On 6 June 2019, the Queensland Civil and Administrative Tribunal ordered the Public Trustee, pursuant to section 59 of the Guardianship and Administration Act 2000 (Qld), to compensate the applicant $37,404.96 for its failure to act with reasonable diligence to protect the interests of the applicant in its administration of a $500,000 award to the applicant for personal injury suffered in a motor vehicle accident.
Originally initiated in 1 December 2009, this is an application by CRG for compensation for the Public Trustee's contravention of section 35 of the Act by failing to act with reasonable diligence to protect the interests of CRG in the exercise of its power regarding a loan it provided to CRG's father, and also certain payments to CRG's father. The Public Trustee was the administrator of a $500,000 award to CRG, then aged 18, for personal injury suffered in a motor vehicle accident and was appointed due to CRG's lack of capacity.
The 'loan matter' involved the Public Trustee in February 2006:
- providing (CRG's father) with a loan of $20,000;
- failing to pursue (CRG's father) for repayment of the loan when he ceased making loan payments;
- crediting the loan amount with payments despite CRG not living with (his father); and
- making other payments to (CRG's father) after the date of the loan.
The relevant 'payments' involved the Public Trustee:
- In 2007, providing $1,200 for board and lodging payments into CRG father's bank account when CRG was not living with his father; and
- A number of individual payments from November 2006 to March 2007 totalling $3,614.16 to CRG's father.
This application also joined the Public Guardian as a respondent for a single issue regarding the Public Guardian providing allegedly inaccurate or misleading information to the Public Trustee, but did not succeed in establishing an entitlement compensation.
The Public Guardian and Public Trustee were appointed under the Act. The Tribunal's jurisdiction to order compensation for CRG is solely derived from s 59 of the Act which empowers the Tribunal to compensate an adult for a loss caused by an appointee's failure to comply with the Act in the exercise of a power.
Exercise of power
Under s 33 of the Act, the administrator is authorised to do, in accordance with the terms of their appointment, anything in relation to a financial matter that the adult could have done if they had capacity when the power was exercised. All General Principles in sch 1 of the Act, except for General Principle 10, must be taken into account in the exercise of power. The General Principles are concerned with the recognition of the adult's human worth and dignity as a valued member of society, and empowerment to exercise basic human rights and the like.
The Tribunal held the Public Trustee was subject to the duties within part 3 of the Trusts Act 1973 (Qld) when making the loan to CRG's father. These duties are incorporated into the Act by way of s 51 of the Act and are imposed on the Public Trustee in making the loan as it constitutes an 'investment' within the meaning of part 3 of the Trusts Act 1973.
Relevantly, in exercising the power to invest, s 22(1)(a) Trusts Act 1973 requires the Public Trustee to exercise the care, diligence and skill a prudent person engaged in the profession of acting as a trustee or investing money would exercise in managing the affairs of other persons. This is read in light of the General Principles which must be taken into account by the Public Trustee and are capable of modifying their duties under part 3 of the Trusts Act 1973 (Qld).
Having regard to the circumstances of the loan, the Tribunal found the Public Trustee made numerous obvious errors in considering the prudency of the loan and in the completion of the loan arrangements and as a result, failed to exercise the care, diligence and skill a prudent person engaged in the profession of acting as a trustee or investing money would exercise in managing the affairs of other persons.
The loan had been requested by CRG's father and stepmother to consolidate their debts as CRG's father had given up his full time work to care for CRG. However, the Public Trustee failed to inquire into exactly what the debts were or how they developed. The Public Trustee's only assessment of the income and expenditure of the family was based on the figures in the loan application which stated considerably lower expenditure figures than their previous loan application two years earlier. On the true figures, it was clear the family was living beyond its means. The assessment that the father could service the loan repayments was flawed.
A second error was made when the loan agreement was drafted. The loan agreement was made solely between the Public Trustee and CRG's father and did not include the stepmother. This is despite the Public Trustee being instructed to include the stepmother in the agreement as importantly, she was in full time permanent employment and CRG's father was not, meaning in the event of default, there was a much better chance of the loan being repaid if the stepmother was included in the agreement.
A third error was the Public Trustee's failure to consider whether it was right to apply interest on the loan, resulting in no interest being levied on the loan. In light of these errors, the Tribunal concluded that the Public Trustee's loan to CRG's father was not an investment that a prudent person engaged in the profession of acting as a trustee or investing money for other persons would have made in managing the affairs of other persons.
Regarding the board and lodging payments, the Tribunal pointed to the Public Trustee's failure to consider that the $20,000 loan had been made just a year ago which was supposed to have capitalised payments for board and lodging. Further, the Public Trustee had failed to consider that there were a total of five months arrears in CRG's repayment of the loan. The failure to perform these two checks caused the Tribunal to order that CRG be compensated for the board and lodging payments.
Regarding the individual payments, the Tribunal considered each payment, identified that CRG did not benefit from the payments, would not reasonably be expected to have made those payments as gifts to his father, and ordered that CRG be compensated for those payments.
The Tribunal ordered the Public Trustee to make a payment to CRG of $18,199.98 ($14,585.80 for the unpaid loan, $3614.16 for the payments) and interest of $19,205, a total of $37,404.96.