[2024] SASC 28

Applicant: PAUL BERNARD COLE No Attendance First Respondent: MYRA JULIA DYER No Attendance Second Respondent: NOMINAL SECOND DEFENDANT No Attendance Interested Party: PUBLIC TRUSTEE Counsel: MR R LAWTON - Solicitor: CROWN SOLICITOR (SA) Hearing Date/s: 15/11/2023 File No/s: SCCIV-97-259 B SUPREME COURT OF SOUTH AUSTRALIA (Civil) DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment. The onus remains on any person using material in the judgment to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court in which it was generated. COLE v DYER & ANOR [2024] SASC 28 Decision of Judge Bochner a Master of the Supreme Court 5 March 2024 HEALTH LAW - GUARDIANSHIP, MANAGEMENT AND ADMINISTRATION OF PROPERTY OF PERSONS WITH IMPAIRED CAPACITY - ADMINISTRATION AND FINANCIAL MANAGEMENT - GENERALLY Application for rescission of a protection order. Aged and Infirm Persons' Property Act 1940 (SA), referred to. Re The Full Board of the Guardianship and Administration Board (2003) 27 WAR 475, considered. -- 1 of 10 -- -- 2 of 10 -- COLE v DYER & ANOR [2024] SASC 28 CIVIL 1 The applicant was born on 23 November 1970. At the age of 23, he suffered severe closed head injuries after being struck by a truck, driven by the respondent, whilst riding his bicycle on the Sturt Highway. Following the issue of proceedings, his claim was settled in the sum of $593,843.19; from this sum, the amount of $259,087.50 (“the protected funds”) was placed with the Public Trustee to be managed on his behalf, pursuant to the provisions of the Aged and Infirm Persons’ Property Act 1940 (SA) (“AIPP Act”). 2 The Public Trustee now makes an application that the orders appointing the Public Trustee as manager of the protected funds on behalf of the applicant be rescinded pursuant to section 11(1) of the AIPP Act on the basis that the protected funds have been exhausted. 3 I approve the application brought by the Public Trustee, but I feel compelled to provide reasons, as I am concerned with the way in which the protected funds were managed by the Public Trustee on behalf of the applicant. Background 4 The motor vehicle accident occurred on 18 February 1994 at approximately 6:00am. Shortly thereafter, the applicant was taken, by ambulance, to the Barmera Hospital and the Riverland Regional Hospital, before ultimately being airlifted to the Royal Adelaide Hospital. He had suffered a severe closed head injury, cerebral swelling and significant loss of blood. 5 The applicant remained sedated in the High Dependency Unit of the Royal Adelaide Hospital until 2 March 1994. He was discharged from the Royal Adelaide Hospital on 5 April 1994, and transferred to the Julia Farr Centre for rehabilitation. It was not until 8 June 1994 that the applicant returned home, where his mother and father, but in particular his mother, became his main care providers. 6 At the time of the settlement of the legal action, the applicant suffered from dysphasia, with particular difficulty in auditory comprehension, poor reading skills, moderate to severe word finding difficulties, writing difficulties, voice difficulties and memory difficulties; in addition, he suffered a range of physical impairments such as back pain, power loss in the right side of his body and uncontrolled shaking. 7 At the time of the judgment, the applicant was employed as a storeman packer by BRL Hardy Ltd at its winery in Berri, South Australia, where he was regarded as a conscientious and competent employee. However, I do not know whether the applicant continues to remain employed, there or elsewhere; despite asking the Public Trustee to provide further information with respect to the applicant’s -- 3 of 10 -- [2024] SASC 28 Judge Bochner 2 current employment status, for the purpose of considering this application, no evidence was provided. 8 The applicant has a child who was born in 1998. The applicant’s relationship with his child’s mother ended before the child’s birth. No further evidence about the applicant’s family circumstances has been provide by the Public Trustee. 9 The extent of the applicant’s current disabilities remains unknown to the Court. The most recent evidence the Court has about the applicant’s injuries and disabilities dates from the time of Court approval of the settlement of the applicant’s claim. 10 The failure of Public Trustee to provide further information requested by the Court about these matters is unhelpful. In order for the Court to carry out its supervisory role with respect to protected estates, it is important that the Court be fully informed of all of the relevant circumstances relating to the making of the orders sought. The failure to provide this information to the Court limits the Court’s ability to make an informed decision and so exercise its supervisory role appropriately. The terms of the consent orders 11 On 11 October 1999, the Court made orders by consent, for judgment for the applicant, in the sum of $593,843.19. The Court made specific orders with respect to the discharge of the applicant’s mortgage and payment in full of a personal loan in his name from the judgment sum. Further the orders provided: 6.5 The sum of TWENTY THOUSAND DOLLARS ($20,000.00) to the plaintiff, which sum the plaintiff requires for the following purposes:- 6.5.1 the purchase of a small second-hand utility for the plaintiff’s transport and maintenance needs; 6.5.2 the purchase of a second-hand tractor for use on the plaintiff’s property at Monash; 6.5.3 the cost to lay a concrete floor to shedding at the plaintiff’s property. 12 The Public Trustee was appointed the manager of the applicant’s estate, and the sum of $259,087.50 was to be paid to the Public Trustee pursuant to the terms of s 8A of the AIPP Act. Order 8 of the judgment provided that, from the moneys held: 8. That the Manager do pay to the plaintiff from the income of the protected judgment monies:- 8.1 an appropriate sum per week to the plaintiff for the maintenance, advancement and benefit of the plaintiff and any property owned by him, such allowance to provide for the wages, sustenance and insurances of the plaintiff’s care givers, the sustenance and personal requirements of the plaintiff, utilities, and an allowance to the plaintiff in lieu of wages: such weekly sum to be reviewed -- 4 of 10 -- [2024] SASC 28 Judge Bochner 3 from time to time to take into account the increased costs by way of inflation and further, the reasonable needs of the plaintiff, the amount of the residue of this Award and any other factor the Manager considers appropriate; 8.2 the costs of and incidental to the purchase of any services, treatment, hospitalisation, materials, aids or equipment which is recommended to the plaintiff, or approved by his medical advisers. Use by the Public Trustee of the moneys held on behalf of the applicant 13 I do not list all the expenditure that was approved by the Public Trustee from the protected funds on behalf of the applicant. Much of this was for everyday expenses, such as council and electricity rates, and are well within the terms of the judgment. There are, however, a number of larger expenditure items which have caused me significant concern. These are as follows: • In 1999, a deluxe spa for $8,995.00; • In 2001, a Holden VX Club Sport R8 sedan for $63,264.00; and • In 2003, a custom-built Harley Davidson trike for $55,000. 14 I note that the combined cost of these three items reduced almost by half the monies held by the Public Trustee on behalf of the applicant and the combined purchase price of vehicles depleted by more than 40% of the value of protected fund monies. 15 In addition, I note that more than $40,000.00 was spent on motor vehicle repairs between the years 2011 to 2016 alone. Powers and duties of managers of protected estates 16 Section 13 of the AIPP Act, among other things, provides the following: (1) The manager shall have the following powers, unless the court in any particular case otherwise orders: … 4. To apply any moneys (whether arising from real or personal property, and whether income or capital) for the maintenance of the protected person, and the spouse or domestic partner and children of the protected person, and for the education of the children of the protected person, and in payment of the debts and liabilities of the protected person: … (2) The manager shall have such other powers and duties in respect of the protected estate as the court in and by the protection order, or from time to time, defines or directs, and the court shall have jurisdiction to confer any such powers upon the manager to be exercised generally in respect of the estate or any part thereof, or upon any special occasion, or in respect of any particular subject matter. -- 5 of 10 -- [2024] SASC 28 Judge Bochner 4 17 There are no reported decisions considering the meaning and effect of s 13 of the AIPP Act. 18 In the Western Australian case of Re The Full Board of the Guardianship and Administration Board1 at [43]-[44], Heenan J (with whom Anderson and Miller JJ agreed) considered the legislative intention of the Western Australian Parliament in relation to the equivalent of the Guardianship and Administration Act 1993 (SA). He said: [43] … In this regard it seems essential to appreciate that the Guardianship and Administration Act is intended to "provide for the guardianship of adults who need assistance in their personal affairs, for the administration of the estates of persons who need assistance in their financial affairs … and to make provision for a power of attorney to operate after the donor has ceased to have legal capacity, and for connected purposes" (see the long title to the Act). From this, and an examination of the entire Act, it is obvious that the legislation is designed for the protection of adult persons whose faculties may be impaired, for any reason, and who are therefore in need of protection and assistance so as to ensure that their financial affairs and other welfare is not jeopardised by improvident, or ill-considered personal decisions or action, or by unscrupulous or ill-advised influence of relatives, friends and others who may deliberately or inadvertently exploit the vulnerability of the person in need of assistance and protection. [44] These ends can be achieved, when it comes to dealings with the property and financial affairs of the person in need of assistance, by ensuring that any financial, property or commercial transactions which would, or might, jeopardise the financial security or interests of the disabled person, are only effective when performed by a properly appointed administrator and with the Board's consent. The emphasis is on conserving the property and financial resources of the disabled person to ensure that they are available for his or her own needs, welfare and enjoyment and are not dissipated. These seem to be the primary objectives of the legislation and all the provisions of the Act can be seen to have meaning and effect as leading towards the achievement of those purposes. In the main, these will be accomplished by conserving the resources and property of the person under administration for use to his or her own advantage or, in cases where expenditure or imminent disposition of property are necessary or advantageous, by scrutinising the transaction to see that it is justifiable or provident having regard to all the circumstances, bearing always in mind the continuing and future needs of the person whose estate is under administration. 19 It seems to me that these words are equally applicable to the purpose behind the enactment of the AIPP Act. The long title of the AIPP Act reads, in part: An Act to make provision for the protection of the property of aged and infirm persons… 20 It is clear from both this, and the terms of the judgment itself, that the judgment sum was paid to the Public Trustee in order that it be protected from imprudent or exploitative transactions; consequently, it can be inferred that a duty is conferred on the Public Trustee to ensure that all transactions involving use of protected funds are prudent and for the best interests of the protected person. I 1 (2003) 27 WAR 475. -- 6 of 10 -- [2024] SASC 28 Judge Bochner 5 note, too, that the AIPP Act does not place a requirement on the manager of funds to consider the wishes of the protected person; thus, the manager, when appointed under the AIPP Act, must ensure that the protected funds are used in a prudent manner to ensure that they are not unduly dissipated. 21 At the time of the settlement of the applicant’s action, he was 29 years old. The duty of the Public Trustee was to manage the sum of $259,087.50 on his behalf, in a prudent and conscientious manner. The Public Trustee should have ensured that the protected funds were spent on the reasonable needs of the applicant, in accordance with the terms of order 8 of the judgment of the Court. The Public Trustee should have had regard to the age of the applicant and the size of the fund, in determining when expenditure from the fund was reasonable, particularly where that expenditure was on non-essential, depreciating assets. The Public Trustee should have made its best efforts to ensure that the fund lasted as long as possible. 22 In my view, it is questionable whether the use of the applicant’s moneys on the items set out above was prudent and in the applicant’s best interests. The deluxe spa 23 On 11 October 1999, the Public Trustee received a letter from the applicant’s mother, dated 6 October 1999, requesting that it approve the purchase of a deluxe spa. The letter contained a quote in the sum of $8,815, plus an additional amount for side rails, the cost of which could not be determined at that time.2 There is no explanation for the request to instal a spa. The Holden car 24 The car was purchased in 2001, for a total price of $63,264.00. The purchase price was comprised of a trade in of the applicant’s current vehicle and a payment from monies held by the Public Trustee. 25 There is correspondence on the Public Trustee’s file from Mrs Cole, requesting approval of the purchase of the vehicle. On the bottom of the letter is a handwritten note of a conversation with Mr Cole (Senior), on 16 July 2001, about the purchase of the vehicle. This note records that the applicant’s previous car is in “immaculate condition”, that the applicant has two interests in life, his motor car and his daughter, and that this is the car that the applicant has been admiring for the last 18 months.3 26 This purchase is difficult to justify. It occurred less than two years after the judgment, which made provision for the purchase of two vehicles for the applicant. The amount of $20,000.00 was considered by the Court, as well as, one can assume, by the applicant’s litigation guardian and lawyers as being an appropriate sum to spend on motor vehicles that suited his needs. It seems inappropriate that 2 FDN 79, DSD 11. 3 Ibid, DSD 10. -- 7 of 10 -- [2024] SASC 28 Judge Bochner 6 the Public Trustee approved the purchase of a car that was worth more than three times the amount contemplated as appropriate by the Court, in such short time thereafter, and when his existing vehicle was in immaculate condition. 27 I also question whether appropriate Public Trustee approval was sought to allow for such a significant purchase. I understand that, in 2005, purchases that exceeded $30,000.00 or more than 5% of the value of a protected estate managed by the Public Trustee, whichever is less, must have been approved by a General Manager within the Public Trustee. There is no evidence of such approval having been obtained in this instance. The Harley Davidson 28 On 28 October 2003, Mr Becker the Personal Estates Officer at Public Trustee who was managing the applicant’s estate at that time, received a letter from Mrs Cole,4 in which she asked the Public Trustee to purchase a custom built Harley-Davidson trike for the applicant. It appears that the letter was referred to the Deputy Public Trustee, Mr Brook, for approval.5 Mr Brook referred to the procedure for the purchase of motor vehicles and asked that the following considerations be addressed: • affordability and financial viability of the proposed purchase. Generate an IPS model based on the estimated purchase price, annual recurring registration, insurance and maintenance costs. If the modelling, estimates that the funds will be depleted during the client’s lifetime, review the level of discretionary payments to determine whether there is scope to reduce the personal allowance and/or other payments. • whether there are any “non financial” concerns with purchase including road behaviour (where client will be the driver) to comply with road laws, traffic offences, licence disqualification or demerit points and expiation notices. • for protected estates under the Aged and Infirm Persons’ Property Act, if personal injury arose as a result of a vehicular accident, check counsel’s opinion on file or ask Legal Officer for any insight from pre-trial negotiation conference. If there are concerns, discuss with a delegated officer.6 29 There is no indication of whether there was any consideration of the issues raised by Mr Brook, save that there was a memorandum from Mr Becker to Mr Brook, dated 5 November 2003, in which he said: I have discussed the matter with his Mother (who has POA for him) and she was very supportive of the purchase and sees it as one of his last hurdles in recovery from his accident in that he was on a motor bike when he suffered his injuries and it is his wish/want to be able to ride a motor bike again.7 4 Ibid, DSD 13. 5 Ibid. 6 Ibid, p 196. 7 Ibid. -- 8 of 10 -- [2024] SASC 28 Judge Bochner 7 30 It is difficult to understand how this purchase was justified. As I have previously set out, only four years earlier, the Court had made provision for the purchase of two motor vehicles which were considered appropriate for the applicant, given his disabilities, and his other personal circumstances. The purchase price of the trike is more than 20% of the capital sum paid to the Public Trustee in October 1999; in November 2003, one can assume that it was a significantly largely proportion of the remaining funds held by the Public Trustee held on behalf of the applicant. There appears to be little or no justification for the purchase of a depreciating asset at such a significant cost. The application before the Court 31 The Public Trustee has applied to have the order appointing it the applicant’s manager rescinded, on the basis that the protected funds have now been entirely exhausted. While I have no choice but to make this order, as it is no longer efficacious, I am concerned that the Public Trustee has failed the applicant in its management of his estate. The applicant is now only 54 years old; while he has many years of life ahead of him, he no longer has access to the fund that has been making payment of many of his ongoing expenses, such has council rates, emergency services levy and utilities. Despite having asked the Public Trustee what has been put in place to ensure that these expenses are paid in the future, no evidence in this regard has been provided. 32 I am concerned that the purchase of two expensive vehicles and the spa was not within the original orders made by the Court. It is difficult to characterise those expenses as necessary for the applicant’s sustenance and personal requirements, or as utilities or an allowance in lieu of wages. Nor can they be characterised as “the costs of and incidental to the purchase of any services, treatment, hospitalisation, materials, aids or equipment which is recommenced to the plaintiff or approved by his medical advisers”.8 33 I am concerned that the Public Trustee has allowed close to 50% of the fund with which it was entrusted to be dissipated on discretionary, depreciating luxury items, as a result of which the applicant no longer has a fund to provide for the ongoing necessities of life. I query whether this was the act of a prudent manager. Conclusion 34 This Court has supervisory jurisdiction over protected estates, and it takes this role seriously. It is not the Court’s function to act as a mere rubber stamp for managers of these protected estates. Instead, it takes seriously its role in ensuring that managers of protected estates fulfil their duties diligently and prudently. 35 Proper, independent inquiries should be made when a manager of a protected estate is confronted with a request to approve the expenditure of monies on depreciating and non-income producing assets. The manager should consider 8 Order 8.2 of the Orders made on 11 October 1999. -- 9 of 10 -- [2024] SASC 28 Judge Bochner 8 whether the purchase of such items would be to the long term detriment of the protected person. In determining whether to approve such a request, the manager must take into account many things, including the size of the available fund, the age of the protected person and his or her life expectancy, the other sources of income available to the protected person and the terms of the order appointing the manager to manage the funds of the protected person. 36 It is the role of the manager of a protected estate to manage the funds of the protected person in a diligent and prudent manner, to ensure that they last as long as possible while meeting the reasonable financial needs of the protected person. The manager is appointed to guard against the protected person themselves making imprudent financial decisions or being vulnerable to exploitation from others. Inherent in this is an expectation that the manager will, if necessary, refuse to spend monies from the fund at the request of the protected person, if the manager considers that the request is not a prudent one. The manager is not simply a bank that holds the money and gives it out whenever requested to do so. Each request should be scrutinised to ensure that every amount paid out from the fund is paid in the best interests of the protected person. -- 10 of 10 --