Russell v Rail Infrastructure Corporation

[2007] NSWSC 447

CITATION:	Leigh Ann Russell by her next friend Julie Ann Russell v Rail Infrastructure Corporation [2007] NSWSC 447 This decision has been amended. Please see the end of the judgment for a list of the amendments.
HEARING DATE(S):	4/5/07
JUDGMENT DATE :	8 May 2007
JUDGMENT OF:	Bell J at 1
DECISION:	1. Verdict and judgment for the plaintiff against the defendant in the sum of $852,482.00; 2. Pursuant to s 77(2) of the Civil Procedure Act 2005 the whole of the judgment sum is to be paid into Court; 3. The defendant is to pay the plaintiff’s costs on the party and party basis to 18 November 2004 and on an indemnity basis from that date.
CATCHWORDS:	Award of fund management for a plaintiff with pre-existing intellectual handicap
LEGISLATION CITED:	Civil Procedure Act 2005
CASES CITED:	GIO of NSW v Rosniak (1992) 27 NSWLR 665 Insurance Corporation of British Columbia v Mandzuk ([1988] 2 SCR 650 Nominal Defendant v Gardikiotis (1995-1996) 186 CLR 49 Renehan v Leeuwin Ocean Adventure Foundation Ltd (2006) 151 NTR 1 Treonne Wholesale Meats Pty Ltd v Shaheen (1988) 12 NSWLR 522 Willett v Futcher [2005] HCA 47; 221 CLR 627
PARTIES:	Leigh Ann Russell by her tutor Julie Ann Russell (Plaintiff) Rail Infrastructure Corporation (Defendant)
FILE NUMBER(S):	SC 20014/04
COUNSEL:	Dr A.S. Morrison SC G. Watson SC / N. Chen (Defendant)
SOLICITORS:	Monaco Solicitors (Plaintiff) Sparke Helmore (Defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

BELL J

Tuesday 8 May 2007

20014/04 Leigh Ann Russell by her next friend Julie Ann Russell v Rail Infrastructure Corporation

JUDGMENT

1 BELL J: The parties have agreed on the calculation of the components of the award of damages conforming to the reasons published on 30 April 2007: Russell v Rail Infrastructure Corporation [2007] NSWSC [402]. There remains an outstanding issue concerning the plaintiff’s claim that her award of damages include a sum to cover the cost of fund management.

2 Senior counsel for the defendant submitted that the issue of whether an intellectually disabled plaintiff was entitled to recover an amount by way of fund management fees was left open by the Court of Appeal in Treonne Wholesale Meats Pty Ltd v Shaheen (1988) 12 NSWLR 522 per Clarke JA (with whom the other members of the Court agreed) at 530.C – D. The question did not arise for decision in Nominal Defendant v Gardikiotis (1995-1996) 186 CLR 49 and while there is a statement to the contrary of the principle for which the defendant contends in the joint judgment, it is submitted that this was obiter and that the issue remains open. This much is said to be plain from the decision in Willett v Futcher [2005] HCA 47; 221 CLR 627 at [11].

3 The defendant submitted that the plaintiff’s inability to manage her verdict moneys arises from her pre-existing intellectual limitations. It submits that its liability in damages is limited to expenses that are the consequence of the harm resulting from its negligence and that this does not extend to the costs of managing the verdict moneys. Counsel submitted that the principles are as explained by McHugh J in Gardikiotis. His Honour observed in that case that the principle “that the defendant should take the plaintiff as he finds him” has no application in this branch of the law of damages (at 60). Gummow J who delivered the leading judgment expressed his agreement with McHugh J on this point (at 66.4).

4 The defendant’s researches had only located one case in which the issue has been determined: Renehan v Leeuwin Ocean Adventure Foundation Ltd (2006) 151 NTR 1. In that case the plaintiff, a person with a pre-existing degree of intellectual handicap, recovered damages in negligence for personal injuries incurred as the result of falling from the main mast of a sail training ship operated by the first defendant. Mildren J discussed the decision in Gardikiotis at [269] – [271]. His Honour allowed an amount for fund management.

5 In the plaintiff’s submission the joint judgment in Gardikiotis is a clear warrant for the allowance of a sum for fund management in the case of a plaintiff with a pre-existing intellectual handicap. Brennan CJ, Dawson, Toohey and Gaudron JJ agreed with the orders proposed by Gummow J substantially for the reasons that his Honour gave. Their Honours observed (at 52.5):

But it is contrary to common sense to speak of the accident causing a need for assistance in managing the fund constituted by her verdict moneys in circumstances where her intellectual abilities are not in any way impaired. It would be otherwise in the case of a plaintiff who is intellectually impaired as a result of a defendant's negligence or by reason of some pre-existing disability.

6 In the plaintiff’s submission all the judgments in Gardikiotis speak with one voice on the question of the entitlement of a plaintiff with pre-existing intellectual handicap to recover a sum for fund management. In written submissions it was contended that McHugh J, resiling from his earlier concurrence in Treonne (at 56 to 57), had reached the same conclusion as is stated in the joint reasons with respect to a plaintiff with a pre-existing disability (WS [36]). I understand his Honour to have disavowed the approach in Treonne to the discounting of the provision for fund management in a case in which the defendant’s tort caused the inability to manage the verdict moneys. I do not understand his Honour to agree with the statement of principle in the joint reasons that I have set out above. It is true that his Honour observes, when dealing with the contention that the expense involved in investing verdict moneys to achieve an outcome consistent with the assumptions that underlie the discount rate should be allowed, that “[e]xcept in those cases where the plaintiff is under a legal disability, a court has no interest in what happens to the plaintiff’s damages” (at 60.9). However I do not understand his Honour to hold that antecedent intellectual incapacity in an adult plaintiff is a basis for an award for fund management: (at 62.3) his Honour concludes his discussion observing that, “the defendant’s negligence has not affected the plaintiff’s intellectual capacity to invest her moneys”.

7 I accept the defendant’s submission that McHugh J’s analysis in Gardikiotis is against an allowance for fund management in an award of damages for a plaintiff whose intellectual incapacity has not been caused by the defendant’s negligence. Contrary to a submission put by the defendant, I take Gummow J to have left the issue open (at 69.5). There is a clear statement in the joint reasons in favour of the provision for fund management in a case such as the present. While not necessary for decision in that case, it nonetheless commands respect. I consider that it is appropriate that an allowance be included in the award of damages for fund management.

8 The parties are agreed that the commercial cost of fund management, calculated by reference to the fees charged by the Public Trustee for the judgment sum, is $99,007.00.

9 The unchallenged medical evidence is that the plaintiff suffers from a mild degree of intellectual handicap. I have summarised this evidence in the earlier judgment. Senior counsel for the plaintiff invited me to find for the purposes of s 76(1)(c) of the Civil Procedure Act 2005 (the CPA) that the plaintiff is a person who is incapable of managing her own affairs. I find that she is.

10 An affidavit sworn by the plaintiff’s tutor, Julie Ann Russell, is in evidence. Ms Russell requests that the Public Trustee hold the verdict moneys in trust for the benefit of the plaintiff.

11 Senior counsel for the defendant submitted that if the Court awards a sum for the cost of fund management it would be appropriate to allow a figure that is less than the commercial rate. No reason in principle was advanced for discounting the expenses that it is agreed will be incurred in administering the plaintiff’s judgment moneys on her behalf. I propose to include in the award of damages the sum of $99,007.00 representing the commercial cost of managing the judgment moneys.

12 Under s 77(2) of the CPA all moneys recovered on behalf of a person whom the court has found to be incapable of managing her own affairs are to be paid into court. Subsection (3) confers power on the court, despite subsection (2), to order that the money be paid to some person as the court may direct. I am asked to direct that the judgment moneys be paid to the Public Trustee to be held on trust for the benefit of the plaintiff. Senior Counsel for the plaintiff stated that the appropriate inquiries had been made of the Public Trustee and it is understood that the Public Trustee is willing to act. Before making the order that is sought I consider that some evidence should be before the Court confirming the Public Trustee’s willingness to act as trustee of the plaintiff’s judgment moneys. I propose to order that the judgment moneys be paid into court. An application that the moneys paid into court on the plaintiff’s behalf are to be paid out to the Public Trustee may be made in chambers when the confirmation from the Public Trustee is available.

13 The total sum awarded to the plaintiff will be $852,482.00 comprising the following components of the award:

Non-economic loss	$320,250.00
Past loss of earnings	$124,226.00
Past loss of superannuation	$13,265.00
Interest on past economic loss	$20,415.00
Future loss of earnings	$284,439.00
Future loss of superannuation	$30,645.00
Past attendant care	$30,645.00
Present attendant care	$43,640.00
Future attendant care services (first 15 years)	$77,700.00
Future attendant care services (following first 15 years)	$112,327.00
Past out of pocket expenses (includes current HIC)	$67,604.00
Future out of pocket expenses	$412,439.00
Total sum	$1,506,950.00
Deduction of 50 per cent for contributory negligence	$753,475.00
Plus fund management costs	$99,007.00
Total amount of award	$852,482.00

14 It is accepted by the defendant that an order for indemnity costs should apply from 18 November 2004.

15 For these reasons I make the following orders:

1. Verdict and judgment for the plaintiff against the defendant in the sum of $852,482.00.
2. Pursuant to s 77(2) of the Civil Procedure Act 2005 the whole of the judgment sum is to be paid into Court;
3. The defendant is to pay the plaintiff’s costs on the party and party basis to 18 November 2004 and on an indemnity basis from that date.
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09/05/2007 - File Number was placed onto coversheet - Paragraph(s) [0]