Levi Jake Saunders by his Next Friend Claire Marie Matthews v Turner
[2020] WADC 133
•14 OCTOBER 2020
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS
LOCATION: PERTH
CITATION: LEVI JAKE SAUNDERS by his Next Friend CLAIRE MARIE MATTHEWS -v- TURNER [2020] WADC 133
CORAM: GETHING DCJ
HEARD: 2 OCTOBER 2020
DELIVERED : 14 OCTOBER 2020
FILE NO/S: CIV 2964 of 2012
BETWEEN: LEVI JAKE SAUNDERS by his Next Friend CLAIRE MARIE MATTHEWS
Plaintiff
AND
ANDREW TIMOTHY TURNER
Defendant
Catchwords:
Tort - Damages for personal injuries - Whether the District Court has the power to terminate a court trust which is created - Parens patriae power - Interrelationship between a District Court court trust and orders made by the State Administrative Tribunal under the Guardianship and Administration Act 1990 - Procedures and principles on a hearing to terminate a court trust - Whether a plaintiff whose court trust is terminated is liable to repay any unused portion of trustees fees allocated in the damages award
Legislation:
District Court of Western Australia Act 1969 (WA), s 55
Guardianship and Administration Act 1990 (WA), s 4
Rules of the Supreme Court 1971 (WA), O 70
Result:
Court trust terminated
Representation:
Counsel:
| Plaintiff | : | Mr J R Johnson |
| Defendant | : | Mr P E Jarman |
Solicitors:
| Plaintiff | : | Julian Johnson Lawyers |
| Defendant | : | Sparke Helmore Lawyers |
Case(s) referred to in decision(s):
Ansons Pty Ltd v Merlex Corporation Pty Ltd [2001] WASC 204
Bailey v Marinoff [1971] HCA 49; (1971) 125 CLR 529
Beer v Duracraft Pty Ltd [2004] WASCA 192
Bofinger v Kingsway Group Ltd [2009] HCA 44; (2009) 239 CLR 269
Chianti v Leume Pty Ltd [2007] WASCA 270; (2007) 35 WAR 488
Commonwealth Bank of Australia Ltd v Saraceni [2013] WASC 115
Deputy Commissioner of Taxation (NSW) v Chamberlain (1990) 26 FCR 221
Dimasi v Walsh [2003] WADC 230
DJL v The Central Authority [2000] HCA 17; (2000) 201 CLR 226
Elliott v Diener (1978) 21 ACTR 21
Equuscorp Pty Ltd v Haxton [2012] HCA 7; (2012) 246 CLR 498
Gamser v The Nominal Defendant [1977] HCA 7; (1977) 136 CLR 145
GC v PC [2014] WASAT 10
Gray by her Tutor v Richards [2014] HCA 40; (2014) 253 CLR 660
Gray v Manolas [2003] WADC 205
Harbeck v Vasse Dozer Hire Pty Ltd [2009] WADC 48
Harold Joseph Martin Cadwallender by his next friend Stavroulla Cadwallender v The Public Trustee [2003] WASC 72
James Hardie & Coy Limited v Seltsam Pty Limited [1998] HCA 78; (1998) 196 CLR 53
Kelly v Solari (1841) 152 ER 24
Lampson (Australia) Pty Ltd v Fortescue Metals Group Ltd [No 3] [2014] WASC 162
Lashansky v Legal Practitioners Complaints Committee [2005] WASCA 217
LS [2018] WASAT 64
LS [2019] WASAT 97
Marshall v The Honourable Alannah MacTiernan MLA Minister for Planning and Infrastructure [2003] WASCA 67
Masterman-Lister v Brutton & Co [2002] EWCA Civ 1889
Max Elio Naso by his next friend Sabatino Naso v Cottrell [No 2] [2001] WADC 7
McDonald v McDonald [1965] HCA 45; (1965) 113 CLR 529
Morris v Zanki (1997) 18 WAR 260
Newton v The Public Trustee [1999] WASC 179
Newton v The Public Trustee [No 2] [2000] WASC 118
Owners of Strata Plan No 23007 v Cross (2006) 233 ALR 296
Patterson v Humfrey [No 2] [2016] WASC 343
Pavey & Matthews Pty Ltd v Paul [1987] HCA 5; (1987) 162 CLR 221
Perpetual Trustee Company Ltd v Cheyne [2011] WASC 225
Perpetual Trustees (WA) Ltd v Naso [1999] WASCA 80; (1999) 21 WAR 191
Re Hoang Minh Le; Ex Parte The Public Trustee [2012] WASC 31
Roth v Duffett [2001] WADC 41
Ryan Nominees Pty Ltd v Western Australian Planning Commission [2003] WASCA 134
Scaffidi v Perpetual Trustees Victoria Ltd [2011] WASCA 159
Sergi v Sergi [2012] WASC 18
Sosa v Carter [1978] WAR 123
Tahlia Burns by her next friend Liesel Nicola Burns v North Metropolitan Health Service [2019] WADC 65
Tanner by his next friend Julie Lee White v Bresland [2005] WADC 18
Todorovic v Waller [1981] HCA 72; (1981) 150 CLR 402
Wintle v Stevedoring Industry Finance Committee [2002] VSC 369
Wood v Public Trustee (WA) (1995) 16 WAR 58
GETHING DCJ:
The plaintiff, Levi Saunders, was seriously injured in a car accident on 3 August 2008 when he was 9 years old. His injuries included a severe acquired brain injury. He commenced an action in the District Court in relation to the accident by writ filed on 28 September 2012. His mother, Claire Matthews, was his next friend.
By orders made on 28 February 2014, a judge of this court approved the compromise of the plaintiff's claim in the amount of $7,000,000 plus trustees fees in the sum of $1,268,813 and costs to be taxed if not agreed. Judgment was entered against the defendant in accordance with the compromise (Judgment). The Judgment placed the judgment sum, less certain statutory deductions, in a trust (Court Trust) the trustee of which was Perpetual Trustee Company Limited (Perpetual). The orders included liberty to apply in general terms.
The Trust was not expressed in terms which brought it to an end when the plaintiff turned 18. This was because on the material then before the court it was expected that, due to his injuries, the plaintiff would not be in a position to manage his own affairs on turning 18.
There have been a number of applications in the State Administrative Tribunal (SAT) relating to the plaintiff pursuant to Guardianship and Administration Act 1990 (WA) (GAA) which I refer to in detail below.
The current position is that there is no order pursuant to the GAA relating to the affairs of the plaintiff.
It is apparent that, over the past five or so years, the plaintiff has made a significant recovery, evidenced by medical opinions which I will refer to in detail later in these reasons.
The plaintiff is now 21, and will turn 22 on 19 October 2020.
By application dated 17 April 2020 the plaintiff sought orders dissolving the Court Trust and revoking the appointment of Perpetual as trustee (Application). Initially, the only affidavit filed in support was one sworn by Tania Watson, a lawyer employed by his solicitors, dated 2 April 2020.
The Application was referred to me for determination on the papers. Having reviewed the materials, I had concerns as to whether it was appropriate to determine the Application on the papers. I convened directions hearings and made programming orders to have the Application determined at a hearing.
As discussed in detail below ([57] to [61]), I formed the view that it was necessary for the plaintiff to give oral evidence as to the matters in support of the Application. This occurred at the hearing of the Application on 2 October 2020. The plaintiff did not call any other witnesses. He did, however, file an affidavit sworn 18 September 2020 by Christopher Marshall, a senior officer of Perpetual, setting out the current financial position of the Court Trust.
Both the plaintiff and the defendants filed submissions in relation to the Application. A significant issue which emerges from the defendant's submissions is whether, if the Court Trust is to be terminated, the trustee's fees not yet levied should be repaid to the defendant.
The issues which arise for determination are:
•Does the District Court have the power to dissolve the Court Trust?
•If it does, what if any weight should be given to any determination of the SAT pursuant to the GAA?
•If it does, what procedures and principles should the District Court adopt?
•If it does, should the District Court exercise its power to terminate the Court Trust on the evidence before the court?
•If the Court Trust is terminated, is there is basis to order the plaintiff to repay the unused portion of the judgment sum that was allocated to trustee's fees?
•What final orders are appropriate?
At the hearing on 2 October 2020, after the plaintiff gave evidence and hearing from counsel, I advised counsel that, in my view:
(a)the District Court does have power to dissolve the Court Trust;
(b)in exercising this power the District Court must come to its own decision as opposed to merely adopting the position of the SAT;
(c)on the facts, the power should be exercised to terminate the Court Trust; and
(d)there is no basis to order the plaintiff to repay the unused portion of the judgment sum that was allocated to trustee's fees.
I then advised counsel that I would provide them with a draft of the orders which I considered appropriate to give effect to this decision, which subsequently occurred. I requested counsel for the plaintiff to liaise with Perpetual as to the form of the orders, an issue on which I consider Perpetual has the right to be heard. Having received this feedback, I made the orders which are set out at [125].
At the hearing on 2 October 2020, I also advised counsel that I would publish reasons for coming to the views set out at [13], which are as follows. Before addressing each of the issues identified it is necessary to review the proceedings in the SAT involving the plaintiff as this provides the context for the Application.[1]
[1] The history of the proceedings in the SAT is taken from the decisions in LS [2018] WASAT 64 (Judge Sharp, Deputy President; Ms N Owen-Conway, Member; Mr M Harford, Senior Sessional Member) and LS [2019] WASAT 97 (Mr J Mansveld, Member).
Proceedings in the SAT involving the plaintiff
In March 2014, Perpetual applied to the SAT pursuant to the GAA to be appointed as an administrator of the plaintiff's estate. It did so for the limited purpose of permitting it to establish and pay the majority of the Trust Fund into a superannuation fund so as to maximise the tax effectiveness of the fund.[2] The SAT granted the order on 19 March 2014 (2014 Administration Order). The appointment was ordered to be reviewed by 19 May 2019.
[2] As to which, see generally: Perpetual Trustee Company Ltd v Cheyne [2011] WASC 225 (Cheyne); Re Hoang Minh Le; Ex Parte The Public Trustee [2012] WASC 31 (Hoang).
On 6 October 2016, the plaintiff's mother made an application under the GAA for the appointment of herself and the plaintiff's brother as joint guardians. This was seen as prudent as the plaintiff was soon to turn 18.
On 24 October 2016, the plaintiff's mother made an application for review of the 2014 Administration Order. She sought an order that she and the plaintiff's brother be appointed as plenary administrators over that part of the plaintiff's estate not within the scope of Perpetual's functions as limited administrator.
On 16 January 2017 the SAT made two orders. The first appointed the plaintiff's mother as his limited guardian to make decisions regarding his accommodation, support services, education, training and work (2017 Guardianship Order). The second appointed the plaintiff's mother plenary administrator of the plaintiff's estate except for that part of the plaintiff's estate in respect of which Perpetual was appointed limited administrator pursuant to the 2014 Administration Order (2017 Administration Order). Both orders were to be reviewed by 16 January 2022.
In August 2017 Perpetual applied for review of the 2017 Administration Order and the 2017 Guardianship Order citing a breakdown in the relationship with the plaintiff's mother.[3] The plaintiff's mother in turn raised with the SAT concerns about the conduct of Perpetual.[4] On 2 October 2017 the SAT adjusted the 2017 Guardianship Order, splitting the role between the plaintiff's mother and the Public Advocate, with a review by 31 January 2018.[5]
[3] Summarised at: LS [2018] WASAT 64 [13].
[4] Summarised at: LS [2018] WASAT 64 [14] - [15].
[5] Summarised at: LS [2018] WASAT 64 [16].
The order made on 2 October 2018 was reviewed at a hearing on 6 February 2018. The SAT declared that the plaintiff was a person who:[6]
(a)is unable, by reason of a mental disability, to make reasonable judgments in respect of matters relating to his estate;
(b)is in need to an administrator of his estate;
(c)is in need of oversight, care or control in the interests of his own health and safety; and
(d)is in need of a guardian.
[6] A copy of the order is Annexure TW4 to the affidavit of Tania Watson, sworn 1 April 2020.
In summary terms, the SAT member ordered that:
(a)subject to (b), the plaintiff's mother be appointed as administrator of his estate;
(b)Perpetual be appointed limited administrator of the plaintiff's estate in relation to his superannuation investment (essentially continuing the effect of the 2014 Administration Order);
(I will refer to pars (a) and (b) as the 2018 Administration Order)
(c)the 2017 Guardianship Order be revoked;
(d)the Public Advocate be appointed the limited guardian of the plaintiff's estate with authority to make decisions concerning his accommodation and support services (2018 Guardianship Order); and
(e)the administration and guardianship orders be reviewed by 5 February 2019.
In March 2018 the plaintiff's mother applied for a review of the 2018 Guardianship Order by a Full Tribunal pursuant to GAA s 17A. There was no challenge to the 2018 Administration Order.[7] At the hearing before the Full Tribunal additional expert evidence was received, some of which I will refer to below.[8] The Full Tribunal in its decision went into some detail as to the relationship issues between the plaintiff's mother and Perpetual, as well as similar issues with the Public Advocate.[9] A recurring theme in the decision is what I would describe as demarcation issues between the various entities and people involved in the care of the plaintiff. The plaintiff gave evidence at the hearing. In the end, by orders made on 8 May 2018 the Full Tribunal revoked the declaration that the plaintiff was in need of a guardian and revoked the 2018 Guardianship Order.[10]
[7] LS [2018] WASAT 64 [26].
[8] Being a report of Dr Camela Pestell dated 12 December 2017.
[9] See generally: LS [2018] WASAT 64 [30] - [58].
[10] LS [2018] WASAT 64 [95] - [101].
The review of the 2018 Administration Order was heard on 9 April 2019. The plaintiff sought the revocation of the 2018 Administration Order on the basis that he was capable of making reasonable judgments concerning his estate. The evidence before the SAT member included expert evidence which I will refer to below.[11] The SAT member revoked the 2018 Administration Order.[12]
[11] Being the report of Martin Jackson, dated 1 March 2019 and the report of Dr Camela Pestell dated 12 August 2019.
[12] The decision is reported at LS [2019] WASAT 97 (Mr J Mansveld, Member).
The SAT member was of the view that the plaintiff suffered from a mental disability for the purposes of the GAA, being the residual effects of the acquired brain injury he sustained in the motor vehicle accident in 2008.[13] The issue then became whether by reason of the mental disability the plaintiff was then unable to make reasonable judgments in respect of matters relating to all or any part of his estate. The SAT member referred to the presumptions in GAA s 4(3), which are in the following terms:
[13] LS [2019] WASAT 97 [68].
(3)Every person shall be presumed to be capable of -
(a)looking after his own health and safety;
(b)making reasonable judgments in respect of matters relating to his person;
(c)managing his own affairs; and
(d)making reasonable judgments in respect of matters relating to his estate,
until the contrary is proved to the satisfaction of the State Administrative Tribunal.
The SAT member then referred to the decision in GC v PC in which the Full Tribunal held that to rebut the presumption of capacity in GAA s 4(3), 'clear and cogent' evidence is required.[14] The SAT member found that the presumption of capacity in GAA s 4(3) was not rebutted on the evidence and revoked the 2018 Administration Order.[15]
[14] GC v PC [2014] WASAT 10 [36] (Judge Parry, Deputy President; Ms D Taylor, Senior Member; Dr R Clarnette, Senior Sessional Member).
[15] LS [2019] WASAT 97 [79].
So, as I have already observed, the current position is that there is no order pursuant to the GAA relating to the affairs of the plaintiff.
The current position is somewhat unsatisfactory. The money invested in a superannuation fund to the account of the plaintiff, just under $7 million, is neither under the direct supervision of the District Court, as part of the Trust Fund, nor the SAT, pursuant to the usual course of the court appointed trustee also being appointed limited guardian.[16]
[16]See generally: Cheyne [46].
Does the District Court have the power to terminate the Court Trust?
The power of the District Court to create a trust of monies recovered by a person under a disability is found in Rules of the Supreme Court 1971 (WA) (RSC) O 70 r 12, which is in the following terms:
12.Control of money recovered for person under disability
(1)Where -
(a)in any proceedings money is recovered by or on behalf of or is adjudged or ordered or agreed to be paid to or for the benefit of a person under disability; or
(b)in any proceedings money paid into court is accepted by or on behalf of a plaintiff who is a person under disability; or
(c)in an application under rule 11(1) the Court has ordered the payment into court or investment of any moneys relating to a settlement or compromise,
the money shall, unless otherwise ordered by the Court, be paid to the Public Trustee for investment on behalf of the person under disability, and if the Court so orders may be invested by the Public Trustee in investments outside the Common Account established under the Public Trustee Act 1941.
(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.
The phrase 'person under a disability' is defined in RSC O 70 r 1:
1.Terms used
In this Order unless the contrary intention appears -
Act means the Guardianship and Administration Act 1990;
person under disability means -
(a)a person who is an infant; or
(b)a represented person; or
(c)a person not being a person referred to in paragraph (a) or (b), who, by reason of mental illness, defect or infirmity, however occasioned, is declared by the Court to be incapable of managing his affairs in respect of any proceedings to which the declaration relates;
represented person means a represented person within the meaning of the Act.
RSC O 70 applies in the District Court.[17]
[17] District Court Rules 2005 (WA) r 6(1).
There is no express power in either the RSC or District Court Rules 2005 (WA) (DCR) to dissolve a trust created pursuant to RSC O 70 r 12.
The issue of the power of the District Court to determine a court trust was considered by the Full Court in Perpetual Trustees (WA) Ltd v Naso.[18]In that case, Mr Naso was injured in a car accident as a minor, sustaining a closed head injury and suffering a permanent irreparable spinal cord injury resulting in a total loss of movement and sensation below his neck. He commenced proceedings in the District Court which were ultimately compromised, resulting in the creation of a court trust. The order creating the trust provided that the judgment was to be held by the applicant on trust for Mr Naso 'until further order'. On reaching the age of 18, Mr Naso wrote to the trustee (the applicant) purporting to terminate the trust and directing that the assets be vested in him. The trustee declined to comply with his request. Mr Naso commenced proceedings in the Supreme Court seeking a declaration that the trust constituted by the District Court order was at an end. In the course of these proceedings, the trustee applied for an order pursuant to RSC O 28 r 1 that Mr Naso submit himself for a medical examination, including a psychiatric examination. This interlocutory application was refused at first instance. On appeal the court (Parker J with whom White J agreed), held that an order pursuant to RSC O 28 r 1 could be made in relation to the determination of Mr Naso's originating summons, and made the order on the facts. However, his Honour stayed the balance of the originating summons until further order. This was because the appropriate course was for Mr Naso to apply to the District Court for an order varying or discharging the order constituting the trust, that trust only being created 'until further order'.
[18] Perpetual Trustees (WA) Ltd v Naso [1999] WASCA 80; (1999) 21 WAR 191 (Naso (SC)).
The Full Court in Naso (SC) did not address whether the District Court had the power to terminate the trust either pursuant to RSC O 70 r 12(2) or in the parens patriae power of the District Court.
Mr Naso then sought orders from the District Court discharging the court trust.[19] On the hearing of the application, Mr Naso gave evidence. The judge hearing the application, Nisbett DCJ, identified a number of areas of concern about Mr Naso's capacity to manage his own affairs including the view that Mr Naso had been manipulated by his father. Mr Naso's father and mother also gave evidence. He also led evidence from a psychiatrist who had prepared a report on his behalf. The oral evidence of the psychiatrist caused Nisbett DCJ to conclude that he had not been adequately briefed in the legal purpose for which his advice on the plaintiff's mental capacity was being sought.[20] The trustee also called a psychiatrist who had examined Mr Naso and prepared a report for the court. His Honour referred to the conflict in the opinions of the experts, and concluded in the following terms:[21]
… It is my opinion that is being sought after all and I may accept or reject the opinions of experts as the case requires. My own assessment of the plaintiff's capacity and the undue influence exercised over him by his father whether it be conscious or subconscious is such that in my opinion the plaintiff does not have an independent capacity to manage his own affairs so that he should be left in day to day control of his estate. …
[19] Max Elio Naso by his next friend Sabatino Naso v Cottrell [No 2] [2001] WADC 7 (Naso (DC)).
[20] Naso (DC) [12].
[21] Naso (DC) [44].
Nisbett DCJ then posed the question: 'Does the court have jurisdiction to order the continuation of a court appointed trust where the beneficiary is of full age and is not by reason of mental illness, defect or infirmity incapable of managing his affairs?'[22] In doing so, His Honour did not take up the invitation of the Full Court to review the initial order creating the court trust to determine whether it should continue to apply, the trust only being created 'until further order'. Rather, his Honour concluded the District Court had jurisdiction and power over persons under a disability from its equitable jurisdiction pursuant to Supreme Court Act 1935 (WA) (SCA) s 16(1)(d) and District Court Act 1969 (WA) (DCA) s 50(2) and s 55.[23] After reviewing authorities on the scope of parens patriae power, his Honour concluded:[24]
Accordingly, it seems to me that I have the jurisdiction to find as a fact that the plaintiff is not capable of managing his own affairs by reason of all of the circumstances I have previously detailed, notwithstanding that he is not an infant and notwithstanding that the evidence discloses no mental infirmity, disease or defect.
[22] Naso (DC) [52].
[23] Naso (DC) [52].
[24] Naso (DC) [61].
His Honour declined to make the orders sought terminating the court trust.
The issue of the jurisdiction of the District Court was next considered in the Supreme Court by McKechnie J in Newton v The Public Trustee.[25] In that case, his Honour observed that the order of the District Court was not expressed to apply 'until further order', as was the case in Perpetual Trustees. Rather there was only 'liberty to apply in respect of the invested monies', which McKechnie J did not consider extended to discharging the order vesting the property in the Public Trustee. His Honour was of the view that the appropriate course for the plaintiff to determine the trust was through an originating summons in the Supreme Court.[26] In a subsequent hearing, McKechnie J heard evidence from Mr Newton, was satisfied that he had sufficient mental capacity and terminated the court appointed trust.[27] Mr Newton gave oral evidence at that hearing, as to which his Honour found:[28]
The plaintiff, Paul Newton, has sworn affidavits and has also given oral evidence before me today. From his answers, both in examination‑in‑chief and in cross‑examination, I have formed the clear impression that he is quite capable of managing his affairs with the assistance from time to time of his parents or professional advisers.
His answers demonstrated that he had clearly thought through issues about the management of his money and had reasonable views as to how and why it should be invested. He says there is about $185,000 remaining. He wishes to invest $100,000 in a house, $30,000 in superannuation and the balance in blue chip shares. He demonstrated a reasonable appreciation of what blue chip shares means by way of examples.
I agree with counsel for the Public Trustee, who appeared principally in the role of amicus curiae, that the purchase of a house is not determinative because the trust could always purchase a house and, in the case of disagreement, directions from the Court could be sought. However, the plaintiff's reasons for purchasing a three‑bedroom house are sensible and demonstrate a competence in decision-making. That is the real issue.
[25] Newton v The Public Trustee [1999] WASC 179 (McKechnie J) (Newton).
[26] Newton [18].
[27] Newton v The Public Trustee [No 2] [2000] WASC 118 (Newton [No 2]).
[28] Newton [No 2] [9] - [11].
However, in Newton McKechnie J did not consider the application of RSC O 70 r 12(2) nor the equitable jurisdiction or parens patriae power of the District Court. His Honour did make the following observation about the interaction of the court's jurisdiction with that under the GAA:[29]
On the other hand, where the incapacity is not a temporary one such as age, there is a requirement to decide the extent, if any, that any incapacity might have on the ability of the beneficiary to manage the funds which would become his or her property. To this extent, although the provisions of the Guardianship and Administration Act (WA) offer a useful and simple method of resolving the question, while protecting the rights of the beneficiary, this court is not absolved by that Act from deciding the controversy in accordance with equitable principles to do justice in a particular case.
[29] Newton [32].
The issue of whether the District Court has the power to dissolve a trust created pursuant to RSC O 70 r 12 was next considered by EM Heenen J in Cadwallender v Public Trustee.[30] Mr Cadwallender was injured in a car accident in 1990. He sustained serious head and other injuries. In 1991 he commenced an action in the District Court against the driver of the other vehicle. Because of the nature and effect of his injuries, the action was brought on behalf of Mr Cadwallender by his wife as next friend as he was considered a person under a disability at the time. In 1994, the action was compromised and a court trust created, with the Public Trustee being appointed. Over the following nine years, Mr Cadwallender lived a 'near normal life in the sense that he has been managing his own financial affairs and making responsible decisions about his own, and his family's, welfare'.[31]
[30] Harold Joseph Martin Cadwallender by his next friend Stavroulla Cadwallender v The Public Trustee [2003] WASC 72 (EM Heenan J) (Cadwallender).
[31] Cadwallender [4].
In 2002 Mr Cadwallender made an application in the Supreme Court seeking a declaration that he was no longer disabled and orders terminating the trust and distributing the remaining funds to him. EM Heenan J identified three issues:[32]
Two main issues arise for consideration on this application. The first is whether or not the court has power to make the declaration sought and to determine the trust established by the order of the District Court of 29 July 1994. This is not a difficult question, nor one upon which there is any controversy. For reasons which will emerge, it is clear that this Court does have that power. The second issue, is one of fact, and that is whether orders as sought by Mr Cadwallender should be made, in the light of the evidence adduced. This requires the court to make findings of fact and, for that purpose, affidavit and oral evidence has been adduced and Mr Cadwallender has been cross‑examined.
A third issue has arisen from the procedure followed in the institution of these proceedings, namely, from the application for the determination of the trust by originating summons to this Court, rather than by any application to the District Court which established the trust.
[32] Cadwallender [5] - [6].
In relation to the first issue, EM Heenan J concluded that the Supreme Court had the power to hear and determine the application, on two bases. The first basis was pursuant to the express power in Trustees Act 1962 (WA) (TA) s 93.[33] The second basis was in the parens patriae or protective jurisdiction of the court.[34] In relation to the second basis, his Honour was of the view that RSC O 70 r 12(2) was comprehensive enough in its terms to include a power to terminate the trust in appropriate circumstances.[35] I say 'in relation to the second basis', as EM Heenan J observed, RSC O 70 'needs to be read and applied having regard to the nature of purpose of the jurisdiction rather than as a code'.[36]
[33] Cadwallender [51].
[34] Cadwallender [51].
[35] Cadwallender [40].
[36] Cadwallender [31], citing Morris v Zanki (1997) 18 WAR 260, 286 - 287 (judgment of the court). See also: Scaffidi v Perpetual Trustees Victoria Ltd [2011] WASCA 159 [50] (reasons of the court); Wood v Public Trustee (WA) (1995) 16 WAR 58, 62 (Pidgeon J, with whom Rowland & Franklyn JJ agreed).
In relation to the second issue, whether the orders should be made, EM Heenan J, after reviewing a number of authorities stated the principle in the following terms:[37]
It follows from these considerations that the only justification for the legal estate in the trust fund to be held and administered by the trustee is the protection of the disabled person rendered necessary by his or her own incapacity. Such an incapacity deemed to exist by reason of infancy alone will disappear on the beneficiary attaining the age of majority and then the beneficiary will be entitled to call for the transfer of the entire corpus of the trust estate. However, where the disability is due to the presence of some other incapacity then the reason for the trust will continue so long as the incapacity continues but not longer. If and when the beneficiary is able to establish that he is no longer disabled because that incapacity has passed or he has recovered from it, then there is no longer any basis to withhold the absolute enjoyment of the trust property. In such cases, however, adequate proof of recovery from the disability must be shown but, once it is, there does not appear to me to be any justification to continue the trust or to withhold the transfer of the corpus to the beneficiary absolutely. As I have previously observed, the exercise of determining whether or not this is the case seems, inescapably, to be a part of the administration of the trust and of the protective role which the court retains in its supervision.
[37] Cadwalleder [45].
Mr Cadwallender filed affidavit evidence and gave evidence himself at the hearing before EM Heenan J.[38] Having reviewed the evidence, his Honour concluded:[39]
The evidence which I have recounted satisfies me that now, in the year 2003, Mr Cadwallender does have the capacity to manage his own affairs and is capable of making responsible decisions about his own welfare and future and the use and disposition of his property. That he has managed the moneys in his ANZ banking account and in the joint account at the United Credit Union for so long shows that he has a very responsible and frugal attitude towards his money. His capacity to amass savings of that dimension from the pensions which comprise the only joint income of himself and his wife is impressive. His proposals for the use of the money presently held by the Public Trustee under the protective trust established by the order of the District Court are cogent. His rationale for having access to the money and independence at his time of life, having regard to his health condition and the family support which he obviously enjoys, is natural and compelling. His plans are for a practical and convenient means of managing the money.
[38] Cadwallender [17] - [23].
[39] Cadwallender [25].
EM Heenan J made the orders sought in the Application.
In relation to the third issue identified, EM Heenan J opined that the District Court did have the power to terminate a court trust it created:[40]
A third issue has arisen from the procedure followed in the institution of these proceedings, namely, from the application for the determination of the trust by originating summons to this Court, rather than by any application to the District Court which established the trust. This raises the question of whether or not the District Court of Western Australia has the power to terminate such a trust. When the plaintiff made application earlier to the District Court for this to be done, his application was refused on the ground that the District Court no longer had any jurisdiction in the matter. In one sense, the question of the power of the District Court to deal with such applications has been side‑stepped by the procedure taken to institute the application in this Court but, as there are no doubt many instances where trusts of this nature have been established by orders of the District Court, and, consequently, probably many occasions when applications of this nature will need to be made, there is an important question of jurisdiction and procedure about whether or not such applications can be dealt with by the District Court. It is convenient to address that issue in the course of this decision.
…
There can be no doubt that the District Court of Western Australia had jurisdiction to entertain and determine Mr Cadwallender's original action for damages for negligence causing the personal injuries sustained in his motor vehicle accident. That was a personal action for damages in respect of the death of, or bodily injury to a person, in respect of which jurisdiction was granted to the District Court specifically by s 50(2) of the District Court of Western Australia Act (1969). As it was an action within the civil jurisdiction of the court, the court had power to grant such relief, redress or remedy or combination of remedies either absolute or conditional, and to make any order that could be made in relation to any such action and to give such and like effect to every ground of defence or counterclaim equitable or legal in full and ample a manner as might be done in the like case by the Supreme Court - s 55. If such an action had been brought in the Supreme Court, this Court would have all the powers conferred by s 16 and s 23 to make provision for the representation and protection of the interests of infants and disabled persons. Indeed, that is the purpose which authorises the rules contained in O 70, including the provisions obliging a disabled person to sue by a guardian ad litem, requiring prior approval of any compromise of a disabled person's claim before it will be binding, and then stipulating for the control of moneys recovered by payment to a trustee appointed by, and subject to the direction of the court. This jurisdiction and these powers are, therefore, all ancillary to a claim directly within the civil jurisdiction of the District Court and no issue can possibly arise that, not being ancillary to the principal claim, they are outside the scope of that court's equity jurisdiction such as led to the decision in Commercial Developments Pty Ltd (t/as Don Rogers Motors Pty Ltd) v Mercantile Mutual Insurance (Workers Compensation) Ltd (1991) 5 WAR 208.
I consider that it is desirable that issues concerning the administration of such court appointed trusts, and, in particular, applications for the termination of the trusts and transfer to the beneficiary of the trust property, should be brought in the court which ordered the establishment of the trust and in the proceedings in which that was ordered. Not only has that court already exercised the protective parens patriae jurisdiction in respect of the particular claimant, but it will have the direct experience and record relating to the composition of the fund which created the trust, the details of the damages suffered by the claimant and the nature of his or her disability which will make it the more convenient and better equipped forum to deal with the issue than a court which has no previous acquaintance with the litigation that led to the establishment of the trust.
[40] Cadwallender [6], [49] - [50].
The question of the jurisdiction of the District Court was considered obliquely by Edelman J in Cheyne. The specific issue in that case was whether the trustee of a court appointed trust had the power to transfer funds to a superannuation fund to be administered for the benefit of the plaintiff. The underlying concern was that the transfer would remove the funds from the trust, removing the power of the court to supervise these funds. The powers given to the trustee were in the usual terms, reflecting the text of RSC O 70 r 12(2). Edelman J held that pursuant to the order creating the trust the trustee had the power to transfer the fund, at least in circumstances were the trustee proposed to apply to the SAT for orders appointing it a limited administrator over the affairs of Mr Cheyne in respect of his rights as a member of the superannuation fund.[41] His Honour also observed that, were it necessary to do so, the parens patriae power of the court could also have permitted orders to be given to allow the proposed transfer.[42] There is nothing in the decision in Cheyne suggesting that the District Court does not have a parens patriae power.
[41] Cheyne [36] - [49].
[42] Cheyne [63]. See also: Hoang [22] - [24].
As to District Court decisions, in Dimasi v Walsh Fenbury J followed the decision in Cadwallender and held that the District Court had the power to hear and determine a court trust which it created.[43] In that case, the plaintiff was injured in a car accident leaving her with significant permanent disabilities including cognitive dysfunction. Her mother was appointed limited administrator for the purpose of proceeding with an action for damages in relation to the car accident. That action was commenced, proceeded to trial, and resulted in a judgment which was paid to the Public Trustee for investment on trust for the plaintiff. A term of the administration order was that it be reviewed after five years. During this period it appeared that the plaintiff had achieved a greater extent of recovery than was initially forecast. On this review, it was revoked. Nearly two years later, the plaintiff applied for an order terminating the court trust requiring the trust money to be delivered to her. The application was determined on the basis of detailed affidavit evidence, including from the plaintiff. The plaintiff did not give oral evidence. Fenbury DCJ granted the orders sought.
[43] Dimasi v Walsh [2003] WADC 230 [25] - [36] (Fenbury DCJ).
Other decisions have accepted that the District Court has a parens patriae power in relation to actions which are otherwise within its statutory jurisdiction and have considered its scope.[44]
[44] Tanner by his next friend Julie Lee White v Bresland [2005] WADC 18 [14] - [21] (Sleight DCJ) (Tanner); Tahlia Burns by her next friend Liesel Nicola Burns v North Metropolitan Health Service [2019] WADC 65 [34] - [35] (Gething DCJ).
In my view, the reasoning of EM Heenan J in Cadwallender is persuasive, binding and supported by both the weight of authority and the considerations of practicality his Honour outlines. Accordingly, I conclude that the District Court has the power to determine a court trust which it has created pursuant to RSC O 70 r 12(1).
If the District Court has jurisdiction, what if any weight should be given to any determination pursuant to the GAA?
As I have mentioned, the SAT has determined that the plaintiff is no longer a person incapable of managing his own affairs.
The District Court in its practice has acknowledged the role played by the SAT exercising powers under the GAA. Specifically, in the Consolidated Practice Directions and Circulars to Practitioners: Civil Jurisdiction the following guidance is provided on how the court will manage the interaction of RSC O 70 with the GAA:
12 PERSONS UNDER A DISABILITY
12.1 Application
12.1.1 This Practice Direction applies to all civil matters commenced or being conducted in the District Court.
12.2 Procedure
12.2.1 Rules of the Supreme Court 1971 (WA) (RSC) O 70 r 1 defines a 'person under a disability' to be an infant, a represented person within the meaning of the Guardianship and Administration Act 1990 (WA) (GAA) or a person 'who, by reason of mental illness, defect or infirmity, however occasioned, is declared by the Court to be incapable of managing his affairs in respect of any proceedings to which the declaration relates'.
12.2.2 The GAA grants to State Administrative Tribunal (SAT) the power to make findings as to a person's capacity to manage their affairs and to make appropriate orders for the representation of people unable to do so. The Court recognises that the expertise in the appointment of representatives of incapable persons resides with the SAT. Accordingly, a person seeking to commence or defend litigation on behalf of an incapable person who is not an infant should first seek a guardianship or administration order pursuant to the GAA. The Court will not usually make a declaration that a person is incapable of managing their affairs for the purpose of making that person a person under a disability within O 70.
12.2.3 A person appointed to represent an incapable person under the GAA does not need to make an application to act as a next friend, unless the party became a represented person after the action was commenced (RSC O 70 r 3).
12.2.4 A person appointed to represent an incapable person must act by a solicitor. The solicitor must file with the writ or appearance a copy of the order by which the next friend was appointed to represent the incapable person (RSC O 70 r 3).
Pursuant to the GAA, a 'represented person' is any person in respect of whom a guardianship order is in force, an administration order is in force or both.[45]
[45] GAA s 3.
As EM Heenan J observed in Cadwallender, the issue of whether the plaintiff now has the capacity to manage his own affairs is one of fact and requires the court to make findings of fact.[46] And (as I have quoted above ([39])), in Newton McKechnie J observed that the GAA did not absolve the court from 'deciding the controversy in accordance with equitable principles to do justice in a particular case'.[47]
[46] Cadwallender [5].
[47] Newton [32].
This leads me to the conclusion that, notwithstanding the decisions in the SAT, the District Court is required to conduct its own inquiry and make a factual determination as to whether the plaintiff continues to be incapable of managing his own affairs as regards the Court Trust. As the decision in Naso (DC) illustrates, there may well be factors going beyond the mental capacity of the plaintiff which justify the continuation of a court trust (in that case including the risk of the plaintiff being subject to undue influence). Further, as set out below ([63] ‑ [65]), the onus of proof in the SAT under the GAA is the reverse of what it is in the present hearing.
I do not accept that submission made on behalf of the plaintiff that the court should attach considerable weight to the conclusion of the SAT and only in exceptional circumstances decline to terminate a court created trust. I do not consider that the decision of the SAT creates anything in the nature of an issue estoppel given the primacy of the District Court's jurisdiction to control a court trust. Having said that, on the assumption that the evidence before the District Court is more or less the same as the evidence before the SAT, one would ordinarily expect the same conclusion to follow, and, if it does not, the reasons for the difference to be clearly articulated.
What procedure and principles should the District Court adopt?
In my view, the appropriate procedure on an application to terminate a court trust is for a hearing to be convened at which the plaintiff calls evidence in support of his or her application.
The plaintiff will need to give evidence. This is at least necessary to ensure that there is a factual basis in the evidence for any expert opinion evidence adduced in support.[48] Ordinarily the plaintiff's evidence should be giving orally, as occurred in Newton, Naso (DC) and Cadwallender. This is for two reasons. The first is that actually seeing the plaintiff give evidence 'in the formal courtroom atmosphere (given the stress which that may impose)'[49] will optimally position the judge to assess the plaintiff's capacity. The second is that there is a risk that the plaintiff's actual capacity may be obscured if his or her evidence is before the court by way of an affidavit carefully prepared by a legal practitioner.
[48] Beer v Duracraft Pty Ltd [2004] WASCA 192 [19] (Murray J), [78](McLure P, with whom Wheeler J agreed).
[49] Roth v Duffett [2001] WADC 41 [12] (Commissioner Greaves) (Roth).
A similar approach of requiring the plaintiff to give evidence has also been taken at hearings to determine whether a plaintiff is a 'person under a disability' within RSC O 70 r 1(c) at the commencement of the action.[50] In that context, the approach taken was to consider whether the plaintiff was capable of managing his or her own affairs in respect of the proceedings in the immediate and short term future, the next 5 to 20 years.[51]
[50] Roth [12]; Gray v Manolas [2003] WADC 205 [10] ff (Commissioner Greaves) (Gray).
[51] Roth [6], [12]; Gray [5]
The defendant is entitled to be heard and may adduce evidence in response. However, on an application of this kind, the defendant's role is more of an amicus curiae than an opponent.
I adopted the procedure at [57] ‑ [60] in relation to the Application.
The appropriate question is whether the plaintiff is capable of managing his own affairs in the short and medium term, being the next 5 to 10 years.[52]
[52] Roth [6], [12]; Gray [5].
There is then the issue of onus. There is no equivalent statutory or rule based presumption to that in GAA s 4(3). At common law, there are two relevant presumptions. The first is that the law presumes that a person of full age is capable of managing his or her affairs.[53] The second is that the law presumes a person's mental condition and capacity to continue unchanged.[54] There is an onus on the person seeking to assert a change of capacity to adduce evidence to prove this.[55]
[53] Owners of Strata Plan No 23007 v Cross (2006) 233 ALR 296[66] - [67] (Edmonds J) (Cross); Masterman-Lister v Brutton & Co [2002] EWCA Civ 1889 [17] (Kennedy LJ) (Masterman-Lister).
[54] Cross [67] - [69].
[55] Cross [67] - [70]; Masterman-Lister [17].
In the exercise of the power in RSC O 70 r 12(1), there is no justification for the court to order that the funds be held on trust for an infant plaintiff beyond the age of 18 unless the protection of the disabled person is rendered necessary by his or her own incapacity.[56]
[56] Cadwallender [45]; Tanner [6] - [13].
In the present case, the fact that the Court Trust was open ended, and not expressed to terminate when the plaintiff attained the age of 18 years, contains an inherent determination by the court that, as at the date of the order, the plaintiff would not be capable of managing his affairs on turning 18. The onus is on the plaintiff to establish that he is now so capable.
Should the District Court exercise its power to terminate the Court Trust?
Overview
The evidence relied on by the plaintiff is in two parts, his evidence and the expert evidence, including that relied on in the SAT. As the expert evidence is most historical, it is instructive to address that first.
Expert evidence
The plaintiff relies on five expert reports, each of which are annexed to the affidavit of Ms Watson:
(a)Dr Peter Chauvel of 6 September 2013 (First Chauvel Report);
(b)Dr Chauvel of 15 November 2013 (Second Chauvel Report);
(c)Dr Carmela Pestell of 12 December 2017 (2017 Pestell Report);
(d)Mr Martin Jackson of 1 March 2019 (Jackson Report); and
(e)Dr Pestell of 12 August 2019 (2019 Pestell Report).
I have no hesitation in accepting that each of Dr Chauvel, Dr Pestell and Mr Jackson are appropriately qualified to provide the opinions set out in their reports.
Dr Chauvel was a consultant in paediatric and rehabilitation medicine. His reviews were done shortly prior to the settlement of the action.
The First Chauvel Report followed an attendance on 5 September 2013. Dr Chauvel commenced this report by summarising the serious injuries which the plaintiff sustained in the car accident, including to his spine, skull and tibia (shin). Relevant for present purposes, there was a number of brain injuries. The plaintiff was in Princess Margaret Hospital for seven months undergoing rehabilitation. Dr Chauvel diagnosed the plaintiff as having an 'acquired brain injury causing left hemiparesis and difficulty with cognition'. He has a 'special difficulty with short term memory, organisation and planning'.[57] As to the level of care required, he opined:[58]
Levi will require a level of care over and above that of a 14-year old boy. He needs continual prompting for activities of daily living. This is provided by home carers and I believe he requires the carer for 40 hours per week. I consider he will require home attendant care for the remainder of his life.
[57] First Chauvel Report, page 3.
[58] First Chauvel Report, page 5.
The Second Chauvel Report was supplementary to the First Chauvel Report. He was specifically asked whether the plaintiff will have the capacity to manage his own legal and financial affairs when he attains the age of 18, to which he opined:[59]
The previous neuropsychological assessment indicates that Levi has a number of problems in his cognition including distractibility, poor attention and reduced memory. I do not believe he will have the capacity to manage his own legal and financial affairs when he attains the age of 18 years.
[59] Second Chauvel Report, page 1.
The balance of the Second Chauvel Report addresses issues going to the plaintiff's then anticipated future care needs.
Dr Pestell is a registered psychologist practising in the areas of clinical psychology and neuropsychology. She had undertaken a number of assessments of the plaintiff prior to that which formed the basis of the 2017 Pestell Report. This included neuropsychological assessments in 2009, 2012, 2014 and 2016.[60] As I have mentioned, the 2017 Pestell Report was prepared for used in the SAT proceedings.
[60] Which are summarised at 2017 Pestell Report, pages 3 - 4.
For the preparation of the 2017 Pestell Report, Dr Pestell saw the plaintiff on 7 December 2019. At that time he was 19 years old. Dr Pestell did not undertake any neuropsychological assessment for the purposes of preparing the 2017 Pestell Report. She opined that the plaintiff was capable of managing his own affairs in relation to all aspects of his life other than financial issues. It is instructive to quote the relevant aspects of her opinion in full:[61]
[61] 2017 Pestell Report, pars 25 - 28, 31 - 33.
25.Is Levi capable of managing his own affairs provided that he receives adequate assistance and/or input from a suitable family member(s) and professional advisor(s) acting in his best interests?
26.As was the case when assessed here in 2016, Levi impressed as being able to understand and remember relevant information, providing information was presented to him in a simple manner and repeated, and he is given the opportunity to ask questions if issues are not clear. Levi reported having reasonable, age appropriate goals for the future and being able to make reasonable lifestyle choices. Thus he is able to retain information while making a decision and express consistent choice. However, whist Levi appeared able to understand the questions put to him, if they were simplified; he had difficulty answering them in full due to his cognitive limitations, and struggled with some financial concepts.
27.Additionally, as was the case in 2016 Levi's history, presenting problems, and neuropsychological profile do suggest that he will struggle with abstract reasoning and verbal problem solving. It is also likely that he will have difficulty appreciating information and will need assistance to apply it to his own situation with good judgment and reasoning. Given Levi's language difficulties, he may have trouble understanding what is being said to him and/or communicating his decisions to others in an articulate manner. He will require extras time to answer questions and it might be helpful to present multiple choice options, rather than asking open ended questions. In addition, he will be unable to understand complex legal letters, documents or contracts, and thus all information presented in this form must be explained to him in a simple manner to ensure his understanding. Levi currently requires support and supervision to complete tasks related to simple financial matters, such as managing budget and purchasing expensive items.
28.In my opinion based on the available information, Levi continues to be socially vulnerable and at risk of exploitation by others. However it is apparent that as he has matured he is more capable of having a greater deal of input into decisions relating to his life, such as accommodation and employment/study choices, as well as who provides treatment and services. Thus in my opinion Levi is capable of managing his own affairs and all aspects of his life(other than financial) provided he receives adequate assistance and/or input from family members and professional advisors acting in his best interests.
…
31.Does Levi require the ongoing formal involvement of Perpetual (or any other Court appointed Trustee) to manage the monies awarded to him following the settlement of his motor vehicle claim?
32.In my opinion based on the available evidence, Levi continues to have difficulty fully understanding his financial and legal situation, such as how his money is invested and the potential consequences of attending the District Court for an impending hearing. Indeed during our interview Levi again indicated that it would be his preference for an independent third party to assist with complex financial decisions, and given his history and neuropsychological profile, I would support this recommendation as the safest option.
33.Nonetheless it is apparent that Levi does have an improved ability to make reasonable choices when presented with the relevant information, and is also keen to improve his financial independence. It would thus be important that he be consulted with all financial decisions so that he can acquire new skills, feel he has more control over his life, and build his independence in this area within a safe and supportive environment. In my opinion, Levi also has the capacity to make an informed choice about which agency he would like to manage his estate, and this should also be taken into consideration.
Turning to the Jackson Report, Mr Jackson is a clinical neuropsychologist. He saw the plaintiff on 1 March 2019 at which time he conducted a neurological assessment. The plaintiff was then 20 years old. Again as I have mentioned, the Jackson Report was prepared for use in the SAT.
Mr Jackson reported the plaintiff as presenting with appropriate test behaviour, passing three tests sensitive to reduced effort. He considered that the neuropsychological profile which emerged from the testing was valid and reliable. In terms of the results of the neuropsychological assessments, Mr Jackson found that the majority of the plaintiff's cognitive skills were in the average range or better. In summary:[62]
It is clear from the results of the current neuropsychological assessment that the majority of Mr Saunders' cognitive abilities are in the Average range or better including his verbal intellectual abilities language skills, perceptual intellectual abilities, speed of processing on some tasks, focused attention, new learning and memory on most tasks, language skills and most executive skills. He still does demonstrate some mild difficulties with some aspects of working memory as well as some mild to moderate difficulties with complex verbal new learning and multiple task processing (although the latter is accurate). Given his brain injury was primarily in the right hemisphere of the brain, he has made a remarkable recovery.
[62] Jackson Report, page 15.
Mr Jackson identified four areas in which the plaintiff had shown significant improvement from the results of assessments carried out by Dr Pestell in November 2016:
•Verbal comprehension abilities
•Processing speed
•New learning and memory abilities
•Language expression skills.
Mr Jackson interviewed the plaintiff in relation to financial management. His mother was not present during this part of the assessment. Given the centrality of this assessment to the present issues, it is instructive to quote in full:[63]
[63] Jackson Report, pages 15 - 17.
Financial Management Interview
I interviewed Mr Saunders with regards to his current financial status. He was able to state that he has approximately $8,000 000 in trust with PTC (the referral letter indicated that the initial amount of money in trust was $8,268,813). He noted that the PTC gives him $800 per week, of which he gives $600 to his mother for household bills, etc., whilst he keeps $200 for his own spending. He noted that PTC have bought a house for him, but for whatever reason it is in PTC's name. He stated that he and his mother have been trying to get the house to be changed into his name (since it was bought with his money), but apparently PTC won't do this.
I asked Mr Saunders how he managed his money, paying bills, etc. He stated that bills that can be paid by regular direct debits are paid that way (they have been set up) and he reviews his bills once a month to make sure that they have all been paid. He stated that he has a separate account for bills, as well as a separate account for his own personal pending. When he gets bills, he works out how much money needs to be put into the bill's account. He has a Commonwealth Bank Mastercard, but he did not know the limit of the card. He stated that the only time he uses his card is to pay for Netflix and Spotify, as well as to buy things online.
This information of the amount of money in trust and regular income etc. was confirmed by his mother.
As mentioned previously, I interviewed Mr Saunders about his cognitive abilities and he indicated that in fact his memory, his concentration, his planning, his organisation and his problem solving abilities had all improved significantly in recent times. He did note that he still struggles in terms of his memory with fine details, but apart from this he didn't really think that there are any major issues. His mother also reported that he had definitely improved cognitively much better with his memory in terms of compensatory strategies (writing things down, etc.) and he is better at making decisions.
I note that the above report by he and his mother that his cognitive skills had improved and in fact there wasn't a whole lot wrong with them now (according to Mr Saunders) is actually supported by the results of the current neuropsychological assessment where there has been quite dramatic improvement over the last two years and there really is not a lot wrong with him now cognitively.
I asked Mr Saunders as to why he thought he had a financial administrator in the past (his mother was removed as his financial administrator) and why he has an organisation such as PTC looking after the money for him. He stated that 'I was a young kid, I could have made mistakes'. He also noted that 'I could have wasted it'. These are all reasonable responses. I asked him about his ability to handle things now, and he stated that he thought he was capable of managing such a large sum of money with the assistance of others. I asked him what assistance he thought he would need, and he noted that his mother helps him (she is an accountant), but he has also started to look into potential financial advisors (Knight Financial Advisors). He noted that money in such funds is generally invested and he stated that they have had difficulty finding out from PTC exactly what the money has been invested in. He thinks that about 70% of the money is invested 'aggressively' (which I assume meant a growth type fund) and that this is primarily in shares. He noted that the other 30% is invested less aggressively (and I assume this meant a balanced type fund).
I asked Mr Saunders what he thought that the role of a financial advisor would be. He stated that the role of a financial advisor would be to explain to him what the different options were in terms of investing his money for the future and to give him a regular income. He believed that once the different options were presented to him, then he had the ability to be able to make a decision about which option he wanted. Mr Saunders noted that he understood that this money was there to try and last for the rest of his life. However, he also indicated that he didn't just want to sit around and live on his money and again reiterated his goal to become some sort of sporting coach. He is going to investigate what he has to do to get into such a role when he returns to Western Australia.
Overall, I am satisfied that Mr Saunders has an acceptable understanding of his financial status and he gave a reasonable account of his current basic financial management. I note that the financial management interview was done when his mother was not in the room and therefore, these were all answers that were supplied by himself with no assistance.
I am also satisfied that Mr Saunders realises that this is a large amount of money that is supposed to last him the rest of his life and that he does not intend just to manage this money himself. He is going to rely on his mother, his family and the advice of a financial planner as to how to invest this money to give him a regular income. This would certainly be a reasonable approach to use.
I also have no concerns that the limited cognitive impairment that Mr Saunders now has would be a major impediment into financial decision making. As stated previously, there has been a substantial improvement in his processing speed, language skills, and new learning and memory over the past two years. All his language skills are average or better and therefore, he certainly has the capacity to understand information that is given to him as much as the average man in the street. His new learning and memory skills are mostly intact apart from getting initially overwhelmed with complex verbal information. However, his ability to learn logically structured information is in the Superior range and therefore, as long as information is given to him in a structured and logical sense, he will have no difficulty understanding and remembering it. Furthermore, basic planning and organisation, abstract reasoning, logical thinking are all in the Average range and again, his ability to weigh up the pros and cons of information and think of solutions to situations is no different to the average man on the street. He does not have a disorder of impulse control, and therefore does not have an impairment where he is just going to spend or waste his money recklessly.
Overall, I am of the opinion that Mr Saunders does in fact have the capacity to manage his financial affairs as the average person and though he may require extra time to process information, he does so accurately. He would require information to be logically structured for him, but this should not be an impediment to his financial management. I am of the opinion that he is able to independently manage his finances, albeit under the advice of a financial planner (which I would recommend for anybody with such a large amount of money).
Mr Jackson was then asked a series of specific questions, which again are of central relevance for present purposes:[64]
[64] Jackson Report, pages 17 - 18.
In response to your specific questions, as follows:
1.Is Levi capable of managing his own financial affairs, provided he receives adequate assistance and/or input from a suitable family member(s) and professional advisor(s) acting m his best interests?
In this respect, how vulnerable do you believe Levi is to influence? Do you consider that any such vulnerability to influence or exploitation is such that he requires a guardian or administrator in relation to his MVA claim proceeds?
If you have concerns in this respect, is it likely they could be satisfactorily dealt with by arrangements that the claim proceeds be paid into a voluntary trust, with a trusted third party (to be selected by Levi) as co-trustee with Levi?
As I have outlined above, there has been a major improvement in Mr Saunders' cognitive abilities over the last two years such that he now has mostly average or better cognitive abilities, apart from some mildly slowed processing speed, mild difficulties with complex and unstructured learning and requiring extra time to multitask. These are all impairments that can be quite easily overcome with compensatory strategies (being given extra time to process information, do one thing at a time if necessary and have information structured for him). Otherwise, his cognitive abilities are intact.
As such, I am of the opinion that he is capable of managing his own financial affairs, provided he receives adequate assistance and/or input from a suitable family member(s) and professional advisors acting in his best interests.
On the basis of the current neuropsychological assessment, Mr Levi is not unduly vulnerable to the influence of others compared to the average person. We are all potentially influenced by people who intend to fraud us, use us, etc. However, Mr Saunders' executive skills are basically intact, his intelligence and language skills are intact, and his ability to learn and remember is mostly intact. He is not impulsive. He can weigh up the pros and cons of situations.
I am of the opinion that he does not require a guardian or administrator in relation to his motor vehicle accident claim proceeds, as he is no more vulnerable than the average person to influence.
Given that I am of the opinion that he is capable of managing his own financial affairs with appropriate support and he is not vulnerable to undue influence more than the average person, then I am of the opinion that it is not necessary for his claim proceeds to be paid into a voluntary trust with a trusted third party as co‑trustee with him. This could certainly be an option if there was remaining concern about his capacity, but as above, given the improvement in the last two years and his current neuropsychological profile, I do not have any concerns that he is any less able than the average person.
2.In relation to his financial affairs, does Levi have appropriate insight and show appreciation that he will require financial advice/assistance in relation to managing his settlement monies?
As noted above, Mr Saunders does have appropriate insight and show appreciation that he would require financial advice and assistance in relation to managing his settlement money. He has already started having discussions with Knight Financial Advisors about that.
3.Does Levi have the capacity to source appropriate assistance and to make reasonable judgments in relation to his financial interests?
Mr Saunders certainly does have the capacity to source appropriate assistance and to make reasonable judgments in relation to his financial interests. His intellectual abilities, his executive skills and his new learning and memory are mostly intact. He is able to weigh up the pros and cons of possibilities that are put to him and make a reasonable decision about them.
4.Does Levi require the ongoing formal involvement of PTC (or any other Court appointed Trustee) to manage the monies awarded to him following the settlement of his MVA?
I am of the opinion that Mr Saunders does not require the ongoing formal involvement of PTC or any other Court appointed trustee to manage the moneys awarded to him following the assessment of his motor vehicle accident. There has been significant improvement in his cognitive functions over the last two years such that he only has some isolated mild impairments that can be overcome with appropriate compensatory strategies.
The final report is the 2019 Pestell Report. As I have indicated, this report was prepared at the request of the SAT. Dr Pestell was asked whether she agreed with the conclusions drawn by Mr Jackson in the Jackson Report. She did:[65]
I last reviewed Mr Saunders in November 2016 and it is evident from Mr Jackson's most recent assessment that he has improved significantly with regard to his cognitive abilities. These are outlined in Mr Jackson's report (and test summary sheet also provided to myself) but include his verbal comprehension abilities, processing speed, new verbal learning and member, as well as language expression.
Mr Jackson also conducted a semi-structured interview to determine Levi's financial capacity and concluded that despite some residual cognitive impairments, Levi has the capacity to manage his financial affairs 'provided he receives assistance and/or input from a suitable family member(s) and professional advisors acting in his best interests' (p. 18). Mr Jackson also concluded that Levi is 'not vulnerable to undue influence more than the average person' (p. 18). Finally, Mr Jackson is of the opinion that Levi does not require the ongoing formal involvement of Perpetual Trustee Company or any other court appointed trustee to manage his settlement monies.
Mr Jackson is a very experienced neuropsychologist and I have considerable respect for his opinion. I have carefully reviewed the report dated 13 March 2019, neuropsychology test profile and court transcript (9 April 2019), and believe I would have formed the same conclusions based on the information provided. Mr Saunders has made an excellent recovery and provided he receives support and professional advice, is now also capable of managing his financial affairs.
The plaintiff's evidence
[65] 2019 Pestell Report, pages 2 - 3.
The plaintiff gave evidence under affirmation. He was questioned by his counsel. Counsel for the defendant did not have any questions for him. Neither did I. His responses to questions were thoughtful and appropriate. There were no delays or misunderstandings in answering questions that would be indicative of any difficulty processing information. It was, however, evident that the plaintiff continues to have some physical limitations.
The plaintiff lives with his mother. They live in a house which is in the name of Perpetual. The plaintiff was able to tell me the approximate cost of the house, and then commented that it had gone up in value in since it was purchased, nominating an amount which indicated to me some insight into the property market. He has a driver's license and a car, which has been modified to accommodate his physical limitations. The car was purchased recently, and the plaintiff was able to tell me for what amount. He also referred to the difficulties in trying to get money from Perpetual to pay for the car and for the ongoing expenses of the car. The plaintiff told me that he had just started a business as a freelance photographer. He regularly goes to the gym and undergoes physiotherapy, and impressed me as being highly self-motivated in improving his physical conditioning. The plaintiff is not receiving any medical treatment at the moment, but continues to be under the care of a Victorian based specialist for his longer term rehabilitation.
The plaintiff was able to describe in some detail his day to day financial arrangements. He receives an allowance from Perpetual which has increased as he has got older. He was able to describe how he usually spends this allowance. He described receiving information regularly from Perpetual as to the money which it manages on his behalf, using appropriate financial terminology.
When asked what he would do if the Court Trust was dissolved, the plaintiff spoke about the financial adviser which he already has a relationship with. It was apparent that he has a very good relationship with this financial adviser, and that they have spoken at length about how the funds would be managed if the Court Trust was dissolved. The plaintiff also spoke about a plan to meet with the financial adviser every month or so, so that the financial adviser could help him become more educated on financial matters.
Then there was this exchange:[66]
And one of his Honour's concerns might be the potential for friends and family to have influence on you if you - if you receive this money and it's - it's in your name rather than the trust. What - what - what can you say about that? ‑ ‑ ‑ There's not much to say, because there's - I'm not really going to be a piggybank of lending out money or helping everyone out cos I've got this large amount of money. It's - it's kind of - I've been awarded because of a reason, and it's kind of just - got to take it. 'I'm sorry, but I can't' - yeah, 'can't help you,' really.
Determination
[66] Transcript, 2 October 2020, page 29.
The plaintiff's evidence mirrors what he told Mr Jackson as set out at [78] above. There is a more than sufficient factual basis in the plaintiff's evidence to give weight to the opinion of Mr Jackson, and also that of Dr Pestell. I accept both their opinions.
When I add the expert evidence to that of the plaintiff, I am satisfied on the balance of probabilities that the plaintiff is capable of managing his own financial affairs, in both the short and medium term. He does not have any incapacity which requires protection by way of a court supervised trust of his damages award.
The justification for having the Court Trust has ceased, and it should now be terminated.
If the Court Trust is terminated, is there is basis to order the plaintiff to repay the unused portion of the damages award that was allocated to trustee's fees?
The issues
As I have identified at the outset of this decision, the defendant contends that if the Court Trust is to be terminated, the trustee's fees not yet levied should be repaid to the defendant. Mr Marshall's affidavit is to the effect that Perpetual has charged $470,526 by way of trustee and administration fees, theoretically leaving a residue of $798,287 from the $1,268,813 allocated to trustee's fees in the Judgment.
The basis on which the defendant asserts that the Judgment should be varied is that, if the Judgment is allowed to stand in its present terms, this would leave the plaintiff unjustly enriched.
The plaintiff contends that the 'once and for all rule' means that once the damages are assessed and judgment entered, that is the end of the matter.
In order to place the defendant's assertions into their proper context, it is instructive to consider the basis on which trustees fees are awarded in the first place.
The basis for awarding trustee's fees
The classic statement of the principle which regulates the assessment of damages is that by Gibbs CJ and Wilson J in Todorovic v Waller:[67]
In the first place, a plaintiff who has been injured by the negligence of the defendant should be awarded such a sum of money as will, as nearly as possible, put him in the same position as if he had not sustained the injuries. Secondly, damages for one cause of action must be recovered once and forever, and (in the absence of any statutory exception) must be awarded as a lump sum; the court cannot order a defendant to make periodic payments to the plaintiff. Thirdly, the court has no concern with the manner in which the plaintiff uses the sum awarded to him; the plaintiff is free to do what he likes with it. Fourthly, the burden lies on the plaintiff to prove the injury or loss for which he seeks damages.
[67] Todorovic v Waller [1981] HCA 72; (1981) 150 CLR 402, 412 (Gibbs CJ & Wilson J).
This statement was endorsed by the High Court in Gray v Richards in the context of a consideration of the extent to which an injured plaintiff could recover fees associated with the management of his or her lump sum damages award.[68] The court continued:[69]
Generally speaking, the third of these principles operates so that a plaintiff does not recover damages for costs he or she might incur in managing a lump sum awarded by way of damages. That is because such costs are not regarded as a loss resulting from the plaintiff's injury …
The decisions of this Court in Nominal Defendant v Gardikiotis … and Willett v Futcher … refined this aspect of the operation of the third principle in Todorovic v Waller so that, in a case where a defendant's negligence has so impaired the plaintiff's intellectual capacity as to put the plaintiff in need of assistance in managing the lump sum awarded as damages, expense associated with obtaining that assistance is a compensable consequence of the plaintiff's injury. In such a case, 'the liability for the [management expenses] is a loss flowing directly from the wrong and is recoverable as damages caused by the wrong' … and, in accordance with the first and second of the principles stated in Todorovic v Waller, the inclusion of such a component in the lump sum award ensures that the plaintiff receives full restitution for the harm he or she has sustained.
[68] Gray by her Tutor v Richards [2014] HCA 40; (2014) 253 CLR 660 [1] (French CJ, Hayne, Bell, Gageler & Keane JJ) (references omitted).
[69] Gray [2] - [4].
The defendant asserts that not to bring to account what now is an overpayment would breach the first principle in Todorovic v Waller.
The plaintiff's objection to the orders sought by the defendant is that it breaches the second principle in Todorovic v Waller.
The plaintiff's position is that the risk of a plaintiff being over compensated as a result of a change in circumstances is borne by the defendant, just as the risk of the plaintiff being under compensated by a change in circumstances is borne by the plaintiff.
Can and, if so, should the court vary the Judgment creating the Court Trust?
The Judgment was perfected, but subject to a general liberty to apply. In Patterson v Humfrey [No 2] Le Miere J reviewed the authorities and discerned five principles as to the scope of 'liberty to apply':[70]
First, liberty to apply is a judicial device which enables the court to supplement the main orders. Secondly, main orders may be supplemented but not to vary or change the nature or substance of the main orders. Thirdly, what amounts to a variation or impermissible change depends on the context of the individual case. What amounts to an order which supplements the main orders can only be appreciated in the context of the individual case. What appears in form to be a further order to give effect to the original order in one case may appear as a variation in a different context. Fourthly, the court may determine any unresolved rights that flow from the making of the main orders. Fifthly, the court may make consequential orders when new facts and circumstances emerge after the making of the main orders.
[70] Patterson v Humfrey [No 2] [2016] WASC 343 [16] (Le Miere J).
In the present case, the order sought by the defendant is to the effect of ordering the plaintiff to repay a portion of the damages the subject of the Judgment on the basis of a subsequent change in circumstances. That, in my view, changes the nature or substance of the main orders. It is not a permissible variation or change within the scope of 'liberty to apply'.
The consequence of the Judgment being perfected is well-settled. It is expressed in the words of Barwick CJ in Bailey v Marinoff:[71]
Once an order disposing of a proceeding has been perfected by being drawn up as the record of a court, that proceeding apart from any specific and relevant statutory provision is at an end in that court and is in its substance, in my opinion, beyond recall by that court.
[71] Bailey v Marinoff [1971] HCA 49; (1971) 125 CLR 529, 530 (Barwick CJ), also Menzies J (531) - (532); Gibbs J (539) (Bailey); Gamser v The Nominal Defendant [1977] HCA 7; (1977) 136 CLR 145, 154 (Aickin J, with whom Barwick CJ, Gibbs & Stephen agreed); DJL v The Central Authority [2000] HCA 17; (2000) 201 CLR 226 [38] (Gleeson CJ, Gaudron, McHugh, Gunmow & Hayne JJ) (DJL); Marshall v The Honourable Alannah MacTiernan MLA Minister for Planning and Infrastructure [2003] WASCA 67 [29] - [31] (Parker J, with whom Murray & Anderson JJ agreed) (Marshall); Lashansky v Legal Practitioners Complaints Committee [2005] WASCA 217 [124] (judgment of the court) (Lashansky).
In the same case, Menzies J made the following observations which are also apposite to the present case:[72]
This appeal is not concerned with the power of a court to alter orders in pending litigation. It is concerned with the power of a court to make an order in litigation which, without any error or lack of jurisdiction, has been regularly concluded and is no longer before the court. To recognize the problem is, I think, to solve it. However wide the inherent jurisdiction of a court may be to vary orders which have been made, it cannot, in my opinion, extend [to] the making of orders in litigation that has been brought regularly to an end.
[72] Bailey (531) - (532).
There are only a limited number of exceptions to the general rule, being:[73]
(a)where there is a specific statutory power to vary;
(b)to amend or vary an order so as to carry out the meaning intended by the court, or to make plain any language which is doubtful;
(c)where a party has not been given a reasonable opportunity to be heard prior to the making of the judgment;
(d)where the judgment or order has been obtained by fraud;
(e)where a judgment or order entered by consent is vitiated by a factor that would vitiate an agreement under general contractual principles;
(f)(potentially) where the parties consent to the order being recalled; and
(g)(potentially) in the exercise of the court's inherent jurisdiction to prevent an abuse of its processes.
[73] See generally: Bailey (530); DJL [37]; Lashansky [125] - [153]; Marshall [29] - [34].
It is common ground that there is no statutory provision or court rule that would empower the court to grant the orders sought by the defendant in the present case.
The defendant's written submissions refer to the decisions in Ryan Nominees Pty Ltd v Western Australian Planning Commission, Commonwealth Bank of Australia Ltd v Saraceni and Ansons Pty Ltd v Merlex Corporation Pty Ltd. However, the principles set out in these decisions relate only to interlocutory orders.[74]
[74] Ryan Nominees Pty Ltd v Western Australian Planning Commission [2003] WASCA 134 [2] (McKechnie J, with whom Barker J agreed); Commonwealth Bank of Australia Ltd v Saraceni [2013] WASC 115 [9] - [11] (Corboy J); Ansons Pty Ltd v Merlex Corporation Pty Ltd [2001] WASC 204 [49] (Sanderson M).
The other ground relied on by the defendant is where a judgment or order entered by consent is vitiated by a factor that would vitiate an agreement under general contractual principles.
Reliance is placed on the decision of Wilcox J in Deputy Commissioner of Taxation (NSW) v Chamberlain.[75] In that case the applicant claimed income tax from the respondent in an amount of $255,579.20. It commenced an action against the respondent. Due to a clerical error, the writ specified the amount owed as being $25,557.92, the decimal point being misplaced. The respondent 'perceived the error and determined to take advantage of it'. He drew up and signed the terms of a settlement in the amount claimed in the writ. A solicitor attended the applicant's office with signed terms of settlement and a cheque, both for the reduced amount. An officer of the applicant signed the terms of settlement and accepted the cheque. Officers of the applicant then filed the terms of settlement and judgment whereupon judgment was entered for the applicant in the reduced amount. Upon becoming aware of the error the applicant brought a second action for the balance, which failed on the basis of res judicata. The applicant then commenced fresh proceedings against the respondent asserting that the settlement should be vitiated on the ground of a unilateral mistake.
[75] Deputy Commissioner of Taxation (NSW) v Chamberlain (1990) 26 FCR 221 (Chamberlain).
At trial of the fresh proceedings, Wilcox J found that the amount claimed was the product of a mistake, that this mistake continued to operate on the minds of the relevant officers of the applicant until judgment was entered and that the respondent was aware of the mistake and knew that, but for the mistake, the applicant's officers would not have consented to the judgment.[76] His Honour also found that the respondent acted unconscionably.[77]
[76] Chamberlain (228).
[77] Chamberlain (229).
The issue then became whether the unilateral mistake entitled the applicant to have the terms of settlement and the judgment set aside or rectified. His Honour stated the principle as being that 'a court may set aside an order, made by consent, and intended to carry out an agreement between the parties, upon any ground on which the agreement itself might be set aside', mistake being such a ground.[78] On the facts, his Honour found that this 'was a case in which equity will set aside the agreement constituted by the Terms of Settlement and the judgment which is founded upon it'.[79] His Honour then went on to find that the conduct of the applicant in commencing the second action for the balance did not disentitle it to relief, that there was no basis to refuse relief as a matter of discretion, but that conditions should be imposed as to costs and interest so that the respondent was not unduly disadvantaged.
[78] Chamberlain (230).
[79] Chamberlain (234).
The plurality of the High Court in DJL v Central Authority affirmed that the jurisdiction in equity to impeach a judgment for fraud remains in Australia, but that the preferable course remains the institution of a separate proceeding.[80]
[80] DJL [36] - [37].
This statement of the principle is sufficient to dispose of the defendant's argument. If the defendant asserts that there is a basis in equity to set aside the settlement agreement between the plaintiff and the defendant which underpinned the Judgment, then the appropriate course is for it to commence a separate proceeding asserting this claim. The reasons for this course are set out in some detail by Barwick CJ in McDonald v McDonald,[81] comments cited with approval by the plurality in DLJ v Central Authority.[82] This was what occurred in Chamberlain. The extent of the factual inquiry in that case is a good example of why it is appropriate to commence a separate proceeding.
[81] McDonald v McDonald [1965] HCA 45; (1965) 113 CLR 529, 532 - 533 (Barwick CJ, with whom Kitto J agreed)
[82] DJL [37].
There is a second reason why the defendant's argument fails. The basis asserted by the defendant to set aside the judgment is that of unjust enrichment. However, the present circumstances do not give rise to any plausible claim in unjust enrichment.
Unjust enrichment was described by Deane J in Pavey & Matthews v Paul as:[83]
a unifying legal concept which explains why the law recognizes, in a variety of distinct categories of case, an obligation on the part of a defendant to make fair and just restitution for a benefit derived at the expense of a plaintiff and which assists in the determination, by the ordinary processes of legal reasoning, of the question whether the law should, in justice, recognize such an obligation in a new or developing category of case …
[83] Pavey & Matthews Pty Ltd v Paul [1987] HCA 5; (1987) 162 CLR 221, 256 - 257 (Deane J). This passage has been cited with approval extensively, including: Bofinger v Kingsway Group Ltd [2009] HCA 44; (2009) 239 CLR 269 [89] (judgment of the court); Equuscorp Pty Ltd v Haxton [2012] HCA 7; (2012) 246 CLR 498 [30] (French CJ, Crennan & Kieflel J).
Or in the words of Justice Edelman in Lampson (Australia) Pty Ltd v Fortescue Metals Group Ltd (No 3):[84]
[84] Lampson (Australia) Pty Ltd v Fortescue Metals Group Ltd [No 3] [2014] WASC 162 [50] - [55] (footnotes omitted).
The concept of unjust enrichment is, in Australia, limited to this taxonomic function. It has been emphasised on numerous occasions that unjust enrichment is not a 'definitive legal principle', and does not supply 'a sufficient premise for direct application in a particular case' … In this sense, unjust enrichment is not the direct basis of restitutionary relief in Australian law ... A comparison might be drawn with the category of torts. A plaintiff cannot plead that a defendant is liable for having committed a 'tort'. 'Torts' describes the category not the action (which might be assault, battery, conversion etc). At an even higher level of theory, the ultimate basis of restitutionary liability was expressed by the joint judgment in Australian Financial Services … as depending upon whether retention is against 'conscience'. Their Honours explained that 'conscience' does not invite subjective evaluation. Instead, it is 'a construct of values and standards against which the conduct of 'suitors' – not only defendants – is to be judged'.
Provided that unjust enrichment is not applied as a direct source of liability, in Australia the taxonomic category of unjust enrichment has served a useful function and might continue to do so. Like the category of 'torts' the category of unjust enrichment assists in understanding even though it is not a direct source of liability. The category directs attention to a common legal foundation shared by a number of instances of liability formerly concealed within the forms of action or within bills in equity. The common features of actions within the 'label', 'concept', or 'notion' of unjust enrichment has generally been thought to be that, subject to defences, a plaintiff can prove its entitlement to restitution of the value of a benefit derived at the plaintiff's expense, if the Court is satisfied that the plaintiff has succeeded on any issues falling within three broad enquiries: …
(i)The defendant must be enriched.
(ii)The enrichment must come at the expense of the plaintiff.
(iii)The enrichment must be unjust.
…
The label, 'unjust factor' is not always used within the legal category of unjust enrichment to describe the established basis of 'injustice' or the recognised basis upon which retention is against conscience... But the label usefully directs attention to the requirement for a plaintiff in Australia to prove a reason for restitution or, in the words of the unanimous joint judgment of the High Court in 2007, 'the existence of a qualifying or vitiating factor falling into some particular category' ... As Gageler J explained in Australian Financial Services …
'Unjust' is the 'generalisation of all the factors which the law recognises as calling for restitution'. Because we need to search for recognised factors, examination of which involves an analysis of case law, the reference to 'injustice' as an element of unjust enrichment, is not a reference to judicial discretion. Normal judicial processes are involved and it is only in cases where there is no recognised basis for saying that injustice has arisen that problems can arise.
(Original emphasis).
The boundaries of what will count as an unjust factor are not fixed … Examples of unjust factors were given by Lord Mansfield in Moses v Macferlan:
money paid by mistake; or on a consideration which happens to fail; or for money got through imposition, (express, or implied) or extortion; or oppression; or an undue advantage taken of the plaintiff's situation.
A quarter of a millennium later, although it is well established that liability in the 'taxonomic' category of unjust enrichment requires the existence of an 'unjust factor', there is only limited judicial recognition of unjust factors beyond those in this list …
There are three problems with the defendant's reliance on unjust enrichment.
The first is that a cause of action in unjust enrichment is a common law claim, having its heritage in the old common law forms of action. It is not an equitable claim,[85] certainly not one falling with the principle identified in Chamberlain.
[85] See generally: Mason K, Carter J W & Tolhurst G J, Restitution Law In Australia (2nd ed, LexisNexis Butterworths), [112] - [113]; Edelman J & Bant E, Unjust Enrichment (2nd ed, Hart Publishing, 2016), pages 9 ‑ 15; Chianti v Leume Pty Ltd [2007] WASCA 270; (2007) 35 WAR 488 [78] (Buss JA with whom Pullin JA agreed); Harbeck v Vasse Dozer Hire Pty Ltd [2009] WADC 48 [29] (Gething PR).
The second is that the remedy for a claim in unjust enrichment is the payment of money, and not the setting aside of a contract.[86]
[86] Edelman & Bant, Unjust Enrichment, page 32.
The third is that the unjust factor relied on by the defendant is not within a recognised category. The unjust factor is essentially that the plaintiff's circumstances have changed since the Judgment was entered and, had the action been tried today, he would not have received as high an award of damages as he did.
The defendant relies on the decision in Kelly v Solari.[87]In that case, an insurance company mistakenly paid out a policy to the defendant which had lapsed. The insurance company was able to recover the money paid. The unjust factor in that case was a mistake of fact at the time the payment was made. The decision has no relevance to the present facts.
[87] Kelly v Solari (1841) 152 ER 24.
It is instructive at this point to refer to the decision in of the High Court in Gamser v The Nominal Defendant. The appellant suffered serious injuries when he was struck by a motor vehicle. He sued, and was successful at first instance, receiving a judgment of $160,000. The respondent appealed, asserting that the damages awarded were excessive. The New South Wales Court of Appeal agreed, and issued a judgment reducing the amount to $125,000. The appellant appealed to the High Court. Before the hearing in the High Court, the appellant suffered a seizure, asserted to be as a consequence either of the head injuries suffered by him in the accident or of the drugs administered to him for the alleviation of pain suffered in consequence of his severe injuries, or as a result of a combination of those two factors. The High Court granted an adjournment to allow the appellant to go back to the Court of Appeal and seek relief arising out of the events subsequent to its decision. The Court of Appeal declined to vary its judgment. This decision was also appealed to the High Court. The High Court agreed that the judgment could not be varied on account of what occurred after it had been entered, but reinstated the original award of damages on other grounds.
The leading judgment was delivered by Aickin J, with whom Barwick CJ, Gibbs and Stephen JJ agreed. His Honour opined that the 'majority judgments in Bailey v Marinoff appear to me to make it clear that there is no inherent power to set aside judgments by reason of changed circumstances on application made after the case has been finally disposed of'.[88] His Honour then quoted the passage from the decision of Menzies J which I have quoted above at [101], going on to hold that the existence of fresh evidence is not a ground on which a judgment may be set aside.[89]
[88] Gamser (154).
[89] Gamser (154).
The orders sought by the defendant in the present application fall squarely into the principle articulated by Aickin J in Gamser. It is an attempt to set aside the Judgment by reason of changed circumstances after the Judgment had been given.
In my view, while the court does have a limited power to set aside or vary a perfected judgment, the present circumstances do not fall within the very limited range of circumstances in which that power may be exercised. I decline to make the orders sought by the defendant.
There are two further matters which I note for completeness sake. The first is that the settlement agreed between the plaintiff (by his next friend) and the defendant was subject to court approval. 'The basic question of concern to the court in considering whether to approve a compromise involving a person under a disability is whether or not the compromise will be for the benefit of the person under the disability'.[90] More specifically, the court is to inquire 'whether the prospect of getting a greater sum by rejecting the present offer is good enough to outweigh, significantly, the risk of not getting any more'.[91] Given the nature of that review, the present case is conceptually different from the class of cases in which a settlement is given effect to by the court, usually though a registrar formally approving a consent order.[92] So it is not immediately apparent that the principle expressed by Wilcox J in Chamberlain is capable of application to the present circumstances.
[90] Sergi v Sergi [2012] WASC 18 [40] (EM Heenan J). See also: Sosa v Carter [1978] WAR 123, 124 (Burt CJ, with whom Wallace & Brinsden JJ agreed).
[91] Elliott v Diener (1978) 21 ACTR 21, 22 (Blackburn J); Sergi [40].
[92] See generally: James Hardie & Coy Limited v Seltsam Pty Limited [1998] HCA 78; (1998) 196 CLR 53, 62 Gaudron & Gummow JJ); Wintle v Stevedoring Industry Finance Committee [2002] VSC 369 [10] - [23] (Ashley J).
The second is that the defendant in its submissions suggests that TA s 90 gives the District Court the power to vary or revoke the Court Trust, without limiting any other powers of the court. However, that power is limited to 'the Court' which is defined in TA s 6 as meaning the Supreme Court.
What final orders are appropriate?
The final orders made were based on the orders made in Cadwallender,[93] and were in the following terms:
1.The Court declares that Levi Jake Saunders is no longer a person under a disability within the meaning of that term in the Rules of the Supreme Court 1971 (WA) O 70(2).
2.Perpetual Trustees do all things necessary to wind up the trust upon which it holds moneys or any other property for the plaintiff pursuant to the order of the District Court of Western Australia in this action on 28 February 2014 and do transfer the whole of the proceeds of the moneys or other property held on trust, after payment of all proper expenses and allowances, to the plaintiff.
3.Perpetual Trustees shall prepare and deliver to the plaintiff accounts of receipts, payments or other expenses made from the trust property and the plaintiff shall have 21 days from the date of receipt of those accounts, or such further time as this Court might allow, to object to the accounts or any part of them.
4.In the event of any objection or objections being made which cannot be resolved by agreement within such further time as the Court may allow, Perpetual Trustees shall pass its accounts for the administration of the trust before a Registrar of this Court.
5.There shall be liberty to apply in relation to any matter arising from the accounts or the passing of these accounts.
6.The cost of this application and of the preparation and passing of the accounts, to be taxed if not agreed, shall be paid from the trust fund.
[93] Cadwallender [52].
Further observations
The somewhat unique circumstances of the present application have brought to light four matters which are of more general application.
The first matter is that I can understand why the defendant's insurer was concerned about the over compensation which has arisen as a result of the plaintiff's better than expected recovery. The enormous costs of trustees fees (here for example $1,268,813) is matter of justifiable concern to the public insurer. However, the present action was settled when the plaintiff was 15. It would not be in the interests of plaintiffs generally if insurers took the view that they could not reliably form a view (for settlement purposes) as to whether an infant with cognitive issues would be incapable of managing his or her affairs when an adult until the plaintiff had reached the age of 18.
It may be that there can be a form of order or undertaking in which the defendant's insurer agrees to indemnify the court appointed trustee for its fees and charges for the duration of the court trust. This could perhaps be coupled with a contract between the defendant's insurer and the court appointed trustee. It may be that either legislation or court rules is required to address this issue.
An ongoing indemnity would address the issue of over payment where the plaintiff's position improves. It would also address the issue of underpayment where the plaintiff's life expectancy exceeds that on which the expected duration of the court trust is based.
The second, third and fourth matters stem from that fact that, in the present case, within a short period of time after the Court Trust was created, a significant proportion of it was removed from the Court Trust ($6,808,818 of $8,460,052) and placed into a superannuation fund. There were very good reasons for this to occur, being the taxation advantages. This is not an uncommon approach, and, from a financial perspective, it appears to be a prudent approach.[94]
[94] As to which, see: Cheyne [43]; Hoang [17] - [18].
The second matter is that the trustee's fees appear to have been based on the court appointed trustee administering the whole of the trust fund for the expected life of the plaintiff. Where a significant proportion of the trust funds is removed from its direct oversight, one would expect that the fees actually charged would be reduced correspondingly. There may well be an offsetting increase in fees buried in the superannuation fund by being a deduction prior to the payment of income to the plaintiff. This calls into question the correctness of the assumption on which plaintiffs are routinely compensated for expenses associated with managing the lump sum awarded as damages, being that the trustee will manage all the funds for the duration of the trust.
The third matter is that, as was recognised in the decisions in Cheyne and Hoang, the investment of monies in the court trust into a superannuation fund removes the money from the trust fund, and thus the ongoing oversight of the court.[95] Provided that the trustee is also appointed limited administer by the SAT, the administration of the money in the superannuation fund will be subject to 'at least the same degree of scrutiny and [the plaintiff] will have at least the same degree of protection' as where the funds are under the direct supervision of the court.[96] However, this result does seem at odds with the purpose for which the court trust was created in the first place, especially if the bulk of the trust funds are moved over. There may need to be some mechanism developed, perhaps in the order creating the court trust, to address this untidy oversight regime.
[95] Cheyne [30], [46]; Hoang [13] - [14].
[96] Cheyne [46]; Hoang [19].
The fourth matter is the interrelationship between the SAT jurisdiction and the court's oversight. As is the norm, the trustee became a limited administrator for the purpose of exercising ongoing oversight over the moneys in the superannuation fund. However, the SAT then determined that the plaintiff was capable of managing his own affairs. So the plaintiff could lawfully have removed all the money from the superannuation fund without reference to either Perpetual or the court.
These matters suggest that it is time for a more general review of the way in which the District Court approaches the issue of oversight of the management of lump sum damages awards to persons who are incapable of managing their own financial affairs.
I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.
JM
Associate14 OCTOBER 2020
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