SJH[2016] QCAT 432

APPEARANCES:

This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (QCAT Act).

REASONS FOR DECISION

1. [1]
   SJH had made his wife, SP, his attorney for financial matters on 15 August 1995 by signing an Enduring Power of Attorney. 
2. [2]
   SJH and SP sold their interest in the family farm to a purchaser associated with their family on 28 March 2013 on terms that included vendor finance of $350,000.  According to the loan agreement, the whole of the principal together with interest was repayable within three months of the death of the last vendor.  There was provision for payment of part principal and interest in May of each year.
3. [3]
   SP passed away in 2015.  As there was no second or successive attorney, SJH did not have any formal decision-maker after his wife’s death.  Two of his children applied to be appointed as his guardians and administrators.  At a hearing of the Tribunal on 9 March 2016, the applicants were appointed as the administrators for SJH for all financial matters.
4. [4]
   In view of evidence given to the Tribunal of the vendor finance arrangement and of two other loans made to family members from the funds of SJH, a direction was made that the administrators should seek authorisation for what was considered to be conflict transactions involving the funds of SJH. Other loans of $120,000 had been made to other family members, on terms that are unclear but which appear to involve regular repayment over time. 
5. [5]
   It is clear from the evidence that the decisions to enter into a vendor financing arrangement and to make loans to family members had not been made by the newly appointed administrators.  Those decisions had been made by SJH’s attorney in 2013.  There is insufficient evidence to determine whether SJH agreed to the transactions at the time, or indeed whether he had the capacity to do so in 2013.  SJH had sustained a stroke in 2009 and he had consequential physical and cognitive impairments. 
6. [6]
   On the evidence before the Tribunal, no conflict transactions have been entered into by the administrators.   The vendor loan is subject to specific contractual conditions and is not payable on demand.  No decisions are needed to be made about that financial arrangement as long as the terms of the loan are complied with by the borrowers. 
7. [7]
   The administrators have made no decisions about the other loans.  It is unclear whether those loans are payable on demand.  As the money was advanced to invest in a business operated by the family members, it is unlikely that there was a term agreed between the lender and borrowers for the loans to be payable on demand.   No decision is needed to be made by the administrators about the loans as long as the loan arrangements involve prudential terms. No further transactions involving the loans are foreshadowed on the evidence before the Tribunal.  Periodic payments had been made before the appointment of the administrators and will continue to be paid with the loans not fully repaid until 2019.  The interest payable appears to be better than earnings that the funds would otherwise generate in a bank account.   
8. [8]
   The direction made by the Tribunal for the administrators to apply for authorisation of conflict transactions arising from the vendor financing arrangements and the loans made in 2013 is difficult to understand.  If the direction was made on the basis that the administrators had to make current decisions about continuing the loans, then authorisation would be required.  However, the evidence does not support a finding that the administrators have made any such decisions or that there is any intention or requirement for the administrators to make ongoing decisions about any of the loans. 
9. [9]
   As I was unable to find any relevant transactions made or to be made by the administrators that needed to be authorised by the Tribunal, I dismissed the application for authorisation of a conflict transaction. If the administrators intend to make decisions to defer repayment of the loans or to change the terms of the loans in favour of the borrowers, then prior authorisation from QCAT would be required for those proposed decisions.
10. [10]
    It is the case that SJH’s attorney should have sought prior authorisation from the court or QCAT for the loans made in 2013.  It is now too late to seek authorisation as retrospective authorisation of a conflict transaction entered into by an attorney cannot be given.^[1]  The loans appear to have been entered into in good faith and at least the vendor finance decision was made at a time that the attorney was receiving legal advice about the transaction.   If the attorney had sought relief from any personal liability for entering into the loans without authorisation, that relief would most likely to have been forthcoming.