BJS [2015] QCAT 263

CITATION: BJS [2015] QCAT 263 PARTIES: BJS APPLICATION NUMBER: GAA10637-14 MATTER TYPE: Guardianship and administration matters for adults HEARING DATE: 16 June 2015 HEARD AT: Hervey Bay DECISION OF: Member Milburn DELIVERED ON: 5 July 2015 DELIVERED AT: Hervey Bay ORDERS MADE: 1. The following Enduring Power of Attorney for BJS is revoked pursuant to s116(d) of the Powers of Attorney Act 1998: a. The Enduring Power of Attorney dated 15 August 2014 appointing BBE as attorney. 2. The Public Trustee of Queensland is appointed as administrator for BJS for all financial matters. 3. The Tribunal dispenses with the requirement for the administrator to provide a financial management plan. 4. The Tribunal directs the administrator to provide accounts to the Tribunal when requested. 5. This appointment remains current until further order of the Tribunal. The appointment is reviewable and is to be reviewed in five (5) years. CATCHWORDS: ADMINISTRATION – where there are allegations of failure to properly fulfil duties by an administrator – where an enduring power of attorney came into existence during the term of an administration appointment POWER OF ATTORNEY – where the adult does not to have capacity to give the enduring powers -- 1 of 9 -- 2 Powers of Attorney Act 1998, s116(d) GJP [2015] QCAT 23 APPEARANCES: BJS BBE, sister CD, mother REASONS FOR DECISION [1] The adult is a single man, aged 45 years, who suffered a severe head injury resulting from an assault in 2007. Tribunal orders [2] There is a history of administration orders involving the adult in both Queensland and Western Australia tribunals. The State Administration Tribunal of Western Australia ordered the appointment of the adult’s sister, BBE on 2 November 2012 as the adult’s administrator. The same tribunal revoked that appointment on 25 October 2013. Meanwhile, in Queensland, on 21 February 2013, the Queensland Civil and Administrative Tribunal (QCAT) appointed BBE as administrator on a plenary basis for two years, with the special condition that the administrator was to provide an updated financial management plan within six months and to show evidence of having obtained advice from a licensed financial planner. Capacity [3] The tribunal will not consider making an order if the adult is capable of making decisions. Capacity, for a person for a matter, means the person is capable of understanding the nature and effect of decisions about the matter, freely and voluntarily making decisions about the matter and communicating the decisions in some way1. [4] The medical evidence produced to the tribunal shows that the adult suffered an acquired brain injury and consequent intellectual disability, such that he would not be in a position to participate in a discussion about his decision- making ability or a discussion about whether a person should be appointed to make his personal decisions. [5] The medical evidence also suggested that he was suffering depression. The doctor went on to state that even though the adult thinks he is ‘fine to make decisions’, he is unable to make rational decisions regarding any financial matters and had impaired short-term memory, with a low IQ. In conclusion, the health professional said that the adult was able to make all 1 Guardianship and Administration Act 2000 (Qld) Schedule 4. -- 2 of 9 -- 3 simple decisions but not make any form of complex decisions. Somewhat contradictorily, the practitioner said that the adult is able to understand and provide instructions with respect to an enduring power of attorney. [6] One would generally expect that a person who is not capable of making complex decisions and not capable of entering into discussions about his own decision-making ability or discussions about whether a person should be appointed to make his personal decisions, would not be capable of understanding and executing a power-of-attorney. [7] The matter before me was part heard on 18 February 2015 and continued on 16 June 2015. The adult did not attend the first day of the hearing. The administrator told the tribunal that she did not discuss attendance at the hearing with the adult. The adult’s mother attended at the hearing in person and she said that the forms indicated to her that ‘his attendance was not necessary’. The tribunal was told that the adult is a very busy person and the adult has a number of other things to attend to which meant he was not in attendance at the hearing. The adult was swimming, under the guidance of the carer, instead of being at the hearing. The clear inference was that the administrator and the adult’s mother did not believe that the adult’s attendance was necessary because he would not understand the nature of the proceedings. [8] The adult did attend on 16 June 2015 and I had an opportunity to make an assessment in relation to capacity. [9] I spent some time in direct dialogue with the adult. He indicated quite clearly that he is capable of making decisions in relation to health and personal matters, and I accept his conclusion in this regard. Quite candidly, he did indicate that he does not understand the nature and effect of decisions in relation to financial matters. That is, save for the most basic of financial matters. He was unable to identify the nature of any income he received except to say that he might receive a disability pension. He did not know the amount and did not know if he received income from other sources. When asked how he accumulated his assets, he said that before he was the victim of an assault, it was because of the income he earned. He did not know how much money he has or anything to do with the investment of his funds. He acknowledged that he is a risk to himself in financial matters and he would squander his funds if left to his own devices. [10] The adult gave no indication of an ability to possess money management skills. He was not able to provide any evidence of planning, problem solving abilities or organisational skills in relation to financial matters. His evidence suggests to me a severe limitation in his capability to deal with financial issues. The adult demonstrated no ability to understand the importance of obtaining independent financial advice or guidance. [11] The tribunal finds that the evidence establishes that the adult cannot understand the nature and effect of decisions about financial matters and is not capable of making financial decisions freely and voluntarily. -- 3 of 9 -- 4 Enduring power of attorney [12] At the request of the administrator, the adult did in fact execute an enduring power of attorney on 15 August 2014, appointing his sister BBE, as his attorney. The power of the tribunal to revoke the power of attorney [13] Understanding the nature and effect of the enduring power of attorney includes understanding the following matters— (a) the principal may, in the power of attorney, specify or limit the power to be given to an attorney and instruct an attorney about the exercise of the power; (b) when the power begins; (c) once the power for a matter begins, the attorney has power to make, and will have full control over, the matter subject to terms or information about exercising the power included in the enduring power of attorney; (d) the principal may revoke the enduring power of attorney at any time the principal is capable of making an enduring power of attorney giving the same power; (e) the power the principal has given continues even if the principal becomes a person who has impaired capacity; (f) at any time the principal is not capable of revoking the enduring power of attorney, the principal is unable to effectively oversee the use of the power2. [14] There is a presumption that the adult did have capacity to make the enduring power of attorney. It remains current and effective unless the tribunal is satisfied that the evidence presented to it is sufficient to rebut the presumption. [15] I have great concern in relation to the manner in which the power of attorney was prepared and executed. [16] The witness to the power of attorney was satisfied that the adult did understand the nature and effect of the documentation. Given my finding that the adult does lack capacity now, as did this tribunal in 2013, did the adult possess decision-making ability sufficient to give a power of attorney when he did? [17] The tribunal heard from the administrator, not the adult, as to the background that led to the preparation and signing of the document. The administrator prepared a generic form of Western Australia power of attorney by completing it, predating it and then posting it to her brother, the 2 Powers of Attorney Act 1998 (Qld) s 41. -- 4 of 9 -- 5 adult. The adult did not ask anyone to prepare a power of attorney for him. He had no idea as to the need, if any, for a power of attorney in his circumstances. As directed by his sister, the adult went to the courthouse, accompanied by his mother and a carer, where he signed the power of attorney. The adult’s mother, who attended the hearing, indicated that she was with her son when he signed the (witnessed) power of attorney document at the courthouse. She says that she and her son were with the witness for 10 to 15 minutes but it might have been longer. She says that the witness did ask a number of questions of the adult. She says that they talked about off-topic matters as well as the power of attorney itself. [18] Why did the adult sign a power of attorney in August 2014? The adult, who did appear in person on 16 June 2015, did not know. His attorney/administrator did provide the answer. She said she had made the decision, on his behalf, to purchase vacant land in Western Australia and sign a building contract to construct a home on it. She felt that it was in his best interest to invest his funds in this manner. The adult did not seem to know she had done this with his money; not that he appeared to care particularly about money at all. The Western Australia regulatory authorities were not prepared to act upon the order made by the Queensland Civil and Administrative Tribunal (QCAT) in February 2013 in this regard. She then arranged for a power of attorney to be prepared in Western Australia and sent to the adult in Queensland, ready for him to sign. [19] At the hearing, the adult stated that he does not understand the nature of the power of attorney. He has ‘heard of the term and he thinks he signed one in Hervey Bay’. I received a copy of the enduring power of attorney dated 15 August 2014 and signed by the adult before a justice of the peace in Hervey Bay. The attorney accepted the appointment and then, it would appear that she immediately acted upon it. [20] A principal may make an enduring power of attorney only if the principal understands the nature and effect of the enduring power of attorney3. There is nothing in the evidence that suggests that, at the time of signing the power of attorney, the witness to the adult's signature had the benefit of any medical evidence to assist him to determine the adult's capacity to give enduring powers. Also according to the witness, the document is incorrectly dated4. [21] I am not satisfied that the power of attorney was signed in circumstances where the adult did understand the nature and effect of the documentation. Need for the appointment of an administrator [22] The tribunal adheres to the general principle of least restrictive option. Before the tribunal can appoint an administrator to make financial decisions for an adult with impaired decision-making capacity, the tribunal must be satisfied that there are circumstances that establish a need for an 3 Powers of Attorney Act 1998 (Qld) s 41. 4 Statement of the witness provided to the tribunal registry. -- 5 of 9 -- 6 administrator5. Need is established if the tribunal determines that the adult is likely to do something in relation to the matter that involves, or is likely to involve, unreasonable risks to the adult’s property; and without appointment, the adult’s needs will not be adequately met or the adult’s interests will not be adequately protected. [23] The adult has substantial assets and he is not capable. Someone must assist him in dealing with his financial affairs. I am satisfied there is a need for an administrator. I am satisfied that without appointment, the adult is likely to do something that involves, or is likely to involve, unreasonable risk to his financial welfare or property and without an appointment the adult's needs will not adequately be met or the adult's interests adequately protected. Whom should the tribunal appoint as administrator? [24] The tribunal must consider the appropriateness provisions outlined in section 15 of the Guardianship and Administration Act 2000 (Qld). [25] The adult lives in Queensland. In fact, he is currently living with his mother on a commercial basis (paying $300 per week by way of board/food/general living expenses such as the cost of bus travel/toiletries/clothes/general spending money for his own use). He is welcome to stay there, according to his mother, as long as he likes. There appears to be no thought of making any change to his living arrangements in the near future. The family home was modified to cater for the needs of the adult. [26] The administrator was required to provide advice to QCAT that she had sought advice from financial advisers. The administrator/attorney did seek financial advice but did not like the advice received from financial advisers. The tribunal did not receive any independent verification of this fact. She made adverse comments about the cost associated with such advisers. [27] Presumably, contrary to the advice provided by financial advisers, the administrator/attorney made the decision to construct a home in the suburbs of Perth, Western Australia, for letting on a commercial basis. The house, once constructed, will consume almost the entirety of the adult’s funds. [28] The administrator/attorney says that prior to making the decision to purchase an investment house and land package in Western Australia on behalf of her brother she exercised due diligence with careful consideration of the following: a) information from the Internet regarding the average growth rates of property in the area b) she approached local rental property managers for information regarding current rental demand and possible expected rental return 5 Guardianship and Administration Act 2000 (Qld) s 12. -- 6 of 9 -- 7 c) she requested an informal valuation of her own property, which is located in the same area, in order to gauge any change in capital growth since her purchase in 2010 d) she identified major developments such as a multi-million-dollar expansion to an existing shopping centre e) after reviewing the facts she believed the property purchased to be a sound long-term growth prospect consistent for guaranteed low-risk income for her brother [29] The administrator/attorney says she consulted family members in relation to the proposed acquisition. However, her mother, who appeared in support of the adult at the hearing, said that she does not understand these financial issues. With prompting, the administrator/attorney informed me of a third sibling, who did not appear on either day of the hearing and did not provide any evidence to the benefit of the tribunal. Conclusion [30] I have concerns in relation to the actions of the administrator/attorney. a) She acknowledged investing the bulk of funds entrusted to her in the house and land package, apparently unconcerned as to the lack of liquidity. b) She apparently did consult but dismissed the advice of financial advisers. c) She has not prepared, or apparently considered preparing, taxation returns for the adult. Prompted, she indicated that she will consider doing so. d) She appeared to have limited understanding of the nature of the now settled litigation in Western Australia undertaken by her as litigation guardian for her brother. e) She gave limited reasons as to why she chose National Trustees as trustee of the proceeds of the litigation. She does not appear to have factored in any income earned for the benefit of her brother in her decision-making processes. [31] The work undertaken by the administrator was subject to review. The financial assessment report, prepared under the Guardianship and Administration Act 2000 (Qld) under the hand of Clinton Miles, Director of Disability Services dated 27 January 2015, was uncomplimentary of the administration work undertaken by the administrator/attorney. Specifically: a) the report writer concludes it is probable that the administrator is not managing the estate in the adult’s best interests and in accordance with the Guardianship and Administration Act 2000 (Qld) b) the adult does not have any growth assets -- 7 of 9 -- 8 c) no evidence was provided to suggest that financial advice was sought prior to the contract (for the vacant land) being executed by the administrator of behalf of the adult d) the examiner was not satisfied there were no significant or unexplained changes to the adult’s asset base e) a settlement statement has not been lodged in relation to the vacant land f) the administrators did not provide a Centrelink/DVA income and asset statement g) on the other hand, the report writer did, somewhat contradictorily, conclude that the adult’s investments appeared to be made with consideration of the adult’s particular needs for liquidity, diversification, maintaining real value, capital appreciation and otherwise in accordance with the prudent person rule [32] In her role as administrator, the adult’s sister was involved in a conflict transaction. The administrator/attorney indicated that in or about 2011 she borrowed the sum of $25,000 from the adult and that she repaid this amount. [33] In relation to the conflict transaction I was informed that: a) The Western Australian tribunal considered the matter. Member S Gillett of the State Administration Tribunal in Western Australia did revoke an administration order in favour of the administrator/attorney on 25 October 2013. b) The administrator raised this issue before the Queensland Civil and Administrative Tribunal (QCAT) at the hearing in February 2013. I have the benefit of the member’s notes in this regard and while I see extensive commentary, I do not see any comments made in relation to the conflict transaction. [34] The adult’s sister requested I deliver my decision promptly because an administrator must consider how to deal with the adult’s litigation proceeds in Western Australia. [35] The tribunal determines that: a) there is a need for a decision in relation to financial matters, b) the adult is likely to do something in relation to financial matters that involves, or is likely to involve, unreasonable risk to the adult’s property, c) without an appointment, the adult’s needs will not adequately be met or the adult’s interests adequately protected, and d) there is a need for the appointment of an administrator. [36] The tribunal considered the adult’s sister who has been acting as his administrator/attorney and the Public Trustee of Queensland. The tribunal finds the adult's sister has failed to consult or, at least, consider the -- 8 of 9 -- 9 recommendations of suitably qualified financial advisers. She has elected to tie up the bulk of the adult's funds in a long-term asset, without due regard for appropriate diversification of the funds. [37] In GJP [2015] QCAT 23, (then Acting) Senior Member Endicott emphasised the importance of the prudent person rule in relation to the issue of diversification and accessibility of funds. The prudent person rule is set out in section 24(1) of the Trusts Act and requires administrators to have regard to many factors when making investments including the desirability of diversifying investments and having regard to the risk of capital or income loss or depreciation6. [38] The tribunal is of the view that an independent administrator would be better placed to liaise with all interested parties, assess the relative merits of options for decisions on financial matters and make decisions that best meet the adult’s needs. In this respect, the Public Trustee of Queensland is an independent decision maker and has extensive skills and experience. The Public Trustee of Queensland is considered the appropriate appointee as administrator in this case. 6 See paragraph [8]. -- 9 of 9 --