The appointment of an administrator after a court compensation trust has been established can be a complex process, as illustrated by the case of LS [2019] WASAT 97.
In this blog post, we will discuss the appointment of an administrator after a court compensation trust has been established, using the LS case as an example, while also referencing relevant legislation from the Guardianship and Administration Act 1990 (WA) (GA Act).
Background
In the LS case, a young man sustained a severe brain injury in a motor vehicle accident and later received a settlement of just over $8 million from a personal injuries claim, which was placed in a court compensation trust [1, 5].
A trustee company was appointed as administrator to manage the funds [2, 9]. This appointment was made under the GA Act [3].
The Need for an Administrator
The appointment of an administrator is essential when a person is deemed unable to make reasonable judgments relating to their estate due to mental disability [13].
In the LS case, the Tribunal found that LS was unable to make reasonable judgments relating to his estate because of his acquired brain injury, and that an administrator was needed [13].
This determination was made subject to the principles set out in s 4 of the GA Act, including the presumption of capacity and the best interests of the person [14].
The Cheyne Decision and Its Impact
The need for the appointment of an administrator in cases like LS's arose from the decision in Perpetual Trustee Company Ltd v Cheyne [2011] WASC 225 (Cheyne) [10].
The Cheyne decision established the following essential elements for such cases [59]:
A person is granted an award of damages arising from a personal injury claim.
A court compensation trust is created, and a trustee is appointed.
The trustee is given the power to apply funds for the maintenance, welfare, advancement, or benefit of the person.
If the person is assessed as having total and permanent disability, funds can be transferred to a superannuation fund for tax benefits.
Funds in the superannuation fund can be immediately used for the person's needs.
Funds can move between the court compensation trust and the superannuation fund.
The Cheyne decision allowed for a practical solution to protect the interests of a person under disability who is subject to a court compensation trust and stands to receive significant financial benefits from the application of those funds to superannuation [62].
Tribunal's Independent Jurisdiction
The Tribunal has independent jurisdiction under the GA Act to appoint an administrator for a person's estate [63].
It must independently find that the person satisfies the requirements of s 64(1) of the GA Act, subject to the principles set out in s 4 [63].
The Tribunal must also be prepared to revoke an existing administration order if the person no longer meets the statutory test for incapacity [65].
Key takeaways
The appointment of an administrator after a court compensation trust has been established is crucial for protecting the interests of a person under disability.
The Tribunal has independent jurisdiction under the GA Act to appoint an administrator and must ensure that the person meets the requirements for incapacity.
The Cheyne decision provided a practical solution for these situations, offering a balance between the need for financial management and the best interests of the person under disability.
Cases referred to in this blog:
LS [2019] WASAT 97
Perpetual Trustee Company Ltd v Cheyne [2011] WASC 225