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  • Unreported Judgment

GVZ

 

[2020] QCAT 213

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL

CITATION:

GVZ [2020] QCAT 213

PARTIES:

In an application about matters concerning GVZ

APPLICATION NO/S:

GAA3428-20

MATTER TYPE:

Guardianship and administration matters for adults

DELIVERED ON:

16 June 2020

HEARING DATE:

10 June 2020

HEARD AT:

Brisbane

DECISION OF:

Member Kanowski

ORDERS:

  1. The administration order made by the Tribunal on 11 August 2017 is changed by removing NRZ as administrator and appointing the Public Trustee of Queensland as administrator for GVZ for all financial matters.
  2. The Tribunal dispenses with the requirement for the administrator to provide a financial management plan.
  3. The Tribunal directs the administrator to provide accounts to the Tribunal when requested.
  4. This appointment of the Public Trustee of Queensland remains current until further order of the Tribunal.
  5. Before 10 September 2020 the administrator must:
    1. (a)
      record the appointment as administrator on any property registered in GVZ’s name with the Registrar of Titles by lodging the appropriate notice with a copy of the Tribunal’s appointment decision;
    2. (b)
      provide confirmation to the Tribunal that this has been done by providing:
      1. a copy of the title search conducted identifying GVZ’s property; and
      2. a copy of the Titles registry “Lodgement Summary Form” confirming the notice has been lodged for each property held by GVZ.
  6. If the ownership of any property of GVZ changes in any way or GVZ acquires an interest in another property the administrator must, within fourteen days of such changes:
    1. (a)
      give a copy of this order to the Registrar of Titles; and
    2. (b)
      give a notice to the Registrar about the changes to GVZ’s interest in another property.

CATCHWORDS:

HEALTH LAW – GUARDIANSHIP, MANAGEMENT AND ADMINISTRATION OF PROPERTY OF PERSONS WITH IMPAIRED CAPACITY – ADMINISTRATION AND FINANCIAL MANAGEMENT – REVIEW, REVOCATION ETC. – where administrator made decisions from which the administrator may benefit – where administrator failed to keep administrator’s property separate from adult’s property – whether administrator competent – whether administrator should be removed

Guardianship and Administration Act 2000 (Qld), s 12,
s 15, s 31, s 37, s 50, s 54

APPEARANCES &

REPRESENTATION:

 

Adult:

Self-represented

Current Administrator:

Self-represented

Public Trustee:

D Granzien

REASONS FOR DECISION

Introduction

  1. [1]
    GVZ has had an intellectual disability since birth. His brother NRZ has been his administrator and guardian for several years. NRZ was appointed to those roles in 2012, and again on review in 2017.
  2. [2]
    This is a Tribunal-initiated review of the appointment of the administrator. The review was initiated because the financial records filed by NRZ for 2018/2019 gave rise to questions about some of the transactions.
  3. [3]
    I heard the matter on 10 June 2020. GVZ and NRZ attended in person. It was apparent from GVZ’s presentation that he was unable to participate to any significant extent because of his intellectual impairment. Mr Granzien appeared for the Public Trustee of Queensland (‘Public Trustee’). He provided some information about how the Public Trustee administers estates generally, but he did not make any submissions on whether NRZ should be removed as administrator.

Does GVZ have impaired capacity for financial matters?

  1. [4]
    A threshold requirement for the appointment of an administrator for an adult is that the adult has impaired capacity for a financial matter.[1]
  2. [5]
    ‘Capacity’ means that a person is capable of understanding the nature and effect of decisions about a matter, freely and voluntarily making decisions about the matter, and communicating the decisions in some way.[2] An adult is presumed to have capacity for a matter.[3] A person has impaired capacity for a matter when they do not have capacity for the matter.[4]
  3. [6]
    The most recent health report on the Tribunal’s file is from GVZ’s long-term general practitioner, Dr Hwang, of May 2017. Dr Hwang attached a 2003 report by Dr Harley of the Queensland Centre for Intellectual and Developmental Disability, which gives useful background information.
  4. [7]
    Dr Hwang noted that a cognitive screening test could not be conducted, owing to the extent of GVZ’s disability. Dr Hwang noted deficits in comprehension and the appreciation of consequences. He considered GVZ incapable of making even simple financial decisions. On the basis of Dr Hwang’s report, I find that GVZ has impaired capacity for financial matters.

Is an administrator needed?

  1. [8]
    An administrator may be appointed for an adult with impaired capacity if, most relevantly, there is a need for a decision in relation to a financial matter and without an appointment the adult’s needs will not be adequately met.[5]
  2. [9]
    GVZ has considerable financial resources. He receives a disability support pension. He has funds in his own name, in the vicinity of $100,000 according to records provided by NRZ in April 2019. GVZ has two-thirds ownership of his home. He lives there with NRZ, who is the owner of the remaining, one-third, interest. The home is an unencumbered inner-city Brisbane property. GVZ came to have his interest in the property by means of an order of the Supreme Court of Queensland in 2012, made in the settlement of a family provision claim. That claim had been initiated by another brother in respect of the deceased estate of the mother of the three men.
  3. [10]
    The Court also made an order that the mother’s will be read as giving the sum of $235,000 to NRZ and another trustee to be held by them upon trust for GVZ for life. The trustees are to pay the net income of the trust funds to GVZ for his needs and wellbeing. The trustees are empowered, alternatively, to pay that income to themselves or others by way of reimbursement for meeting such costs. Any income not so applied can be accumulated for use in later years. Further, if the trustees conclude that GVZ’s income is insufficient for his needs and wellbeing, they are empowered to apply capital as well. The Court also ordered, in effect, that after GVZ dies, the capital is to be paid to his mother’s personal representative. Further, the will is to be read as making NRZ the residuary beneficiary.
  4. [11]
    I will refer to the trust as the testamentary trust.
  5. [12]
    While I do not have a copy of the will of the men’s mother, it can be safely inferred from the Court orders that any capital left in the testamentary trust will ultimately, after GVZ’s death, go to NRZ, less any expenses associated with administering the mother’s estate. I draw that inference.
  6. [13]
    The balance sheet of the testamentary trust as at 30 June 2019 shows assets in the form of investments of some $347,000 and a liability of some $2,000 being an unpaid present entitlement of GVZ. (I have rounded these amounts). It seems that the assets have grown not only through investment but also through the addition of some capital by GVZ, including the $10,000 transfer to be discussed later in these reasons.
  7. [14]
    Overall, it can be seen that GVZ’s property and financial interests are substantial. Decisions need to be made on an ongoing basis about matters such as how much to spend on maintaining or improving the home, what insurance is most appropriate, how funds in GVZ’s name are to be invested, and so on. While operative decisions do not have to be made by or on behalf of GVZ in relation to the testamentary trust, there is a need to monitor whether GVZ is receiving appropriate amounts from the trust. If he were not, there would be a need for decisions about what action could be taken.
  8. [15]
    Even though the right of an adult with impaired capacity to make decisions should be interfered with to the least extent possible,[6] the reality is that GVZ is in no position to make financial decisions, even with support. There is therefore a need for an administrator. Without an administrator, GVZ’s needs will not be adequately met.
  9. [16]
    As this is a review, I must revoke the appointment of an administrator if I would not appoint an administrator if a new application for appointment were to be made.[7] I would make an appointment if a new application were to be made, so I do not propose to revoke the appointment of an administrator. However, it is relevant to consider whether to remove NRZ as administrator and make a new appointment.[8]

Should NRZ be removed as administrator?

  1. [17]
    NRZ can be removed only if he is no longer competent or if another person is more appropriate for appointment.[9]
  2. [18]
    There are three matters of concern raised in the review.

First matter of concern

  1. [19]
    The first matter is that NRZ as administrator for GVZ in 2018/2019 forgave $10,000 of debt owed by the trustees of the testamentary trust (i.e. NRZ and the other trustee) to GVZ. This was done by deed. A recital in the deed said that NRZ had received advice from GVZ’s accountant that this was financially appropriate.
  2. [20]
    This transaction served to reduce the ‘unpaid present entitlements’ figure shown in the balance sheet of the testamentary trust as a liability owed to GVZ down to the $2,000 (in round figures) mentioned in paragraph 13 above.
  3. [21]
    Correspondence on file indicates that NRZ asked the solicitors who drew up the deed of forgiveness to prepare a template for future similar deeds.
  4. [22]
    When I asked NRZ how this transaction of forgiving debt was in GVZ’s interest, he insisted that it was. His explanation ran along the lines that it was not clear how this debt had sprung up in the accounts, and that trying to get to the bottom of that would have consumed an inordinate amount of cost for GVZ.
  5. [23]
    I am by no means convinced that the unpaid present entitlement amounts shown from time to time in the balance sheets of the testamentary trust would be anything other than the amounts of distributions declared but not paid. However, even if their origin was unclear, it is troubling that the only course contemplated by NRZ was to forgive the bulk of the debt rather than insisting that the trustees (one of whom is himself) pay the debt to GVZ.
  6. [24]
    It is also troubling that NRZ would assume that the cost of investigating the origin of the debt would be borne by GVZ. Any lack of clarity about the origin of the debt was not of GVZ’s making. Similarly, I note that in various documents (including the document dated 31 March 2019 referred to later in these reasons) NRZ has treated the entire $550 cost of having the deed of forgiveness prepared by the solicitors as a cost borne by GVZ. This is despite a term in the deed that the cost of preparing the deed was to be borne by the testamentary trust.
  7. [25]
    When I put to NRZ that the accumulation of capital in the testamentary trust has the potential in the long run to advantage himself, he expressed surprise and uncertainty.
  8. [26]
    The fact that NRZ may benefit in that way does not itself preclude him from being the administrator, just as being a potential beneficiary of an adult’s estate does not of itself mean there is a conflict of interest between an administrator and an adult.[10] However, the potential for self-benefit is something an administrator should be mindful of, so that the administrator can consciously think through whether a particular decision is truly for the benefit of the adult.
  9. [27]
    An administrator may not enter into a ‘conflict transaction’ without approval of the Tribunal.[11] Further, subject to limited exceptions, an administrator may not give away the adult’s property without Tribunal approval.[12] Forgiving a debt owed to an adult is a form of giving away property.

Second matter of concern

  1. [28]
    This involves a transfer of $10,000 of GVZ’s funds to the testamentary trust in 2018/2019. NRZ’s explanation, while confusing, seems to be that he wanted to ensure for the sake of transparency that all money for GVZ that originated from their mother’s estate ended up in the testamentary trust.
  2. [29]
    Even if there is some logic to this explanation, it is concerning that NRZ has, on his version of events, not appreciated that this transaction has the long-term potential to benefit himself.
  3. [30]
    Of course, whether that potential is realised depends on what happens over the long term with the capital of the testamentary trust. It may all be expended for the benefit of GVZ. However, present indications, including from NRZ’s oral evidence, are that the testamentary trust is being run in a way that is highly protective of capital. I acknowledge that NRZ attributes that approach to a desire to ensure that any significant future needs of GVZ, such as repairs or renovation to the home, can be met. It is not my role to review NRZ’s actions as trustee, but I note that any administrator for GVZ should carefully weigh up the pros and cons for GVZ in contributing capital to the testamentary trust. NRZ does not appear to have done that.
  4. [31]
    Further, an administrator will need to consider whether such a transaction is a conflict transaction and/or a gift.

Third matter of concern

  1. [32]
    This involves transfers of funds from a bank account (xx5503) in GVZ’s name to a bank account (xx0944) in NRZ’s name. The records that are before the Tribunal relate to the 2018/2019 year, but it is apparent from NRZ’s oral evidence that the practice continues.
  2. [33]
    The bank statements show that GVZ’s pension and National Disability Insurance Scheme payments go into account xx5503. In 2018/2019 there was a repeated clearing of funds from that account to account xx0944 in order to bring the balance down to $5,999. NRZ says that the figure of $5,999 has since been changed to $6,999. From account xx0944, transfers are then made to other accounts. NRZ gave oral evidence that these other accounts are in his name, and that the whole arrangement is designed to make provision for the payment of bills for GVZ, many of which are in the joint names of GVZ and NRZ because they are co-owners of their home. NRZ points to the practicality of paying joint bills from a common fund. He says it would be impossible to pay them any other way.
  3. [34]
    I do not accept that payment of a joint bill from two separate sources is impossible. It would be a common enough situation for an administrator to have to arrange to pay only a portion of a joint bill, as Mr Granzien confirmed in respect of the Public Trustee.
  4. [35]
    When NRZ was appointed administrator in 2012, he signed a document at the Tribunal hearing about his duties as an administrator. It contains lists of things to do and not to do. The first bullet point in the list headed ‘What you must NOT do’ is ‘Mix your money or property with the adult’s (for example, by putting the adult’s money into your own bank account)’. When I pointed this out to NRZ, he attempted to justify his actions on the ground that the money in question comes from an account in GVZ’s name.
  5. [36]
    At the hearing I asked NRZ several times to explain whether the amounts transferred out of account xx5503 were calculated by reference to GVZ’s actual costs, rather than just reflecting a practice of trimming the account balance. His responses seemed to be to the effect that he was justified in transferring all of the surplus from time to time over $5,999 because GVZ’s income is less than his outgoings. NRZ said that he is subsidising GVZ’s expenditure. I asked NRZ how this could be when the financial management plan he filed in 2017 shows a surplus of income over expenditure of more than $1,000 per fortnight. NRZ said that expenses have since increased. I do not accept that they could have increased so markedly in a few years.
  6. [37]
    NRZ handed up a document dated 31 March 2019 headed ‘[GVZ’s] Expenditure – Reasoning’. It lists income and expenditure of GVZ on an annual basis. It shows GVZ’s expenses as almost $19,000, and his income at some $14,000. (I have rounded these figures). The document concludes: ‘Difference $4,903.50 is owing to Administrator’. What is troubling about this document is that it fails to show the full income that GVZ receives from the testamentary trust. It merely factors in some of that income, $4,447.96, in referring to particular costs met from ‘trust distribution’. According to the financial statements of the testamentary trust, distributions to GVZ have been substantially higher than $4,447.96: some $13,000 in 2018/2019, for example. (I have again rounded the figure). It is disturbing that NRZ as administrator conceives that he is subsidising GVZ, and that he has calculated an amount owing to himself as a result – whether or not he is inclined to recover that amount – when the evidence as a whole indicates a healthy surplus of income over expenditure.

Is NRZ competent to be the administrator?

  1. [38]
    An administrator is no longer competent if, for example, a relevant interest of the adult has not been adequately protected or the administrator has contravened the GA Act.[13]
  2. [39]
    An administrator must keep his or her property (other than jointly-owned property) separate from the adult’s property.[14] GVZ’s practice instead is to routinely mix some of GVZ’s funds with his own. NRZ has sought to justify the mixing of funds on the basis that it enables him to meet joint expenses. I do not accept that mixing is necessary for that purpose.
  3. [40]
    NRZ wrongly conceives of himself as subsidising GVZ’s costs. That shows a significant failure by NRZ to comprehend GVZ’s circumstances. This is despite NRZ’s long involvement as administrator and as one of the two trustees of the testamentary trust. It is also despite his ready access to professional advisers that is evident from emails and other correspondence that he has provided.
  4. [41]
    NRZ has also engaged in transactions which have added to the capital of the testamentary trust without properly considering whether these have been in GVZ’s interests, and without taking into account the potential for self-benefit. NRZ has indicated a desire to continue to forgive debt owed to GVZ. There is no basis for confidence that any future decision by NRZ to forgive debt would be reached after a weighing up of all relevant considerations.
  5. [42]
    In light of these matters, I find that NRZ is not competent to be GVZ’s administrator. He should be removed as administrator.

Who instead should be appointed as administrator?

  1. [43]
    Several matters must be taken into account in assessing whether a person is appropriate to be appointed as administrator.[15] These include whether the person is likely to apply the general principles of the GA Act; the extent to which interests are likely to conflict; whether the person is accessible and available to the adult; and the person’s competence to perform the functions of administrator.
  2. [44]
    Having regard to those factors, I consider that the Public Trustee is an appropriate appointee.
  3. [45]
    NRZ submitted that the Public Trustee should not be appointed because of the fees that would be charged and because it would add to the paperwork burden upon him.
  4. [46]
    If NRZ was competent, it may be that he would be more appropriate as administrator because of his ready availability to GVZ and the absence of fees. On the other hand, the desirability of having someone independent monitor whether the testamentary trust is being administered in the most beneficial way for GVZ would be a countervailing consideration. In any event, as NRZ is not competent, he is not an appropriate appointee.
  5. [47]
    I will therefore appoint the Public Trustee.

Ancillary orders

  1. [48]
    Ordinarily, a financial management plan is required from an administrator.[16] I will dispense with this requirement because the Public Trustee is experienced in administering similar financial matters, and has systems in place to ensure prudent financial management.
  2. [49]
    The appointment should be until further order. I will not require the provision of accounts, except upon request by the Tribunal, again because of the accountability systems employed by the Public Trustee. I will require the Public Trustee to take steps to ensure that the new appointment is advised to the Registrar of Titles.

Conclusion

  1. [50]
    The need for an administrator continues, but it is appropriate to appoint the Public Trustee instead of NRZ. I make orders accordingly.

Footnotes

[1] Guardianship and Administration Act 2000 (Qld) (‘GA Act’), s 12(1)(a).

[2] Ibid, Schedule 4 (definition of ‘capacity’).

[3] Ibid, Schedule 1 s 1.

[4] Ibid, Schedule 4 (definition of ‘impaired capacity’).

[5] Ibid, s 12(1)(b) and (c).

[6] GA Act, s 5(d).

[7] Ibid, s 31(2).

[8] Ibid, s 31(3)(b).

[9] Ibid, s 31(4).

[10] GA Act, s 15(3).

[11] Ibid, s 37.

[12] Ibid, s 54.

[13] GA Act, s 31(5).

[14] Ibid, s 50.

[15] Ibid, s 15(1).

[16] GA Act, s 20.

Close

Editorial Notes

  • Published Case Name:

    GVZ

  • Shortened Case Name:

    GVZ

  • MNC:

    [2020] QCAT 213

  • Court:

    QCAT

  • Judge(s):

    Member Kanowski

  • Date:

    16 Jun 2020

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.
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