Incapacity in relationships: The tension between State Administrative Tribunal and the Family Court of WA

Introduction

Over the last 10 years or so the Family Court of WA (FCWA) and the State Administrative Tribunal (SAT) have had to deal with an increasing number of property settlement and maintenance claims and applications for guardianship and administration involving couples who are still married or in a de facto relationship but no longer live together because of failing health, old age, mental health or substance abuse issues.

The table below highlights the expected percentage increase in age of our Australian population and suggest these issues will become even more pronounced in the future.

 

[1] https://aifs.gov.au/facts-and-figures/ageing-australia

Enduring Powers of Attorney (EPA) and Enduring Powers of Guardian (EPG) are often in place as part of a suite of documents dealing with estate and succession plans.

But are there proper detailed discussions occurring with clients about the power and potential abuse that is open to appointees?

It is often the case that where one partner loses capacity, due to his or her health or age, the other partner may not be able to assume the role of guardian or administrator.  Others may be appointed such as adult children of a prior relationship or siblings of the affected partner, but is this the right choice?  Who is the best person to “step into the shoes” of the person with incapacity?  If it is an adult child of the relationship who is appointed then the potential exists for there to be significant conflict between that child, as the Guardian of the parent with a disability and his or her other parent.

I will endeavour to briefly deal with the tensions and confusions that arise between SAT and the FCWA and some practical issues for practitioners to consider in this area.

Overview of family law financial relief – parties not separated

In family law, a person with a disability requires the appointment of a case guardian.

A person with a disability means a person who, because of a physical or mental disability:

• does not understand the nature or possible consequences of the case; or
• is not capable of adequately conducting, or giving adequate instructions for the conduct of, the case.

Who may be appointed to the role as a Case Guardian?

Generally, a case guardian is a relative or a friend of the affected person, has no interest in the case adverse to that person and can fairly and competently conduct the case.

The Rules also provide for the appointment of a Case Guardian in circumstances where there is an existing “manager of the affairs of a party” (see Rule 102).

A person is “a manager of the affairs of a party” if they have been appointed pursuant to an EPG (Rule 105(2)).

Therefore, the appointment of a person to act on behalf of a client pursuant to an EPG should involve careful consideration of the consequences of that appointment so that he or she fully understands the power being provided to that person may well extend beyond that which is envisaged, usually health and lifestyle issues.

The functions and powers of a Case Guardian are summarised by the Full Court in Kannis & Kannis (2003) FLC 93-135 at page 78,261:

“The person who accepts the duties of a guardian ad litem does not do so as a matter of form.  The guardian ad litem on behalf of an insane person or an infant represents that person before the Court, and it is his duty to see that every proper and legitimate step for that person’s representation is taken.  He has got to give his mind to it, and decide for himself upon the material put before him what course of action to take…”

Note: guardian ad litem is now called a Case Guardian.

I suggest that the definition of “a manager of the affairs of a party” is not exhaustive and limited to a person under an EPG, by reference to the word “includes”. Accordingly, the appointment of administrator (temporary or plenary) by SAT would also provide a procedure for the appointment of a Case Guardian in Family Court proceedings by filing relevant documents.

An important point to understand is that the FCWA has the power to make both property settlement and maintenance orders involving couples that have not legally separated. This includes de facto couples in WA (but does not extend to de facto couples living outside of WA who must be separated first for the court to have jurisdiction).

If an adult child from a previous relationship is appointed a guardian under an EPG and the parent subsequently loses capacity then, notwithstanding the other partner may be caring for that person in an ongoing relationship in their family home, the adult child as Guardian can apply to the Family Court for an order appointing that person as the Case Guardian for his or her parent and press for financial relief now.

These applications are sadly not unusual.

The Family Court will examine whether or not it is just and equitable to proceed with the hearing of such application.

It gets more complicated if that parent subsequently dies before the FCWA proceedings are finalised. The Case Guardian falls away and is substituted by the executor of the deceased’s estate post the grant of probate. Again, I recommend that adult children not be appointed in the short-term to be executors because of the risk of putting them in conflict with their other parent.

Guardianship and Administration Act 1990 (WA)

The Guardianship and Administration Act 1990 (WA) (“GAA”) sets out all of the relevant provisions concerning dealing with a person under disability and several prior articles have been presented by STEP dealing with a detailed review of the legislation. I commend those wishing to have a greater understanding of the intricacies involved in matters under this legislation to review these very useful publications.

SAT is empowered to make decisions about the appointment of a guardian and/or administrator for a person who lacks capacity.

A guardianship order is made if a person is not able to look after their own health or safety. Guardianship orders enable the guardian to make personal, medical or lifestyle decisions – but remember the Guardian will also be considered the manager of the affairs of that party for Family Law purposes involving the appointment of a Case Guardian.

An administration order is made if a person is unable, by reason of a mental disability, to make reasonable judgements about all or any part of their estate. Administration orders enable the administrator to make financial or legal decisions.

Both guardianship and administration orders can either be plenary (all encompassing) or limited to particular functions.

Once SAT has determined that the person needs a guardianship and/or administration order, it must decide who to appoint. I refer to the separate articles that have been delivered by STEP concerning who may be eligible to be appointed a guardian or administrator and the steps involved in determining who may be the appropriate appointee.

Family Court: SAT– where is best?

Unfortunately, the GAA has not been structured to work with the provisions of the FLA and there is no possibility to transfer the proceedings from SAT to FCWA.  Accordingly, there are cases being dealt with by judicial officers in separate forums on behalf of parties under a disability with the potential to create great difficulties for practitioners and litigants.

The powers of FCWA in exercising its jurisdiction for both married and non-married couples is extensive and involves the ability to not only making orders between parties but also against a range of third parties, companies, trusts, financial institutions, issue injunctions, set aside transactions and deal with all property of whatever kind.

In contrast SAT’s powers are confined to dealing with the best interests of the person the subject of any application and making orders in favour of third parties for them to act on behalf of the incapacitated party.

Practitioners involved in discussions with clients about succession and estate planning, preparation of new Wills, EPG’s and EPA’s, review of trust deeds and long-term dynastic estate planning should include consideration of family law.

Once a practitioner is aware of concerns about incapacity for a client, it is in everyone’s interests to obtain advice from a specialist family lawyer of the options available and how best to address long-term needs and issues – it cannot be about early testamentary dispositions no matter how attractive it might be to the immediate members of family.

I would also urge practitioners to carefully review what, if any, EPA’s are in place and discuss this important issue with clients with limitations built into the document mindful of the particular circumstances of the individual’s.

This interesting area of law involving the crossover between the 2 jurisdictions will continue to develop at a fast rate.  Ultimately, the objective is to have in place an arrangement that properly supports parties in a committed relationship, be it married or de facto, deal with the difficult circumstances where they are unable to live together.  And for lawyers, accountants & financial advisers to work with SAT and FCWA to achieve a sensible and cost effective outcome for the parties who find themselves in these difficult positions.

Disclaimer

This article is not legal advice and the views and comments are of a general nature only. This article is not to be relied upon in substitution for detailed legal advice.

If you would like to republish this article, please contact us prior to doing so at info@osullivandavies.com.au.

Contact us today to schedule a consultation and take the first step towards securing your future.