Re KA

Upon an exercise of protective jurisdiction, responsive to a notice of motion filed by the plaintiff on 21 September 2020, on 18 November 2020 I made interlocutory orders (including an order for the appointment of the NSW Trustee as receiver and manager of a fund held in the trust account of the fourth defendant, the solicitor on the record for the fifth defendant) designed to facilitate: (a) an independent medical examination of the fifth defendant, directed towards provision of a report to the Court on her capacity for self-management; and (b) the appointment of a visitor to attend upon her to understand, and to report to the Court on, her current needs and her views about the conduct of her affairs generally.

The motion was heard on the basis of affidavit evidence on both sides of the record (to which evidence no objection was taken by any party) without cross examination of any deponent. The fifth defendant was not presented to the Court for examination.

The orders were made following a hearing on 30 October 2020; an adjournment of the proceedings to permit the parties to make inquiries (thus far unsuccessful) about the availability of an independent medical expert with Serbian language skills, to accommodate the fifth defendant’s cultural background; the provision by the NSW Trustee to the Court, and the parties, of a report dated 15 November 2020; and a resumption of the hearing on 18 November 2020, when submissions as to the form of the Court’s orders were entertained.

At the time orders were made on 18 November 2020, the parties expressed themselves to be content for the orders to be made without the publication of formal reasons.

On 20 November 2020 the solicitors on the record for the first to third and fifth defendants requested that formal reasons be published. These reasons are published in response to that request.

The defendants did not challenge: (a) the jurisdiction of the Court to make the orders made on 18 November 2020; (b) the standing of the plaintiff to apply for protective orders affecting the fifth defendant; (c) the bona fides of the plaintiff’s application, beyond expression of a case that the fifth defendant wishes to have nothing to do with him; or (d) the appropriateness of receivership orders to facilitate an independent review of the fifth defendant’s circumstances.

The major point of concern expressed on the defendants’ side of the record about the Court’s orders appears to be what is reported to the Court to be a reluctance on the part of the fifth defendant to submit to any form of medical examination. A determination that such an examination should be conducted having been made, no substantial controversy attached to the Court’s other orders, all lawyers anticipating that they would work with the NSW Trustee in its performance of the limited functions conferred on it by the orders.

Nevertheless, it should be noted, part of the fifth defendant’s opposition to a medical examination, as was reported to the Court, ostensibly on her behalf, may be a resistance to any ongoing engagement with the NSW Trustee.

The plaintiff is a retired minister of religion in a church to which the fifth defendant once belonged, if (in her judgement) she does not now belong. The church in question is of a denomination of respectable reputation.

The defendants have adduced affidavit evidence to the effect that the fifth defendant long ago ceased to be a member of that denomination and that she has since adopted another (equally respectable) denominational allegiance.

The plaintiff asserts an interest in the fifth defendant’s personal welfare as a pastor and as a friend. He maintains that he has no personal interest in her property, and no expectation of any such interest. Through his counsel, he has informed the Court that: (a) should the fifth defendant be found, upon an independent medical examination, to be capable of managing her own affairs; (b) should she, expressing her own independent views, say that she has no desire to continue personal contact with him; and (c) should it be found that she is safe, secure and being properly cared for in her current accommodation, he will not press for further protective orders affecting her.

The first defendant is an accountant to whom the fifth defendant has ostensibly granted an enduring power of attorney. The second defendant is a solicitor ostensibly appointed by the fifth defendant as an enduring guardian, jointly and severally with her nephew, DS. The third defendant is a tenant of the fifth defendant, a restaurateur. The fourth defendant is the solicitor on the record for the first, second, third and fifth defendants. The second defendant is the solicitor on the record for the fourth defendant.

The fifth defendant’s nephew, DS, currently a resident of Norway, is not presently named as a defendant in the proceedings; but he has filed an affidavit in the proceedings (through the office of the fourth defendant), ostensibly on behalf of the first, second, third and fifth defendants. He is actively involved in the proceedings.

The defendants’ evidence in opposition to the plaintiff’s motion comprises affidavits from each of the first defendant, the third defendant, the wife of the third defendant, the fifth defendant’s nephew, DS, and the fifth defendant herself.

The NSW Trustee has familiarity with the estate of the fifth defendant, having managed it for about five years until 19 June 2020 or thereabouts.

Between 9 October 2015 and 19 June 2020 the NSW Trustee managed the estate of the fifth defendant, as the estate of a “protected person” within the meaning of section 38 of the NSW Trustee and Guardian Act 2009 NSW, as the fifth defendant’s financial manager, pursuant to an order made by the Guardianship Division of the NSW Civil and Administrative Tribunal (“NCAT”) under the Guardianship Act 1987 NSW.

NCAT revoked the management order affecting the fifth defendant on 19 June 2020, not because it was satisfied that she was capable of managing her own affairs, but because it deemed it in her interests to do so: in the hope of reducing the costs of her ongoing care and thereby facilitating her continuing residence in her home of many years at North Bondi.

NCAT had no up-to-date medical evidence, and no evidence from a geriatrician, before it when it nevertheless decided that the fifth defendant remained incapable of managing her own affairs. It had one psychologist’s report from 2015 (which it preferred over the other available medical reports), another psychologist’s report from 2018 or 2019, and a short 2019 report from a general practitioner.

The fifth defendant is a wealthy, 83 year old, childless widow of Serbian origin, without family in Australia, characterised by NCAT (in terms not disputed by any party to these proceedings) as a person vulnerable to undue influence and exploitation. By all reports, she was in fact financially exploited by a tenant, Y, who died on 14 August 2019; and a member of staff of her professional care service may also have taken advantage of her to secure a personal benefit. On 29 November 2019, at a time when her estate was under management by the NSW Trustee, she executed an enduring power of attorney in favour of the first defendant and an enduring guardianship appointment in favour of DS, and the second defendant jointly and severally. Each of those instruments expressly recorded the fifth defendant’s determination to remain living in her North Bondi residence and to preserve it from sale.

On an application to NCAT by DS, filed on 9 December 2019, for revocation of the management order affecting her, the fifth defendant’s three enduring appointees (DS, the first defendant and the second defendant) persuaded the Tribunal on 19 June 2020 that it was in her best interests, and a means for her to remain living in her North Bondi home, for them to be allowed to manage her affairs without the intervention of a financial manager.

Paragraph 11 of the Tribunal’s reasons for decision (with editorial adaptation) provides a summary statement of the case advanced by DS in the Tribunal proceedings:

The applicant before the Tribunal, DS, was represented at the Tribunal’s hearing of 19 June 2020 by the fourth defendant and counsel retained by the fourth defendant.

The Tribunal’s reasons for decision contain no expression of concern about the plaintiff (who was not in attendance before the Tribunal on 19 June 2020) or any person associated with him. At the hearing before the Tribunal the application of DS (represented by the fourth defendant) was supported by each of the first defendant and the second defendant, all of whom gave evidence by telephone, as did the fifth defendant.

Shortly after the management order was revoked, in mid-August 2020, the fifth defendant was relocated from her North Bondi home to an address (which the defendants have insisted remain confidential) in Liverpool, where she is said to be living alone but with private care arrangements in place.

The fifth defendant’s relocation was apparently effected by the first, second and third defendants, without notice to the plaintiff, after an altercation about access to the fifth defendant at her North Bondi home, with a view to withdrawing her from any contact with people said to be associated with the church to which she once belonged, and of which the plaintiff is a retired minister. In addition to relocating the fifth defendant, the first and second defendants at about the same time applied on her behalf for apprehended domestic violence orders said to be necessary to keep church-connected individuals away from her.

No party to these proceedings advances the view that the fifth defendant is capable of managing her own affairs without assistance. In written submissions dated 29 October 2020 prepared by junior counsel for the first, second and third defendants, and (ostensibly) for the fifth defendant, the following submission was made:

On one view, the fifth defendant is not only a person who is incapable of managing her own affairs, and vulnerable to undue influence and exploitation, but she is a person who has come under the influence of persons who have taken her under physical control, isolated her from people with whom she formerly associated and (contrary to what was put to NCAT, but very quickly after NCAT’s decision) moved her away from her home of many years. The defendants adduced no evidence of an intention to return her to her home, with or without renovations to assist her to remain there. It evidently remains vacant.

Although the fifth defendant’s will dated 15 September 2015 (witnessed and ostensibly prepared by the fourth defendant) expressly acknowledged the plaintiff as the person (her priest) to whom she then entrusted her funeral service, the affidavits sworn by and on behalf of the fifth defendant in opposition to the plaintiff’s summons (and motion) attribute to the fifth defendant statements which demonise the plaintiff and the church. Those affidavits do not sit comfortably with the will, even allowing for a parting of ways between the fifth defendant and the plaintiff’s church.

In my opinion, it is in the interests of the fifth defendant (and, indeed, everybody involved in management of her affairs and with her care) for a determination to be made, with the benefit of an independent medical examination and the report of an independent visitor, as to what her capacity for self-management really is and precisely what her personal circumstances, and views, really are.

By a summons filed on 3 September 2020 and amended on 21 September 2020, the plaintiff seeks orders, inter alia, to the effect that:

At a directions hearing held on 14 September 2020, an order was made that the fourth and fifth defendants by themselves, their servants and agents, be restrained from disbursing, charging or otherwise dealing with the sum of $358,225.32 paid by the NSW Trustee to the fourth defendant (on trust for the fifth defendant) on or about 25 August 2020 without the prior leave of the Court or the written consent of the NSW Trustee.

Through senior counsel, the defendants have foreshadowed that, should an independent medical examination of the fifth defendant establish that she is not capable of managing her own affairs, an application may be made (on the plaintiff’s amended summons or by a cross summons yet to be filed) for an order for the appointment of a protected estate manager nominated by them.

All parties to these proceedings are of Serbian heritage. I do not exclude the possibility that tensions between the parties have a cultural dimension, but I put it to one side simply noting that “access” to the fifth defendant is a live, and explosive, issue. Each side of the record has sought court orders to limit contact with the other. On 3 September 2020 I made an order, on the application of the plaintiff, that, subject to further order, the defendants by themselves, their servants and agents be restrained from communicating with, approaching or making contact with, the plaintiff, or deponents of affidavits sworn in support of the plaintiff’s summons without the leave of the Court. On their side, as earlier recorded, the defendants have sought in the Local Court Apprehended Domestic Violence Orders against persons associated with the plaintiff.

The fifth defendant is said to have a reasonable command of English, but (senior counsel suggests) she might be more comfortable with the Serbian language if she were to be medically examined as to her capacity. The plaintiff and the NSW Trustee are prepared to accommodate this, if it can be accommodated, as would be desirable if it can be done.

The fifth defendant has an estate with an estimated value in excess of $6 million or thereabouts. As recorded by NCAT’s reasons for decision of 19 June 2020, the real estate she owns comprises her residence at North Bondi (with an estimated value of $3 million); a commercial property at Bondi (with an estimated value of $2 million), leased and operated as a restaurant by the third defendant; and a property at Surry Hills (with an estimated value of $1.5 million), owned as a tenant in common in equal shares with Y.

On 9 October 2015 NCAT made a financial management order committing management of the fifth defendant’s estate to the NSW Trustee. That order had the effect of suspending an enduring power of attorney which the fifth defendant had granted to Y on 16 February 2015.

On 26 July 2016 the Tribunal appointed DK as the fifth defendant’s guardian for 12 months to make decisions about her health care and who should have access to her.

On 24 July 2017 the Tribunal reviewed that guardianship order and appointed the Public Guardian for 12 months to make decisions about the fifth defendant’s health care, legal services and who should have access to her.

That guardianship order was allowed to lapse when reviewed by the Tribunal on 19 July 2018. At that time the fifth defendant was receiving support services in her home daily through a professional service provider retained by the NSW Trustee.

On 29 November 2019 (at a time when her estate was under financial management) the fifth defendant executed an enduring power of attorney appointment in favour of the first defendant. On the same date, she also executed an enduring guardianship appointment, appointing DS, and the second defendant jointly, as her enduring guardians.

The power of attorney includes an express limitation on the authority of the first defendant in the following terms (with editorial adaptation):

The guardianship appointment expressly records the following limitation on the authority of the fifth defendant’s guardians:

The guardianship appointment also records, as a direction to the fifth defendant’s guardians, the following:

If the power of attorney and the guardianship appointment are to be taken at face value, there is, at least, a doubt about whether either instrument could be said unequivocally to authorise the fifth defendant’s relocation from her home to a distant suburb of Sydney. What the first and second defendants (in particular) appear to have done in effecting her relocation appears to be justified by them on the basis that the decision to relocate was hers, rather than theirs, and it was a decision made voluntarily by her and with full information about factors affecting her welfare.

In revoking the financial management order affecting the fifth defendant on 19 June 2020, the Tribunal accepted assurances from DS and the first and second defendants that it was in the best interests of the fifth defendant that the financial management order be revoked because informal arrangements for her care had been put in place and, despite her considerable wealth, it was desirable to reduce her estate’s exposure to the substantial costs incurred in the provision of professional care for her, so that she could continue living in her North Bondi home.

The reasons for decision published by the Tribunal included the following (with editorial adaptation and emphasis added):

Notably, the Tribunal did not revoke the financial management order affecting her estate on the basis that she is capable of managing her own affairs, and its reasons included a concern to ensure that arrangements were in place to enable her to remain living in her own home.

In recognition of the Tribunal’s revocation of the financial management order affecting the fifth defendant, on or about 25 August 2020 the NSW Trustee paid into the trust account of the fourth defendant (a solicitor), on the account of the fifth defendant, the sum of $358,225.32. It is that fund which has been attached by the Court’s appointment of the NSW Trustee as a receiver and manager.

The defendants’ affidavits in opposition to the plaintiff’s motion emphatically articulate a case to the effect that the fifth defendant is capable of managing her own affairs (with the assistance of her co-defendants and DS); that she is fully able to express her own views (through them); and that (with their active support) she wants to have nothing to do with the plaintiff, members of his church, the NSW Trustee or any independent medical examination.

A problem with this evidence, however, is that, whilever the fifth defendant is kept under close quarters by or with her co-defendants and DS, their affidavits articulating an emphatic case (which does not sit comfortably with the case advanced before NCAT or with the nature of the fifth defendant’s long friendship with the plaintiff as her priest) cannot be taken as definitive or relied upon with confidence.

What the fifth defendant’s co-defendants and DS have done, in an apparent departure from what DS and the first and second defendants told NCAT they would do, and in taking control of the person and property of the fifth defendant to the total exclusion of the plaintiff, calls for an independent review by persons unconnected with any partisan interest.

By reference to the judgment of the Court of Appeal in Angliss v Urquhart [2001] NSWCA 441, the defendants contended that I should refrain from making an order for a medical examination of the fifth defendant against her wishes (as communicated to the Court by them, albeit with an affidavit said to have been affirmed by her).

That case was very different from this one. In adversarial proceedings the Court of Appeal was required to review orders (made by reference to Part 25 rule 5 of the Supreme Court Rules 1970 NSW, the equivalent of rule 23.4 of the Uniform Civil Procedure Rules 2005 NSW) for the medical examination of an elderly man, on the application of persons advancing their own interests, in circumstances in which there was already medical evidence available and the prospect of a court-ordered examination represented a particular risk to the old man’s health.

The current proceedings involve an exercise of protective jurisdiction (of the character described in Secretary, Department of Health and Community Services v JWB and SMB (Marion’s Case) (1992) 175 CLR 128 at 258-259) in which the welfare of a vulnerable person is the dominant consideration: Holt v Protective Commissioner (1993) 31 NSWLR 227 at 238; cf, NSW Trustee and Guardian Act 2009 NSW, section 39(a).

The facts of the present case more closely resemble the facts in the seminal judgment of the Full Court in In re WM (a person alleged to be of unsound mind) (1903) 3 SR (NSW) 552. There, the Full Court upheld an order for examination of a vulnerable person over the opposition of the persons in whose care and control the vulnerable person was.

Mindful of the judgment of the Full Court, I did not lightly exercise the Court’s discretion in favour of arrangements designed to facilitate the provision to the Court (and, through the Court, to the parties) of reports by an independent medical examiner and an authorised visitor. The circumstances in which the order for financial management of the fifth defendant’s estate was discharged by NCAT were in themselves unusual (because, despite her continuing incapacity for self-management, a management order was discharged), and the course of events following NCAT’s discharge of the management order suggests that closer attention needs to be given to the possibility that both her person and her property are in need of a regime of protective orders. There may be a need for orders designed to ensure that her affairs are managed under the supervision of the Court or subject to the regime for which the NSW Trustee and Guardian Act 2009 provides.

The orders made on 18 November 2020, for which these reasons provide an explanation, were in the following terms:

Particular care needs to be taken to ascertain the nature and extent of any (in)capacity the fifth defendant may have for self-management, and self-expression, because she evidently needs a high level of personal care; and a decision may well have to be made, sooner or later, to sell some of her real estate in order to fund the care she needs. There is a potentially complex inter-relationship between her functional capacity, management of her person (including guardianship and access) and management of her estate.

The fifth defendant’s denial of any incapacity for self-management, and her expressed reluctance to submit to an independent medical examination, are consistent with NCAT’s refusal to discharge the financial management order affecting her on the ground of a present capacity for self-management. It is not unusual for a person in need of protective management to express strong opposition to any form of management regime. It is sometimes an indicator of incapacity. Whether it is so in this case remains an open question.

The opposition of the fifth defendant’s co-defendants, and her nephew, to an independent medical examination of the fifth defendant invites doubt about their objectivity. If the fifth defendant is truly able to manage her own affairs, and to express her own independent views, and if the arrangements currently in place for her care are truly satisfactory, a way to demonstrate that is to facilitate her examination by an independent medical expert and to facilitate the work of an authorised visitor. Keeping her in close quarters, under the control of a small group of individuals who resist an independent review of her circumstances, carries a risk to her in management of her affairs that her welfare is not (as it should be) the paramount consideration.

The orders made on 18 November 2020 were designed to facilitate a review of her personal circumstances, allowing an independent assessment to be made of her capacity, her views, and her needs going forward. As illustrated by the limitation of the Court’s receivership order to a part only of her estate, they were designed to do what appears to be necessary, but no more than presently deemed necessary, to protect her interests and her welfare.