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- Unreported Judgment
DBM  QCAT 244
Guardianship and administration matters for adults
14 July 2016
21 July 2016
Guardianship and administration matters for adults - application for appointment of administrator - where conflicts of interest exist - Loans made during adult’s incapacity - Appropriateness of Proposed Administrators –
Guardianship and Administration Act 2000 (Qld) sections 12, 14, 15 and Schedule 1 and 4.
BN, DM ( teleconference)
Simone Fraser of Counsel. instructed by Prue Poole of Mc Innes Wilson, with Jody Pezet.
REASONS FOR DECISION
- DBM was diagnosed with Alzheimer’s dementia in 2012. The diagnosis arose when he was living in England, where he had lived and practiced as a doctor since 1972. He remained in his own home in England requiring 24 hour care as his condition progressed until, in October 2015, his children BN and DM brought him to Australia, where they both reside, to enter full time residential care. His condition is now characterised as severe dementia.
- DBM’s assets are held in England and Australia. On 8 May 2012, DBM appointed his son BN as a co-attorney under the United Kingdoms Lasting Power of Attorney for health and welfare, and for property and financial affairs. The other co-attorneys are resident of England and France respectively. Upon DBM’s relocation to Australia, BN sought to act upon his appointment in relation to the Australian assets, learning subsequently that the Lasting Power of Attorneys made in the United Kingdom were not operable in Queensland. He approached the Tribunal together with his sister DM to manage his father’s financial affairs in this jurisdiction.
- The Guardianship and Administration Act 2000 (the Act) requires that before the Tribunal make an appointment of an administrator, the Tribunal to must be satisfied of DBM’s incapacity to make financial decisions; of the need for the financial decisions to be made and the appropriateness of the proposed appointee in terms outlined in sections, 12 14 and 15 of the Act.
- The evidence before the Tribunal from Dr S dated 26 February 2016, and his open correspondence dated 28 January 2016, is that DBM has severe dementia and is unable to make any simple decisions and unable to make decisions freely and voluntarily. In an Aged Care Assessment Team Assessment dated 14 October 2015, DBM’s is noted as having advanced dementia and his speech is described as unintelligible. The medical evidence very clearly indicates that DBM is unable to make decisions freely and voluntarily and consequently, DBM has not met the threshold for capacity as described at Schedule 4 of the Act.
- The Tribunal must also be satisfied that there is a need for financial decisions to be made and with out an appointment the adult’s needs will not be adequately met or interests adequately protected. DBM resides in full time residential care which needs to be funded from his Australian held pension to do so. Draw dawns from his superannuation account will be necessary and the Lasting Power of Attorney has not been accepted by the fund manager. The balance of the Refundable Accommodation Deposit needs to be serviced and day to day living and accommodation expenses at the nursing home need to be met.
- DBM’s house in England was sold under the Lasting Power of Attorney and on 22 January 2016, the proceeds of 2.5 million Pound were deposited into his British bank account. BN gave evidence at the hearing that ultimately DBM’s two children aim to bring DBM’s European assets to Australia to be managed centrally when the economic environment suits transferring British Pounds into Australian Dollars. While currently only $413,000 of his Australian estate is the subject of the application, it is clear that this is likely to sizably increase over time.
- The evidence before the Tribunal is that DBM has ongoing residential and care expenses and has income and assets which need to be managed. There are ongoing financial decisions need to be made relating to the investment of his funds. There is no one with accepted Australian authority presently to deal with these decisions. Without an appointment of an administrator DBM’s interests will not be protected.
- The Tribunal must also be satisfied under section 14 of the Act that the proposed appointee is appropriate for appointment having regard to section 15 (1) considerations.
- These are:
(a) the general principles and whether the person is likely to apply them;
(b) if the appointment is for a health matter—the health care principle and whether the person is likely to apply it;
(c) the extent to which the adult’s and person’s interests are likely to conflict;
(d) whether the adult and person are compatible including, for example, whether the person has appropriate communication skills or appropriate cultural or social knowledge or experience, to be compatible with the adult;
(e) if more than 1 person is to be appointed—whether the persons are compatible;
(f) whether the person would be available and accessible to the adult;
(g) the person’s appropriateness and competence to perform functions and exercise powers under an appointment order.
- The Tribunal is satisfied that both appointees are likely to apply the General Principles. There is evidently a longstanding supportive and caring relationship which has not been weakened despite the geographical distance. There is no doubt that given the strong relationship that exists between the children and their father, both are compatible with DBM. BN indicates he visits DBM four times a week. It is also apparent that BN and DM have a history of collaborating together around their father’s needs, extending loans from their family trust for to fund their fathers very high cost care. They present as amicable with one another. They are both readily available to deal with DBM's financial needs, having moved him from England to be closer to them both. Both present as competent to perform the tasks of administrator being financially stable themselves and with a history of investing on their own behalf. They have both sought the advice of financial planners in relation to dealings with DBM’s assets.
- However, the Tribunal must also explore any conflict of interest which may exist between DBM and the proposed appointees. The proposed appointees gave evidence that they had loaned a total of $750,000 to the adult from their family trust to fund DBMs care needs and accommodation. Both BN and DM are the Principals and primary beneficiaries of a family trust established with funds received from an inheritance from their aunt. Their parents are the secondary beneficiaries of this discretionary trust. Both BN and DM stated at the hearing that they had no intention of recalling these funds in their father’s lifetime. BN stated that the funds were extended when DBM was receiving 24 hour care in his home in England at a cost of $38,000 per month. They also extended $400,000 of the Refundable Accommodation Deposit from the Trust. They stated that DBM has no other children. On the basis that they do not intend to recoup the loan, this does not appear to bring their respective interests into significant conflict.
- However, the Tribunal holds concerns about loan agreements that occurred after DBM had been determined as having advanced dementia and had lost the capacity to enter into legal or financial transactions. On 4 January 2016 BN entered into a loan from DBM for a sum of 190,000 Pounds at a rate of 5% interest to be repaid in full by 4 January 2021.. The agreement was executed on behalf of DBM by his English Power of Attorney, OV under the Lasting Power of Attorney. BN explained that he applied this loan to the purchase of an investment property in Spain where his daughter lives for the benefit of his family. He said this property is currently tenanted and receiving a rental returns. He indicated that he had made this loan and investment before he received advice about the concerns this may raise and stated that he had no intention of leaving his father in a difficult financial situation. He indicated that there had been a history of gifting and financial support from DBM to his two children which had enabled them to live mortgage free lives.
- Following this, another loan agreement was made, executed by BN as power of attorney for DBM, loaning 190,000 Great British Pounds of DBM’s funds to DM at a 5% interest repayable by 23 February 2021. DM indicated that this had been made before she received advice about the appropriateness of the loan in the current circumstances. She indicated that she was willing to repay this amount in full and could do so immediately. Her willingness to do so is significant in the ultimate outcome of this application. Upon repayment of this loan the Tribunal will be satisfied that no conflict of interest arises in this matter for DM.
- The loan agreements between both DM and BN and DBM concerns the Tribunal where they were made after DBM had been diagnosed with advanced dementia, (note the ACAT assessment of 14 October 2015) Furthermore; the first loan was made to BN while he had active power under the UK Lasting Power of Attorney. While BN was not bound by Australian Law in this transaction, there are obligations pertaining to the fiduciary relationship which existed while he was appointed co-attorney. The loan is a clear conflict of interest and duty in relation to his obligations at general law, despite an apparent that ongoing practice of loaning and gifting between DBM and his children.
- BN made no representations about immediate repayment of this loan, but sought to satisfy the Tribunal of his appropriateness by offering security for the loan. This offer did not appear to resolve the conflict of interest which exists where he would, as appointed administrator, have the power to choose not to recover the loan or take action upon default in repayment, where it was in his own pecuniary interest to avoid action. The loan is not an insubstantial amount. It translates to approximately $380,000 Australian Dollars. The Tribunal considers that should BN be appointed as administrator, there would be a significant conflict of interest while this loan remains on foot. This affects his appropriateness for appointment.
- The Tribunal explored previous relevant transactions between DBM and his children. BN explained that in 2006 DBM sold his Gold Coast home in Beechmont where BN had lived for 8 years. He explained that DBM then used $600,000 of the proceeds to purchase another home in BN’s name. BN’s name has been on the certificate of title since 2006. He explained that DBM had always supported BN and his sister financially throughout their adult life.
- DM, similarly had the property she lived in gifted to her by DBM. It was also purchased by DBM in 2006, however, he transferred it to her sole name as a gift in 2011.There was evidently a clear practice of DBM looking after is children’s financial well being.
- While this may be the case, the Tribunal considers the ongoing existence of a loan to an administrator with the power to elect to take action against himself upon default upon payment is a conflict of interest that affects the appropriateness of the proposed appointee. The existence of security upon the loan offers no avoidance of this conflict where the substitute decision make will be making the decision whether or not to enforce the security. DM has undertaken to extinguish this loan and repay the funds immediately. The conflict of interest arising from this loan agreement would not exist for her once this loan was extinguished. The Tribunal notes that the practice within the family of gifting has affected the way this transaction should be viewed, and does not affect her appropriateness and competence to perform the role in terms outlines at section 15 (1) (g). Given that BN has made no representations about immediate repayment of the loan, and seeks to continue to operate under the loan agreement, the Tribunal finds that his interest conflict with the interest of DBM, such that he cannot be considered appropriate for appointment. The Tribunal wishes to make clear that it does not consider any dishonest conduct has occurred in this transaction.
- During the hearing it was submitted by Counsel for the applicants DM would be prepared to act as a sole appointee, and would immediately repay the loan. DM confirmed this during the hearing.
- The Tribunal therefore appoints DM as administrator for DBM for all financial matters. The Tribunal makes directions for DM to provide evidence of repayment of the loan on or before 31 July 2016.
- Published Case Name:
- Shortened Case Name:
 QCAT 244
21 Jul 2016