of the estate of the defendant to which it was appointed on 31 January 2012. 4. ORDER, pursuant to section 41(1)(b) of the NSW Trustee and Guardian Act and section 47 of the Interpretation Act 1987, that Ability One Financial Management Pty Limited be appointed manager of the estate of the defendant subject to the orders and directions of the NSW Trustee. 5. ORDER, pursuant to sections 61(1) and 64 of the NSW Trustee and Guardian Act, that Equity Trustees Wealth Services Limited take such steps as may be necessary or expedient to transfer management of the estate of the defendant from itself to Ability One Financial Management Pty Limited. 6. ORDER that, within 28 days of these orders being made or such other time as may be appointed by the NSW Trustee, Equity Trustees Wealth Services Limited lodge with the NSW Trustee such accounts as the NSW Trustee may in writing require from it in relation to management of the estate of the defendant. 7. ORDER that Ability One Financial Management Pty Limited may not do anything in reliance on its appointment as manager of the estate of the defendant until the NSW Trustee has authorised it to assume management of the defendant's estate. 8. ORDER, pursuant to section 68 of the NSW Trustee and Guardian Act, that Ability One Financial Management Pty Limited give such, if any, security in respect of its management of the defendant's estate as the NSW Trustee may determine to be appropriate. 9. NOTE the orders and notations made in the judgment reported as Re Managed Estates Remuneration Orders [2014] NSWSC 383 (2 April 2014). 10. ORDER, subject to: 1. further order; 2. due performance by it of its obligations as a manager of protected estate; and 3. its ongoing liability to account for estate property, that Ability One Financial Management Pty Limited be allowed out of the estate of the defendant such, if any, remuneration for its provision of services as manager of the estate of the defendant (including any fees approved by the NSW Trustee from time to time) as may be just and reasonable, not exceeding the amounts or rates disclosed to the Court upon their appointment as manager or such other amounts or rates as may, from time to time, be fixed by the NSW Trustee. 1. ORDER that Ability One Financial Management Pty Limited, as manager of the estate of the defendant, provide to the NSW Trustee, or as the NSW Trustee may in writing direct, an accounting for its management of the estate of the defendant as and when directed by the NSW Trustee so to do. 2. RESERVE for further consideration all questions relating to the accountability of Equity Trustees Wealth Services Limited for its management of the estate of the defendant, including any entitlement on the part of Equity Trustees Wealth Services Limited to apply for remedial orders. 3. ORDER that the plaintiff provide a copy of these orders to: 1. the defendant; 2. the father of the defendant; 3. Equity Trustees Wealth Services Limited; 4. Ability One Financial Management Pty Limited; and 5. the NSW Trustee. 1. ORDER that the costs of the plaintiff, the defendant and the NSW Trustee of and incidental to these proceedings be paid out of the estate of the defendant. 2. ORDER that all interested persons be at liberty to apply, generally, as they may be advised. ********** 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 February 2017