CGJ [2012] QCAT 603

CITATION: CGJ [2012] QCAT 603 PARTIES: CGJ APPLICATION NUMBER: GAA8407-12 / GAA8632-12 MATTER TYPE: Guardianship and administration matters for adults HEARING DATE: 27 November 2012 HEARD AT: Brisbane DECISION OF: C Endicott, Senior Member DELIVERED ON: 27 November 2012 DELIVERED AT: Brisbane ORDERS MADE: 1. The application by CEW for leave to withdraw as administrator for CGJ is dismissed. 2. The application for authorisation of a conflict transaction for CGJ is dismissed. CATCHWORDS: GUARDIANSHIP – where an administrator has been appointed to manage financial decisions for an adult with impaired capacity – where administrator set up a special disability trust – where administrator also trustee of that trust – where proposal to contribute adult’s funds into that trust – where such a contribution is not permitted by the terms of the trust – where conflict transaction not authorised Guardianship and Administration Act 2000, ss 37, 54 APPEARANCES and REPRESENTATION (if any): APPLICANT: CEW appearing on his own behalf OTHER INTERESTED PARTIES: CEW’s son -- 1 of 4 -- 2 REASONS FOR DECISION [1] CGJ lives in the community and receives support from a service provider. CGJ has an intellectual impairment and she had lived with her parents for some years but after her mother passed away, arrangements were put into place for CGJ to live more independently to increase her mobility and social interaction. [2] Over the years, CGJ’s parents had been instrumental in putting aside money for their daughter’s future needs. In December 2007 her father applied to be her administrator for all financial matters and in March 2008 her father was appointed to that position for a period of five years. By the time of the application was made for the appointment of an administrator, savings of more than $80,000 had been accumulated. [3] By the time of that appointment, the accumulated funds had become the property of CGJ and were in a bank account and a term deposit in her sole name. The funds ever since December 2007 have been described as being the asset of CGJ absolutely. Her father as her administrator has reported each year to the tribunal that these funds are the property of CGJ. He confirmed that the information he provided about CGJ’s financial affairs, including her ownership of funds in excess of $80,000, was correct in various documents filed with the tribunal on at least six occasions over four years. [4] On 25 September 2012 CEW filed an application with QCAT for leave to withdraw as administrator for CGJ. He explained that he had established a special disability trust for his daughter and that he no longer needed to be her administrator. During a directions hearing held on 9 October 2012 CEW stated that the trust had been established and he was one of the trustees of the trust but he had not yet made any contributions to the trust apart from a nominal amount to set up the trust. CEW told the tribunal that he intended to put the accumulated savings into the trust. [5] In response to directions made by QCAT, CEW provided to the tribunal a copy of the trust deed and a copy of a letter from his lawyer setting out the advice that CEW had received. The written advice from the lawyer was short: You instructed me that you had saved a significant sum of money for the benefit of your daughter, and you were concerned to establish an arrangement such that [your daughter] would continue to benefit from the monies upon your death. I raised with you the possibility of establishing a Special Disability Trust pointing out advantages of so doing and you then instructed me to prepare the CGJ Special Disability Trust which I did… Pursuant to the Trust Deed, the Trust Fund and income derived therefrom is to be held on trust for your daughter, solely. [6] It would appear from the letter of advice quoted above and from the oral evidence given to QCAT by CEW that contrary to what he had reported to the tribunal since December 2007, he actually continued to regard the accumulated funds as his property and not as the property of his daughter. He became concerned about how the funds would be handled when he -- 2 of 4 -- 3 passed away and also when his daughter passed away. He had obtained advice that he could seek a court made will for his daughter but he had decided against that step due to the estimated legal costs of $40,000. [7] CEW told the tribunal that he had sought also advice from Centrelink and was told that he could set up a special disability trust for his daughter. [8] In the trust deed provided to QCAT by CEW, it is set out that the trustee may accept contributions from anyone who is eligible to be a donor. It is expressly set out in paragraph 3.2(c) of the trust deed that the trustee shall not accept any asset transferred to the trust by the principal beneficiary unless that asset was part of a bequest or a superannuation death benefit. CGJ is the principal beneficiary of the trust. The funds in question are not part of a bequest or a superannuation death benefit. [9] The funds owned by CGJ cannot be contributed to the trust under the terms of the trust deed. CEW was unaware of this fact until the hearing on 27 November 2012 and when made aware of the fact, he told the tribunal that he would ask his lawyer to remove that particular term from the trust deed. [10] The unchallenged evidence provided to the tribunal since December 2007 is that CGJ is the legal owner of funds in excess of $80,000 held in bank accounts in her name. Those funds owned by CGJ cannot be contributed into the special disability trust established at the request of CEW. The purposes and effect of a special disability trust is to permit family members to contribute their money for the support of a person with a disability and in doing so to quarantine the money from the impact of the assets test of Centrelink. It is not the purpose of a special disability trust to enable an adult with a disability to quarantine the assets of that person from the assets test of Centrelink. [11] Even if the terms of the trust permitted such a contribution, the transaction would be essentially a gift made by the administrator to himself as one of the trustees of the trust. In that event, the funds would change from being the property of CGJ absolutely to being held beneficially on her behalf by the trustees subject to the terms of the trust deed. In the event of CGJ’s death, the funds would not form part of her estate but would be distributed back to the donors. It was anticipated that the major donor would be described as CEW. [12] An administrator must apply the law when making decisions for an adult with impaired capacity. A gift of CGJ’s property to her father (even on the basis that he is her trustee) constitutes a conflict of interest for CEW between his role as administrator and his role as recipient of the gift. An administrator is required to avoid conflict transactions and can only enter into such a transaction if the tribunal authorises the transaction.1 An administrator is authorised by the Guardianship and Administration Act 2000 (GAA 2000) to give away an adult’s property only in certain specified 1 Section 37(1) of the Guardianship and Administration Act 2000. -- 3 of 4 -- 4 circumstances.2 CEW cannot rely on section 54 of GAA 2000 as authorisation for contributing the funds of CGJ to the special disability trust as none of the factors in section 54 apply in this case. [13] After considering the terms of the trust deed, the provisions of GAA 2000 and the evidence put forward by CEW, I was satisfied that the proposal for the contribution of the funds owned by CGJ into the special disability trust could not, and therefore should not, be authorised by the tribunal. The application for authorisation of that transaction was dismissed. [14] CEW had sought leave to withdraw as his daughter’s administrator under the mistaken belief that there would be no longer any need for that role to be performed by him once the special disability trust held her property. In view of the decision of the tribunal to refuse to authorise the contribution of the funds of CGJ into the special disability trust, I am satisfied that the need remains for CGJ to have an administrator. I dismissed the application by CEW for leave to withdraw from that role. [15] At the hearing I explained to CEW that I accepted that he had been motivated by proper intentions but his understanding of the relevant legal issues was unfortunately limited. It was disappointing that the advice he obtained did not delve sufficiently into the particulars of the case. It would have been readily apparent that CEW had been appointed as the administrator of his daughter. Even superficial enquires should have revealed that the moneys he sought to contribute into the special disability trust were the same moneys held in bank accounts in the name of CGJ and would be prevented from being contributed into the trust by the terms of the trust deed. Further research should have revealed that the obligations imposed on CEW as her administrator prevented the transaction he proposed. [16] I urged CEW to seek further advice and perhaps reassurance about the intestacy rules as to how the law deals with the property of CGJ after her death. It is likely that the effect of those rules accords with what CEW was hoping to achieve when he first embarked on his queries about what the future held in respect of the funds held by his daughter. 2 Section 54 of the Guardianship and Administration Act 2000. -- 4 of 4 --