NSW Civil and Administrative Tribunal New South Wales Medium Neutral Citation: EVN [2017] NSWCATGD 16 Hearing dates: 17 January 2017 Date of orders: 17 January 2017 Decision date: 17 January 2017 Jurisdiction: Guardianship Division Before: J Currie, Senior Member (Legal) Dr S McSwiggan, Senior Member (Professional) D Crowley, General Member (Community) Decision: 1. The application by Mr SZC for a financial management order in relation to the estate of EVN is dismissed. Catchwords: FINANCIAL MANAGEMENT – application for financial management – need for a financial management order – separate representative's views considered – duties of attorney appointed under Enduring Power of Attorney – continuation of current attorney in best interests – application dismissed Legislation Cited: Powers of Attorney Act 2003 (NSW), ss 13(1), 36, 38 Cases Cited: CJ v AKJ [2015] NSWSC 498 G v G [2016] NSWSC 511 McD v McD (1983) 3 NSWLR 81 Re W and L (Parameters of Estate Management Orders) [2014] NSWSC 1106 Category: Principal judgment Parties: Ms EVN (person under consideration) Mr SZC (applicant) Mrs BMH (appointed attorney of Ms EVN) The NSW Trustee and Guardian Representation: Separate Representation: N Danis (Ms EVN) Legal Representation: J Muscat (Mrs BMH) K Ridley (Mr SZC) File Number(s): 63391 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 decided to dismiss the application. Background 1. Ms EVN is a 58-year-old woman who ordinarily lives in her own home in Southern Sydney with her son, Mr CFN. Ms EVN has been diagnosed with moderate to severe early-onset dementia and it is reported that she requires significant assistance with her activities of daily living. She obtains in-home support services from a charitable organisation and is in receipt of a disability support pension. 2. Mr SZC is Ms EVN's father and Mr UGC is her brother. Ms EVN is a widow, her husband having taken his own life in 2007. Her son, Mr DXN, died in 2013. Mr CFN is her surviving son. Mrs BMH is Ms EVN's long-term friend and carer. 3. By two separate instruments dated 12 March 2013, Ms EVN appointed Mrs BMH as her enduring guardian and her attorney. The instrument under which she appointed Mrs BMH as attorney (the Power of Attorney) is an enduring power of attorney. 4. On 12 August 2016, the Guardianship Division Registry received from Mr SZC two applications which sought respectively the appointment of a guardian and of a financial manager for Ms EVN. On 31 October 2016, the Tribunal ordered that Ms EVN be separately represented in all proceedings pending before the Tribunal. 5. On 13 December 2016, the Tribunal heard the guardianship application and made a guardianship order which appointed the Public Guardian as Ms EVN's guardian for six months with the authority to make decisions about her accommodation. The hearing of the financial management application was adjourned for approximately five weeks. 6. At an interlocutory hearing on 29 November 2016, the Tribunal granted leave for Mrs BMH to be legally represented by Mr Julian Muscat, Solicitor, and for Mr SZC, the applicant, to be legally represented by Mr Kieran Ridley, Solicitor. 7. The purpose of the Tribunal's proceedings at Sydney on 17 January 2017 was to conduct the adjourned hearing of the financial management application made by Mr SZC in respect of Ms EVN. Parties and witnesses 1. The Appendix to these Reasons for Decision identifies the parties to the application and the witnesses who participated in the hearing. [Appendix removed for publication.] Issues for determination by the Tribunal 1. The issues for our determination were: 1. Is Ms EVN incapable of managing her affairs? 2. Is there a need for another person to manage Ms EVN's affairs of and would it be in her best interests for a financial management order to be made? 3. If an order is to be made on the basis of the answers to those questions, who should be appointed as financial manager? Absence of Ms EVN from the hearing 1. The Tribunal seeks to hold its hearings in a way which promotes the participation of the person who is the subject of the application or review and we do our best to obtain the views of the subject person whenever possible. 2. We noted that the last hearing on 13 December 2016 proceeded in the absence of Ms EVN, on the basis of the parties' agreement that she would be likely to be distressed by the proceedings and would have difficulty expressing her views. That appears also to have been the case at the hearing on 31 October 2016. The Reasons for Decision from that hearing recorded that: "[Ms EVN] was in attendance at the hearing but it was apparent to the Tribunal that [Ms EVN] had no meaningful understanding of the process that she was involved in as a consequence of this application." 1. At the present hearing all participants were in consensus that because of Ms EVN's disabilities her capacity to understand the proceedings and the issues which fell for decision by us, would not have improved and that she may well become upset or distressed if required to participate in the hearing. We accepted that this was so. 2. Although it is obviously important to extend procedural fairness to all parties, and particularly to the subject person (in this case Ms EVN), it is well established that in circumstances where they will not be able to understand the nature of the proceedings or the issues before us and may become distressed if required to participate, then the hearing can and should proceed in their absence, provided that that would not be contrary to their welfare or interests. We were satisfied that it would promote the welfare and interests of Ms EVN for the important issues before the Tribunal to be decided by us today, and that it would be unreasonable and probably pointless to adjourn the hearing for a second time, in order to attempt to have her participate. For those reasons, we decided to proceed in the absence of Ms EVN. THE TRIBUNAL'S ASSESSMENT OF THE EVIDENCE AND DETERMINATION OF THE ISSUES Is Ms EVN incapable of managing her affairs? The legal principles and authorities 1. The Supreme Court of New South Wales has provided guidance in several decisions as to how the Tribunal should assess a person's capability to manage his or her affairs. 2. In earlier cases, the Court had based its test predominantly on the ability of the subject person to conduct the ordinary everyday affairs of people. It was said that if by reason of a failure to do this, there would be a real risk that they would be disadvantaged or that their money or assets would be at risk of dissipation, then they would properly be treated as being incapable of managing their affairs. 3. However, that approach has been reviewed and altered in more recent cases in which it has been emphasised that the Tribunal should not be relying just on hypothetical notions such as "the ordinary affairs of people" but rather should focus on the capability of the particular person to deal with his or her actual assets and to do what he or she is proposing to do with them. 4. Recently, in the NSW Supreme Court case of CJ v AKJ [2015] NSWSC 498, His Honour Justice Lindsay set out his preferred approach to this issue. He said that a court or tribunal should focus on whether the subject person is able to make and implement 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. 5. The relevant time for considering whether a person is incapable of managing his or her affairs is not merely the day of hearing but the reasonably foreseeable future: McD v McD (1983) 3 NSWLR 81, [86]; Re W and L (Parameters of Estate Management Orders) [2014] NSWSC 1106. Application of those principles in the present case 1. In considering this most important issue, we considered certain items of written medical and clinical evidence. These included two older reports being a short medical certificate from her general practitioner, Dr Z, dated 6 June 2011 and a report of 16 April 2010 from a clinical neuropsychologist. There was also more recent written material including a document of unknown source apparently being a medical "summary" as at 21 July 2016 and a short report dated 9 November 2016 from Dr Y, geriatrician at a public hospital. The conclusions in the three earlier reports were consistent with Dr Y's conclusion that Ms EVN: "does not have capacity to make decisions around financial management, health and accommodation needs". 2. At the hearing, we indicated to the participants our preliminary view, and confirmed that they were subject to any submissions to the contrary which any party wished to make. Our preliminary view was that at present and for the foreseeable future, Ms EVN would not be able to make and implement decisions about her own affairs in a reasonable, rational, and orderly way without undue risk of neglect, abuse, or exploitation. There was consensus amongst the participants that this was the case. No view to the contrary was expressed. Both the Legal Representatives confirmed that there was no issue between their respective clients as to Ms EVN's incapability. The Separate Representative, Ms Nihal also indicated her acceptance of a finding of incapability. 3. On that basis, we were satisfied that Ms EVN is incapable of managing her affairs. Is there a need for another person to manage the affairs of Ms EVN and would it be in her best interests for a financial management order to be made? The nature of the issue 1. It was common ground between the parties that for the present in the foreseeable future there is a need for someone to be available to manage Ms EVN's affairs. The evidence as analysed by us above supports this finding. We found accordingly. 2. The real issue is whether Ms EVN's interests are best served by allowing the management of her affairs to continue to be in the hands of Mrs BMH as her appointed attorney under the Power of Attorney or alternatively by the making of a financial management order. The position of the applicant, Ms EVN's father, Mr SZC 1. Mr SZC asked us to make a financial management order. In substantial written material, including a useful Case Outline apparently prepared by his Legal Representative and supplemented by Mr Ridley's submissions at the hearing, Mr SZC contends that Mrs BMH should not be allowed to continue to manage Ms EVN's affairs because she has not complied with her duties and obligations as an attorney. The following are the principal assertions made on behalf of Mr SZC in support of that contention: 1. Mrs BMH has failed to provide adequate explanation of particular items of expenditure by her on Ms EVN's account. At the hearing, Mr SZC asserted that even if there is some explanation for the expenditure of these items, Mrs BMH's failure to provide an explanation "just does not look good". 2. Although it is accepted that for particular periods Ms EVN's son, Mr CFN, was drawing funds from Ms EVN's account by use of a debit card without the knowledge or consent of his mother or of Mrs BMH as her attorney, Mrs BMH should have been aware at an earlier stage that this was being done and that it was depleting the assets of Ms EVN, to whom she owed duties as an attorney. 3. Mrs BMH has made it clear that she may, as attorney, apply Ms EVN's money for the benefit of finding appropriate accommodation for Ms EVN's son, Mr CFN. That would be contrary to her fiduciary obligation to act at all times in the best interests of Ms EVN alone and not in the interests of third parties. It would also probably be beyond her powers as an attorney. We note that s 13(1) of the Powers of Attorney Act 2003 (NSW) confirms that a power of attorney: "…does not authorise an attorney to execute an assurance or other document, or to do any other act, as a result of which a benefit would be conferred on the third party unless the instrument creating the power expressly authorises the conferral of the benefit." There is no such express authority in the Power of Attorney. 1. We understood Mr SZC to contend that Mrs BMH's intention to apply Ms EVN's money to benefit Mr CFN indicates her lack of familiarity with her duties and obligations as an attorney. 2. It was also asserted on behalf of Mr SZC that Mrs BMH has not been receptive to a proposal from him to arrange for the repair and sale of the house in which Ms EVN and Mr CFN presently live (which, it seems agreed, is in need of renovation and repair) and to arrange for the sale of that house and purchase of a unit in regional NSW closer to the homes of Mr SZC and Ms EVN's brother, Mr UGC. It is submitted that this demonstrates that Mrs BMH is not prepared to approve transactions which would benefit Ms EVN's estate and improve her standard of living. We understand that Mr SZC's position is that these proposed arrangements for repair, renovation, sale, and purchase would be undertaken only if Mrs BMH's appointment as attorney was terminated. We initially understood that he would undertake these arrangements at his own expense, but it was subsequently confirmed that he would seek reimbursement of his expenses from Ms EVN's estate, out of the proceeds of the sale of the current residence. Mr SZC asserts that with his extensive experience in the property market, he is well-placed to make these arrangements and that with appropriate repairs and renovations Ms EVN's current residence could be sold for an amount substantially exceeding its present value. 1. Mr SZC does not seek to be appointed as financial manager. He asked us to make a financial management order under which we commit the management of Ms EVN's estate to the NSW Trustee and Guardian. The position of Ms EVN's attorney, Mrs BMH 1. Mrs BMH filed a statutory declaration made by her on 24 October 2016 and she and her Legal Representative made written and oral submissions. It is asserted on Mrs BMH's behalf that she has been a close friend of Ms EVN for over 20 years, that she has provided care and support for her, particularly in the period following her husband's suicide in 2007 and the death of her son, Mr DXN, in 2013 when, she asserts, she was Ms EVN's "chief supporter". Mrs BMH asserts that following the funeral for Mr DXN, Ms EVN asked her to be her attorney. She asserts in paragraph 6 of her statutory declaration that: "At the time of the appointment [Ms EVN] was deeply concerned for [Mr CFN]'s welfare and expressly told me that I was to take his welfare into account when making decisions as her attorney." 1. Mrs BMH asserts, in summary, that she has conscientiously acted to assist her friend, Ms EVN, as her attorney. She confirms that she commenced to take an active role in Ms EVN's financial management in 2014 when it became apparent to her that Ms EVN was no longer capable of managing her regular payments. Mrs BMH asserts that she took control of Ms EVN's savings accounts completely in 2014, that she imposed an appropriate budget and stopped Ms EVN from accessing her own savings. She also asserts that she accompanied Ms EVN to appointments with financial counsellors from a community support service provider. 2. Mrs BMH contends that she has acted properly as attorney. In answer to a specific question from the Presiding Member, she confirmed that she has at all times attempted to act in Ms EVN's best interests, that she had never used any of Ms EVN's money or property for her own personal benefit and that she had to her knowledge done nothing that might give the impression that she had done so. 3. In answer to the specific allegation that she allowed Mr CFN to access his mother's money, Mrs BMH made the following explanation: 1. At all relevant times, there were three bank cards (which we understood to be debit cards) in existence relating to Ms EVN's estate. The first two of these were in existence prior to her appointment as attorney. 2. The first card was in Ms EVN's own name, but the second (of which Mrs BMH was not aware until February or March 2016) was in Mr CFN's name and gave him drawing authority. A third card was in Mrs BMH's own name. 3. When Mrs BMH became aware that there were unauthorised withdrawals from Ms EVN's account, she believed that the withdrawals had been made by Mr CFN using the first card. She removed the card from him. At that time, the bank had not notified her of the existence of the second card and she was unaware of it. 4. As soon as she became aware of the second card and Mr CFN's misuse of it, she reclaimed the card from him. 5. Mrs BMH used the third card to get small amounts of cash, normally $50-$100, to pay carers and some utilities and at an early stage to purchase cigarettes for Ms EVN. 1. In answer to a question from the Presiding Member as to whether she had ever reimbursed herself from Ms EVN's account for an expense, Mrs BMH said that she may have done so only once and she recalled that the amount was less than $30. She emphasised that it was her policy to retain possession of Ms EVN's cards. In short, her assertion is that she did what was reasonably possible and necessary to retain control over the cards and to reclaim possession of the second card from Mr CFN as soon as she became aware of its existence and misuse. 2. Mrs BMH said that she now accepted that Ms EVN needed to be accommodated permanently in an assisted care facility such as a nursing home. She believed that there were insufficient funds to enable full renovation of Ms EVN's current residence and believed that it needed to be sold. She made it clear that she believed that this left an unresolved problem of where Mr CFN should reside. In her statutory declaration, Mrs BMH suggested that any excess from the sale of the current residence, after meeting Ms EVN's care facility costs, could be used to acquire a small property in which Mr CFN could live. 3. Mr Muscat, on behalf of Mrs BMH, submitted that if she were appointed as financial manager, she would seek active assistance and advice from NSW Trustee and Guardian as to how to properly proceed on these matters. 4. Mrs BMH confirmed that if we decided that a financial management order should be made, she wished to be appointed as financial manager, subject to the authority and direction of NSW Trustee and Guardian. The views of the Separate Representative, Ms Danis 1. Ms Danis' contention was that we should be satisfied that Ms EVN's financial affairs could continue to be managed by Mrs BMH. She accepted that Mrs BMH had taken steps to prevent misuse of Ms EVN's debit cards as soon as she became aware of the misuse. Ms Danis contended that we should find that there was no evidence of fraud or misappropriation by Mrs BMH and no breach of her fiduciary duties as attorney. 2. Ms Danis accepted that there might be a sustainable contention that Mrs BMH could have become aware at an earlier stage of the misuse of Ms EVN's debit card. She contended, however, that it would be open to us to find that she had not acted with unreasonable delay and that this was not a circumstance which prevented our finding that Ms EVN's best interests would be served by having Mrs BMH continue to manage her affairs. 3. Ms Danis also asked that we give particular weight to the fact that the appointment of Mrs BMH as Ms EVN's attorney represents a clear expression of Ms EVN's views and preferences. 4. Ms Danis contended that we should dismiss the application. In the event that we were not prepared to take that action, Ms Danis contended that we should make a financial management order appointing Mrs BMH as financial manager, subject to the authority and direction of the NSW Trustee and Guardian. Views expressed by other family members and friends 1. Other family members and friends attended the hearing and we asked them to provide a brief statement of their views. 2. Mr CFN expressed strong support for Mrs BMH to be allowed to continue to manage his mother's affairs. He told us that Mrs BMH had been "a lifesaver" and that she "would do anything for Mum and me". Mr NAC, the husband of Mrs BMH, strongly supported the continuation in office as attorney of his wife. Mr UGC, the brother of Ms EVN, urged us not to allow Mrs BMH to continue in office as attorney. He asserted that the apparent misuse of Ms EVN's debit cards should have been acted upon much sooner than it was. Our analysis and conclusions 1. We commence our analysis by noting that there is no application before us to review the making or the operation and effect of the Power of Attorney. That means of course that the remedies available under the Powers of Attorney Act, including a declaration that the Power of Attorney was invalid when made, or an order replacing the attorney or requiring the attorney to give an account of her dealings, are not available. In any case, there is insufficient evidence before us to conclude that the Power of Attorney is invalid because Ms EVN lacked the mental capacity to make it when she did, or that it is invalid by reason of a breach of the formalities required under the Powers of Attorney Act, or that it is invalid for any other reason, for example that the making of it was induced by undue influence or fraud. However, evidence as to the operation and effect of the Power of Attorney is directly relevant to our decision as to whether or not it is in the best interests of Ms EVN to allow her affairs to be managed under the Power of Attorney. 2. Ultimately we concluded that the welfare and interests of Ms EVN are best served by allowing the management of her financial affairs to continue under the Power of Attorney; that is to be managed by Mrs BMH, as appointed attorney. We could not be satisfied that there was a current need for Ms EVN's affairs to be managed by a person appointed by this Tribunal or that it was in her best interests for a financial management order to be made. Our reasons for these conclusions were as follows: 1. We found the submissions of the Separate Representative, Ms Danis, particularly persuasive. In particular, we were persuaded that the appointment by Ms EVN of her friend Mrs BMH as attorney constituted a clear expression of Ms EVN's views and preferences. Clearly, Ms EVN reposed very substantial trust in Mrs BMH by appointing her and that appointment and the expression of trust which it reflected should not lightly be discarded. 2. We should interfere with the appointment of Mrs BMH as attorney only if it is established that she has acted improperly or in breach of her duties as attorney or is likely to do so in the future or if it is clear in some other way that Ms EVN's interests would not be served by a continuation of her appointment. In our view, the evidence clearly establishes that there was no overt or substantial breach by Mrs BMH of her duties as attorney. We accept her assertion that she has endeavoured in the past and intends in the future to act in the best interests of Ms EVN. In particular, we agree with the conclusion of the Separate Representative that Mrs BMH took steps to terminate the misuse of Ms EVN's debit card as soon as she became aware of the true source of the problem. 3. We must observe that a closer examination by Mrs BMH of the relevant bank account statements might have brought the problem to her attention earlier. However, we regard any such partial lapse of diligence as insufficient in the circumstances to cast doubt upon Mrs BMH's fitness to continue in office. 4. We note that at all times Mr SZC's offer to renovate and then arrange for the sale of Ms EVN's current residence was subject to the condition that Mrs BMH should resign as attorney. Mr SZC confirmed that condition at the hearing. If the plan were one that was likely to lead to a substantial infusion of funds into Ms EVN's estate (by reason of the sale price of the property being considerably enhanced by the renovations), then that is something which a conscientious attorney should carefully consider. However, we note that it may not in fact be necessary for the current residence to be sold in order for Ms EVN to obtain permanent assisted accommodation at a concessional accommodation fee rate. As we understand it, she is eligible for a concessional rate on the basis that her current residence would be exempted as an asset for up to two years because her carer, Mr CFN (who as we understand it is in receipt of a carer's pension) continues to reside there. This is clearly an area in which Mrs BMH as attorney will need to take proper advice. We are confident that as a result of the issue being fully aired at the hearing she is aware of the issue and we encourage her to take advice on it. 5. We are also satisfied that Mrs BMH is now aware of her obligation as attorney to act only for the benefit of her beneficiary, Ms EVN, and not for the benefit of any third party such as Mr CFN. The Power of Attorney does not allow a benefit to be conferred on third parties. In relation to any proposal to benefit Mr CFN, we note that it would be open to Mrs BMH to obtain legal advice as to the availability and prospects of success of an application to the Tribunal for advice or directions under s 38 of the Powers of Attorney Act. That section permits the Tribunal to approve or disapprove of any act proposed to be done by an attorney, to give such advice or direction as it considers appropriate and to vary the effect of a Power of Attorney, or make one of the wide range of orders available under s 36 of that Act. We of course make no comment or assessment as to the prospects of success of such an application; we merely note that advice could be obtained on this matter. 1. Finally, we took into account the recent Supreme Court case of G v G [2016] NSWSC 511, where Justice Lindsay emphasised that in considering what order should be made a tribunal must be mindful of the protective purpose of the jurisdiction; and the need to ensure that whatever is done, or not done, by the Tribunal is in the interests and for the benefit of the person under consideration as a person in need of protection. 2. We found that the continuation in office of Mrs BMH as the appointed attorney of Ms EVN under the Power of Attorney is the course of action which best preserves and protects her welfare and interests. 3. It must follow that there is no need for us to make a financial management order and that the making of such an order would not be in Ms EVN's best interests. 4. For those reasons, the financial management application made by Mr SZC must be dismissed. We ordered accordingly. ********** 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: 11 September 2017