BRYN JONES, AN INFANT by his Next Friend JEAN ISABELLA JONES & ANOR -v- MOYLAN [2000] WASCA 361

Reported Decision:	(2000) 23 WAR 65
Jurisdiction:	SUPREME COURT OF WESTERN AUSTRALIA	Citation No:	[2000] WASCA 361
Court:	THE FULL COURT (WA)
Case No:	FUL:60/1999	Heard:	9 FEBRUARY 2000
Coram:	KENNEDY J WALLWORK J McKECHNIE J	Delivered:	21/11/00
No of pages:	41	Judgment Part:	1 of 1
Result:	Appeal allowed
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Parties:	BRYN JONES, AN INFANT by his Next Friend JEAN ISABELLA JONES PETER JONES PAUL GERARD MOYLAN
Catchwords:	District Court Damages Gratuitous services to injured party Incapable plaintiff Moral obligation to make payment to provider of gratuitous services Power of the District Court to order payment Extent of jurisdiction in equity Whether ancillary to jurisdiction for awarding damages for personal injuries Principles to be considered in making payment
Legislation:	Nil
Case References:	Batchelor v Burke (1981) 148 CLR 448 Beasley v Marshall (No 4) (1986) 42 SASR 407 Commercial Developments Pty Ltd (Trading as Don Rogers Motors Pty Ltd) v Mercantile Mutual Insurance (Worker's Compensation) Limited (1991) 5 WAR 208 Griffiths v Kerkemeyer (1977) 139 CLR 161 Hobday v Attorney General (NSW) [1982] 1 NSWLR 160 Hunt v Severs [1994] 2 AC 350 In re Clore's Settlement Trusts [1966] 1 WLR 955 In Re Snowden (Dec'd) (1970) 1 Ch 700 Jones v Moylan (1996) 17 SR (WA) 77 Jones v Moylan (1997) 18 WAR 492 Kars v Kars (1996) 187 CLR 354 Library Board of Western Australia v Attorney General (WA) & Ors [1999] WASC 263 Lowther v Bentinck (1874) LR 19 Eq 166 Morris v Zanki (1997) 18 WAR 260 Pelechowski v Registrar Court of Appeal [1999] HCA 19; (1999) 162 ALR 336 Re DJR and the Mental Health Act 1958 (1983) 1 NSWLR 557 Re ES and the Mental Health Act 1958 (1984) 3 NSWLR 341 Schneider v Eisovitch [1960] 2 QB 430 Van Gervan v Fenton (1992) 175 CLR 327 W v Q (1992) 1 Tas R 301 Wilson v McLeay (1961) 106 CLR 323 Atlas Tiles Ltd v Vriers (1978) 144 CLR 202 Bailey v Government Insurance Office of NSW, unreported; SCt of NSW (Carruthers AJ); No 15051 of 1985; 29 July 1998 Brotherston v Royal Perth Hospital, unreported; DCt of WA (French DCJ); 20 December 1995 Cooper v Keller, unreported; DCt of WA (Kennedy DCJ); 11 April 1994 Cullen v Trappell (1980) 146 CLR 1 Griffiths v Gardiner, unreported; DCt of WA (Sadleir DCJ); 26 September 1996 Hayes v Yin, unreported; DCt of WA (Nisbet DCJ); No 3038 of 1998; 7 September 1999 Homewood v SGIC, unreported; DCt of WA (Sadleir DCJ); 7 February 1996 Maddelena v Board of Fremantle Hospital, unreported; DCt of WA (Clarke DCJ); 19 February 1998 MS v ES [1983] 3 NSWLR 199 Nestle v National Westminster Bank PLC [1993] 1 WLR 1260 O'Neill v Orchard, unreported; DCt of WA (Hammond CJDC); 7 August 1996 Paul v Rendell (1981) 55 ALJR 371 Pennant Hills Restaurants Pty Ltd v Barrell Insurances Pty Ltd (1981) 55 ALJR 259 Perpetual Trustee Co Ltd v Shelley (1921) 21 SR (NSW) 426 Smith v Reynolds [1989] VR 309 Smith v Reynolds (No 2) [1990] VR 391 Spencer v Williams [1984] VR 120 Stephenson v Geiss, unreported; SCt of Qld (Lee J); No 1360 of 1995; 4 July 1997 Todorovic v Waller (1981) 150 CLR 402 Wood v Pennell, unreported; DCt of WA (Sadleir DCJ); 28 April 1994 Wood v Public Trustee (WA) (1995) 14 WAR 251 Zanki v Morris, unreported; DCt of WA (Viol DCJ); 29 March 1996

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA TITLE OF COURT : THE FULL COURT (WA) CITATION : BRYN JONES, AN INFANT by his Next Friend JEAN ISABELLA JONES & ANOR -v- MOYLAN [2000] WASCA 361 CORAM : KENNEDY J

WALLWORK J

McKECHNIE J

HEARD : 9 FEBRUARY 2000 DELIVERED : 21 NOVEMBER 2000 FILE NO/S : FUL 60 of 1999 BETWEEN : BRYN JONES, AN INFANT by his Next Friend JEAN ISABELLA JONES

First Appellant (First Plaintiff)

PETER JONES

Second Appellant (Second Plaintiff)

AND

PAUL GERARD MOYLAN

Respondent (Defendant)

Catchwords:

District Court - Damages - Gratuitous services to injured party - Incapable plaintiff - Moral obligation to make payment to provider of gratuitous services - Power of the District Court to order payment - Extent of jurisdiction in equity - Whether ancillary to jurisdiction for awarding damages for personal injuries - Principles to be considered in making payment

(Page 2)

Legislation:

Nil

Result:

Appeal allowed

Representation:

Counsel:

First Appellant (First Plaintiff) : Mr E M Heenan QC & Ms J A Stone

Second Appellant (Second Plaintiff) : No appearance

Respondent (Defendant) : Mr B C Sierakowski

Solicitors:

First Appellant (First Plaintiff) : Karp & Steedman

Second Appellant (Second Plaintiff) : No appearance

Respondent (Defendant) : Brian C Sierakowski

Case(s) referred to in judgment(s):

Batchelor v Burke (1981) 148 CLR 448
Beasley v Marshall (No 4) (1986) 42 SASR 407
Commercial Developments Pty Ltd (Trading as Don Rogers Motors Pty Ltd) v Mercantile Mutual Insurance (Worker's Compensation) Limited (1991) 5 WAR 208
Griffiths v Kerkemeyer (1977) 139 CLR 161
Hobday v Attorney General (NSW) [1982] 1 NSWLR 160
Hunt v Severs [1994] 2 AC 350
In re Clore's Settlement Trusts [1966] 1 WLR 955
In Re Snowden (Dec'd) (1970) 1 Ch 700
Jones v Moylan (1996) 17 SR (WA) 77
Jones v Moylan (1997) 18 WAR 492
Kars v Kars (1996) 187 CLR 354
Library Board of Western Australia v Attorney General (WA) & Ors [1999] WASC 263
Lowther v Bentinck (1874) LR 19 Eq 166
Morris v Zanki (1997) 18 WAR 260
Pelechowski v Registrar Court of Appeal [1999] HCA 19; (1999) 162 ALR 336

(Page 3)

Re DJR and the Mental Health Act 1958 (1983) 1 NSWLR 557
Re ES and the Mental Health Act 1958 (1984) 3 NSWLR 341
Schneider v Eisovitch [1960] 2 QB 430
Van Gervan v Fenton (1992) 175 CLR 327
W v Q (1992) 1 Tas R 301
Wilson v McLeay (1961) 106 CLR 323

Case(s) also cited:

Atlas Tiles Ltd v Vriers (1978) 144 CLR 202
Bailey v Government Insurance Office of NSW, unreported; SCt of NSW (Carruthers AJ); No 15051 of 1985; 29 July 1998
Brotherston v Royal Perth Hospital, unreported; DCt of WA (French DCJ); 20 December 1995
Cooper v Keller, unreported; DCt of WA (Kennedy DCJ); 11 April 1994
Cullen v Trappell (1980) 146 CLR 1
Griffiths v Gardiner, unreported; DCt of WA (Sadleir DCJ); 26 September 1996
Hayes v Yin, unreported; DCt of WA (Nisbet DCJ); No 3038 of 1998; 7 September 1999
Homewood v SGIC, unreported; DCt of WA (Sadleir DCJ); 7 February 1996
Maddelena v Board of Fremantle Hospital, unreported; DCt of WA (Clarke DCJ); 19 February 1998
MS v ES [1983] 3 NSWLR 199
Nestle v National Westminster Bank PLC [1993] 1 WLR 1260
O'Neill v Orchard, unreported; DCt of WA (Hammond CJDC); 7 August 1996
Paul v Rendell (1981) 55 ALJR 371
Pennant Hills Restaurants Pty Ltd v Barrell Insurances Pty Ltd (1981) 55 ALJR 259
Perpetual Trustee Co Ltd v Shelley (1921) 21 SR (NSW) 426
Smith v Reynolds [1989] VR 309
Smith v Reynolds (No 2) [1990] VR 391
Spencer v Williams [1984] VR 120
Stephenson v Geiss, unreported; SCt of Qld (Lee J); No 1360 of 1995; 4 July 1997
Todorovic v Waller (1981) 150 CLR 402
Wood v Pennell, unreported; DCt of WA (Sadleir DCJ); 28 April 1994
Wood v Public Trustee (WA) (1995) 14 WAR 251
Zanki v Morris, unreported; DCt of WA (Viol DCJ); 29 March 1996

(Page 4)

1 KENNEDY J: The facts are set out in the reasons to be published by McKechnie J, and there is no need for my repeating them, except to the extent necessary for the purpose of these reasons.

2 The first appellant, by his then next friend, his father, Peter Jones, instituted proceedings in the District Court for damages for injuries sustained by him on 7 April 1989 when, at the age of eight, while crossing a road, he was struck by a motor vehicle driven by Paul Gerard Moylan, the respondent. As a result of the accident, the first appellant has been left with severe permanent disabilities and he will require constant care and supervision for the rest of his life. Negligence was admitted on behalf of the respondent and the parties, subject to the approval of the compromise by the District Court, conditionally agreed upon the amount of the settlement.

3 On an application for approval of the proposed compromise of the action by entering judgment for the first appellant against the respondent in the sum of $2,083,944.04 (Jones v Moylan (1996) 17 SR (WA) 77), there were essentially three issues raised for consideration. The first was the appropriateness of the proposed judgment sum. The second was whether Perpetual Trustees (WA) Ltd should be appointed trustee of the proceeds of judgment. The third was the manner of disbursement of the proceeds of the judgment and, in particular, whether the sum of $500,000 should be paid to Mr Peter Jones in his personal capacity for his own use, comprising $377,184.70 for past gratuitous services, $9,924.02 for past medical and related treatment and travelling expenses, $51,951.33 for past extra living expenses and $60,939.95 to assist with the purchase of suitable accommodation for the first appellant.

4 Wisbey DCJ held that the proposed compromise was in the interests of the first appellant and that it should be approved. In arriving at this conclusion, his Honour had regard to the issue of contributory negligence on the part of the first appellant. As to the trustee, the learned Judge declined to appoint Perpetual Trustees (WA) Ltd, being of the view that the reasons advanced for its appointment were not sufficiently cogent to displace what he described as the prima facie requirement of O 70 r 12 of the Supreme Court Rules, which had been adopted by the District Court. In relation to the application of the proceeds of the judgment, his Honour declined to authorise any payment to the second appellant for his rendering of past gratuitous services.

(Page 5)

5 His Honour said, at 81 - 82:

"In the application presently before me I have the power to approve the compromise and make appropriate directions pursuant to r 12(1). I do not have the power, by direction, to recognise the disabled person's moral obligations (if any); and I note in this case that apart from the conflict problem, there is no evidence upon which I could appropriately determine the value and extent of any such obligations.

At some future time, if an appropriate application is made pursuant to O 70 r 12(2) the court has power to give directions in respect of the application of the income or of the capital and income of the investment for the maintenance, welfare, advancement, or otherwise for the benefit of the plaintiff. If the Public Trustee considered that it required directions as to the appropriateness of a payment, such as the one being contemplated, it could make an appropriate application. It could, of course, make its own determination of the position without requiring the direction of the court."

6 The appellants appealed to the Full Court, seeking the payment by the Public Trustee to the second appellant of the sum of $500,000, or such other sum as the Court should deem fit, to pay for, inter alia, $377,184.70 for past gratuitous services and further seeking that the Public Trustee should pay the sum of $1,500,000, or such other sum as the Full Court should deem fit, to Perpetual Trustees (WA) Ltd, to be held by it on trust for the first appellant until further order, with Perpetual Trustees (WA) Ltd to have all the powers of investment and otherwise conferred by the Trustees Act 1962, including the power to make advances out of income or capital for the welfare, education and advancement of the first defendant, with liberty to apply to a Judge of the District Court of Western Australia at any time in respect of the management or investment of the trust moneys.

7 In the Full Court, the first and second appellants were represented by the same counsel, instructed by the one firm of solicitors. The Public Trustee was neither a party to the appeal, nor was it represented at the hearing of the appeal. Counsel instructed by the State Crown Solicitor appeared as amicus curiae. The respondent was represented by counsel, but only for the purpose of arguing against his having any further liability for costs in the matter.

(Page 6)

8 After a hearing lasting two days, the Full Court, differently constituted, by a majority, made the following orders:

"1. The appeal be and is hereby allowed.

2. The Public Trustee pay such sum as is held by it on trust to the first appellant (first plaintiff) as a consequence of order 4 of the orders made by his Honour Judge Wisbey on 29 October 1996, after deduction of its fee of $7,666 to Perpetual Trustees (WA) Ltd to be held by it on trust for the first plaintiff until further order, with Perpetual Trustees (WA) Ltd to have all powers of investment and otherwise conferred by the Trustees Act 1962 (WA), including the power to make advances out of income or capital for the welfare, education and advancement of the first defendant and with liberty to apply to a Judge of the District Court of Western Australia at any time in respect of the management or investment of the trust moneys.

3. The question of the amount to be paid (or that Perpetual Trustees (WA) Ltd will be directed by the Court to pay) to the second appellant for

(i) past gratuitous services provided to the first appellant (first plaintiff) by the second appellant (second plaintiff)

(ii) past medical and related treatment, travelling expenses, and

(iii) past extra living expenses

be remitted to a Judge of the District Court for determination after hearing such evidence as is adduced by the appellants and upon notice to the respondent (defendant) and the State Crown Solicitor.

4. ….

5. …. "

9 Pursuant to the orders made by the Full Court, the matter came before Deane DCJ on 28 May 1998. The same counsel appeared for both appellants, but no other party was present or represented. It was then ordered that up to date financial information should be furnished to the

(Page 7)

court in this regard by the new trustee to assist it in arriving at its decision. The matter ultimately came on for hearing on 31 July 1998 and 5 August 1998 before Sadleir DCJ, who ordered the Perpetual Trustees (WA) Ltd, as trustee for the first appellant, to pay the sum of $61,875.35, being moneys actually paid out by the second appellant as next friend for his past travelling expenses and his past extra living expenses. His Honour declined to direct that any payment be made to the second appellant for the gratuitous services which he had rendered to the first appellant. A second appeal was then instituted by the appellants.

10 In the course of hearing this appeal, a question as to the jurisdiction of the District Court was raised, and it is necessary, in my view, to consider how this issue was dealt with by the Full Court which allowed the previous appeal and ordered the remission of the matter to the District Court.

11 In the previous Full Court (Jones v Moylan (1997) 18 WAR 492), Pidgeon J agreed with the reasons of Wallwork J and with the orders proposed by him. Murray J dissented. In their judgments, both Wallwork and Murray JJ gave consideration to the question of whether the District Court had jurisdiction (or power) to make an order authorising the payment sought.

12 In his reasons (at 496), Wallwork J said, in commenting on the earlier decision of this Court in Morris v Zanki (1997) 18 WAR 260:

"The court held that there is an ancient protective jurisdiction to establish a regime for the conservation of funds for the benefit of an injured person under a legal disability and that the ultimate source of the power and duty to protect the interests of a disabled person lies in the role of the Crown as

parens patriae

. It noted that initially the Court of Chancery had jurisdiction in respect of the estates of persons under a disability, with the Lord Chancellor acting as the delegate of the Sovereign. This is a jurisdiction which the Supreme Court of Western Australia has inherited as part of its inherited jurisdiction and specifically through section 16(1)(d) of the

Supreme Court Act 1935 (WA)

. The court held that this aspect of the court's jurisdiction is the subject of section 37(1) of the

Public Trustee Act 1941(WA)

. That section provides that the investment of moneys under the control or subject to any order of the Supreme Court shall be made by the Public Trustee. The provisions of O 70 r 12 are a reflection of those basic principles.

(Page 8)

The powers conferred on the Supreme Court and its practice and procedure in this regard carry through to the District Court: see

District Court Act of Western Australia 1969 (WA)

, sections 52, 53 and 57."

13 His Honour then turned to the issue of the payment being sought to be made in favour of the second appellant for the gratuitous services which he had provided to his son. He referred to the District Court Judge's reasons in which he had said that, in the application before him, he had the power to approve the compromise and to make appropriate directions pursuant to O 70 r 12(1), but that he did not have the power, by direction, to recognise the disabled person's moral obligations (if any). His Honour then went on to deal with the question of whether there existed a power in the learned District Court Judge to order any payment to the next friend for past gratuitous services and, if there were such a power, how much money should have been ordered to be paid in this case. He considered, with respect to the question of power, two questions. The first was whether the Court should ever order the payment of moneys on behalf of an incapacitated person to another person pursuant to a moral obligation and, secondly, whether in the present case there was a conflict of interest arising from the fact that the proposed recipient of the moneys was the next friend. His Honour said, at 502:

"With respect to the power of the court to order a payment in recognition of a moral obligation, assuming that the proposed recipient of the moneys is not the next friend, one of the considerations in an award of damages for past gratuitous services is that the defendant should not be in a better position because the carer has not charged the injured person, perhaps because the carer is a member of that injured person's family. In a case which is decided on the evidence, the award is made to the injured person to recognise the need that person had for the services which were provided: see

Kars v Kars

(1996) 187 CLR 354. In a defended case where the proposed recipient is not the next friend, and assuming that the plaintiff was mentally incapacitated, there would be a windfall to the injured person if that person was allowed to keep that part of the damages which had been awarded for past gratuitous services. Therefore, in my view, it is just that the court should have the power to order that those damages be paid to the carer in that situation. It is also consistent with the court acting in the best interests of the injured person."

(Page 9)

14 His Honour continued, at 505 - 506:

"It is important to bear in mind the words of Toohey, McHugh, Gummow and Kirby JJ in

Kars v Kars

(at 371-372) where their Honours said:

'It is enough to remember what Stephen J said in

Griffiths v Kerkemeyer

'The plaintiff should, I think, be regarded as beneficially entitled to the judgment he obtains without question of the imposition of any trust in respect of some part of his damages in favour of one who has rendered, or may in the future render, gratuitous services to him.'

This conclusion is now too deeply entrenched in this part of the law in Australia for this Court to re-open it. It is an accepted principle in Australia that the damages for past and future gratuitous services constitute a sum designed to provide for the injured plaintiff's established needs … The plaintiff might, or might not, reimburse the provider. According to the repeated authority of this Court, contractual or other legal liability apart, whether the plaintiff actually reimburses the provider is entirely a matter between the injured plaintiff and the provider.'

To answer the questions posed by me above, I am quite satisfied that this Court has the power to order a payment out of "

Griffiths v Kerkemeyer

" damages to a carer in a case such as this. As La Forest J said in

Re Eve

(1986) 31 DLR (4th) 1 at 17 of his celebrated judgment:

'… the courts will continue to use the

parens patriae

jurisdiction to deal with uncontemplated situations where it appears necessary to do so for the protection of those who fall within its ambit … To these remarks may be added those of Lord Manners who … expressed the view that 'It is … impossible to say what are the limits of that jurisdiction; every case must depend upon its own circumstances'. '

(Page 10)

La Forest J also quoted from Lord Denning who said:

'No limit has ever been set to the jurisdiction. It has been said to extend 'as far as necessary for protection and education : see

Wellesley v Wellesley

by Lord Redesdale …'

La Forest J also quoted from Sir John Pennycuick, who said:

'The Courts when exercising the parental power of the Crown, have, at any rate in legal theory, an unrestricted jurisdiction to do whatever is considered necessary for the welfare of a ward. It is, however, obvious that far reaching limitations in principle on the exercise of this jurisdiction must exist …'

La Forest J said (at 28):

'The courts have frequently stated that it (the

parens patriae

jurisdiction) is to be exercised in the "best interest" of the protected person, or again, for his or her "benefit" or "welfare".'

Applying the above comments, it is my view that, in a case like this where a parent is the next friend and the carer at the same time, a court has a duty to consider the present interests of the injured person. That requires the court, in my opinion, to make a judgment after hearing the evidence which the next friend wishes to put forward."

15 His Honour then expressed the view that the question of the sum to be paid to the next friend for past gratuitous services, past medical and related treatment, travelling expenses and past extra living expenses should be referred to a Judge of the District Court. He noted that the sum of $60,939.95, which had been claimed by the second appellant to assist with the purchase of suitable housing for his injured son was no longer an issue, as the Public Trustee had already arranged for the purchase of a house for him.

16 Murray J dissented both as to the appointment of the Perpetual Trustees (WA) Ltd and as to the payment to the second appellant of any sum for gratuitous services. He did not, however, as I read his judgment, challenge the jurisdiction of the District Court to determine the matter.

(Page 11)

17 At 509, his Honour said:

"I do not consider that his Honour [Wisbey DCJ] misunderstood the legal framework within which he was to decide the issue before him and in which the exercise of his discretion was to be undertaken. It has been held that this Court has an inherent jurisdiction, reflecting the role of the Crown as

parens patriae

, to approve the compromise of an action brought by a plaintiff under legal disability, so as to make enforceable the judgment thus obtained upon the court's satisfaction that it is for the benefit of the disabled plaintiff. The Public Trustee is the office which,

prima facie

, shall be given the management of the judgment fund, subject to the directions of the court. The

Public Trustee Act 1941 (WA)

, s 37, and the

Rules of the Supreme Court 1971 (WA)

, O 70, reflect that legal position. It is therefore right to say that the management of such moneys will be placed with the Public Trustee, subject to the supervision of the court, unless, upon cogent evidence, good reason emerges for taking the contrary course consistently with the performance by the court of its essentially supervisory and protective role … "

It would appear that this Honour, when referring to "the court", was referring to the District Court or the Supreme Court. When referring specifically to the Supreme Court, he clearly identified it as "this Court".

18 At 510 - 511, his Honour continued:

"The learned District Court Judge noted his general power under the inherent jurisdiction of the court and the Rules to make orders in respect of the payment to persons other than the person under a disability of amounts awarded in the judgment, provided such orders were for the benefit of that person. His Honour noted that orders of the type now sought had been made by other judges of his court on previous occasions. He noted that he had been referred to authorities decided in other jurisdictions which, however, were concerned with the powers of a trustee rather than the court sitting as he was. He concluded that whilst a trustee might, under certain circumstances, have power "to make appropriate payments to providers of gratuitous services for meeting the past needs of the incapable person", the court could not regard the making of such an order as relevantly for the benefit of the disabled person

(Page 12)

when there was no legal basis for any such claim by a provider of such services.

He therefore considered that he had no power to make an order which was effectively concerned "to recognise the disabled person's moral obligations (if any)", particularly in a case such as this where his Honour noted what he described as "the conflict problem" which arose from the fact that the application was effectively made by the second appellant as the infant plaintiff's next friend, but for his personal benefit, and in addition where, as his Honour put it, there was no evidence upon which he could properly determine the value and extent of any obligation which might exist.

The complaint which the ground of appeal makes about this line of reasoning is simply that his Honour erred in concluding that he had no power to order that any part of the damages awarded to the first appellant be paid to his next friend. In my opinion, the learned Judge did not draw any such conclusion but, as I have indicated, his view of his incapacity to make the order was of a more limited kind related directly to the ground upon which the order was sought, rather than his jurisdiction in global terms."

19 At 512, his Honour identified the issue as follows:

"The question is, upon the assumption that such items [gratuitous services rendered to the first appellant], could or should a court, in exercising a power to approve a compromise and make orders consequentially in respect of the payment to persons other than the person under disability, order those payments upon the grounds asserted, in the discharge of the court's duty to exercise its discretion for the benefit of the person under disability."

20 His Honour then went on to point out that in Van Gervan v Fenton (1992) 175 CLR 327, the High Court had made it clear that the true basis of a claim for damages with respect to care or services provided gratuitously to the plaintiff who has suffered personal injury is the need of the plaintiff for those services. The amount awarded is then to be a quantification of that loss of the plaintiff which will not be a financial loss to the plaintiff. He continued, at 513:

(Page 13)

"In

Kars v Kars

(1996) 187 CLR 354, the question was whether the principle of the recovery of an award of damages for gratuitous services was to be upset by the fact that the provider of the gratuitous services to the injured plaintiff was a family member who also happened to be the defendant

tortfeasor

. The court held that that was not the case, having regard to the principle upon which such awards of damages were made. As Dawson J put it (at 360):

'… it cannot be said in Australia that the underlying rationale of awarding damages for services provided gratuitously is to enable the carer to receive proper recompense for his or her services. The damages are recoverable to compensate the plaintiff for the loss which is evidenced by the need for the services and it is a matter for the plaintiff, whether they are used to recompense the person providing the services … True it is that the value of services provided or to be provided gratuitously to satisfy a need will ordinarily provide a guide in quantifying the damages to be awarded for the loss giving rise to the need, but those damages are general damages which are incapable of precise mathematical calculation and remain at large until quantified.'

Therefore, as his Honour put it, "the damages which a plaintiff receives for the need for services is compensation for the loss or incapacity giving rise to the need". "

21 Murray J then referred to the joint judgment of Toohey, McHugh, Gummow and Kirby JJ in which they held that there was no question of the imposition of any trust in respect of any part of the damages in favour of the voluntary carer or person who might in future adopt that role. They went on to say, at 372:

"This conclusion is now too deeply entrenched in this part of the law in Australia for this Court to re-open it. It is an accepted principle in Australia that the damages for past and future gratuitous services constitute a sum designed to provide for the injured plaintiff's established needs. That sum may be calculated by reference to what the provider does and even what the commercial costs of doing it would entail. But the focus is upon the plaintiff's needs. The plaintiff might, or might not, reimburse the provider. According to the repeated authority of

(Page 14)

this Court, contractual or other legal liability apart, whether the plaintiff actually reimburses the provider is entirely a matter between the injured plaintiff and the provider."

22 Murray J continued, at 17:

"[It] is therefore my view that whilst it is not a question of a technical lack of power or jurisdiction inherently possessed by the court or as reflected in the Rules, once it is accepted that the court's power to make auxiliary orders upon the approval of a compromise is the exercise of a protective jurisdiction, fundamentally conditioned by the application of the

parens patriae

role and the need to make orders which are in a form calculated to materially enhance or preserve the financial position of the person under disability, then in my opinion, the court may not accede to an application which is in fact designed to divest the disabled litigant of a substantial sum."

23 It is, in my view, sufficiently clear that, in both the judgment of Wallwork J (with which Pidgeon J agreed) and the judgment of Murray J, their Honours accepted that a Judge of the District Court has the jurisdiction to make the orders being sought with respect to the payment to the second appellant of a sum for gratuitous services rendered by him to the first appellant. It was not the case that the remitting of the matter back to a Judge of the District Court was made without considering whether that Court had the necessary jurisdiction. In these circumstances, the matter having been remitted to the District Court, it would not, in my opinion, be appropriate for this Court to revisit the question of jurisdiction.

24 The general position, however, remains most unsatisfactory. As I understand it, Judges of the District Court have been divided on the question of their jurisdiction in cases such as the present, and there have been a number of cases in which orders of the general nature now being sought have been made, whilst in other cases the jurisdiction has been denied. This is a matter in which it would be desirable for the Parliament to legislate in order to clarify the powers of the District Court and so to remove any doubt. For myself, I have some difficulty in accepting that this matter falls within any "inherent jurisdiction" of that court, and I cannot accept that the District Court can augment its jurisdiction by adopting Rules of Court. Consideration should also be given to the extent of the jurisdiction, and as to whether it is desirable to confer jurisdiction upon that court to hear applications "at any time in respect of the

(Page 15)

management or investment of the trust moneys", noting that "Court" in the

Trustees Act 1962

is defined to mean the Supreme Court of Western Australia or a judge thereof. In my view, it is desirable that the District Court should be able to determine what, if any, payments should be made out of a judgment sum, to the provider of past gratuitous services in cases such as the present in which the plaintiff is unable to make his or her own decision.

25 In relation to the substance of the appeal, I am generally in agreement with the reasons to be published by McKechnie J and with the order which his Honour proposes. Although my initial view was that, rather than an outright payment, it might have been preferable to have dealt with the matter by way of an interest free loan during the lifetimes of the second appellant and his wife, and the survivor of them, this is not a matter which has been explored, and I take it no further.

26 I would repeat the finding of Sadleir DCJ, set out in the reasons of McKechnie J:

"He [Bryn Jones] is incapable of living without assistance. That assistance has been, and continues to be, almost entirely provided by his father and stepmother, who, I have no doubt, are persons of the highest character and integrity and who have shown an unstinting devotion to the welfare of the first plaintiff. There can be nothing but admiration for the selfless commitment by his parents to all that can be done for the first plaintiff's care and welfare. There is no circumstance to be contemplated in which either the second plaintiff or his wife would act to the detriment or disadvantage of the first plaintiff."

There can also be no doubt that the second appellant has suffered financially as a consequence of his devotion to the care and welfare of his son.

27 It is clear on the material before us that the award of damages will not be sufficient to cover the costs of the future care of the first appellant for the remainder of his anticipated life span. The damages were reduced having regard to the first appellant's contributory negligence and, as senior counsel for the first appellant pointed out, the arbitrary discount figure of 6 per cent presently fixed by s 5 of the Law Reform (Miscellaneous Provisions) Act 1941 makes it practically certain that the money will be inadequate. A payment of the amount contemplated out of the trust fund will obviously bring forward the time when the moneys will run out and the first appellant will need to rely upon the community after that time.
(Page 16)

But in the meantime, while his father and step-mother are alive, with their support, the first appellant will enjoy the ability to live with some degree of independence. The application of the moneys for the intended purpose, I have no doubt, will be of significant benefit to the first appellant in permitting the second appellant and his wife to live close by his home and in a position to continue their selfless service to him.

28 When the matter first came on for hearing before us, it was immediately apparent that there was a major conflict of interest, the application being made by counsel for the first appellant's father as his next friend, with the only other appearance being by counsel for the respondent, whose only interest was in relation to costs and not in relation to the merits of the application. The hearing was therefore adjourned. Mrs Jean Isabella Jones, the first appellant's paternal grandmother, was substituted as next friend, there was a change in the solicitors acting for the first appellant and, when the matter came on for hearing before us again, Mr E M Heenan QC, with Ms J A Stone, appeared for the first appellant. The second appellant was not represented. I would like in particular to acknowledge the assistance which Mr Heenan gave to this Court in this case in his extremely thorough and helpful presentation.

29 WALLWORK J: I agree that the orders proposed by McKechnie J, and agreed to by Kennedy J, should be made. I do not wish to add anything further.

McKECHNIE J

Introduction

30 This appeal raises important questions for consideration. The first relates to the nature of an award for damages when that award includes a component for gratuitous services supplied to an intellectually disabled plaintiff. The second relates to the jurisdiction of the District Court to allow a plaintiff to fulfil a moral obligation by making a payment from trust moneys to the family member who supplied those services.

The history of the litigation

31 When he was but 8 years old, Bryn Jones and his brother were crossing the road when they were hit by a vehicle driven by Mr Moylan. His brother was killed and Bryn suffered catastrophic injuries which have

(Page 17)

left him severely intellectually and physically disabled to such an extent that he will require constant care throughout his life.

32 A history of the matter is to be found in the first appeal: Jones v Moylan (1997) 18 WAR 492.

33 Through his father, Mr Peter Jones acting as next friend, Bryn Jones, whom I shall now refer to as the plaintiff, commenced an action for damages for negligence arising from the accident which injured him.

34 The trial was listed to commence on 21 October 1996. Shortly before the trial the defendant made an offer to settle the plaintiff's action.

35 As a result the plaintiff sought leave to compromise the action pursuant to the O 70 r 10. This Order was adopted by the District Court and forms part of the rules of that Court.

36 The compromise was approved by Wisbey DCJ on 29 October 1996. Judgment for the plaintiff was entered against the defendant for $2,003,657.20. Wisbey DCJ's orders were as follows:

"1. The conditional compromise of the First Plaintiff's claim against the Defendant for damages for personal injuries sustained by the First Plaintiff as alleged in the Statement of Claim herein be approved and there be judgment for the First Plaintiff against the Defendant in the sum of $2,003,657.20.

2. The Defendant do pay any amount due to the Health Insurance Commission pursuant to the provisions of the Health and Other Services (Compensation) Act 1995 (Commonwealth) direct to the Health Insurance Commission in part satisfaction of the judgment.

3. The Defendant do, within 7 days of the date of service of the judgment, or within 7 days of the receipt of the notice of demand from the Health Insurance Commission, whichever is the later, pay to the Plaintiffs' solicitors the sum of $3,657.25 in satisfaction of the outstanding special damages.

4. The Defendant do, within 7 days of the date of service of this judgment, or within 7 days of the receipt of the notice of demand of the Health Insurance Commission, whichever is the later, pay the balance of the sum of

(Page 18)

$2,000,000.00 after deduction and payment of any amount due to the Health Insurance Commission pursuant to the provisions of paragraph 2 to the Public Trustee to be held by it on trust for the First Plaintiff until further order, such investment not being restricted to the common fund.

5. The Defendant do pay the Plaintiffs' costs of this action in the agreed sum of $200,000.00.

6. There be liberty to apply."

37 Wisbey DCJ refused to appoint a private trustee company (Perpetual Trustees (WA) Ltd in place of the Public Trustee and also refused to make a payment from the damages to Mr Peter Jones for services gratuitously provided.

38 The actual order of Wisbey DCJ, as in common in all cases for damages, is an award of a single sum for damages for negligence.

39 True it is that the sum is calculated by consideration of different heads of loss and damage, but the judgment is for a single sum.

40 Because the action was compromised, there are no reasons for judgment.

41 However, leave to compromise was obtained under O 70 which requires an opinion of counsel.

42 Counsel's opinion is available. It sets out the possible damages which might be obtained if the matter proceeded to trial.

43 The opinion considered damages in the range of $2,244,976.30 to $2,269,976.30.

44 Having regard to the uncertainties of litigation, and the possibility of a claim for interlocutory negligence, counsel recommended settlement of the proffered sum of $2,000,000 which represented 92 per cent of the amount which counsel estimated might be obtained if the matter proceeded to trial.

45 The plaintiff appealed against the refusal of Wisbey DCJ to make the two further orders which had been sought in the consent judgment.

(Page 19)

46 On 16 January 1998 the Full Court (Pidgeon and Wallwork JJ, Murray J dissenting) published reasons (Jones v Moylan (supra)) and made orders:

"1. The Appeal be and is hereby allowed.

2. The Public Trustee pay such sum as is held by it on trust to the First Appellant (First Plaintiff) as a consequence of order 4 of the orders made by His Honour Judge Wisbey on 29 October 1996, after deduction of its fee of $7666, to Perpetual Trustees (WA) Ltd to be held by it on trust for the First Plaintiff until further order, with Perpetual Trustees (WA) Ltd to have all powers of investment and otherwise conferred by the Trustees Act 1962 (WA), including the power to make advances out of income or capital for the welfare, education and advancement of the First Defendant and with liberty to apply to a judge of the District Court of Western Australia at any time in respect of the management or investment of the Trust monies.

3. The question of the amount to be paid (or that Perpetual Trustees (WA) Ltd will be directed by the Court to pay) to the Second Appellant for

(i) past gratuitous services provided to the First Appellant (First Plaintiff) by the second appellant (Second Plaintiff);

(ii) past medical and related treatment, travelling expenses, and

(iii) past extra living expenses

be remitted to a Judge of the District Court for determination after hearing such evidence as is adduced by the Appellants, and upon notice to the Respondent (Defendant) and the State Crown Solicitor.

4. The Respondent (Defendant) pay the Appellants' (Plaintiffs') costs of the appeal to be taxed.

5. The Respondent (Defendant) be granted a Certificate of Indemnity with respect to payment of the Appellants'

(Page 20)

(Plaintiffs') costs pursuant to section 10 of the Suitors' Fund Act."

47 Upon its remission to the District Court, the matter came before Deane DCJ who expressed concern at the impact a part-payment would have on the plaintiff's financial security and required up-to-date information to be furnished by Perpetual Trustees.

48 Eventually, the matter proceeded to hearing before Sadleir DCJ who refused to make an order for payment of any sum in respect to past gratuitous services, essentially for the reason that to do so would deplete the trust fund to an unacceptable degree.

49 From that decision the plaintiff now appeals on the grounds that the refusal was an error of law and discretion.

50 When the matter first came for hearing in November 1999, the Full Court was concerned at a possible conflict of interest between the plaintiff's then next friend, Mr Peter Jones, and the subject matter of the litigation. Mr Peter Jones is the person who, with his wife, has unstintingly supplied the gratuitous services which form the subject matter of the proceedings before Sadleir DCJ and the present proceedings.

51 As a result, the appeal was adjourned, the Court ordering the removal of Mr Peter Jones and the appointment of another next friend. By order of Kennedy J on 17 January 2000 the plaintiff, now no longer an infant, was declared a disabled person and a new next friend was substituted.

52 The plaintiff's next friend is now his paternal grandmother Jean Isabella Jones. New solicitors have been retained by her and the plaintiff is represented at the hearing of the appeal by Mr Heenan QC and Ms Stone.

53 Mr Peter Jones, who is also the second appellant, has indicated he wishes to take no part in the appeal and will abide the decision of the Court.

54 The defendant, who is named as respondent to the appeal, appeared through counsel Mr Sierakowski. He was given leave to withdraw but, in the event of costs becoming an issue, may wish to be heard on that question.

(Page 21)

The jurisdiction of the District Court to make the order sought

55 A fundamental question which emerged during the course of the appeal is the jurisdiction of the District Court to make orders of the type contemplated by this case.

56 An order to allow payment by a trustee from trust moneys to meet a moral obligation is a matter within the general equitable jurisdiction of the Supreme Court: Supreme Court Act 1935 (WA), s 16. The question which arises is whether there is a similar jurisdiction in the District Court.

57 The jurisdiction of the District Court to hear and determine all personal actions making a claim for damages in respect to the death or bodily injury to a person arises from the District Court Act s 50(2). This section also provides that the District Court may exercise all the powers and authority that the Supreme Court has and may exercise in relation to those matters.

58 Section 55 provides:

"The Court or a District Court Judge has, as regards any action or matter within its or his jurisdiction for the time being, power -

"(a) to grant, and shall grant, in the action or matter such relief, redress or remedy, or combination of remedies, either absolute or conditional; and

(b) to make any order that could be made in regard to any action or matter, and shall in each such action or matter give such and the like effect to every ground of defence or counterclaim equitable or legal,

in a full and ample manner as might and ought to be done in the like case by the Supreme Court or a Judge thereof."

59 This provision was examined in Commercial Developments Pty Ltd (Trading as Don Rogers Motors Pty Ltd) v Mercantile Mutual Insurance (Worker's Compensation) Limited (1991) 5 WAR 208.

60 In that case the appellant was the defendant in a District Court action brought by a worker for damages for personal injuries. Following the service of the statement of claim, the appellant issued a third party notice against the respondent as second and third party. The respondent applied for an order that the third party notice be struck out or dismissed on the

(Page 22)

grounds that the District Court did not have jurisdiction to grant the relief sought. The third party notice constituted an action for a declaration that the appellant was entitled to be indemnified by the respondent.

61 Malcolm CJ, with whom Pidgeon and Rowland JJ agreed, was of the opinion at 218:

"… in such a case as the present where, on the face of it, a declaration is sought without any consequential relief, the jurisdiction to grant the declaration cannot be described as 'ancillary'."

He continued at 219:

"In my opinion, nothing in s 55 or s 57 of the District Court Act gives the District Court jurisdiction to grant equitable relief against a third party which the court would be unable to grant against the third party if it were sued in a separate action. Section 55 operates with respect to any action in matters within the jurisdiction of the District Court. Section 57(1) applies only to 'matters … cognisable by the Court'. Hence provisions of s 57(3) and (7) apply only to such matters. In particular s 57(3) only applies to 'an equitable estate or right, or other matters of equity' otherwise within the jurisdiction of the District Court. It has no application to a personal action for damages for death or bodily injury so as to enable relief to be given 'against any other person whether already a party to the same cause or matter or not' as described in s 24(3)(b) of the

Supreme Court Act

62 The question for decision in this case is whether the District Court has power to direct payment out of the judgment sum to a person who has provided gratuitous services.

63 In my opinion the District Court lacks jurisdiction to make the orders sought. There are a number of reasons for this conclusion:

(a) There is power in the Supreme Court exercising equitable jurisdiction to allow a trustee to make a payment in conscience to perfect a moral obligation even though the payment is not directly within the objects of the trust:

In Re Snowden (Dec'd)

(1970) 1 Ch 700;

Hobday v Attorney General (NSW)

[1982] 1 NSWLR 160;

Library Board of Western Australia v Attorney General (WA) & Ors

[1999] WASC 263. The District Court lacks this general equitable jurisdiction.

(Page 23)

(b) Pursuant to the

Trustees Act 1962

(WA) s 59 and s 60, a trustee is empowered to make payments from the income, or in certain conditions the capital, for the maintenance, education, advancement or benefit of the beneficiary.

These are words of wide import, or "large words" per Jessell MR in

Lowther v Bentinck

(1874) LR 19 Eq 166 at 169, "benefit" being the "largest" of all.

In Re ES and the Mental Health Act 1958 (1984) 3 NSWLR 341, which is further discussed below, Powell J took a "large view" of "benefit" as encompassing a payment for gratuitous services.

In In re Clore's Settlement Trusts [1966] 1 WLR 955 the court allowed a trustee to make charitable donations in pursuance of a sense of moral obligation which a principal beneficiary might owe, the reasoning being supported by reference to the donation being a benefit.

So a trustee has a discretion whether to make a payment for gratuitous services if the trustee is satisfied that such a payment is reasonable, having regard to all the circumstances, including the need to preserve the trust fund and generate income.

If the trustee requires assistance concerning the exercise of the discretion then it is open to the trustee to apply to the Supreme Court for directions: Trustees Act, s 92. The District Court has no jurisdiction to deal with any such application.

(c) In the damages action, the defendant has no interest in the question whether a stranger to the litigation has a moral claim on portion of the damages. The defendant's only interest is whether he or she is liable for damages for negligence and, if so, to what sum. In a consent judgment, such as the present case, the defendant's interest ceases upon judgment being entered.

When the plaintiff is under a disability, either through age or lack of mental acuity, a trustee will be appointed to administer the judgment sum. The sum is payable to the trustee to be held thereafter on the terms of the trust created by the order of the Court amplified, where appropriate, by statute - either the

Public Trustee Act

or the

Trustees Act

as the case may be. Therefore the trustee has a real and legitimate interest to be heard on any application which will have as an inevitable result the diminution of the trust fund.

(Page 24)

It may be (and I express no final opinion on the point) that the person who provided the gratuitous services has the right to be heard on the application.

The fact that the defendant is uninterested in the matter and that non-parties are interested in the matter provides a reliable indication that the order sought is not ancillary in nature.

64 For these reasons the District Court has no jurisdiction to make the orders sought.

65 At first glance this conclusion may give rise to an apparent inconvenience. It would appear to be convenient if orders could be made at the time of judgment finally disposing of all matters in contention.

66 However, a moment's reflection will see that this inconvenience is more apparent than real. For the reasons outlined, the question whether to make a payment to a gratuitous service provider is quite a different question from that which exercises a Judge's mind in deciding whether to grant judgment in the negligence action.

67 In determining the question of the gratuitous payment the Judge will have to consider a number of matters in the exercise of the discretion. Some of these are outlined below. So, in almost all cases, the matter will have to return to a Judge for determination of the issue in any event.

68 Some reliance was placed on Rules of the Supreme Court O 70 r 12. By the District Court Consolidated Practice Direction in January 1997, par 3(6) the District Court adopted O 70 r 12. Under the heading "Control of money recovered", O 70 r 12 gives power to the court as follows:

"(2) The Court may at any time, and from time to time, give directions for the application of the income or of the capital and income of the investment for the maintenance, welfare, advancement, or otherwise for the benefit of the person under disability".

69 The rule-making power and, in particular, the adoption of O 70 r 12 cannot enlarge the jurisdiction of that Court beyond the District Court Act s 57.

70 Pelechowski v Registrar Court of Appeal [1999] HCA 19; (1999) 162 ALR 336 per Gaudron, Gummow and Callinan JJ provides an illustration of the limited jurisdiction of a District Court compared with a Supreme Court.

(Page 25)

71 If an order to disburse from trust funds a payment by way of an act of grace for services rendered with grace is an exercise of distinct equitable power, not otherwise within the District Court's jurisdiction, then O 70 r 12 cannot extend jurisdiction.

72 It was argued that the power to allow such payment is an incidental equitable power under District Court Act s 55. Examples of such a power include the power to grant leave to compromise an action and give leave to appoint a next friend.

73 These are clear examples of matters which are incidental to the main action and therefore within the limited equitable jurisdiction of the District Court.

74 The analogy does not hold good when extended to an order granting leave to disburse moneys from a trust fund due under a moral obligation.

The decision in Jones v Moylan (1997) 18 WAR 492

75 When this matter first came before the Full Court in Jones v Moylan (supra), there were two issues. The first was whether the trial Judge had erred in failing to place the money in trust with Perpetual Trustees (WA) Ltd rather than the Public Trustee. The second was whether the Court had the power to order a payment out of "Griffiths v Kerkemeyer damages" to a carer. It is this second ground which is pursued in the present appeal.

76 The majority judgment was delivered by Wallwork J, with whom Pidgeon J agreed.

77 Wallwork J said that there were a number of questions arising out of the second ground of appeal. One was whether there was power in a Judge to order any payment to the next friend for past gratuitous services (at 502). Wallwork J then dealt with a series of cases which will be examined later in this judgment.

78 The live issue before the Full Court in Jones v Moylan (supra) was whether there was a power generally to order payment for services gratuitously supplied. The jurisdiction of the District Court to make such an order, if it was appropriate, seems to have been assumed by all involved.

79 Murray J, who dissented in the result, did address the question of jurisdiction at 514 when he said:

(Page 26)

"To endeavour to apply that conclusion in the context of these proceedings, it is therefore my view that whilst it is not a question of a technical lack of power or jurisdiction inherently possessed by the court or as reflected in the Rules, once it is accepted that the court's power to make auxiliary orders upon the approval of a compromise is the exercise of a protective jurisdiction, fundamentally conditioned by the application of the

parens patriae

80 With great respect to Murray J, I am of the opinion that this statement is too wide and that there is indeed a lack of jurisdiction possessed by the District Court to make the order sought.

81 If this matter were coming to the Full Court for the first time, I would consider that Sadleir DCJ lacked jurisdiction to determine the question and would dismiss the appeal as incompetent.

82 However, Sadleir DCJ was performing a function remitted to him by orders of the Full Court. Those orders have not been challenged. The jurisdiction issue I have just discussed was not a live issue in the previous proceedings. All necessary parties to the controversy had notice or were represented before Sadleir DCJ who took evidence and delivered a reasoned judgment. No person has sought in these proceedings to set aside the order of the Full Court, even assuming a Full Court differently constituted is capable of doing so.

83 In the circumstances, I consider the Full Court is justified in determining this appeal on the grounds which are raised and argued by the plaintiff.

The nature of an award of damages for gratuitous services

84 It is necessary to state briefly the basis for the inclusion in an award of damages an amount representing the cost of gratuitous services provided to the plaintiff.

85 Griffiths v Kerkemeyer (1977) 139 CLR 161 decided that a person who was permanently disabled as a result of the negligent act of another

(Page 27)

was entitled to be awarded damages which included a sum representing the value of services rendered gratuitously.

86 Gibbs J approached the case by setting out the previous rule and formulating or giving acquiescence to a new rule which he stated at 169 as follows:

"Where necessary services have been provided gratuitously by a relative or friend, it should now, as a general rule, be held that the value of the services so provided should not reduce the damages payable to the plaintiff."

87 Stephen J adopted the approach of Megaw LJ in Donnelly v Joyce [1974] QB 454. At 173 Stephen J said:

"… the critical point is his Lordship's affirmation that when a plaintiff, as a result of his accident-caused injuries, becomes in need of goods or services that need is itself a loss suffered

by him

, for which

may recover damages against the defendant. It is then, his Lordship said, irrelevant to his entitlement to those damages that the need has been satisfied by the gratuitous supply to him of the needed goods or services."

88 Mason J was of the same view. At 192 he said:

"The respondent's relevant loss is his incapacity to look after himself as demonstrated by the need for nursing services and this loss is to be quantified by reference to the value or cost of providing those services. The fact that a relative or stranger to the proceedings is or may be prepared to provide the services gratuitously is not a circumstance which accrues to the advantage of the appellant. If a relative or stranger moved by charity or goodwill towards the respondent does him a favour as a disabled person then it is only right that the respondent should reap the benefit rather than the wrongdoer whose negligence has occasioned the need for the nursing service to be provided … It is now recognised that the true loss is the loss of capacity which occasions the need for the service."

89 While it is common to refer to "Griffiths v Kerkemeyer damages" as a convenient shorthand expression encompassing the provision of gratuitous services, the true principle is that the damages are awarded to an injured plaintiff for loss of capacity and it is happenstance whether the

(Page 28)

service needed to deal with that loss of capacity is provided gratuitously or for reward:

Van Gervan v Fenton

(1992) 175 CLR 327.

90 The principle set out in Griffiths v Kerkemeyer (supra) has evolved in the 20 years since it was pronounced.

Payment to a gratuitous service provider: General principles

91 Some early indication that Australian authority may take a different line from United Kingdom authority is provided within Griffiths v Kerkemeyer in the judgment of Stephen J. Stephen J cited with approval the approach taken by Taylor J in Wilson v McLeay (1961) 106 CLR 323. At that time a decision of Paull J, apparently supported by authority, awarded special damages for gratuitous services but required an undertaking from the plaintiff to pay over the sum to those who performed the services: see Schneider v Eisovitch [1960] 2 QB 430.

92 In Kars v Kars (1996) 187 CLR 354 the High Court considered whether a tortfeasor's liability to pay damages for gratuitous future care to be given to an injured plaintiff is reduced because the tortfeasor, rather than a third party, is likely to provide that care. The Court held that the damages were not to be reduced.

93 Dawson J at 360 said:

"Since the acceptance of the rationale in

Donnelly v Joyce

by this Court in

Griffiths v Kerkemeyer

, it cannot be said in Australia that the underlying rationale of awarding damages for services provided gratuitously is to enable the carer to receive proper recompense for his or her services. The damages are recoverable to compensate the plaintiff for the loss which is evidenced by the need for the services and it is a matter for the plaintiff whether they are used to recompense the person providing the services."

94 At 372 the other members of the Court, Toohey, McHugh, Gummow and Kirby JJ in a joint judgment, said:

"It is an accepted principle in Australia that the damages for past and future gratuitous services constitute a sum designed to provide for the injured plaintiff's established needs. That sum may be calculated by reference to what the provider does and even what the commercial costs of doing it would entail. But the focus is upon the plaintiff's needs. The plaintiff might, or

(Page 29)

might not, reimburse the provider. According to the repeated authority of this Court, contractual or other legal liability apart, whether the plaintiff actually reimburses the provider is entirely a matter between the injured plaintiff and the provider."

95 This decision of the High Court represents a fundamental departure from the decision of the House of Lords in Hunt v Severs [1994] 2 AC 350 in which the House of Lords held that money for gratuitous services is held on trust by the plaintiff for the provider of those services.

96 Kars v Kars (supra) thus made explicit the principle underlying Griffiths v Kerkemeyer that an award of damages which included a loss of capacity, which occasioned the need for gratuitous services, was an aspect of the plaintiff's damage and that no question of a trust arose because the nature of the provision of the services is irrelevant to the loss of capacity which is being compensated.

97 Kars v Kars represents the authoritative statement of the law and the decisions which I am about to consider must be seen in the light of this later development. These decisions all followed Griffiths v Kerkemeyer but did not have the benefit of the authoritative statement in Kars v Kars.

98 Each of the authorities to which reference will be made were decisions in the Supreme Court of the particular jurisdiction. Thus the question of jurisdiction, which I have earlier discussed, was not present.

99 In Re DJR and the Mental Health Act 1958 (1983) 1 NSWLR 557, Powell J, sitting in the Protective Division of the Supreme Court, had to deal with an application in relation to facts similar to those in the present case. DJR was a young man of 20 who, when not quite 8 years of age, had the misfortune to be seriously injured in a motor vehicle accident. He sustained serious brain damage which rendered him incapable of ever managing his affairs and also affected him so that he would need constant care and attention throughout his life. In that case the care and attention had been provided almost entirely by his mother who had given up her employment in order that she might continue to do so.

100 The Protective Commissioner, who was appointed manager of DJR's estate, made application to the Court for advice and direction under the provisions of the Mental Health Act 1958 (NSW).

101 Powell J first held, in direct consequence of the principle in Griffiths v Kerkemeyer, that a person who has received an award of damages, which contains within it a sum referrable to the value of past legal

(Page 30)

services rendered gratuitously to him, is not subject to any legal or equitable obligation to pay the sum in question to the person or persons who may have provided the voluntary services to him.

102 Powell J then considered the question of jurisdiction and held that the Supreme Court had inherent jurisdiction to order a payment for gratuitous services, the inherent power being derived from the Royal prerogative. With respect, I agree: See Library Board of WA v Attorney General (supra). Powell J then concluded that the Protective Commissioner had power to recognise the moral claim of a person who provided gratuitous services by authorising a payment to them of an appropriate amount of money. Importantly he continued at 565:

"Whether or not, in any particular case, it is appropriate to exercise that power, and, if so, what is the sum appropriate to be paid, will need to be considered later."

103 Applying the principles at 567, he said:

"In a case in which the relevant verdict has been found by a judge … then … since it represents the value of the services - the sum allowed for the services gratuitously supplied not only provides a convenient starting point, but, in many, if not all cases, will be the sum appropriate to be allowed. "

104 In that case Powell J awarded the amount which, having been calculated, was the amount of the cost of gratuitous services.

105 In Re ES and the Mental Health Act 1958, Powell J further considered the question of payment under a moral obligation for gratuitous services, posing the dilemma at 343 in this form:

"Such a case appears to pose for the court an exquisite dilemma: while it is undoubtedly open to the court, in an appropriate case to authorize the making, out of the estate of a mentally ill, or incapable, person of an ex gratia payment in recognition and satisfaction, of some moral claim upon that person, the court's overriding duty to ensure that that person's estate is so managed as to serve that person's best interests would - at least prima facie - not seem to permit the making of an ex gratia payment - however well justified morally - out of an estate which is clearly not sufficiently large to permit full-time professional care to be afforded to the person in question. …"

(Page 31)

106 Powell J then took the view that the dilemma was often more apparent than real, taking a "large view" of the "benefit" that might flow to the incapable person by the making of such a payment.

107 He noted each case may be considered on its merits and in that case authorised a payment notwithstanding that the estate appeared to be inadequate to provide for ES being given institutional care. At 344 he said in relation to the care provided by ES's parents:

"I have little doubt that, in addition to providing to ES's parents some recognition of their past care of him, any payment which would ease their financial burdens, or, even, enable them to buy some small luxuries for themselves, will make it easier for them to continue to carry the heavy burden of providing for their son."

108 In Beasley v Marshall (No 4) (1986) 42 SASR 407 the Public Trustee applied by a summons for certain orders in respect to gratuitous payments. The matter was referred to the Full Court. The Full Court held that there was no doubt about the power of the Public Trustee to make appropriate payments to those who have rendered gratuitous services by way of providing for the plaintiff's needs in the past and to make future payments to persons who might render such services in the future. The Full Court noted that the power to make the payments is a discretionary power.

109 The Full Court held at 411 that:

"A manager should take the responsibility for making the decision. He should not, unless there are special circumstances, incur the cost of seeking a direction from the court. It is not the function of the court to conduct inquiries into the value of gratuitous services. There is no legal obligation or legal entitlement and it is a matter for the manager to do what the plaintiff would be morally obligated to do if he were not under a disability. A provider of gratuitous services will not be heard by the court to complain about the exercise of the discretion by the manager."

110 With respect I consider the proposition is stated too widely.

111 A trustee must act in respect of the corpus of the trust so as to preserve it and so as to expend it on the care, maintenance, education, advancement or benefit of the beneficiary. A trustee may well think it

(Page 32)

proper to approach the Supreme Court in a case where the exquisite dilemma is posed.

112 In W v Q (1992) 1 Tas R 301, Cox J considered an application by the Public Trustee saying at 305:

"The court which assesses damages does so without any regard to whether the gratuitous provider of the services will be financially rewarded by the plaintiff. Whether a reward will be bestowed is completely irrelevant to the court's consideration of the quantum of damages. I hold the view that as beneficial entitlement to the funds belongs exclusively to the plaintiff, what moral obligations may rest on the plaintiff, and whether he or she should satisfy them, fall to be determined by the plaintiff, or if there is a trustee because of the plaintiff's incapacity, on the trustee if the trustee has the power to make a payment. However I respectfully agree with King CJ [in

Beasley v Marshall (No 4)

]

that the trustee should regard himself as subject to the same moral obligation as would attach to the plaintiff if he were not under the disability."

113 Cox CJ left the decision to the Public Trustee.

114 Powell J took the view that the compelling issues in these cases posed for the court an "exquisite dilemma", albeit one more apparent than real.

115 I have no wish to quibble with such an evocative phrase but it can serve to mask the true nature of the exercise of judicial discretion.

116 After taking into account all matters relevant, the discretion is to be exercised solely for the welfare, benefit and advancement of the disabled person.

117 It is not an exercise in choosing between two unpalatable alternatives: denial of a moral obligation on the one hand, or a serious diminution of the capital of a trust fund on the other hand.

118 It is an exercise in discretion designed to make the right decision for the benefit of the disabled person in all the circumstances. Powell J was right to stress that each case would have to be considered on its merits.

119 In the written submissions filed on behalf of the appellant when Mr Peter Jones was next friend, and adopted in the present proceedings by

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Mr Heenan, it was contended that evidence of a trustee should not be adduced on an application for payment over of funds to a person to reimburse him or her for past gratuitous services. I reject that submission. Evidence from the trustee as to the costs of care, having regard to life expectancy, the performance of the fund, and the effect of a diminution of the fund on possible future income, will always be necessary to the proper exercise of the discretion. Without such evidence the Court will be unable to evaluate all the relevant circumstances to decide whether a payment should be made.

120 During the course of his submissions, Mr Heenan argued that awards of damages in cases of severe injury will not provide sufficiently for the costs of future care. In support of this submission he pointed, amongst other things, to the obligation to use the 6 per cent compound discount multiplier introduced by Acts Amendment (Actions for Damages) Act 1986 into the Law Reform (Miscellaneous Provisions) Act 1941.

121 I am inclined to accept the submission.

122 It was also submitted that the "Griffiths v Kerkemeyer damages" were intended as compensation for past loss and not intended to contribute to the future care of the plaintiff.

123 Therefore, it was submitted in conclusion, it is wrong to supplement one head of damages by money taken from another, or to prevent money being used for a purpose intended because it may be needed to supplement a deficiency elsewhere.

124 Although I accept the first two submissions, I do not accept the conclusion which is said to follow.

125 There was but one single award and in a protective jurisdiction, such as the Court is exercising, it does not particularly matter how the amount of damages was calculated.

126 Furthermore, the fact that the capital amount might be inadequate for the purpose of maintaining the plaintiff is hardly justification for reducing it even further.

127 On the contrary, it provides a good reason for preserving the capital.

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The present case: the decision of Sadleir DCJ

128 The claim before Sadleir DCJ by Mr Peter Jones was for a round sum of $440,000 made up as follows:

(i) $377,184.70 for past gratuitous services provided by him to the first plaintiff;

(ii) $9924.02 for travelling expenses;

(iii) $51,951.33 for past extra living expenses.

129 Sadleir DCJ had before him an affidavit filed on behalf of Perpetual Trustees by Ms Michael, the Private Client Manager, who oversaw the trust fund of the first plaintiff. That affidavit, which Sadleir DCJ accepted, set out certain information as follows:

"(i) In the opinion of counsel for the plaintiffs on which the compromise was based, the additional cost of a house for the first plaintiff was estimated at $150,000.

(ii) A house was purchased for the first plaintiff on 22 February 1997 (when the Public Trustee was trustee of the fund) at a cost of $350,000.

(iii) The current cost of a paid live-in full-time carer is approximately $70,000 per year. Counsel's advice to the trustee is, however, that if the first plaintiff's life expectancy is from 47.5 to 57.5 years then the future cost of 24-hour care would be of the order of $1.8M whereas the allowance for this cost in the opinion on which the compromise was based is $850,000.

(iv) The opinion by counsel for the plaintiffs on which the compromise was based assessed the full value of past gratuitous services at $250,000 together with interest of $50,000. No explanation was given in the opinion as to how those figures were reached. They are inconsistent with the figures (totalling $500,000) on which the recommendation by counsel for the plaintiffs that $500,000 be paid to the second plaintiff for his past gratuitous services is based.

Nor is it explained on behalf of the plaintiffs why the figures in the schedules for past gratuitous service should be different again from both those figures.

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(v) In achieving the compromise a discounting was made including a reduction for a possible finding of contributory negligence, from the sums which counsel for the plaintiffs had assessed in their opinion including the sums for past gratuitous services.

(vi) After consultation with the second plaintiff Ms Michael prepared a budget for six months from 1 July 1998 on the basis that the second plaintiff would continue to provide the 24-hour care required by the first plaintiff and that the second plaintiff would be paid the difference between $20,000 (per annum) and the amount of expenditure for paid carers which is $7,500 annually (approximately $144 per week).

(vii) The annual expenditure is budgeted at $74,450 per annum with taxation included in that figure at $12,500 and company fees at $12,250."

130 At 17 of his judgment Sadleir DCJ reached the following conclusion:

"Apart from the question of conflict of interest, this application has formidable difficulties which include the fact that the sum sought to be paid out represents a very considerable proportion (over 20 per cent) of the amount for which the action was compromised and the fact that the fund as it exists will be strained to meet the first plaintiff's future requirements of support and maintenance."

131 Sadleir DCJ then examined the authorities which I have previously set out. He accepted the evidence of Mr Peter Jones and his wife, reaching the conclusion at 23:

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132 Sadleir DCJ noted the possibility of the vicissitudes of life, including adversities, which may leave the plaintiff without the support and care of either or both Mr Jones and his wife by reason of illness or accident, at an unexpectedly early time which could throw him back on others, including entirely commercial care givers.

133 His Honour made findings as to Mr Jones' intention to use any funds provided by the Court to construct a house for himself and his wife on land which he had purchased in Fremantle about 100 metres from the house which was bought by the trustee for the plaintiff. His Honour found:

"It was his [Mr Peter Jones'] evidence, which I do not doubt in any respect, that such a payment would be used by him to facilitate the accommodation project to build on his land and to carry out the renovations to the plaintiff's house. In the result, the first plaintiff will be enabled to live independently but with his parents resident close by. The project would overall serve the best interests of the first plaintiff. The importance and benefits which such a project would bring are supported by the medical and psychological evidence."

134 Having found that the general nature of Mr Peter Jones' care justified a value such as claimed in total for past gratuitous service, Sadleir DCJ then faced the exquisite dilemma to which Powell J referred.

135 He concluded:

"… upon a balance of all considerations I do not believe that the payment to the second plaintiff [Mr Peter Jones] of the amount claimed for past gratuitous services should be authorised.

That is because of the very considerable depletion of the fund by such a payment and the consequences upon the future provision for the first plaintiff. Whilst recognising the very strong moral obligation owed to the second plaintiff, the situation is such that a reasonable and responsible person who is sui juris would have regard to the capital of the fund, the extent to which it may provide adequately for the future of the first plaintiff and the consequences of its depletion by such a substantial payment."

136 Sadleir DCJ bore in mind that the proposal was informal and that the funds would be applied largely to provide an asset for Mr Peter Jones with

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no formal legal structure to ensure any contingent benefit to the plaintiff. Thus, in the event of the incapacity or death of Mr Peter Jones, or his wife, there would not only be a removal of the care, support and guidance, but a loss of benefit from a very large proportion of his fund represented by the component of past gratuitous services.

137 The depletion of the trust fund and the matter of concern to Sadleir DCJ are very powerful considerations against making the order.

138 On the other hand, in this case there were other considerations of very significant weight to which his Honour did not, in the final balancing exercise, particularly enumerate, although they can be found within his findings.

139 They include a wide view of the overall benefit that would enure to the plaintiff notwithstanding the depletion of the trust fund. Sadleir DCJ remarked during the course of his judgment:

"… it is to be recognised that, in general, the overall quality of gratuitous services provided by relatives and friends must necessarily be greater than that provided by commercial carers. Persons who provide gratuitous services should normally be given encouragement and support and the moral obligation owed to them should be recognised where that is reasonably possible."

140 Necessarily, his Honour must have concluded that in the particular circumstances, having regard to the amount claimed, it was not "reasonably possible".

141 This wide view, as a matter of public interest, is a relevant consideration and ought to be accorded due weight. It will never be a decisive consideration by itself but should be added to the scales in favour of the making of a payment.

142 Another factor, which appears to have been overlooked by Sadleir DCJ, is that it may be in the interests of both the plaintiff and the public that the services continue to be provided to the plaintiff and that one measure of maintaining this public interest will be to provide some recompense to the provider of such services, notwithstanding that the trust fund would be depleted.

143 In the present case, Sadleir DCJ was concerned about the lack of formal arrangements in relation to the purchase of the property should

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Mr Jones later not be in a position to allow the reversion of the estate back to the plaintiff.

144 This is a matter of weight. In the particular circumstances it needs to be balanced against the unstinting devotion shown by Mr Jones to his son, such that one might well postulate that Mr Jones would be unlikely to leave his son worse off.

145 With great respect to the learned trial Judge, he has not given sufficient weight to the tangible and intangible benefits that would accrue to the plaintiff if the arrangement for the building of the second house were to be concluded.

146 Sadleir DCJ noted that:

"… the first plaintiff shows indications that, like any normal young person, he will wish to live as independently as possible and there is even the prospect that eventually he may marry or enter into a

de facto

relationship."

147 Mr Peter Jones has purchased a block very close to the plaintiff as it would be disastrous if there was a loss of daily contact. He intends to build a house on it.

148 Payment of an amount to satisfy a moral obligation will often benefit a plaintiff. Having regard to the findings of Sadleir DCJ as to the relationship between the plaintiff and Mr Peter Jones, I consider payment would benefit the plaintiff. In my opinion Sadleir DCJ erred in the exercise of his discretion in failing to give sufficient weight to the factors I have outlined. Had he given them sufficient weight, then he would have concluded that some payment to offset the gratuitous services provided to the plaintiff by Mr Peter Jones would have been to the plaintiff's overall benefit notwithstanding the overall diminution of the trust fund. I am mindful of the exquisite dilemma faced by Sadleir DCJ and indeed by the court. I am also conscious that this is an appeal against the exercise of a judicial discretion. Appellate courts do not generally intervene in the exercise of judicial discretion. Nevertheless, in the present case I consider that a substantial amount ought to have been ordered because I am quite persuaded that it would be for the benefit of the plaintiff to do so. In other words, the discretion miscarried.

The amount to be allowed

149 The claim for payment in the District Court was for $377,184.70.

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150 That amount exceeded the $300,000 which had been estimated for the value of services plus interest in the joint opinion of counsel. That figure appears to be the upper sum which counsel considered might have been allowed had the matter gone to trial.

151 Before this Court Mr Heenan did not submit that there was an error in the trial Judge's reasoning, in that he approached the matter on the basis that it was all of the $377,000 or nothing because, as Mr Heenan conceded, the alternative figure which might have been awarded would nevertheless be a substantial figure.

152 Mr Heenan contended for a sum of $275,000. He contended that when the action was compromised for $2,000,000, this represented a slight discount on the overall estimate of counsel. Within that estimate there was an allocation of $250,000 for the cost of past care and $50,000 for interest on the past care, leading to a figure of about $300,000 to constitute the component of the award of damages actually received by the settlement. This in turn might be reduced pro rata in proportion to the amount recovered. The result leads to a sum around $275,000. The application of a 6 per cent discount for adverse contingencies would reduce the figure to about $260,000 although there may be a fallacy in reasoning to reduce an amount awarded for past services for adverse contingencies.

153 In Re DJR (supra) Powell J took the view that the sum allowed for the service gratuitously supplied not only provides a convenient starting point but in many, if not all, cases will be the sum appropriate to be allowed.

154 King CJ in Beasley v Marshall (No 4) took the view that the trustee should regard himself as subject to "the same moral obligation as would attach to the plaintiff if he were not under the disability".

155 With great respect, I am unable to agree with a proposition stated so widely as that stated by Powell J, or even with a proposition that prima facie the amount allowed for gratuitous services should be the amount paid to the service provider.

156 Where there is a fund which will be seriously depleted by the payment of gratuitous services, then the balancing exercise as to what may be in the disabled person's benefit is not able to be so easily calculated.

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157 This accords with the principle in Kars v Kars which reinforces the original principle in Griffiths v Kerkemeyer to the effect that it is the plaintiff's incapacity which is being compensated, not the payment of an item of special damages.

158 While calculations of the type set out above may provide some guide as to a possible allowance for gratuitous services, it should be remembered that the provision of gratuitous services does not give rise to a legally enforceable action for debt. A Judge, in balancing the mix of factors necessary to make an appropriate order for the benefit of a plaintiff, may regard as being in the plaintiff's benefit some payment to the provider of gratuitous services which is nevertheless short of the actual value of such services. A Judge may so regard a lesser payment as appropriate because of the concurrent need to preserve a reasonable capital sum in trust for the plaintiff's benefit.

159 For this reason I do not accept that there is a prima facie entitlement to the full amount allowed for gratuitous services in the calculation of the award of damages.

160 Nevertheless, the amount calculated as the value of the gratuitous services is a guide.

Conclusions

161 A Full Court will not lightly interfere with the exercise of discretion by a trial Judge, particularly one faced with an exquisite dilemma in respect of which a Judge might reasonably choose either alternative.

162 However, in this case Sadleir DCJ did err in failing to make allowance for payment of gratuitous services, having regard to all the evidence and the findings he made in relation to the relationship and the past and continuing care.

163 The sum of $350,000 has already been expended by the trust in the purchase of a suitable house for the plaintiff and this capital is effectively unavailable as working capital to increase the fund. Any payment of significance will deplete the fund and have an obvious effect on the future income available to care for the plaintiff.

164 As against that in honouring the obligation, especially in the circumstances of this case, I consider the overall benefits to the plaintiff are such that a payment must be ordered.

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165 The actual selection of a figure is not one that can be accomplished by calculation in all circumstances, except perhaps when the amount to be provided is low, having regard to the overall trust fund available.

166 In this case the indicative amount of $275,000 constitutes a reasonable balance between the various factors necessary to be given weight in making a decision for the benefit of the plaintiff.

167 The function of an award of interest is to compensate a plaintiff for the loss or detriment which he or she has suffered by being kept out of his or her money during the relevant period: Batchelor v Burke (1981) 148 CLR 448 per Gibbs CJ at 456.

168 In the present case the position of Mr Peter Jones is not precisely similar to that of a plaintiff. In consequence the provisions of the Supreme Court Act s 32 do not precisely apply. The fact that Mr Bryn Jones may have pursued a claim for interest on the Griffiths v Kerkemeyer damages is not relevant. However it is in the circumstances appropriate to make an allowance for a sum analogous to the payment of interest. Therefore to the sum of $275,000 I would add an amount of $25,000 representing an amount analogous to an interest payment. This amount broadly, but not precisely, follows Mr Heenan's calculations and submissions.

169 I am aware that this does not, in any sense, fully recompense Mr Jones.

170 Having regard however to the present state of the trust fund and all the circumstances, an order of this amount will be to the plaintiff's benefit and advancement.

Orders

171 The appeal should be allowed and the order of Sadleir DCJ set aside. In lieu thereof, there be an order that Perpetual Trustees Ltd pay to Mr Peter Jones, the second appellant, from the trust fund, the sum of $300,000 in recognition of a moral claim for the past provision of gratuitous services to Mr Bryn Jones.

Jones v Moylan (No 2)

[2000] WASCA 361

21 NOVEMBER 2000

BRYN JONES, AN INFANT by his Next Friend JEAN ISABELLA JONES & ANOR -v- MOYLAN [2000] WASCA 361