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- Unreported Judgment
FV  QCAT 15
FV, son of FV
Guardianship and administration matters for adults
9 November 2015 and disposed of on the papers after further submissions
7 January 2016
The application for authorisation of a conflict transaction is refused
Son and daughter in law wishing to purchase adult’s quarter share in house – contract leaving adult exposed to risk
Guardianship and Administration Act 2000 (Qld) s37
Adult’s husband, represented by Philip Anthony solicitor, of Jones Leach Lawyers Pty Ltd
REASONS FOR DECISION
- The adult suffers from severe dementia and is in residential care, a placement which is likely to be permanent.
- The adult used to live upstairs in a house with her husband. Her two sons lived downstairs. Legally, the ownership of this property is divided into four equal shares, held as tenants in common by the adult, the adult’s husband and by her two sons.
- In May 2015 an order was made appointing the adult’s husband and her two sons jointly as the administrators of the adult’s share of the property. The adult’s husband was also appointed as administrator of the proceeds of sale of that share, an appointment which would take effect should her share be sold.
- One of the sons together with his wife, wishes to purchase the adult’s share in the property and also to purchase the share of the property owned by the adult’s husband. The intention therefore is to purchase a 50% share in the property.
- Since the son is an administrator of the adult’s share in the property that he wishes to purchase, in order to be able to complete this purchase, the son now applies to the Tribunal for authorisation of a conflict transaction. This is under section 37 of the Guardianship and Administration Act 2000 which prohibits a “conflict transaction” by an administrator unless it is authorised by the Tribunal. It is clear that the proposed sale and purchase is a conflict transaction.
- The applicant son and his wife have offered to pay $215,000 to purchase the two shares in the property. From a sale appraisal lodged with the Tribunal, this price appears to be fair. It is based upon a value of the property of $430,000.
- The applicant son, with assistance from conveyancing solicitors, has to date submitted to the Tribunal four forms of contract. All of these have correctly stated that they are subject to the Tribunal’s approval.
- The first two contracts were considered at the hearing on 9 November 2015. Assisted by his solicitor Mr Anthony, the adult’s husband raised a number of concerns about these contracts. The main concerns were that the first contract provided for the sale of the two shares in the property for $105,000 and the second contract included the other son as a seller and therefore provided for the sale of three shares in the property for $210,000. Neither of these amounts reflected the value of the property of $430,000 and meant that the contract did not provide for the adult to receive the correct amount for her share.
- At the hearing, another problem with the transaction which was apparent was that there was a mortgage on the property. Neither contract made any provision for the discharge of this mortgage. There were also problems with the names of the parties and the provision for their signatures.
- Although both the sellers and the purchasers had lawyers involved there had been no contact between them as to the correct form of the contract.
- The hearing of the matter was adjourned to permit that contact to occur so that the problems with the draft contracts could be deal with and for a revised contract to be submitted to the Tribunal for consideration. The Tribunal indicated that it would be able to consider such a draft contract on the papers.
- On 18 November 2015 a redrafted contract was submitted to the Tribunal by the solicitors for the applicant son. The Tribunal considered this contract but pointed out to the parties in writing that the contract required the adult to transfer her quarter share of the property to the purchasers unencumbered. Since there was a loan secured on the property, this contract therefore obliged her to discharge the loan in its entirety and ensure that the mortgage was released prior to or upon the transfer of her share. It was also unclear from the paperwork submitted at that time how much was owing on the mortgage, and therefore whether the correct money amounts were shown on the contract.
- On 5 January 2016 a further redrafted contract was submitted to the Tribunal by the solicitors for the applicant son but it did not address the Tribunal’s concerns about the sale. It continued to provide that the adult must transfer her share in the property unencumbered yet the total purchase price she and her husband would receive was $215,000.
- Attached to this contract was a bank loan statement. This showed that there was a home loan with some $32,000 odd outstanding as at 30 June 2015. It also showed that there were four named borrowers: the adult, the adult’s husband and the two sons. From this document, the loan appeared to be a joint debt (with each borrower owing all the money).
- This therefore, raises a further concern: even if the contract is altered so that the transfer is to be made subject to the mortgage, the adult will remain as a borrower from the bank and she would remain responsible for the repayments of this loan. Despite disposing of her interest in the property therefore, she would remain at risk to the bank should the other borrowers default in making these repayments.
- There is a special condition in this fourth contract that of the purchase price $15,000 is to be paid to the bank and that the buyer will be responsible to repay the remainder of the loan. These provisions do not solve the problem arising from the requirement to transfer the share unencumbered and the continued existence of the loan in the adult’s name.
- It is not for the Tribunal to draft a contract for the parties which is sufficient to enable it to authorise the transaction. The applicant son has legal advice and the Tribunal’s concerns about the transaction have been made clear. In the circumstances there is no alternative but to dismiss this application. This does not mean that the application cannot be brought again should a satisfactory arrangement be proposed.
- Published Case Name:
- Shortened Case Name:
 QCAT 15
07 Jan 2016