AMFE [2012] QCAT 301

CITATION: AMFE [2012] QCAT 301 PARTIES: AMFE APPLICATION NUMBER: GAA4992-12 MATTER TYPE: Guardianship and administration matters for adults HEARING DATE: On the papers HEARD AT: Brisbane DECISION OF: C Endicott, Senior Member DELIVERED ON: 19 June 2012 DELIVERED AT: Brisbane ORDERS MADE: ADR as the appointed administrator for AMFE is authorised to enter into a conflict transaction being the transfer of the one third share held by AMFE in the property situated at Morayfield Queensland to ADR as trustee of The AMFE All Needs Protective Trust. CATCHWORDS: ADMINISTRATION – where administrators held property jointly with an adult with impaired capacity – where administrator made a decision to transfer by way of gift the legal interest owned by the adult in the property – where transfer was a conflict of interest transaction – where transfer was not authorised before being effected Guardianship and Administration Act 2000, ss 31, 37, 50, 54, 152 Guardianship and Administration Tribunal v Perpetual Trustees Qld Limited [2008] QSC 49 APPEARANCES and REPRESENTATION (if any): This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (QCAT Act). -- 1 of 4 -- 2 REASONS FOR DECISION [1] AMFE has resided with her parents, ADR and AKR, in a house at Morayfield for many years. Her parents had been appointed as her administrators in 2003 after a finding that AMFE has impaired decision making capacity for financial matters. That appointment was reviewed and continued in 2008 for a five year term. [2] AMFE’s parents were aware that they are aging and they wanted to plan for her future security. AMFE’s parents decided that setting up a trust would be the best way to meet her needs. They had previously attended several workshops, seminars and information sessions where they sought advice on setting up a trust fund as an option of securing AMFE’s residential needs into the future. [3] They contacted a lawyer whom they believed was well informed about the legal issues associated with families with a family member with a disability. They provided their lawyer with information about their daughter and their concerns for the future. That information included the fact that they were the appointed administrators for AMFE. They instructed their lawyer to set up The AMFE All Needs Protective Trust. The trust was established on 6 November 2009. [4] ADR is the trustee of the trust and AMFE is the primary beneficiary of the trust. There are a range of discretionary secondary beneficiaries of the trust including the siblings of AMFE, their spouses and children. [5] AMFE had been since 2004 a joint owner as a joint tenant with her parents of the house in which she resides in Morayfield. On 5 January 2010 the joint tenancy was severed and AMFE and her parents then held the property as tenants in common with each having a one third interest in the property. On 14 January 2010 AMFE’s interest was transferred for no financial consideration to ADR as trustee of the trust. [6] The effect of that transfer was to alienate from AMFE the interest she had held in the property. Her estate was decreased by the actions of her administrators and her legal interest in the property has since 14 January 2010 been held by one of the administrators subject to the terms of the trust. [7] It is difficult to ascertain what benefit the setting up of the trust and the transfer of her legal interest in the property to the trust has had for AMFE. Before the series of steps embarked on by her administrators, AMFE had had a realistic potential to own the entire interest in the property on the deaths of her parents. The risk that she would be vulnerable to the schemes of persons who prey on adults with impaired capacity was already minimised by the appointment of administrators. They had the obligation to exercise their powers with reasonable diligence to protect AMFE’s interests. However by the end of the steps taken by her administrators, AMFE no longer had the potential to own any legal interest -- 2 of 4 -- 3 in the property but rather one of her administrators was the legal owner of her former interest in the property. [8] Subject to subparagraph 2, section 50 of the Guardianship and Administration Act 2000 requires administrators to keep their property separate from the adult’s property. In contravention of that obligation, ADR is now the legal owner of AMFE’s property interest which she holds on trust for AMFE and for other beneficiaries. The property interest was gifted by the administrators to the trust in contravention of section 54 of the Guardianship and Administration Act 2000. QCAT has no power to excuse a contravention of the Act. [9] The actions of the administrators in contravening their statutory obligations could call into question whether they continue to be competent as administrators under section 31(5)(a) and (d) of that Act. The administrators were directed to provide an explanation for their actions and in doing so gave the tribunal the information set out in paragraphs 2 to 5 of these reasons. [10] I accept the evidence of the administrators that they had no intention of contravening the Guardianship and Administration Act 2000. I accept that they were unaware that the transfer by gift of their daughter’s property to ADR contravened their statutory obligations and put at risk their continued role as her administrators. I accept that they had acted on what they had believed to be correct legal advice and that they were distressed to learn that their actions were misconceived. [11] The transfer of the property interest of AMFE to one of her administrators to be held in trust for AMFE and for other family members as beneficiaries gave rise to a conflict of interest. ADR faced a conflict between her duty as an administrator to comply with her obligations to act diligently to protect her daughter’s property rights and the interests of her other children who by the transaction gained a beneficial interest in what had formerly been AMFE’s third share of the house property. [12] The tribunal can authorise an administrator to enter into a conflict of interest transaction.1 In Guardianship and Administration Tribunal v Perpetual Trustees Qld Limited the Supreme Court found that authorisation can be given retrospectively.2 [13] There is little practical purpose to require the administrators to arrange a transfer of AMFE’s property rights back to her. AMFE has not been in the position to make decisions about her property rights since 2003 when her administrators were first appointed. Her administrators have made a decision to have her property rights held in a trust which is designed for her benefit and to secure her future wellbeing. While that decision was unnecessary and was apparently based on legal advice that did not take 1 Section 152 of the Guardianship and Administration Act 2000. 2 Guardianship and Administration Tribunal v Perpetual Trustees Qld Limited [2008] QSC 49. -- 3 of 4 -- 4 into consideration the legal obligations of the administrators, it was a decision honestly made by loving and concerned parents. [14] I am prepared in those circumstances to authorise the conflict transaction. However it is most concerning that a legal practitioner could provide advice on such an important issue to a family without properly considering the duties of administrators. The advice to proceed with the unauthorised gifting of AMFE’s property to her administrator to hold in trust suggests a lack of understanding of the provisions of the Guardianship and Administration Act 2000. The advice resulted in the administrators contravening that Act and placing their coveted role as decision makers for their daughter at risk. I would expect that the administrators would seek to have AMFE reimbursed for any costs she incurred as a result of the transaction. -- 4 of 4 --