Exit Distraction Free Reading Mode
- Unreported Judgment
CRG QCAT 168
QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL
CRG  QCAT 168
In an application about a matter concerning CRG
Guardianship and administration matters for adults
6 June 2019
On the papers
HEALTH LAW – GUARDIANSHIP, MANAGEMENT AND ADMINISTRATION OF PROPERTY OF PERSONS WITH IMPAIRED CAPACITY – ADMINISTRATION AND FINANCIAL MANAGEMENT – GENERALLY – application for compensation for failure to comply with the Guardianship and Administration Act 2000 (Qld) in the exercise of a power – nature and extent of the duties – whether duties were breached and if so, the correct amount of compensation
Guardianship and Administration Act 2000 (Qld), s 11, s 33, s 34, s 35, s 51, s 54, s 59, s 138
Trusts Act 1973 (Qld), s 22, s 23, s 24
Duchess of Argyll v Beuselinck (1972) 2 Lloyd’s Rep 172
Matthew Jones, counsel, appointed as a separate representative for CRG and appearing pro bono
Tony La Spina, Senior Legal Officer
Represented by various officers
This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld)
REASONS FOR DECISION
- This is an application by CRG for compensation for certain things done by CRG’s then administrator (the Public Trustee) and guardian (the Public Guardian) in 2006 and 2007.
- The application comes to the tribunal under the Guardianship and Administration Act 2000 (Qld) (‘GAA’). By section 59 of that Act, the tribunal may order a guardian or administrator for an adult to compensate the adult for a loss caused by the appointee’s failure to comply with the GAA in the exercise of a power.
- The manner of such an application is not specified in the GAA or in the QCAT Act. This application has been made by applying for directions under section 138 of the GAA about a matter already before the tribunal relating to CRG. Although an application seeking compensation from the Public Trustee on that basis was made back on 1 December 2009, it had remained outstanding and unresolved. On
28 February 2018 the tribunal recognised it as an application which needed to be dealt with and made an order accordingly. The delay and apparent difficulty in recognising this is was largely due it seems, to a number of other issues dealt with by the tribunal from time to time with respect to CRG.
- Subsequent directions identified the precise issues to be determined by the tribunal. With respect to the claim against the Public Trustee, the directions of 14 March 2018 as varied on 10 May 2018 identified the issues as whether the Public Trustee failed to act with reasonable diligence to protect the interests of CRG (as required by section 35 of the GAA) and therefore failed to comply with the Act in the exercise of a power by:-
- (a)providing (CRG’s father) with a loan of $20,000;
- (b)failing to pursue (CRG’s father) for repayment of the loan when he ceased making loan repayments;
- (c)crediting the loan account with payments despite CRG not living with (his father);
- (d)making other payments to (CRG’s father) after the date of the loan.
- The above issues were identified as being for determination in the ‘loan matter’.
- On 30 July 2018 the tribunal directed the current administrator to provide full particulars of the payments made after the date of the loan which were objected to and referred to in paragraph (d) above.
- On 2 October 2018, the current administrator filed a list of the payments concerned. The issue as to whether these payments were properly made, and whether the Public Trustee should give compensation in respect of them has been treated by the parties as an issue to be heard and determined by the tribunal.
- The payments fall into these categories:-
- (a)Centrelink payments. There were 5 fortnightly Centrelink pension payments of $186.40 totalling $930 which were payable to CRG, and which were paid by Centrelink into CRG’s bank account between 26 October and 27 December 2006 over a period when CRG was not living with his father. It is said that the Public Trustee was aware that CRG’s father held CRG’s bank card and so could withdraw from the bank account, and therefore the Public Trustee failed to act with reasonable diligence in permitting these payments to continue after becoming aware that CRG had left the residence of the father.
- (b)Supplementary payments. These were 3 fortnightly payments of $310 totalling $930 paid by the Public Trustee into CRG’s bank account between
26 October and 19 December 2006 over a period when CRG was not living with his father. The Public Trustee describes these payments as supplementing the part pension CRG was receiving from Centrelink. Again it is said that the Public Trustee allowed these to continue despite knowing that CRG’s father had access to the account.
- (c)Board and lodging payments. Said to be 4 payments of $400 totalling $1,600 paid by the Public Trustee into CRG’s father’s bank account between
26 February and 20 April 2007 when CRG was not living with his father. The Public Trustee says there were three such payments described as being for board and lodging.
- (d)Individual payments. A number of individual payments totalling $2,914.16 paid by the Public Trustee to CRG’s father or to pay various bills from
1 November 2006 to 2 April 2007 which, it is said, should not have been made.
- On 24 October 2018 the Public Guardian (at the time of the events called the Adult Guardian) was added as a respondent to the application but only in respect of the following issue:-
Whether the Adult Guardian failed to act with reasonable diligence to protect the interests of (CRG) (as required by section 35 of the Act) and therefore failed to comply with the Act in the exercise of a power by between the date of the loan and 20 April 2007:
- (a)providing the Public Trustee with inaccurate or misleading information about where (CRG) was living; and thereby
- (b)causing payments to be made to (CRG’s father) as listed on pages 4 and 5 of the submissions of (CRG’s administrator) of 2 October 2018 and marked “H412” by the tribunal.
- The payments referred to here are the payments set out in (a) to (d) above.
- The identification of the issues to be heard and determined in this application has been important to ensure that the parties are fully aware what evidence is relevant and required to present to the tribunal so that the application can be dealt with properly. This seems particularly important bearing in mind the age of the matters, which means that such evidence might well be more limited or difficult to obtain. For this reason as can be seen later in these reasons, I have had to limit this decision to what is strictly within the issues as defined.
- In order to decide this application I need to set out the duties owed by the respondents in so far as they can form the basis of an application for compensation to the tribunal. Then I need to consider whether the duties were breached by either of the respondents.
Duties owed by the respondents
- The appointments of guardian and administrator were under the GAA. The tribunal’s jurisdiction to award compensation to an adult is under section 59 of that Act, which reads:-
59 Compensation for failure to comply
- (1)A guardian or administrator for an adult (an appointee) may be ordered by the tribunal or a court to compensate the adult (or, if the adult has died, the adult’s estate) for a loss caused by the appointee’s failure to comply with this Act in the exercise of a power.
- The tribunal has no other jurisdiction to award compensation. There is no room for example, to consider whether there has been a breach of any other duty which might be imposed at common law or in equity, or by statute. So it can be seen that the application will only succeed if there has been a failure to comply with the GAA in the exercise of a power.
- The power is described in Chapter 4, Part 1 of the GAA. In particular, section 33 says:-
33 Power of guardian or administrator
- (1)Unless the tribunal orders otherwise, a guardian is authorised to do, in accordance with the terms of the guardian’s appointment, anything in relation to a personal matter that the adult could have done if the adult had capacity for the matter when the power is exercised.
- (2)Unless the tribunal orders otherwise, an administrator is authorised to do, in accordance with the terms of the administrator’s appointment, anything in relation to a financial matter that the adult could have done if the adult had capacity for the matter when the power is exercised.
- What are the requirements of the GAA in the exercise of a power? These fall into three categories:
- (a)the requirement to act honestly and with reasonable diligence to protect the adult’s interests; and
- (b)the requirement to apply the General Principles; and
- (c)the prudent person investment rule.
- The requirements of the GAA in the exercise of a power need to be read in the light of the purpose of the GAA as set out in section 6. That states that the Act seeks to strike an appropriate balance between the right of an adult with impaired capacity to the greatest possible degree of autonomy in decision making and the adult’s right to adequate and appropriate support for decision making. Of relevance, the way that purpose is to be achieved includes stating principles to be observed by anyone performing a function or exercising a power under the scheme and recognising that the public trustee is available as a possible administrator for an adult with impaired capacity.
- The excerpts from the statutory provisions below are in the terms as they existed on 10 February 2006 when the loan was made. Insignificant changes in the legislation since then are not referred to.
- As for (a), this is in section 35 of the GAA:-
35 Act honestly and with reasonable diligence
A guardian or administrator who may exercise power for an adult must exercise the power honestly and with reasonable diligence to protect the adult’s interests.
Maximum penalty—200 penalty units.
- As for (b), this is in sections 11(1) and 34 of the GAA:-
11 Principles for adults with impaired capacity
- (1)A person or other entity who performs a function or exercises a power6 under this Act for a matter in relation to an adult with impaired capacity for the matter must apply the principles stated in schedule 1 (the general principles and, for a health matter or a special health matter, the health care principle).
If an adult has impaired capacity for a matter, a guardian or administrator who may exercise power for the matter must—
- (a)apply the general principles; and
- (b)if the matter is a health matter, also apply the health care principle.
The tribunal in deciding whether to consent to special health care for an adult with impaired capacity for the special health matter concerned, must apply the general principles and the health care principle.
6 Function includes duty and power includes authority—see the Acts Interpretation Act 1954, section 36.
34 Apply principles
- (1)A guardian or administrator must apply the general principles.20
- (2)In making a health care decision, a guardian must also apply the health care principle.
20 See schedule 1 (Principles).
- The General Principles in Schedule 1 are largely concerned with achieving the balance described in section 6. They are concerned with the recognition of the adult’s human worth and dignity as a valued member of society, and empowerment to exercise basic human rights and the like.
- Of particular relevance to this application however, and relied on by the Public Trustee, are the general principles in paragraphs 7(4) and 8, which read:-
7 Maximum participation, minimal limitations and substituted judgment
- (1)Also, the principle of substituted judgment must be used so that if, from the adult’s previous actions, it is reasonably practicable to work out what the adult’s views and wishes would be, a person or other entity in performing a function or exercising a power under this Act must take into account what the person or other entity considers would be the adult’s views and wishes.
8 Maintenance of existing supportive relationships
The importance of maintaining an adult’s existing supportive relationships must be taken into account.
- I would add this principle which also seems to be relevant:-
10 Appropriate to circumstances
Power for a matter should be exercised by a guardian or administrator for an adult in a way that is appropriate to the adult’s characteristics and needs.
- As for (c) (the prudent person investment rule), this is incorporated into the GAA by the effect of section 51 of the GAA, which provides that an administrator may only invest in ‘authorised investments’. An authorised investment is defined in the dictionary as ‘(a) an investment which, if the investment were of trust funds by a trustee, would be an investment by the trustee exercising a power of investment under the Trusts Act 1973, part 3; or (b) an investment approved by the tribunal’.
- Part 3 of the Trusts Act 1973 (Qld), and in particular sections 22 to 24, set out the duties of a trustee when considering in what way to exercise a power of investment.
- Section 51 of the GAA therefore has the effect of incorporating these duties into the requirements of the GAA, so that the tribunal could compensate the adult if the duties were not complied with.
- In this matter, the Public Trustee accepts that the loan to CRG was an ‘investment’ within Part 3 of the Trusts Act 1973 (Qld), and accordingly that the duties in that Act, as incorporated by section 51 of the GAA, applied to the Public Trustee in making the loan.
- The statutory provisions of the Trusts Act 1973 (Qld) which apply are:-
22 Duties of trustee in relation to power of investment
- (1)A trustee must, in exercising a power of investment—
- (a)if the trustee’s profession, business or employment is, or includes, acting as a trustee or investing money for other persons—exercise the care, diligence and skill a prudent person engaged in that profession, business or employment would exercise in managing the affairs of other persons; or
- (b)if the trustee’s profession, business or employment is not, or does not include, acting as a trustee or investing money for other persons—exercise the care, diligence and skill a prudent person of business would exercise in managing the affairs of other persons.
- (2)A trustee must, in exercising a power of investment, comply with a provision of the instrument creating the trust that is binding on the trustee and requires the obtaining of a consent or approval or compliance with a direction for trust investments.
- (3)A trustee must, at least once in each year, review the performance, individually and as a whole, of trust investments.
23 Law and equity preserved
- (1)A rule or principle of law or equity imposing a duty on a trustee exercising a power of investment continues to apply except so far as it is inconsistent with this or another Act or the instrument creating the trust.
- (2)Without limiting the rules or principles mentioned in subsection (1), they include a rule or principle imposing—
- (a)a duty to exercise the powers of a trustee in the best interests of all present and future beneficiaries of the trust; and
- (b)a duty to invest trust funds in investments that are not speculative or hazardous; and
- (c)a duty to act impartially towards beneficiaries and between different classes of beneficiaries; and
- (d)a duty to obtain advice.
- (3)A rule or principle of law or equity relating to a provision in an instrument creating a trust that purports to exempt, limit the liability of, or indemnify a trustee in relation to a breach of trust, continues to apply.
- (4)If a trustee is under a duty to obtain advice, the reasonable cost of obtaining the advice is payable out of trust funds.
24 Matters to which trustee must have regard in exercising power of investment
- (3)Without limiting the matters a trustee may take into account when exercising a power of investment, a trustee must, so far as they are appropriate to the circumstances of the trust, have regard to the following matters—
- (a)the purposes of the trust and the needs and circumstances of the beneficiaries;
- (b)the desirability of diversifying trust investments;
- (c)the nature of and risk associated with existing trust investments and other trust property;
- (d)the need to maintain the real value of the capital or income of the trust;
- (e)the risk of capital or income loss or depreciation;
- (f)the potential for capital appreciation;
- (g)the likely income return and the timing of income return;
- (h)the length of the term of the proposed investment;
- (i)the probable duration of the trust;
- (j)the liquidity and marketability of the proposed investment during, and at the end of, the term of the proposed investment;
- (k)the total value of the trust estate;
- (l)the effect of the proposed investment for the tax liability of the trust;
- (m)the likelihood of inflation affecting the value of the proposed investment or other trust property;
- (n)the cost (including commissions, fees, charges and duties payable) of making the proposed investment;
- (o)the results of a review of existing trust investments.
- (2)A trustee—
- (a)may obtain, and if obtained must consider, independent and impartial advice reasonably required for the investment of trust funds or the management of the investment from a person whom the trustee reasonably believes to be competent to give the advice; and
- (b)may pay out of trust funds the reasonable costs of obtaining the advice.
- There is some debate in the submissions about the effect of the general principles upon the prudent person investment rule and upon the ‘reasonable diligence to protect the adult’s interests’ rule in section 35 of the GAA. There is nothing in the Act one way or the other to suggest which rule should prevail in the event of a conflict between them. The Public Trustee has suggested that the prudent person investment rule cannot override in all instances the General Principles because they are the very basis of the GAA.
- This raises the question therefore, as to whether an administrator is in breach of the GAA if an investment is made which accords with the General Principles but which is in breach of the prudent person investment rule. Or for that matter, whether an administrator is in breach of the GAA if a payment is made which accords with the General Principles but which is in breach of the obligation to exercise reasonable diligence to protect the adult’s interests.
- One point to make is that all the General Principles, except for 10, require the taking into account of the principle. This means that the General Principles, leaving aside 10 for the moment, have the effect of modifying the reasonable diligence and prudent person investment rules by adding things which must be taken into account when exercising the power, but they cannot prevail over those rules. An example might be where the adult is adamant that on a particular day there will be success on the local pokie machine provided that enough money is put into it. Principle 7(2) requires that the adult’s right to make decisions must be taken into account, but here the administrator would be right to decide that the obligation in section 35 to be reasonably diligent to protect the adult’s interests should prevail over the adult’s wishes.
- General principle 10 is more prescriptive because it requires the exercise of the power in a way that is appropriate to the adult’s characteristics and needs. It can be seen however, that for an administrator this is not in conflict with the reasonable diligence obligation in section 35. This is because section 35 does not require protection of the adult’s financial interests, but requires protection of all the adult’s interests. General principle 10 helps to show what those interests are. So there is no conflict when expenditure which might be imprudent when viewed from a purely financial standpoint is in fact in the interest of the adult because it is appropriate to the adult’s characteristics and needs under General Principle 10. An example would be where the adult needs payment of expensive vet bills for a pet who provides considerable comfort for the adult.
- It can be seen therefore that the requirement to apply the General Principles do not conflict with the reasonable diligence obligation in section 35.
- However, there will be times when the administrator will wish to act in a way which would be a breach of section 35 unless there is a saving provision. One instance is in the case of gifts. This is relevant to this matter as can be seen below. Despite section 35, gifts from the adult’s funds are permitted in the circumstances set out in section 54 which is as follows:-
- (1)Unless the tribunal orders otherwise, an administrator for an adult may give away the adult’s property only if—
- (a)the gift is—
- (i)a gift or donation of the nature the adult made when the adult had capacity; or
- (ii)a gift or donation of the nature the adult might reasonably be expected to make; and
- (b)the gift’s value is not more than what is reasonable having regard to all the circumstances and, in particular, the adult’s financial circumstances.
- (2)The administrator or a charity with which the administrator has a connection is not precluded from receiving a gift under subsection (1).
- Another instance is reasonable amounts to provide for the needs of a dependant of the adult. These are covered by section 55.
- In both cases it could be difficult to say that any such expenditure is protective of the adult’s interests, yet such expenditure within either sections 54 and 55 would not be a breach of section 35.
- Turning now to the question whether there is any conflict between the prudent person investment rule and the provisions of the GAA, it is necessary to understand how the prudent person investment rule arises. The rule is in section 22 of the Trusts Act 1973 (Qld) and it applies to a trustee ‘in exercising a power of investment’. In the case of an administrator appointed under the GAA, the power to invest arises from section 33(2) of the GAA. That section authorises the administrator to do anything in relation to a financial matter that the adult could have done if the adult had capacity to do so. That would include investing.
- Hence, in so far as the GAA requires the administrator to apply the General Principles, this is capable of modifying the power to invest, which is itself contained within the GAA. The prudent person investment rule must therefore be read with that modification in mind. I therefore agree with the submission made on behalf of the Public Trustee about this.
- In practical terms this means that pursuant to section 22(1), when exercising a power of investment, the Public Trustee must exercise the care, diligence and skill that a prudent person engaged in the profession of acting as a trustee or investing money for other persons would exercise in managing the affairs of other persons. This must be read in the light of section 24 which requires the trustee to have regard to the purposes of the trust and the needs and circumstances of the beneficiaries in so far as appropriate to the circumstances of the trust. It is notable that this latter provision is closely similar to General Principle 10 with which the Public Trustee must comply. And in addition to the above, the Public Trustee must take into account the other General Principles. So, it is right that an administrator appointed under the GAA should consider the benefit to the adult of a particular investment and could make an investment which would confer a particular benefit on the adult provided of course it satisfied the prudent person investment rule.
- Finally, for the sake of completeness I note that section 36 of the GAA provides that the appointee must exercise a power as required by the terms of any order of the tribunal, and section 37 requires the appointee to avoid a conflict transaction. Sections 38 to 48 provide further for the appointee’s rights and powers connected with the appointment. Sections 49 to 55 contain various obligations such as the need to keep proper records, the need to keep the appointee’s property separate from the adult’s property, provisions if there is a power to invest, and restrictions on the power to gift the adult’s property.
- The parties are agreed that this matter should be determined on the balance of probabilities, and whilst it is submitted on behalf of the Public Trustee that the applicant has a burden of proof, in reality in this particular case because of the age of the matters complained of, all parties have been reliant upon the documentation provided by the respondents.
- I am also mindful that in these types of cases it is easy to fall into the trap of finding fault merely on the basis that after events show that mistakes were made. As Megarry J observed in Duchess of Argyll v Beuselinck  2 Lloyds LR 172 at 185:
In this world there are few things that could not have been better done if done with hindsight. The advantages of hindsight include the benefit of having a sufficient indication of which of the many factors present are important and which are unimportant. But hindsight is no touchstone of negligence. The standard of care to be expected of a professional man must be based on events as they occur, in prospect and not in retrospect.
- Even with this in mind however, I have been able to reach some clear conclusions on the matters for determination.
The circumstances of the appointments
- In December 2000 a court awarded CRG, who was then aged 18, the sum of $500,000 damages for personal injury suffered in a motor accident. The Public Trustee was appointed administrator of the award because of CRG’s lack of capacity. Pursuant to that order, on 21 February 2001 the Public Trustee received a sum of $463,921.
- At the time this money was received, CRG was living in a hostel. In the ensuing months CRG lived in various places. Some of the time he was with his mother and her partner, or his uncle and aunt, or in a unit in West End, then for a short time at a hostel in Brisbane followed by a time at a second hostel. It does appear that CRG was very unsettled at the time.
- For a year between December 2002 and December 2003 the Public Trustee was not CRG’s administrator, this role being done by others pursuant to a tribunal order. During this time, a large amount of CRG’s money went missing. On 12 December 2003 on an emergency interim basis the tribunal restored the Public Trustee as administrator for CRG. This appointment was confirmed in an order of the tribunal on 8 April 2004.
- On 22 December 2003 the Adult Guardian was appointed as guardian for accommodation, contact, health and provision of services decisions for CRG. This order was stated to remain current until further order to the tribunal. On 8 April 2004 there was an order of the tribunal relating only to contact with specified persons. This was for two years, and was continued on 31 March 2006. Then under an interim order on 19 December 2006 the appointment of the Adult Guardian as guardian was enlarged to include seeking help for and making representations for CRG.
The circumstances leading up to the loan
- CRG was homeless from time to time in early 2003 and then lived in a hostel. He was in jail for about 6 weeks and after his release in December 2003 he lived with his father and his father’s wife (who for convenience, I shall call his ‘stepmother’) in their rented home together with their other children.
- By early 2004 CRG’s father said that he had resigned from his employment to look after CRG and that they had borrowed significant amounts of money from relatives to help pay for food, and to provide the children with some kind of Christmas, and to pay electricity rent and phone bills. Also the car needed emergency repairs on several occasions and the refrigerator had stopped working. CRG’s father produced a calculation showing that the family’s expenditure referable to CRG from 11 December 2003 to 19 February 2004 had been a total of $2,165.83. On this basis, from January 2005 the Public Trustee started to pay $150 a fortnight for CRG’s board and lodging. This was either paid directly to CRG’s father or into CRG’s bank account to which CRG’s father had access.
- By a letter received on 22 July 2005, CRG’s father and stepmother requested an interest free loan of $20,000 from the money held by the Public Trustee, which they would repay over 5½ years at $300 per month. At the time they were living in a house owned by the Department of Housing and the idea was that CRG’s father and stepmother would purchase the house from the Department. The $20,000 was needed as a deposit. The remainder of the purchase money would be raised by a loan from the Aboriginal and Torres Strait Islander Commission. In the letter, CRG’s father explained that he had left his job in order to care for CRG who was still living at home. He was in receipt of benefits which included a carer’s allowance, but was also working part-time. The stepmother was working with a weekly income. The figures provided showed that fortnightly household income far exceeded expenditure.
- A Principal Public Trust Officer in the Pubic Trustee’s office considered this proposal and on 1 August 2005 recommended its acceptance. It was noted that CRG appeared to be doing well in the care of his father and stepmother, and so this was an arrangement which should be encouraged. The proposal showed that CRG’s father and stepmother were able financially to maintain the repayments on the proposed home loan. It was in CRG’s best interest for their request to be supported. CRG had no immediate need for the funds and his father and stepmother were providing a level of care that CRG’s funds would not support if they ceased to provide it. They had suggested reasonable terms and were happy to set up a repayment system from their bank account.
- At the time, CRG had a total of $381,793 which was held by the Public Trustee. It was invested in a mixture of Public Trustee Investment Funds and in an investment property which was rented out.
- The recommendation of the Principal Public Trust Officer was considered by the Acting Regional Manager who on 2 August 2005 approved the proposal in principle. In doing so, the officer noted that while CRG remained with the family his quality of life was the best that it could possibly be. He noted that the family had more than enough surplus of income over expenditure to cope with the housing loan, but that this would alter dramatically if CRG’s stepmother’s employment ceased. The officer wished to apply conditions to check the stability of her employment and some assurance that if she did lose her employment the lender would not call in the loan but would allow it to continue, and a written guarantee from CRG’s father that the family would accommodate and support CRG for as long as the loan remained unpaid. Further, the loan would only be interest free for the first two years but that the loan could be extended to up to ten years on that basis. These terms were given to CRG’s father and stepmother in a letter that same day.
- It is notable that both the initial assessment and its approval in principle was on the basis that the loan would be to both CRG’s father and to the stepmother.
- As a result of this letter, the Public Trustee received a copy of a letter from CRG’s stepmother’s employers which confirmed that she was a permanent full-time employee, it being anticipated that ‘she will have a long, successful career with us’.
- There was also an undertaking given at that time, signed both by CRG’s father and stepmother to care for and accommodate CRG indefinitely. It said:-
We have, therefore, no hesitation in confirming that we will continue to support and accommodate CRG for ‘so long as any monies loaned to us are outstanding’ and beyond.
- The proposed loan of $20,000 for the deposit on the house did not proceed. Instead, in January 2006 the father and stepmother wrote to the Public Trustee saying that CRG was better and they continued to care for him, although this was at the emotional and financial disadvantage of the other members of the family. They had changed their plans. They were not now going to purchase the house, but instead needed a loan of $20,000 to consolidate their debts. CRG’s father pointed out that having to give up his full time work had put considerable financial pressure on the family. So that instead of receiving $150 a fortnight for board and lodgings this could be withheld for a period of three years and in addition they would pay $106.42 a fortnight. In this way, they would repay the proposed loan of $20,000.
- At the time CRG had a total of $391,803 held by the Public Trustee. It was invested in a mixture of Public Trustee Investment Funds and in an investment property which was rented out.
- An Acting Principal Public Trust Officer referred this new suggestion to a different Acting Regional Manager from the person who had considered the proposed loan in August the previous year. The Acting Regional Manager asked for clarification as to there being some ‘major benefit to’ CRG and information about the debts to see if they would be better off after the proposed loan. Contact was made with CRG’s father about this. He confirmed that the loan of $20,000 would enable them to clear all their debts. There were current repayments of $590 per month on those debts. CRG’s father confirmed that the stepmother was still working for the same employer.
- This information was reported to the Acting Regional Manager who on 25 January 2006 signed this entry at the bottom of the memorandum:-
In view of the current arrangements with (CRG) being cared for by (his father), as well as their cultural traditions, advance the $20,000 but first get a loan agreement signed by him and (the stepmother).
- There were certain obvious errors made in considering the prudency of this loan and in the completion of the loan arrangements.
- There was no enquiry into exactly what the debts were or how they had developed. The proposal six months previously which was for a loan for a deposit to purchase the house had listed the family’s income and expenditure. There were no debt repayments shown there at all. No debts were referred to in that proposal except the debts which would arise from the proposed property purchase. There was mention in that proposal of the loan moneys being used ‘to consolidate a certain amount of debt and secure a deposit on a housing loan’, however.
- Overall, the previous proposal and the later proposal raised questions about the debts. If it were the case as appeared from the figures in the previous proposal that the family’s income was far in excess of expenditure, how could the debts have arisen? In what circumstances had the debts arisen? When did they arise? To whom was the money owed? Whose debts were they? In particular did the documentation and the answers to these questions suggest that the family were either attempting to mislead the Public Trustee or were irresponsible with money or both?
- The Public Trustee’s assessment of the income and expenditure of the family was based on the figures in the loan application. It was decided that this presented a rosy picture. Yet the figures which had been provided in early 2004, when CRG’s father was explaining that he had given up work to look after CRG and he was asking for financial help, presented a very different picture and showed considerably greater expenditure. Examples of the differences are: telephone $160 per quarter, against $500 per month; television zero, against $45 per month; food $100 per week, against $300 a week; electricity $150 a quarter, against $500 a quarter; and AAPT zero, against $500 a month.
- The information in early 2004 was that the family was in debt to relatives. There was also a Telstra bill showing that there was $1,938.39 owing, and a bill from AAPT for $1,106.98.
- It was clear on the true figures and upon the information available to the Public Trustee that the family was living beyond its means. The assessment that CRG and the stepmother could service the loan repayments was flawed. On this basis alone it was imprudent to make the loan.
- A second error was made when the loan agreement was drafted. The loan was made solely between the Public Trustee and CRG’s father and did not include the stepmother. This was contrary to the instruction given by the Acting Regional Manager on 25 January 2006. It is likely that there were good reasons why that instruction was given. The loan application was made both by CRG and by the stepmother. The undertaking signed on 22 August 2005 to continue to care for CRG was signed by them both. The assessment of the family income compared with its expenditure had been assessed relying on the family income as a whole and that included the stepmother. And most importantly, the stepmother was in full time permanent employment. CRG’s father was not. This meant that should things go wrong, there was a much better chance of the loan being repaid if it were made to both of them. Finally, although this was not properly investigated, it did appear that some of the debts which had arisen were those of the stepmother. Since the money was being lent to consolidate the family’s debts, it should be paid to those who owed the debts.
- A third error was made I think, by the failure to consider whether it was right to apply interest on the loan. This was something considered by the Public Trustee when the earlier loan for a deposit on the house was considered. Any prudent investor should always consider whether interest should be applied. And if no interest is to be applied there is an element of gift in the loan, and an administrator under the GAA has to consider the effect of section 54, that is whether the adult might reasonably be expected to make such a gift. Here I do not think that CRG would have done so.
- I also think that the whole basis for the loan had serious weaknesses. The stated basis was that providing accommodation for CRG with his father should be encouraged. Although it was completely unclear whether and for how long CRG would be living with his father, it should have been apparent to the Public Trustee that clearing the debts of CRG’s family was not necessarily going to benefit CRG in this respect. Objectively it can be seen that the family having got into debt, and living beyond its means would simply get into debt again. And upon that happening, CRG’s father would be likely to seek further financial support, as indeed happened. In the circumstances, the signed undertaking given by CRG’s father and stepmother, despite having some value, was to be regarded sceptically.
- The loan agreement was made on 10 February 2006. It provided for complete repayment over 3 years, but no interest levied on the loan provided it was paid in accordance with the repayment schedule. It did not say what would happen if repayments were not made in accordance with the repayment schedule however, nor the rate of interest which could be recovered in that event. The repayments were to be made by forgoing the payments of $150 per fortnight and the borrower would pay a further $106.42 per fortnight, a total of $256.42 per fortnight.
- Pursuant to the loan agreement, CRG’s father received the sum of $1,000 on
6 February 2006 by way of loan advance, and $19,000 on 10 February 2006. The actual payments made appear in the documents provided by the Public Trustee. Between 10 February 2006 and 24 October 2006 the father should have made 18 fortnightly payments of $106.42, but only made 10. The last payment was 24 October 2006.
- Although the $150 per fortnight was stopped when the loan was made, a number of other payments were made to CRG’s father and to pay the family’s bills. Some of these payments have been impugned in this application.
Conclusion on Public Trustee’s liability - loan
- I must conclude therefore that in making the loan agreement of 10 February 2006, contrary to section 35 of the GAA, the Public Trustee did not exercise the power for CRG with reasonable diligence to protect CRG’s interests in that:-
- (a)Although in making the loan it was Public Trustee’s aim to improve CRG’s housing and home security in accordance with the General Principles, whether the prospect of being successful in this aim was improved by making the loan was not properly investigated and examined.
- (b)The ability of the borrower to repay the loan was not properly investigated and examined.
- (c)The loan was made only to one borrower and should have been made to CRG’s stepmother as well.
- (d)The loan did not carry interest if repaid in accordance with the loan agreement, and therefore had the element of a gift. That element did not satisfy the test in section 54 of the GAA.
- In the circumstances this was not an investment that a prudent person engaged in the profession of acting as a trustee or investing money for other persons would have made in managing the affairs of other persons.
Correcting the error
- Correcting the error entails (as far as possible) restoring CRG to the financial position in which he would have been had the loan not been made.
- If the loan had not been made CRG would have been better off by $20,000 on 10 February 2006. Credit should be given however, for the loan repayments which were made, that is $1,064.20. CRG’s father also effectively made payments of $150 per fortnight by forgoing this amount which was previously being paid for CRG’s board and lodging. This was as agreed in the loan agreement. Some 29 credits of this amount were made to the loan account between 10 February 2006 and 28 March 2007. These total $4,350. The credits then stopped.
- It is said on CRG’s behalf that it is wrong to apply the credits of $150 a fortnight for so long, bearing in mind CRG was not living with his father after the beginning of November 2006 and the Public Trustee was aware of this from 13 December 2006, when the current administrator informed the Public Trustee that CRG had been ‘living on the streets’ for the last three weeks. I note that two months later however, the Public Trustee was told by the Adult Guardian that CRG was again living at home. And on 19 April 2007 it was noted that CRG had been convicted through the Mental Health Tribunal and that he will ‘reside with his dad until accommodation is found and he finished his probation’.
- It does appear from the material submitted by the Public Trustee that its policy of expending CRG’s funds with the aim of trying to secure accommodation for CRG was on two levels: firstly a base level regular payment made either directly to the father or into CRG’s bank account to which the father had access on the basis that a home would be available for CRG. These were the $150 fortnightly payments. Then in addition, supplementary payments from time to time for extraordinary items, or to pay bills, or for general support. It appears on the balance of probabilities that the Public Trustee recognised that the $150 per fortnight was sufficient only to maintain the status quo and would not be sufficient over those periods when CRG was living at home, rather than on the streets.
- Since $150 per fortnight was a modest amount which seemed to achieve the availability of accommodation for CRG with his father when CRG wished to live there, the two level policy followed by the Public Trustee for CRG was sensible and worked.
- The tribunal is assisted by the file notes provided by the Public Guardian. Effectively these are a log of telephone calls and other contact with CRG, the family and various agencies between February 2006 and April 2007. The notes demonstrate that CRG’s home base was still with his father over this period. Although efforts were being made to arrange accommodation for him, certainly he was living nowhere else permanently. As time went on CRG seemed to spend more time away from home and when he did so was sleeping rough, but it was important that he had a base to return to. It appears that it was an essential element in the probation order made on 19 April 2007 that he must live at home pending other accommodation being found for him, although it appears that he did not keep to this.
- In the circumstances I think the Public Trustee was justified in regarding the forgone payments of $150 per fortnight as properly credited to the loan repayment account up to 28 March 2007.
Public Trustee’s liability – payments said to be wrongly made
- The claims here must be regarded in the context that there were many payments made either directly into CRG’s bank account or into his father’s account or to pay bills over the same period to which these relate, which are not impugned.
- As for the Centrelink payments, the Public Trustee said that it did not make the payments and therefore they should be disregarded by the tribunal. This is strictly true having regard to the issues identified in the directions of 14 March and 10 May 2018 because the issues are limited to payments made by the Public Trustee. Although the Public Trustee has provided some additional documentation about these payments, it is possible they are not complete. In the circumstances, I am unable to reach a reasoned conclusion on this particular complaint. I need to take a strict view of the established issues and regard the Centrelink payments as not before me for determination.
- As for the supplementary payments the Public Trustee says that although it made the payments, they were not paid to CRG’s father but were paid into CRG’s bank account and therefore they should be disregarded by the tribunal. Again this is strictly true having regard to the issues identified in the directions of 14 March and 10 May 2018 because the issues are limited to payments made to CRG’s father. CRG’s current administrator says that the Public Trustee was aware that CRG’s father had access to CRG’s account. I do not agree with the submission made at a directions hearing on 23 October 2018 by CRG’s current administrator that therefore they were equivalent to a payment to CRG’s father. The information available to determine this matter is limited. In the circumstances, I need to take a strict view of the established issues and regard this particular issue as not before me for determination.
- As for the board and lodging payments the Public Trustee agrees that it made three such payments to CRG’s father. The documents which have been produced show that the first seems to have been paid on 26 February 2007 and the last on 20 April 2007. As appears from a memorandum of 6 February 2007 created internally by the Public Trustee, the payments were made in the belief that CRG was living with his father again and in order to support that arrangement on a short term basis. The Public Guardian has produced a record of a meeting with CRG, at which the Public Trustee was present, and although CRG was homeless at that time, he did seem to agree that he could live with his father.
- The internal memorandum does not demonstrate however, that the decision maker recognised that the loan of $20,000 made just a year before was supposed to have capitalised payments for board and lodging, albeit at a much lower rate than now being paid. The fact also that there were a total of five months arrears in CRG’s repayments of the loan was not considered, despite this being known to the Public Trustee. Had these things been recognised they would have cast doubt on whether payments of money to CRG’s father would in fact benefit CRG. Had these things been recognised, I think a better check would have been made about whether CRG was in fact living with his father over the relevant period, and whether he would in fact benefit from these payments. On the balance of probabilities these checks would have revealed that he would receive no benefit from the payments. CRG needs to be compensated for the loss of three amounts of $400 = $1,200.
- As for the individual payments, I take a similar view about most of them. There were payments of $525.49 on 1 November 2006 for an electricity bill and $319.65 on the same day for the payment of a telephone account. It would appear from the filed material that the Public Trustee paid these bills on the request of CRG’s father. The Public Trustee explains that at the time it was aware that CRG was living with his father and the payments were considered appropriate taking into account his need for support. There was no enquiry as to the correct proportion of these bills to pay. There were a number of people living in the house and only a proportion of the bills would relate to CRG. CRG’s father was behind in the repayments of the loan and the $150 per fortnight for board and lodging had been capitalised board and lodging, albeit at a low rate. In the circumstances payment of these bills was a gift and need to be considered by applying the tests in section 54 of the GAA. Bearing in mind the fact of the earlier loan I do not think that CRG would reasonably be expected to make this gift. CRG should be compensated in the sum of $845.14 in respect of these two bills.
- There was a payment of $500 on 2 November 2006 for funeral expenses. There is a note on the Public Trustee’s file showing that CRG’s father telephoned and said that he and CRG were attending a funeral and $500 was needed to cover their expenses in travel and accommodation. Although there is no note about the relative benefit arising from this, it is difficult to say that this was a breach of the duty to act with reasonable diligence bearing in mind this would be extraordinary expenditure outside that normally covered by the loan monies and the expenditure appeared to be to CRG’s benefit.
- There was a payment of $240 on 20 November 2006 to the Department of Housing for one week’s rent. This was paid on CRG’s father’s request so that they could be ‘one week in advance’. This was agreed to and paid. Again this was effectively a gift to the father because there was nothing to show that it benefited CRG. In the circumstances, I do not think that CRG would reasonably be expected to make this gift. CRG should be compensated in the sum of $240 in respect of this payment.
- There was a payment of $300 on 8 February 2007 for groceries paid to CRG’s father and a payment of $1,029.02 on 13 February 2007 for a telephone bill which was in the name of CRG’s stepmother. CRG was only living with his father intermittently over the period to which these bills related, although the Public Trustee may have thought that he was there more permanently. There is a note that Public Trustee did question the telephone bill and was told that this was the cost of telephone calls over several months to locate CRG. However, no consideration appears to have been given to the fact that the family had previously had high telephone bills, that CRG’s father had received the loan, he was in arrears in the repayments and that the cost of board and lodging had been capitalised by the loan arrangement. Had better enquiries and consideration been given, on the balance of probabilities I think the Public Trustee would have recognised that in fact what was being said about the telephone account was probably incorrect, and that CRG would not benefit from these payments. CRG should be compensated in the sum of $1,329.02 in respect of these payments.
Failing to pursue (CRG’s father) for repayment of the loan when he ceased making loan repayments
- It is said that a greater effort should have been made to pursue CRG’s father to repay the loan on his default. It is clear however that CRG’s father was living beyond his means, that he was in debt and had no assets. Since the loan was made only to him, any such efforts would have been fruitless. This head of claim fails.
Is the Public Guardian liable?
- The main point argued by the current administrator is that the Adult Guardian was aware by 26 October 2006 that CRG had left his father’s house, and that the Adult Guardian had a duty to inform the Public Trustee of this fact but did not do so until December 2006, thereby causing payments to be made by the Public Trustee. The issue as set out in the directions of 24 October 2018 are wider than that and are that the Adult Guardian failed to keep the Public Trustee informed about where CRG was living between the date of the loan and 20 April 2017, but then the claim is limited to the payments (a) to (d) as listed near the beginning of these reasons.
- The evidence and submissions from the Public Guardian demonstrate that the Adult Guardian spent considerable time ascertaining the whereabouts of CRG when it learned that he had left home, largely to no avail. Much effort was spent communicating with relevant parties and the necessary agencies.
- As in the claim against the Public Trustee, the Centrelink payments and the supplementary payments are not before me for a decision because they were not paid to CRG’s father. As for the board and lodging payments these were paid after the date when it is said the Public Guardian informed the Public Trustee that CRG was no longer living with his father and so there can be no liability in respect of these.
- In respect of the individual payments, the payments of $525.49, $319.65, $500 and $240 were paid within the period when it is said the Public Guardian should have informed the Public Trustee that CRG was not living with his father. The claim with respect to the $500 which was paid for funeral expenses fails because payment of these costs was reasonable even upon the basis that CRG was not living with his father.
- As for the payments of $525.49, $319.65 and $240, I think there is a causation problem. It cannot be said that the Public Trustee’s decisions about whether or not to make these payments would have been affected by any information provided by the Adult Guardian at any particular time about CRG’s whereabouts. This is because, as can be seen from the file notes, the whereabouts of CRG and whether he was physically at home at any particular time was changing regularly and frequently.
- The claim for compensation against the Public Guardian fails.
The successful claims
- The dates of payments from CRG’s money and the claims arising from these payments are as follows. Where the payments were made over a period, a mid-way date is given here:-
10 February 2006
Loan of $20,000 less repayments and notional repayments of $5,414.20 = $14,585.80
1 November 2006
Electricity and telephone bills totalling $845.14
20 November 2006
Rent payment of $240
10 February 2007
Groceries and telephone bill $1,329.02
24 March 2007
Board and lodging payments $1,200
- The successful claim is therefore in two parts - $14,585.80 paid on 10 February 2006, and a total of $3,614.16. For the interest calculation below, the mid date for the payments totalling $3,614.16 is 11 January 2007.
- The starting date for the accrual of interest for making the loan is agreed as when the loan money was drawn down. The correct starting date for other payments is when the payments was made. The correct ending date for the accrual of interest would normally be when the compensation is paid, but in this case it is convenient to have the ending date as the date of the tribunal’s order since there will be no difficulty in it being paid.
- There is disagreement about the rate of interest. In its submissions of 25 February 2019 the Public Trustee points out that the interest award is compensatory and not punitive, and contends it should be calculated based on what the money would have earned over the period. It suggests that the return on CRG’s funds lodged with it up to the time when it ceased to be administrator on 23 May 2017 is the correct rate up to that time. The Public Trustee has produced a calculation showing that a principal of $14,585 held on behalf of a client would have earned interest to 23 May 2017 of $5,074.56. This is about 3% per annum simple. The difficulty with this is that it is based on the return from the cash account. Over such a long period this is not where the money would have been held. There would have been other types of investments available for the money. The evidence shows that CRG’s money was invested not in cash, but in an investment fund operated by the Public Trustee, also CRG owned some land at one point, and there was also an investment property which was let out. It is impossible to say from this material provided by the Public Trustee what the money would have earned for CRG.
- On CRG’s behalf it is suggested that the interest should be at 10% per annum at least over the period up to April 2013, this being a reasonable default interest or pre-judgment rate at that time as demonstrated by a print out from the online Supreme Court of Queensland pre-judgment interest calculator. It is pointed out that when the Public Trustee lodged a minor civil dispute claim in the tribunal on 7 February 2012 against CRG’s father for repayment of the loan, it sought interest at 10% per annum simple.
- The fact that the Public Trustee claimed interest from CRG’s father at 10% per annum in 2012 shows that it intended to present that rate to the tribunal as reasonable. From April 2013 we know from the print out that pre-judgment interest rates fell as reflected in the interest calculator. I think that with the available information I can do no better than to use the online Supreme Court of Queensland pre-judgment interest calculator for the interest calculation.
- According to the calculator, interest on $14,585.80 from 10 February 2006 to the end of May 2019 is about $15,630. Interest on $3,614.16 from 11 January 2007 to the end of May 2019 is about $3,575.
- I shall order the Public Trustee to make a payment to CRG of $18,199.96 and interest of $19,205, a total of $37,404.96.
 Section 7.
 Dictionary in Schedule 4 of the GAA.
 Submissions of the Public Trustee given on 25 February 2019, paragraph 1.
 Public Trustee submissions given on 25 February 2019, paragraph 5.
 Section 21 of the Trusts Act gives a trustee a power to invest unless forbidden by the instrument creating the trust. The definitions of ‘trustee’ and ‘instrument creating the trust’ in section 5 are wide enough to include the Public Trustee and the GAA itself respectively. These provisions however make no difference to the analysis because the prudent person investment rule in section 22 applies to any power of investment and not merely to that given by section 21. It is also to be noted that the Public Trustee has an obligation to invest under section 19 of the Public Trustee Act 1978 (Qld).
 Page 8 of the documents attached to the Public Trustee’s submissions of 1 June 2018.
 Undertaking dated 22 August 2005.
 It is page 28 to the submission of the PTQ dated 1 June 2018.
 Annexure 29 to the submissions received on 6 June 2018.
 Annexure 16 to Public Trustee’s submissions received on 6 June 2018 (memorandum of 6 February 2007).
 Annexure 17.
 These comprise some 60 pages in attachment A to the Public Guardian’s submissions of 23 November 2018.
 The Public Guardian’s log attached to its submissions of 23 November 2018 demonstrate this.
 Attachment 6 to submissions of Public Guardian of 13 September 2018.
 The Public Guardian’s log over this period attached to its submissions of 23 November 2018 tend to show this.
 Email of 30 October 2006 from CRG’s father.
 Email of 17 November 2006 from CRG’s father.
 This can be seen from the calculation which is in Annexure B to the submissions received on
21 December 2018.
 Attached to the submissions of Matthew Jones received on 20 December 2018.
 The minor civil dispute application appears at Annexure 23 to the Public Trustee’s submissions received on 6 June 2018. The submissions state that CRG’s father was not served with the application.
- Published Case Name:
- Shortened Case Name:
 QCAT 168
06 Jun 2019