Peters v Northern Territory of Australia - [2025] NTSC 71

CITATION:Peters v Northern Territory of Australia [2025] NTSC 71
PARTIES:PETERS, Michele (by her litigation guardian Gregory Peters)
v

NORTHERN TERRITORY OF AUSTRALIA

TITLE OF COURT:  SUPREME COURT OF THE NORTHERN TERRITORY
JURISDICTION:  Supreme Court exercising Territory jurisdiction
FILE NO:29 of 2017 (21717889)
DELIVERED:  29 September 2025
HEARING DATE:  7 August 2025
JUDGMENT OF:  Smyth A/AsJ
CATCHWORDS:

Party under disability – compromise of claim – management of settlement amount ordered to be held on trust by private trustee – Parens patriae jurisdiction – whether person continuing to be under disability – power of Court to inquire as to whether person remains under a disability and whether now capable of managing financial affairs – test to be applied – termination of trust and direction to trustee to pay settlement to plaintiff
Supreme Court Rules 1987 (NT), 15.08, 79.05
Cadwallender (by his next friend Stavroulla Cadwallender) v The Public Trustee [2003] WASC 72; Re Erdogan’s Application (2012) 36 VR 579; CJ v AKJ [2015] NSWSC 498; Renehan v Leeuwin Ocean Adventure Foundation Ltd [2006] NTSC 28; referred to.
Lindsay G, ‘The Incapacitated Plaintiff and Personal Injury Compensation Proceedings’, Paper given at the New South Wales Bar Association: Personal Injury and Common Law Conference, Sydney, 11 March 2017.
Luntz H and Harder S, Assessment of Damages for Personal Injury and Death (Sydney, LexisNexis, 5th ed, 2021)
REPRESENTATION:
Counsel:
Plaintiff:G Mullins KC
Defendant:E Farquhar
Interested Party: L Moldenhauer
Solicitors:
Plaintiff:A Little Legal Help Pty Ltd
Defendant:Solicitor for the Northern Territory
Interested Party: Sparke Helmore Lawyers

Judgment category classification:    B
Judgment ID Number:  Smy2511
Number of pages:  16

IN THE SUPREME COURT
OF THE NORTHERN TERRITORY
OF AUSTRALIA
AT DARWIN
Peters v Northern Territory of Australia [2025] NTSC 71

No. 29 of 2017 (21717889)
BETWEEN:

MICHELE PETERS (BY HER LITIGATION GUARDIAN GREGORY PETERS)

Plaintiff

AND:

NORTHERN TERRITORY OF AUSTRALIA

Defendant

CORAM: SMYTH A/AsJ
REASONS FOR JUDGMENT
(Delivered 29 September 2025)

The Plaintiff makes application for a variation of the orders of
Luppino M (as he then was) dated 6 June 2017 (“the original order”) by way of summons filed 19 June 2025, which was amended orally on the day of the hearing.
The original order was made consequent upon the approval of a compromise of a claim between the Plaintiff and the Defendant. This application seeks an order removing the Australian Executor Trustees Limited as trustee of the Plaintiff’s settlement funds and directing payment of the remaining settlement amount to the Plaintiff to manage herself. In short, the basis of the order is that the Plaintiff is now no longer suffering from the disability that warranted the original order and is capable of managing her own financial affairs. As such, it is open for her to have the original order varied to reflect the change in her circumstances.
The following affidavits, for the purpose of this application, were relied on at the hearing and taken as read: Michele Peters made 16 July 2025 and 7 August 2025, Gregory Peters made 16 July 2025, Katrina Harper made 31 July 2025 and Susan Little made 17 July 2025, 1 August 2025 and 7 August 2025.
Background
By writ filed 10 April 2017, the Plaintiff, by her litigation guardian, commenced proceedings in this Court seeking damages arising from personal injury caused by an alleged breach of the Defendant’s duty of care, in circumstances of a surgical procedure undertaken at the Royal Darwin Hospital. In particular, the Plaintiff’s claim arose out of the alleged failure of the Defendant to perform the Plaintiff’s laparoscopic right adrenalectomy surgery to a reasonable standard on 21 October 2014. The alleged injury to the Plaintiff comprised permanent brain damage which left the Plaintiff with serious stroke-like disabilities, including memory loss, cognitive deficits, left-side of body deficits, bilateral loss of peripheral vision, vertigo and ongoing fatigue. The Plaintiff’s need to commence proceedings by a litigation guardian arose from the injury that she sustained as a consequence of the surgical procedure referred to in the proceedings. The proceeding was subsequently settled before proceeding to trial.
At the relevant times, during the ligation and in respect to the settlement of the proceeding, the Plaintiff was assessed as being incapable of managing her own financial affairs. Four main expert reports were relied on during the litigation by the Plaintiff and Defendant in respect to her disability, which included the:[1]
(a)Report of Professor Lorraine Dennerstein, psychiatrist, dated 2 February 2016;
(b)Report of Ms Michelle French, occupational therapist, dated February 2016;
(c)Report of Dr Barry Rawicki, neurologist, dated 2 March 2016; and
(d)Report of Dr Judith Frayne, neurologist, dated 15 December 2016.
Without setting out the precise details of those reports, they collectively describe a picture of a Plaintiff who suffered a significant brain injury and required significant on-going support in respect to many if not all aspects of daily living, including managing her finances. Dr Rawicki relevantly opined:^[2]
“As a result of the cerebral ischemia, Mrs Peters has significant impairment and disability and significant changes to her lifestyle and participation… She has major disability related to her stroke… She is unable to perform any complex community tasks. She is unable to pay bills or be involved at all in managing the finances. She is unable to add or subtract even basic numbers. She is unable to go shopping because she can’t remember what needs to be bought and because of her poor exercise tolerance and fatigue.”
On settlement of the matter, pursuant to Supreme Court Rule 15.08, the Court approved the compromise of the claim and ordered that the settlement sum be held on trust for the Plaintiff, the nominated trustee being Australian Executor Trustees Limited. That order, directing the settlement amount to be held on trust, did not refer expressly to the power upon which the order was made. It is clear, however, that the Court possesses a power, under its parens patriae jurisdiction, to make such protective orders directing a trustee to hold settlement amounts on trust.[3]
Thereafter the settlement was managed by the nominated trustee,[4] until this application was brought.
Ceasing to be Under a Disability
There is a presumption that a person of full age is capable of managing his or her own affairs.[5] Where a Court determines that a person who is awarded damages (or monies following the approval of a compromise) is unable to manage their own affairs, the Court may direct that the amount be paid to a public official or some other person. The Court is then able to make an order for the protective management of the estate.[6] That is what happened in this proceeding.
Given the Court’s powers to determine that a person is under a disability and to direct that their settlement monies be held on trust, it is conversely within the Court’s powers to determine if a person has ceased to be under a disability and is otherwise entitled to manage their own affairs.[7] It has been stated that the Plaintiff bears the onus to prove that she has the capacity or competency to manage her affairs and is therefore no longer under a disability.[8] Alternatively, it has been suggested that the Court should adopt an inquisitorial approach to such a process, and therefore it may be inappropriate to speak of an onus of proof at all.[9] Whether there is an onus or not is not necessary for me to decide because, as set out in the reasons below, if one is imposed on the Plaintiff, it has been discharged.
In determining whether a person has ceased to be under a disability and is capable of managing their own financial affairs, the Court will apply similar criteria to those which apply when an order for management is made.[10] The question is whether the circumstances which prompted the Court’s intervention have ameliorated so that the beneficiary of the Court’s protection may take back control of the property managed for his or her benefit. A most helpful discussion of the test for incapacity can be found in Re Erdogan’s Application.[11] I agree with the statement of Dixon J, in Re Erdogan’s Application, that any on-going debate as to whether a subjective or objective test is to be applied is perhaps of no real substance. The correct approach is to focus on whether the beneficiary has sufficient cognitive function to be capable of understanding the general nature of what he or she is doing by his or her participation in managing his or her affairs. That question is necessarily directed to the circumstances of the beneficiary and the affairs that he or she must manage. The test, as in Re Erdogan’s Application, is as stated by Dixon J:[12]
“The beneficiary must show that he or she has the capacity or competency to manage his or her affairs and is, therefore, no longer a person under disability… A beneficiary must demonstrate the capacity to make decisions in relation to his or her property and financial affairs. The inquiry is into the quality of cognitive function and mental capacity, which inquiry is partly illuminated by a medical perspective and is partly a factual inquiry for the decision maker. In each context the focus remains on the circumstances of the beneficiary.”
In respect to evaluating capacity, the inquiry will usually require an assessment of medical or neuropsychological opinion, with consideration of the following key considerations:[13]
(a)capacity to understand, with the assistance of proper explanation and advice, the issues that will arise in self-management of his or her financial affairs. The identification of capacity requires the identification of the nature, extent and significance of the issues that will arise for consideration by the beneficiary in the management of financial affairs.
(b)capacity to make rational decisions. The issue of capacity is not to be assessed by whether the beneficiary’s decision is that which would be made by a person of ordinary prudence. Not every person has the ability to manage competently his or her financial affairs unaided. The inquiry is not into the competence of the management process or the probable outcomes in the future. Issues about capacity concern process not achievement, the result need not be right but it must be rationally reached. The jurisdiction protects against vulnerability, not against mistakes.
(c)capacity to direct or implement the transactions that are, or may be, required.
Evaluating such capacities or competencies requires identification of the cognitive ability to implement or participate in processes, particularly:
(a) an ability to identify and comprehend the existence of an event, transaction or issue which requires management — a decision or a choice.
(b)once the matter is identified, insight into, and understanding of, the matter is needed. The person must be able to understand or appreciate and recall the relevant facts, the alternatives available, whether by action or inaction, including seeking advice or assistance where appropriate, with sufficient clarity to permit rational choice or decision.
(c)the person must have the capacity to reason, to make a rational decision or choice about the steps to be taken or avoided to achieve an appropriate outcome or otherwise give effect to or implement a transaction.
Disposition
The factual foundation for the variation of the original order is set out in the various affidavit material. Relevantly, the Little affidavit of 17 July 2025 deposes:
(a)Ms Little was previously the solicitor acting for the Plaintiff in this proceeding. She had maintained contact with the Plaintiff and her husband in a non-professional capacity since settlement until about mid-2017.
(b)During the period mid-2017 to 2024, Ms Little had no contact with the Plaintiff but resumed contact with her in mid-2024. From that period Ms Little observed significant improvements, from her previous interactions, in the Plaintiff’s functional and cognitive capabilities.
(c)In about mid-late 2024, Ms Little had qualified as a sole practitioner and was instructed by the Plaintiff to engage a neuropsychologist, with a view to obtaining a report to determine if the Plaintiff’s capacity had improved, such that she was capable of managing her own financial affairs.
(d)In January 2025, Dr Chantal Roddy, a neuropsychologist, was engaged to provide a neuropsychological report. A copy of Dr Roddy’s report is annexed to the affidavit of Ms Little made 17 July 2026.[14]
Dr Roddy’s report, in summary, relevantly opines:
(a)Mrs Peters presents with relative personal weaknesses in working memory, perceptual reasoning and visual memory on a background of otherwise age-appropriate cognition that is in keeping with pre-morbid estimated functioning. Visual processing and poor visual memory are likely linked to her stroke which impacted bilaterally in her occipital lobes. In other domains assessed, her cognition is at or exceeding that of her age-matched peers.[15]
(b)Mrs Peters’ functioning is notably improved relative to her 2016 assessments of post stroke functioning. While there are some residual deficits, Mrs Peters had demonstrated improvements in several areas of functioning. She is now able to manage many daily and financial tasks independently, whereas she previously required assistance and support to do so.[16]
(c)While Mrs Peters had difficulty with visual memory and visual skills, these areas do not have a direct impact on her capacity to independently manage her financial affairs. Her comparatively strong auditory-verbal memory and executive functioning skills appear to allow her to compensate for her areas of difficulty. She does not demonstrate any cognitive impairments which preclude her from managing her financial affairs independently.[17]
(d)It is my view that Mrs Peters demonstrates a sound understanding of the nature and extent of her financial portfolio. She is able to explain the types of accounts, purpose of each account, and the processes through which these are managed without prompting. She demonstrates a clear understanding of her income which aligns with collateral information provided and breakdown of expenditure. Mrs Peters shows an appreciation of the need for prudential spending to ensure that her income and investments are able to continue to support her and Greg for the remainder of their lives. Mrs Peters has also indicated that she has benefited from and will continue to benefit from receiving financial advice from experts to guide her investment and budgeting.[18]
(e)To the best of my knowledge, there is no evidence of any unduly risky, impulsive, or otherwise irresponsible financial decisions made by Mrs Peters in the management of her financial affairs. Mrs Peters presents as cautious and demonstrates an appreciation of the need for prudential budgeting and timely management of bills. She is aware of financial risks including possible exploitation by others, cyber-crime, or irresponsible spending leading to depletion of her assets.[19]
(f)Mrs Peters is able to understand and appreciate the need to plan for the future with respect to her finances. She is able to explain that she needs her investments and savings to last another 10-15 years comfortably so that she and Greg are provided for. Mrs Peters understands that were she to plan large purchases or events, that these would need to be balanced to ensure that these do not overly deplete her assets. She indicates that she does not plan any such purposes and will continue to be guided by financial advice.[20]
(g)Mrs Peters has demonstrated that she is able to plan, organise and execute financial responsibilities independently. To the best of my knowledge, she had independently managed her finances for the last few years without incident. Her executive functioning skills and organisational skills are age-appropriate and she has in place strategies to manage and track financial transactions. Collateral information outlines that she has done so without assistance from Greg (her husband) for a number of years now.[21]
(h)Mrs Peters is aware that there exists a level of potential risk or influence from others with regard to her finances. She is mindful of this and has managed this without any evidence of adverse events in the past few years. She asserts that she has only made financial decisions after careful consideration and consultation with Greg and her financial advisor(s).[22]
(i)My view is that Mrs Peters is able to act in her best interests without external oversight. She has demonstrated that she values professional financial advice to help guide her investments and oversee her portfolio. There is no evidence on current assessments to indicate that Mrs Peters requires the control of a trustee to continue. I am satisfied that she has the capacity to manage her finances independently in future.[23]
(j)It is my view that Mrs Peters does demonstrate the cognitive and functional capacity to independently manage her financial affairs. She currently demonstrates she is able to make informed decisions with an appreciation of the impact of these decisions. She is aware of potential financial risks and exploitation and takes measures to protect from these risks. I am satisfied that Mrs Peters is able to act in her own best interests, with appropriate caution and care in managing her current and future affairs.[24]
As noted above, the observations in respect to the Plaintiff’s improved condition were supported by Ms Little’s own observations, and by others including Ms Jane Campbell, the Plaintiff’s former financial adviser,[25] and Mr Gregory Peters, the Plaintiff’s husband.[26] In terms of continued management of her portfolio, it was the Plaintiff’s evidence that notwithstanding the discharge of the current trustee, it was her intention to continue to retain on-going expert financial advice in respect to financial management.[27] The net market value of the Plaintiff’s estate, as at 25 July 2025, remains considerable.[28]
In my opinion, in the circumstances, the Plaintiff has discharged the onus (if one applies) in respect to her recovery from the relevant disability. As stated in Cadwallender,[29] where adequate proof of recovery from disability is shown, there is no longer any justification to continue the trust or withhold the transfer of the corpus to the beneficiary absolutely. I am satisfied on the evidence that the Plaintiff has the capacity to understand, with the assistance of proper explanation and advice, the issues that will arise in self-management of her financial affairs; the capacity to make rational decisions and the capacity to direct or implement the transactions that are, or may be, required.
I therefore make the following orders:
(1)The litigation guardian be removed from these proceedings;
(2)The trustee company currently managing the Plaintiff’s trust fund pursuant to the order of Master Luppino made 6 June 2017, namely, Australian Executor Trustees Ltd (AET), do all things necessary to wind up the trust upon which it holds moneys or any other property on behalf of the Plaintiff pursuant to the order of Master Luppino made 6 June 2017 and 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 whose receipt shall be a sufficient discharge for the trustee;
(3)AET prepare and deliver to the Plaintiff accounts of receipts, payments or other expenses made from the trust property and the Plaintiff shall have twenty-one (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 thereof. In the event of any objection/s made which cannot be resolved by agreement within such further time as the Court may allow, AET shall pass its accounts for the administration of the trust before the Registrar of the Court;
(4)Liberty to apply in relation to any matter arising from the accounts or passing of these accounts and the matter generally;
(5)The costs of this application and of the preparation and passing of the accounts of the trustee to be taxed, if not agreed, shall be paid from the trust fund.

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[1] Annexed to the Little affidavit of 25 May 2017, annexures SML3, SML5, SML7 and the Little affidavit of 17 July 2025 annexure SL2.

[2] Annexure CML5 of the Little affidavit of 17 July 2025.

[3] See Renehan v Leeuwin Ocean Adventure Foundation Ltd [2006] NTSC 28 [46] and cases mentioned therein, including in particular Cadwallender (by his next friend Stavroulla Cadwallender) v The Public Trustee [2003] WASC 72 at [29] (“Cadwallender”). Supreme Court Rule 79.05 provides that money in Court or to be paid into Court can be ordered to be held by a person for the benefit of a person under a disability, and where no person is nominated, the money is to be paid to the Public Trustee to hold on trust for the benefit of the person. In this circumstance it is not apparent that settlement money was in Court or to be paid into Court, rather it was proposed that the Defendant pay the money directly to the nominated trustee to hold on trust. In the absence of an order under Rule 79.05 the parens patriae jurisdiction nonetheless allows an order directing the relevant payment to a trustee to hold the payment on trust.

[4] Represented and referred to in this application as the interested party, namely Australian Executor Trustees Ltd.

[5] Re Erdogan’s Application (2012) 36 VR 579 at [49] (“Re Erdogan’s Application”).

[6] CJ v AKJ [2015] NSWSC 498 at [14-49].

[7] Cadwallender at [45].

[8] Re Erdogan’s Application at [58].

[9] See Luntz H & Harder S, Assessment of Damages for Personal Injury and Death, 5th Ed. 2021, LexisNexis, p 1020 and Lindsay G, The Incapacitated Plaintiff and Personal Injury Compensation Proceedings, Paper given at the New South Wales Bar Association: Personal Injury and Common Law Conference, Sydney, 11 March 2017 at [120].

[10] See Luntz H & Harder S, Assessment of Damages for Personal Injury and Death, 5^th Ed. 2021, LexisNexis, p 1032; Re Erdogan’s Application at [50].

[11] Re Erdogan’s Application at [73].

[12] Re Erdogan’s Application at [71].

[13] Re Erdogan’s Application at [73-74].

[14] Annexure SL6 (“the Roddy Report”). A summary of the neuropsychological tests conducted included: Test of premorbid function (TOPF), Wechsler Adult Intelligence Test 4^th Ed (WAIS-IV), Wechsler Memory Test – 4^th Ed (WMS-IV) – Older Adult, California Verbal Learning Test – 3^rd Ed. (CVLT-3) – Alternate Form, DKEFA Tower of London Test and Verbal Fluency Test, Victoria Stroop Test, Trail Making Test, Depression Anxiety and Stress Scales – 21-item version (DASS-21). See Annexure SL6 (appendix A) of the Little Affidavit 17 July 2025.

[15]Pages 13-14 Roddy Report.

[16] Page 14 Roddy Report.

[17] Page 14 Roddy Report.

[18] Page 15 Roddy Report.

[19] Page 15 Roddy Report.

[20] Page 16 Roddy Report.

[21] Page 17 Roddy Report.

[22] Page 17 Roddy Report.

[23] Page 18 Roddy Report.

[24] Page 18 Roddy Report.

[25] Affidavit of Little made 1 August 2025.

[26] Affidavit of Gregory Peters made 16 July 2025.

[27] Affidavit of Michele Peters made 16 July 2025 at [18] and Michele Peters made 7 August 20.25 at [4-7].

[28] Affidavit of Katrina Harper made 31 July 2025 at [4].

[29] Cadwallender at [45].