NSW Civil and Administrative Tribunal New South Wales Medium Neutral Citation: KXS [2016] NSWCATGD 65 Hearing dates: 28 June 2016 Date of orders: 28 June 2016 Decision date: 28 June 2016 Jurisdiction: Guardianship Division Before: R Booby, Senior Member (Legal) W Longley, Senior Member (Professional) S Fogg, General Member (Community) Decision: 1. The estate of Mr KXS is subject to management under the NSW Trustee and Guardian Act 2009. 2. Ms TAL is appointed as the financial manager of the estate. 3. This order be reviewed by the Tribunal within 3 months. Catchwords: FINANCIAL MANAGEMENT – application for a financial management order – 14-year-old subject person – person under legal incapacity – need for financial manager to assist with administration of discretionary trust and legal proceedings – separate representative appointed – private manager appointed Legislation Cited: Civil Procedure Act 2005 (NSW), s 3 Guardianship Act 1987 (NSW), ss 4, 15, 25M Minors (Property and Contracts) Act 1970 (NSW), s 50 Cases Cited: CJ v AKJ [2015] NSWSC 498 Holt v Protective Commissioner (1993) 31 NSWLR 227 McD v McD (1983) 3 NSWLR 81 P v NSW Trustee and Guardian [2015] NSWSC 579 P v R [2003] NSWSC 819 PB v BB [2013] NSWSC 1223 Re D [2012] NSWSC 1006 Re W and L (Parameters of Protected Estate Management Orders) [2014] NSWSC 1106 Category: Principal judgment Parties: Mr KXS (subject person) Ms JBS (applicant and carer) Ms TAL (party joined) The NSW Trustee and Guardian Representation: Separate Representation: M Streeter (Subject Person) File Number(s): 61463 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 (s 65, Civil and Administrative Tribunal Act 2013 (NSW)). REASONS FOR DECISION FINANCIAL MANAGEMENT APPLICATION What the Tribunal decided 1. The Tribunal appointed Ms TAL as Mr KXS's financial manager, subject to the authorities and directions ordered by the NSW Trustee and Guardian and ordered that the order be reviewed in three months. 2. The Tribunal ordered that Mr KXS be represented by a separate representative at the review of the order and that the separate representative should provide the Tribunal with a submission regarding whether the best interests of Mr KXS were best met by the confirmation of the order or whether matters would more appropriately be determined by the Supreme Court. Background 1. Mr KXS is 14-years-old and resides with his mother, Ms JBS, in regional NSW. His brothers, Mr DZS and Mr MYS and his sister, also live in the house. 2. On 15 December 2015, the Tribunal received an application from Ms JBS seeking the appointment of a financial manager for each of her three sons. 3. On 12 April 2016, the Tribunal held a directions hearing at which it: 1. Ordered separate representation for each of Ms JBS's sons. 2. Joined as a party to the proceedings Ms TAL, who is the aunt of Mr KXS. 3. Directed any legal practitioner assisting Ms JBS to file a submission detailing how the proposed financial management order would benefit Mr KXS and any other strategies that had been considered in relation to this matter. 1. Mr Mark Streeter attended the hearing as the separate representative for Mr KXS and his siblings. 2. On 7 June 2016, the Tribunal refused an application made by Mr KDT, a solicitor, who sought to represent Ms JBS. 3. In a letter dated 7 June 2016, law firm A per Mr KDT state that they act for Ms JBS and had been instructed to request the withdrawal of the application. The hearing 1. 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.] 2. Ms JBS did not attend the hearing. The Tribunal attempted unsuccessfully to telephone her. 3. The Tribunal must ensure that it conducts its hearings in such a way as to extend procedural fairness to the parties. This includes a requirement that the parties must be given a reasonable opportunity to be heard, and to present their case. 4. The Tribunal noted that Ms JBS had participated in the Directions hearing and also was assisted by a solicitor in relation to her applications. 5. Ms TAL was of the view that there were matters that needed to be heard by the Tribunal and that the matter should be heard despite the absence of Ms JBS. 6. The Tribunal is required to follow principles set out in s 4 of the Guardianship Act 1987 (NSW). These principles include that paramount importance should be given to the welfare and interests of a person subject to an application under that Act. 7. Taking these matters into account, the Tribunal was satisfied that Ms JBS knew about the hearing and had been provided with an adequate opportunity to attend the hearing and to put her views and that it was in the best interests of Mr KXS to continue with the hearing despite the absence of Ms JBS, whilst taking her absence into account in any orders made by the Tribunal. 8. Mr KXS was also absent from the hearing. Ms TAL said that she had spoken to Mr DZS, the 16-year-old brother of Mr KXS, who told her that Ms JBS had refused to allow her children to attend the hearing. 9. Mr Mark Streeter said that he had been able to speak to Mr DZS but not to his younger siblings. 10. Taking all of these matters into account, the Tribunal was satisfied that it was in the best interests to continue with the hearing despite Mr KXS's absence, whilst taking his absence into account in any orders made by the Tribunal. Preliminary Matter – Application to withdraw the application 1. Mr Streeter expressed the view that taking into account the application for withdrawal and the absence of the applicant, it was open to the Tribunal to consent to the withdrawal and to dismiss the application. However, he said that the Tribunal is required to act in the best interests of the subject of the application and those interests might be better met by considering the application. 2. Ms TAL opposed withdrawing the application because: 1. If the application were withdrawn another application could be made in the future and she might not be advised of any new application. 2. She opposed the appointment of Ms JBS as the financial manager because she was concerned that such an appointment would not be in the best interests of Ms JBS's sons because she was of the view that Ms JBS was not using available funds to the benefit of her children. 1. The Tribunal was of the view that it was in the best interests of Mr KXS to hear Ms TAL's concerns and therefore it was not in his best interests to consent to the withdrawal of, and to dismiss, the application. Preliminary Matter – Application for summons 1. Ms TAL applied for the issue of a summons to the Department of Immigration and Border Protection seeking the provision of a Marriage Certificate certifying the marriage of Ms JBS to Mr TPS in Macedonia. She states that the Certificate was provided in support of an application for a spousal visa for Mr TPS and that in accordance with the will of the late Mr LQS the marriage would terminate Ms JBS's life interest in the home. 2. The application was refused by the Registrar. What did the Tribunal have to decide? 1. The questions to be considered by the Tribunal are: * Is Mr KXS incapable of managing his affairs? * Is there a need for another person to manage Mr KXS's affairs and is it in his best interests for a financial management order to be made? * If so, who should be appointed financial manager? Is Mr KXS incapable of managing his affairs? 1. In Re D [2012] NSWSC 1006, White J assessed the history of case law in relation to financial management and noted that initially the issue of capability was approached by referring to hypothetical or abstract notions of the ordinary affairs of man. However, the Court now assesses the person's own capacity to do what they are proposing to do [58]. White J used a "rational appreciation" of assets test to determine a person's capability to manage his or her affairs. He adopts the reasoning of Barrett J in P v R [2003] NSWSC 819 who said that the task of the Court in these circumstances: …is to make a judgment as to the capacity and ability of the person concerned to cope with the ordinary routine affairs of living, particularly so far as they concern the person's property…the requisite judgment is to be made in the light of objective physical facts concerning the relevant person's property, money and other assets and the way the person is able to look after them. If there is a lack of capacity, the reason for it does not matter [26]. 1. In PB v BB [2013] NSWSC 1223, Justice Lindsay confirmed that the question focuses attention on the special circumstances of the person. His Honour stated, at [7]: Of central significance is the functionality of management capacity of the person said to be incapable of managing his or her affairs, not: (a) his or her status as a person who may, or may not, lack "mental capacity" or be "mentally ill"; or (b) particular reasons for an incapacity for self-management. 1. 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, [38], and P v NSW Trustee and Guardian [2015] NSWSC 579, [309]. 1. The relevant time for considering whether a person is incapable of managing his or her affairs is not merely the day of the hearing but the reasonably foreseeable future (McD v McD (1983) 3 NSWLR 81 at 86). See Lindsay J in Re W and L (Parameters of Protected Estate Management Orders) [2014] NSWSC 1106 at [20]. 2. Section 15 of the Guardianship Act stipulates that the Tribunal must not make a guardianship order for a person under the age of 16. However there is no such restriction in the Guardianship Act in respect of making a financial management order. 3. In a letter to the Tribunal dated 14 December 2015, Mr KDT of law firm A states that: 1. Mr DZS, Mr MYS, and Mr KXS have inherited the family home as joint tenants in accordance with the will of their late father, Mr LQS. 2. Ms JBS has a life interest in the home now owned jointly by her sons. 3. Ms JBS was seeking the financial management order to enable her to encumber the property to obtain funds to maintain the family home as well as to support the children's expenses. 1. In addressing the issue of capability Mr Streeter described Ms JBS's sons as coming under the statutory assumption of incapacity to conduct legal proceedings under s 3 of the Civil Procedure Act 2005 (NSW) which includes "a child under the age of 18 years" in the definition of person under legal incapacity to conduct such proceedings. 2. The Tribunal had regard to a copy of the will of the late Mr LQS and was of the view that the wording of the clauses regarding the family home evidenced some unclear drafting. Similarly the will does not specify the nature or terms of the "discretionary trust" the proceeds of which are to be distributed amongst Mr LQS's four children. The Tribunal was of the view that there may be a need for clarification of these matters. 3. During the hearing, Ms TAL expressed concerns about the administration of a discretionary trust. 4. The Tribunal was of the view that the specific financial circumstances pertaining to Mr KXS are those related to the legal situation related to the will of his late father and the administration of the discretionary trust and his rights in respect of the family home. 5. The Tribunal is of the view that these are complex legal matters and that they are beyond the capability of a 14-year-old child who is also statutorily incapable of conducting proceedings in a court in respect of these matters. 6. The Tribunal is satisfied that taking into account the age of Mr KXS and the nature of his affairs he is not able to manage those affairs. Is there a need for a financial management order and is it in Mr KXS's best interest that a financial management order be made? 1. In considering whether there is a need for a financial management order, the Tribunal took into account s 50 of the Minors (Property and Contracts) Act 1970 (NSW) which establishes that: 50 Property of minor (1) Where a minor is beneficially entitled at law or in equity to property, the Supreme Court may, on such terms as the Court thinks fit, make orders authorising a person, either generally or in any particular instance: (a) to make any disposition of the property, (b) to receive the proceeds of disposition of the property, (c) to call for a disposition of the property to the person so authorised or as the person directs, (d) to receive the income of the property, (e) to sue for and recover any chose in action comprised in the property, (f) to invest the property, or (g) to apply the capital or income of the property for the benefit of the minor. (2) The Court shall not make an order under this section unless it appears to the Court that the order is for the benefit of the minor. 1. The preliminary view of the Tribunal was that taking into account the provision cited in the preceding paragraph, Ms JBS's application might be more appropriately heard in the Supreme Court if the relevant matters were restricted to those matters referred to in the letter of Mr KDT dated 14 December 2015, being that Ms JBS was seeking to be appointed the financial manager so that she could encumber the property to obtain funds to maintain the family home as well as to support the children's expenses. 2. However, Ms TAL expressed the view that there were matters that should be considered by the Tribunal other than the reasons as put in the application for the order. These matters were: 1. Ms JBS had told Ms TAL's husband that she wanted to sell the house and move elsewhere. 2. Ms TAL was concerned about the administration of the discretionary trust for the following reasons: 1. A letter from law firm B to Ms JBS dated 15 July 2008, shows that the latter had been paid a sum of $544,146.51 from a superannuation fund of her late husband as well as a sum of $111,126.14 by way of distribution of assets. 2. Ms TAL said that Ms JBS appeared to have spent the sums she received under the will because her application was based on the need to encumber the family home to pay for ongoing expenses. 3. Ms TAL said that she has seen a document indicating that Ms JBS is indebted to Centrelink in the amount of $45,000. 4. Ms TAL was concerned that the trust funds were endangered due to Ms JBS's apparent lack of funds and financial management skills. 1. Ms TAL believes that Ms JBS has remarried. She said that Ms JBS's spouse was previously in Australia but was required to leave due to visa issues and that the marriage was undertaken as means of legitimising the spouse's return to Australia. The terms of the will are to the effect that if Ms JBS remarries or lives in a de facto relationship her life tenancy is extinguished. In the absence of a financial manager, there is no one to seek the enforcement of that clause of the will. 1. As Ms JBS was not present at the hearing, the matters raised by Ms TAL could not be put to her. The Tribunal was, therefore, cautious about accepting unreservedly the evidence provided by Ms TAL. However, in the absence of any evidence to the contrary, the Tribunal was of the view that it should put some weight on the evidence, which indicated that the financial welfare and interests of Mr KXS required some oversight. 2. Mr Streeter said that in his view there is a need for a financial manager to act for Mr KXS. 3. The Tribunal was of the view that in the absence of a financial manager Mr KXS is not able to investigate, clarify, or enforce his rights resulting from the will of his late father or his future financial rights in respect of those bequests and therefore the Tribunal was satisfied that there is a need to appoint someone to manage Mr KXS's affairs and that it is in his best interests to appoint a financial manager to provide sufficient authority for intervention in his affairs, including any appropriate legal action. Who should be appointed as financial manager? 1. In appointing a financial manager, as in making all other orders under the Guardianship Act, the Tribunal must act with the interests of the person concerned as the paramount consideration and in accordance with the other principles set out in s 4 of the Guardianship Act. 2. Section 25M of the Guardianship Act provides that, if the Tribunal makes a financial management order, it may appoint a suitable person to manage the person's estate or may commit the management of the estate to the NSW Trustee and Guardian. 3. In Holt & Anor v Protective Commissioner (1993) 31 NSWLR 227, the Court said that the dominant consideration in making orders about financial managers was the welfare of the person. The President of the Court of Appeal emphasised the Court's broad discretion in deciding who should be financial manager but also set out possible considerations as to the competing advantages of the then Protective Commissioner and a family member as the manager of an estate. The NSW Trustee and Guardian now exercises the role of the Protective Commissioner. 4. On the side of the then Protective Commissioner was seen to be the manifest independence of the statutory office, the advantages of a dispassionate and neutral approach in situations of family conflict and divided views as to the best interests of the person, expertise and experience in managing estates, an impeccable reputation and the security provided to an estate against loss or damage. 5. The advantages of the appointment of a family member were more economic management of smaller estates (that is, freedom from fees) and a greater familiarity with assets and liabilities in smaller estates, a greater capacity of a person with a disability to interact with the manager so as to exercise a greater influence over the broad directions of the management of the estate, love and affection for and knowledge of the protected person and concern for his or her quality of life, and particular qualities or qualifications enabling family members to act as managers. 6. The Court considered that interrelated property interests in a family situation, where a conflict of interest and duty may be "more apparent than real", should not necessarily present an absolute bar to appointment of a family member who is otherwise appropriate. However, when appointing a family member, a decision maker must be satisfied that the estate, income and capital assets, will be utilised to advance the interests and quality of life of a protected person rather than to eventually increase the assets of the family. 7. In her application, Ms JBS seeks to be appointed as the financial manager. In her parallel applications in respect of the siblings of Mr KXS, Ms JBS states that Mr KXS supports her application. 8. Mr Streeter said that he spoke to Mr DZS twice and on both occasions he supported the need for a financial manager but was opposed to the appointment of Ms JBS as the financial manager, saying he would support the appointment of anyone other than Ms JBS. Mr Streeter was not able to speak with Mr KXS or Mr MYS. 9. As Ms JBS was not in attendance at the hearing, the Tribunal was unable to put to her the matters raised by Ms TAL or to discuss with her Mr DZS's comments to Mr Streeter. In the absence of satisfactory resolution of these matters, the Tribunal could not be satisfied that Ms JBS was a suitable person to be appointed as the financial manager. 10. Ms TAL proposed that she be appointed as the financial manager. She said that she had financial management experience resulting from conducting her own cleaning business for some 11 years and keeping the books for that business. She said that she has never been bankrupt or convicted of a dishonesty offence. She said that she understands that some of the matters canvassed in the hearing relate to complex areas of law and that if appointed as financial manager, she might need to seek legal advice on behalf of Mr KXS. She indicated that she understands the role of the NSW Trustee and Guardian in respect of private financial managers and is willing to abide by the directions and authorities issued by the NSW Trustee and Guardian. 11. Mr Streeter said that Mr DZS supported the appointment of Ms TAL and that he said that Mr KXS and Mr MYS would support the appointment. 12. Mr Streeter said that in a matter involving the issues raised in this hearing he would usually recommend the appointment of the NSW Trustee and Guardian as the financial manager. However, given the particular context of this matter his view was that Mr KXS would benefit from the appointment of a family member because it would be necessary for the financial manager to liaise closely with Ms JBS's three sons. He noted also that in respect of the matter currently before the Tribunal Ms TAL has advocated strongly for Mr KXS and his brothers and could continue to do so as the financial manager. 13. On the basis of the evidence the Tribunal was satisfied that Ms TAL was a suitable person to be appointed as financial manager for Mr KXS subject to the authorities and directions of the NSW Trustee and Guardian. Should a reviewable financial management order be made? 1. The Tribunal may determine that a financial management order should be reviewed within a specified time. In this matter, the Tribunal determined that the financial management order should be reviewed within three months for the following reasons: 1. Ms JBS and Mr KXS did not take part in the hearing. 2. The making of a financial management order in the circumstances of this matter is uncommon and it will be in the best interests of Mr KXS to review whether or not the order remains to be in his best interests. 3. It may be that once other matters are clarified or finalised, the issues related to the interests in the family home and any actions in respect of the property should be dealt with by the Supreme Court. Order for Separate Representation 1. The Tribunal was of the view that due to the unusual and complex nature of the issues raised in this matter as well as the young age of Mr KXS, it is in his best interests that he be separately represented at the review of the order and therefore the Tribunal ordered that he be separately represented at that hearing. 2. The Tribunal was also of the view that having reviewed the circumstances applying at the time of the review, the separate representative should prepare submissions for the Tribunal regarding whether it is in the best interests of Mr KXS that the order be confirmed or whether matters would more appropriately be determined by the Supreme Court. ********** 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: 04 July 2017