KNF[2017] QCAT 144

REASONS FOR DECISION

The matter for determination

1. [1]
   On 19 June 2015, the tribunal appointed TMS and RMS (the former administrators) as administrators for KNF (the adult). At the same time, the tribunal revoked a power of attorney made by the adult on 19 May 2015, where he had appointed them as his attorneys. The tribunal revoked the power of attorney upon finding that the adult lacked the capacity to make it.
2. [2]
   The tribunal directed the former administrators to provide certain financial documentation to the tribunal for review purposes at various intervals.
3. [3]
   During the first financial review, the financial assessment team at the tribunal identified that the former administrators engaged in conflict transactions during the term of their appointment. This resulted in the tribunal initiating an application for a review of the appointment of the administrators.
4. [4]
   That review hearing commenced on 15 December 2016. On that day, being the first day of hearing, the tribunal revoked the appointment of the former administrators. The tribunal then appointed the Public Trustee of Queensland as administrator. During the hearing, the tribunal initiated an ‘application for consent to conflict transactions’, to consider the legal position regarding the conflict transactions identified by the financial assessment team. The tribunal adjourned the hearing of the Authorisation of a Conflict Transaction, part heard, to 16 February 2017.
5. [5]
   In short, the conflict transactions identified by the tribunal related to the acquisition of a motor vehicle by the former administrators and the use of the adult’s funds ($5000), described as a loan, by one of the administrators to purchase a motorbike for the administrator’s personal use.
6. [6]
   Prior to the hearing of this matter on 16 February 2017, the administrator had repaid the $5000 ‘loan’. Given that the current administrator did not intend to pursue the matter of any forgone interest that might have been earned on the ‘loan’, which would have been minimal, the tribunal determined it would restrict its findings to the matter involving the acquisition of a motor vehicle (and subsequent transactions relating to the motor vehicle).

Capacity

7. [7]
   The adult is 82 years old.
8. [8]
   Based on medical material provided to the tribunal, and the tribunal’s own observations of the adult, it determines that the adult lacks capacity to make independent decisions. That finding reflects the findings of the tribunal in hearings involving the adult on 19 June 2015 and 15 December 2016.
9. [9]
   Despite the tribunal’s finding, the tribunal does accept that the adult could clearly state his support for the former administrators’ decision to use his funds to buy a motor vehicle.
10. [10]
    In doing so, the tribunal determined that the adult was supportive of the former administrators, was appreciative of their efforts to support him and enjoyed their company, but had limited insight into the acquisition of a motor vehicle. The adult had no appreciable understanding of the value of the vehicle, particularly relative to his modest net worth.

Brief history

11. [11]
    The former administrators are members of the adult’s family and they have maintained close contact with him. The adult never married and he has no children.
12. [12]
    The adult moved from New South Wales to live near the former administrators in Queensland. They would visit upon him regularly and assist him with matters such as attending doctor’s appointments, shopping, and other necessary and leisure activities.
13. [13]
    Initially, upon moving to Queensland, the adult lived independently and did so until January 2015. When the adult was hospitalised following a fall in December 2014, medical staff undertook an assessment of risk and determined that the adult lacked capacity at that time.
14. [14]
    Medical staff determined that the adult was no longer able to care for himself independently. Until other arrangements were put in place, the former administrators welcomed the adult into their home and they cared for him. That home proved to be insufficient in size to appropriately accommodate all occupants, so the former administrators did rent a larger home, which suited their collective purposes for some time, before the adult required nursing home care.
15. [15]
    In October 2015, the former administrators assisted the adult to move into a nursing home. The adult has lived in supported accommodation since then.

Motor vehicles

16. [16]
    At all relevant times, the adult did not drive a motor vehicle, however he did gain benefit from the use of a motor vehicle.
17. [17]
    The former administrators bought a vehicle (vehicle #1) on 18 March 2016. The administrators paid $31,000 for vehicle #1. The former administrators funded the acquisition by a trade-in of their own personal vehicle, at an agreed value of $8000 and paid the balance of the purchase price by drawing $23,000 from the adult’s account.
18. [18]
    The sum of $23,000 represented 74.19% of the purchase price and the sum of $8000 represented 25.81% of the purchase price.
19. [19]
    According to their evidence, the administrators bought vehicle #1 on the strength on an ‘agreement’ they made with the adult prior to their appointment as administrators at a tribunal hearing on 19 June 2015.
20. [20]
    At various times, the administrators described the ‘agreement’ as an unsecured loan of $23,000 by the adult to them. At other times, they categorised the ‘agreement’ as a joint acquisition.
21. [21]
    The former administrators were not able to provide any meaningful reason as to why they did not raise the issue of the ‘agreement’ during the tribunal hearing on 19 June 2015, especially when called upon to sign a document (the duties document) clearly setting out the duties as administrators.
22. [22]
    The duties document included, in part, a notation that the administrators should not mix their money or property or, without obtaining the tribunal’s approval, loan or gift adult’s money to themselves or someone closely associated with them or transfer ownership of the adult’s property to themselves or someone closely associated with them. The duties document stated that as administrators, they must keep the adult’s assets in his name.
23. [23]
    The administrators quickly determined that vehicle #1 was not suitable for the intended purpose. After taking delivery of the vehicle they took it to the adult’s residence but found they could not fit the adult’s walker into it. Within weeks of making the original acquisition, they exchanged it for a larger vehicle (vehicle #2).
24. [24]
    The list price of the vehicle #2 was $1100 less than the list price of vehicle #1. While the exchange of vehicles was cash neutral, the administrators lost $1100 if one is to accept the list prices as evidence of the value of the respective vehicles.
25. [25]
    On 24 December 2016, the former administrators sold vehicle #2 for $19,500. They paid this amount, in full, into the adult’s account.

The factual position

26. [26]
    At the hearing, the former administrators characterised their actions as consistent with the joint acquisition by them and the adult of a motor vehicle for their common good.
27. [27]
    That evidence is inconsistent with statements made by them to the effect that they had borrowed $23,000 from the adult.
28. [28]
    The former administrators did register both motor vehicles in their names. They did not register the vehicles in the name of the adult. The administrators explained this because they were going to be responsible for the insurance, registration, maintenance, and fuel. They further explained that for practical reasons in dealing with all those matters, they considered it better to register the motor vehicles in their names.
29. [29]
    That evidence is inconsistent with their statements to the effect that they borrowed the money from the adult.
30. [30]
    Whether the administrators borrowed the money from the adult or whether the administrators and the adult jointly contributed towards the purchase price of the vehicles is significant, given the substantial shortfall suffered as a result.
31. [31]
    If the tribunal determines that the former administrators had borrowed $23,000 from the adult, then they would assume all the shortfall suffered consequent upon the sale of the motor vehicles. If the tribunal determines that the former administrators used the adult’s funds to assist in purchasing the vehicles in the administrators’ names, then the adult would share in the shortfall.

Factual conclusions

32. [32]
    I am satisfied that the former administrators used the adult’s funds to obtain an asset in the administrators’ names and that the administrators contributed towards the cost of that asset from their own resources (through their trade-in).
33. [33]
    While that construction of the arrangement is financially disadvantageous to the adult, I cannot appropriately categorise the financial arrangements between the former administrators and the adult as a ‘loan’ arrangement.
34. [34]
    I come to this conclusion because I accept the evidence of the former administrators that they acquired vehicle #1, in part, because of their desire to transport the adult. I accept their evidence that they exchanged vehicle #1 for vehicle #2 specifically to accommodate and transport the adult’s walking aid in the vehicle.
35. [35]
    I do not conclude that the former administrators acquired vehicle #1 for their own purposes solely. The fact that prior to the acquisition, they did not test whether the vehicle was suitable for his purposes, is in my view nothing more than a mistake on their part.
36. [36]
    I simply accept that administrators do make mistakes from time to time.

Legal position and findings

37. [37]
    In Guardianship and Administration Tribunal v Perpetual Trustees Qld Ltd [2008] QSC 49, Mullins J determined that the tribunal has power to authorise retrospectively conflict transactions and that power is found in s 37 of the Guardianship and Administration Act 2000.
38. [38]
    The solicitors representing the former administrators conceded that the acquisition of the motor vehicles constituted a conflict transaction. I accept that position.
39. [39]
    They argued that the former administrators engaged in the conflict transactions in good faith and were mindful of the best interests of the adult. I accept that evidence, in part because the adult clearly has a positive relationship with the former administrators, the former administrators have cared for the adult for an extended period and the former administrators did not fully appreciate their obligations as administrators.
40. [40]
    I accept the submission of the solicitors acting for the former administrators to the effect that the loss suffered on the resale of the vehicles should be shared by the parties in proportion to their initial contributions.
41. [41]
    Applying resulting trust principles, given that vehicle #2 was sold for $19,500, the adult’s interest of 74.19% is $14,467.05. The former administrators interest of 25.81% is $5032.95.
42. [42]
    As the administrators paid $19,500 into the adult’s account, the current administrator of the adult’s account is authorised to pay to the former administrators the sum of $5032.95.
43. [43]
    I decline to make a further order, sought by the solicitors representing the former administrators, by way of a direction that the current administrator acquires a car, which in part and on conditions could be used by the former administrators for their personal use. That is an issue for the current administrator to consider in the proper conduct of the administration of the adult’s affairs.