Willett v Futcher
[2005] HCATrans 325
[2005] HCATrans 325
IN THE HIGH COURT OF AUSTRALIA
Office of the Registry
Brisbane No B78 of 2004
B e t w e e n -
BELINDA ANN WILLETT (AN INFANT BY HER LITIGATION GUARDIANS DEBORAH ANN WILLETT AND PATRICK WILLETT)
Appellant
and
DUDLEY D. FUTCHER
Respondent
GLEESON CJ
McHUGH J
GUMMOW J
HAYNE J
CALLINAN J
HEYDON J
TRANSCRIPT OF PROCEEDINGS
AT CANBERRA ON TUESDAY, 24 MAY 2005, AT 10.16 AM
Copyright in the High Court of Australia
MR D.F. JACKSON, QC: If the Court pleases, I appear with my learned friend, MR T. MATTHEWS, for the appellant. (instructed by Quinlan Miller & Treston)
MR D.B. FRASER, QC: If the Court pleases, I appear with my learned friend, MR M.P. KENT, for the respondent. (instructed by McInnes Wilson)
GLEESON CJ: Yes, Mr Jackson.
MR JACKSON: Your Honours, the appeal turns ultimately on the resolution of two issues, one of law and the other of fact. The issue of law concerns the extent to which what may be conveniently described as management fees are recoverable as part of damages in the case of an intellectually disabled plaintiff incapable of looking after that plaintiff’s affairs, and the issue of fact as whether the evidence established an entitlement to more than the amount allowed by the primary judge under that head, some $180,000.
Your Honours, may I just say a couple of things about the basic facts before moving on to the argument in relation to those matters. The basic facts are not in dispute. The appellant was a young child in 1979. Until the motor accident in which she was injured in that year, she had the prospect of growing up and living her life as a young and an older woman in command of her faculties and her life. In particular, she had the opportunity, as with the vast majority of the population, to choose what to earn and what to do with her money, to save for a rainy day or not, and, if she had not saved enough, to try to work for more.
Your Honours, if one goes to the Court of Appeal’s reasons at page 430, I want to refer to two paragraphs, paragraphs [1] and [11]. Your Honours will see the reference to the fact that she sustained severe brain damage and other injuries in the accident and at paragraph [11] at page 432, your Honours will see the basic material being that she had:
such severe cognitive deficits, resulting from the tortfeasor’s action, that she will never be able to manage her own affairs. She requires continuous care which is presently provided by her parents. In the immediate future this care is likely to be provided upon commercial arrangements. She has a present life expectancy of 59 years.
Your Honours, the capacities to which I referred a moment ago were taken away from her when she suffered severe brain damage and other injuries in the 1979 motor accident and, your Honours, one is speaking about a long period of 59 years of life expectancy.
Now, your Honours, her action was settled on terms sanctioned by the order of the Supreme Court of Queensland which appears at page 1. May I invite your Honours to note several matters concerning the orders ‑ ‑ ‑
GUMMOW J: What is the explanation for the time gap? This has happened in 2002.
MR JACKSON: Yes, your Honour. I am sorry I am not sure of the gap your Honour is referring to.
GUMMOW J: What is the date of the accident?
MR JACKSON: It was 1979, your Honour. She was only a very young child then.
GLEESON CJ: |She was only nine weeks old.
MR JACKSON: Yes.
GUMMOW J: I see.
MR JACKSON: Your Honours, could I invite attention to a number of matters in the order. The first is by order 1(a) the settlement sum was to be $3.85 million plus a sum by way of damages in respect of reasonable management fees. We note that a question has been raised by the Court about the relationship of that order to some enactments. May I come to that a little later. That is the first aspect of the order.
The second aspect of the order was order 2 which was that Perpetual Trustees be appointed administrator of the fund. The quantum of the fund to be so administered was to be calculated in accordance with order 5, and your Honours will see some payments had to be made from it, and then the manner of assessment of damages for reasonable management fees in the event of inability to agree was provided for by order 11.
Your Honours, could I just mention in passing the terms of 11(g) and 11(h). The amount which was the fund after the deductions contemplated by the order was the sum of $3.25 million. The parties were not able to agree on the amount and so there was the hearing before Justice White in the Supreme Court of Queensland which resulted in her Honour’s judgment, which your Honours will see in the appeal book.
Your Honours, could I before going to the detail of that go to the underlying legal framework in terms of the ability to recover in respect of this head of damages, if I could put it that way. Perhaps I should just say something, your Honours, to deal with the question that has been raised by the Court before I go on to deal with that aspect.
Your Honours asked how paragraph 1(a) of the order of Justice Byrne at page 1 fitted with section 48(2) of the Guardianship and Administration Act 2000 read in the light of section 41 of the Trustee Companies Act. May I, your Honours, say this, that one sees in the first place that section 48 of the Guardianship and Administration Act 2000 provides in section 48(2) that the remuneration for administration of an adult, to put it shortly:
may not be more than the commission payable to a trustee company under the Trustee Companies Act 1968 if the trustee company were administrator for the adult.
That takes one, your Honours, to the Trustee Companies Act and, in particular, to section 41. By section 41(1) of that Act your Honours will see that:
in respect of every estate . . . committed to the administration or management of a trustee company as . . . administrator . . . or in any other capacity –
I am cutting out various words –
the trustee company shall be entitled to receive –
could I pause there to refer your Honours to the next clause as well –
in addition to all moneys properly expended by the trustee company and chargeable against the estate, a commission at a rate to be fixed from time to time by the board of directors of the trustee company but not in any case exceeding, after discounting for any GST payable . . .
(a) $5 for every $100 of the capital value of the estate; and
(b) $6 for every $100 ‑ ‑ ‑
GUMMOW J: Do we have the Trustee Companies Act?
MR JACKSON: Yes, your Honour. It is section 41(1). I am sorry, your Honours. I thought your Honour said was I referring to the Trustee Companies Act.
GUMMOW J: No. My question is whether we have been supplied with it.
MR JACKSON: Yes, I am sorry, your Honour. I do not think your Honours have. Could I endeavour to say very shortly what I wanted to say about it and I will give your Honours copies of the relevant provisions. Section 41(1) says you cannot get more than $5 per $100 of capital value and $6 per $100 of income received on account of the estate, plus, of course, expenditure. Now, that is subject to two further things. The first, your Honours, is that under section 45 in addition to any other moneys the trustee is entitled to charge and receive fees for such things as:
(i) arrangement of insurances;
. . .
(iv) preparation of income and land taxation returns;
(v) inspection and report upon real and personal estate;
(vi) keeping of books of account –
and so on. However, in addition to that, and going back to section 41(7), it is provided:
Nothing in this section –
which includes the $5 and $6 commission rates –
shall prevent:
. . .
(b) the payment of any commission or fee which has been agreed upon between the trustee company and the parties interested therein –
Now, in this case, your Honours will appreciate that there were guardians of the appellant at the relevant time, and in relation to any difference there might be between the application of the provisions to which I have referred and the rates and so on provided for by those statutes, there was, we would submit, an agreement falling within that provision.
HAYNE J: Between whom?
MR JACKSON: Between, your Honours, the persons who were the “litigation guardians” – that is the expression used - that is the parents of the child and the Perpetual Company. Well, your Honour, all there has to be is between the persons interested therein and at the time they were ‑ ‑ ‑
HAYNE J: That person interested was the person of unsound mind.
MR JACKSON: Well, your Honour, they were persons representing them at the time. Could I say, your Honour, in relation to it a couple of things. One is talking about a question of the assessment of damages by the judge and by the court.
HAYNE J: No, one is talking about the administration of a trust fund.
MR JACKSON: Your Honour, I appreciate that.
HAYNE J: And the fees properly chargeable by a trustee against the trust fund.
MR JACKSON: Yes. Your Honour, could I say in relation to that the issue arose in circumstances where first the question which had to be decided was which trustee - the competing ones, the Public Trustee and the Perpetual Trustee - should be appointed administrator? All the questions of fees to be charged and the dealings that had been in relation to them were matters before the judge who appointed Perpetual Trustee. It is not a matter that has been thought necessary to go further into and then the question of the assessment of damages is something for this head based on the evidence, both of the Public Trustee’s figures, which were those of course higher than Perpetual’s, and the Perpetual figures. Now, your Honours, if one were to ‑ ‑ ‑
HAYNE J: But it becomes self-defining, Mr Jackson, surely. If the point is one to be resolved by agreement, presumably agreement between the injured person and the trustee without regard to the cap imposed by the legislature, the set of questions thus presented about damages is radically different from the set of questions presented if the legislative cap is given effect.
MR JACKSON: Well, your Honour, could I say this in relation to what your Honour has put to me. The issue that is the subject of the decision of Justice White, the Court of Appeal and before the Court now was the question of what was the appropriate amount to be allowed as the reasonable costs. The evidence in relation to that came fundamentally from two sources of persons who engage in this activity.
One source was from the Public Trustee whose fees were those fixed pursuant to statute, and the amounts that the Public Trustee would charge for engaging in these activities were in evidence. Another source was Perpetual, and the fees that it would propose to charge for engaging in the same thing was in evidence. The ranges were not very different really. The judge in those circumstances if one were to say the amounts that could be charged by Perpetual pursuant to statute were such and such, one would then have to take into account the amounts that might be charged as outlays and all these things.
Your Honours, all I am seeking to say is that these were not binding on the judge; they were simply matters going to the evidence. The actual figures – it is not possible without going to further evidence to demonstrate what the figures might be, but if there is any difference it would only be very slight, in our submission.
GLEESON CJ: I was going to ask ‑ ‑ ‑
MR JACKSON: It would only be slight, in our submission.
HAYNE J: Between 5 per cent corpus, 6 per cent income on the one hand, and the fees charged.
MR JACKSON: Yes, your Honour, taking into account the amounts that would be able to be charged for expenditure, taxation ‑ ‑ ‑
HAYNE J: What, on 45(1) fees?
McHUGH J: On 5 per cent of 3.25 million, that is about 162,500.
MR JACKSON: Doing the best we can without going to the fine detail of it, the difference would be of the order of – the figures would be about $137,121 different but that does not take into account the ability to charge for the separate matters that are referred to in section 45.
GLEESON CJ: Would the outgoings covered by section 45 include fees paid to fund managers whose services are engaged by the Perpetual Trustee Company?
MR JACKSON: Yes, your Honour, they could, as well as – it is not just outgoings that are referred to under section 45. Your Honour will see that in addition there are fees that may be charged for doing those things in addition to the fees under section 44.
GLEESON CJ: Yes. I notice that item – sometimes you hear an expression “manager of managers” used in relation to fund managers. The way some of these funds operate is that they engage the services of specialist managers in relation to particular kinds of investment.
MR JACKSON: Yes, your Honour.
GLEESON CJ: Would they be entitled to pass on fees incurred by them in that way under that section?
MR JACKSON: It would probably be under section 41(1) itself.
HAYNE J: Why?
MR JACKSON: Because section 41(1) refers to those fees of $5, the commission fees, being payable:
in addition to all moneys properly expended by the trustee company and chargeable against the estate ‑ ‑ ‑
HAYNE J: Those are fixed by 45(1), are they not? Under what category of 45(1) do these fees fall?
MR JACKSON: Your Honours, could I just say, with respect, it is not clear that the terms of section 45(1) exhaust the ambit of the amounts that may be properly expended by the trustee company and chargeable against the estate. One sees, for example, that in section 45 there is not anything that would allow them to charge the cost of a postage stamp. The point I am seeking to make is this, that the sources of money that might be charged against the estate, or the identification of them, is: one, the commission under section 41(1); two ‑ ‑ ‑
HAYNE J: Which is not all profit.
MR JACKSON: Well, not necessarily, your Honour, not necessarily. Your Honour, this is an issue, with respect, which the Court, we would submit, does not need to go into and should not go into because it is not a matter that has ever been raised relevantly at the stage of the case with which the Court is concerned.
McHUGH J: But it raises a fundamental question, does it not, as to whether or not there may not be some defect in legislation which prevents this sort of arrangement being entered into? I mean, if section 41(1) puts a cap on what can be charged by trustees, then the result may be that people in the position of the injured plaintiff are at a considerable disadvantage.
MR JACKSON: Your Honour, if that was so, then perhaps the appropriate course in a sense would be for the matter to be remitted for further trial of the issue, but the position, in our submission, is simply this. In the end, what was seeking to be done was to fix an amount for damages. The evidence showed, if one went to the Public Trustee, it would cost X; if one went to the Perpetual Trustee, their estimate was Y and, your Honours, the figures were not very far apart.
McHUGH J: But you are seeking to charge the defendant with a head of special damages which may not be in law payable by you.
MR JACKSON: Your Honour, what we are seeking to do is to have the damages assessed in accordance with the evidence of what the likely expenditure would be. Now, so far as the Public Trustee is – and this is one of the difficulties with the approach taken by the Court of Appeal. They appeared to look only at the evidence concerning Perpetual rather than looking at the fact there was evidence of the statutorily authorised charges that there would be for the Public Trustee. They looked essentially at part only of the evidence, with respect.
McHUGH J: I appreciate the force of your case. You say this is a claim for special damages, it is special damage, it is payable after the date of injury and it is payable by reason of the need for your client to get expert advice to assist the plaintiff, and the statute imposes various obligations on the trustee, including to diversify, to protect capital, to do many other things and to exercise reasonable care and skill. It may be that if Perpetual Trustee did not invest in the market as opposed to 10‑year bonds or the short‑term money market, they would be guilty of a breach of their duty under the Act, because they had not exercised reasonable care and skill.
MR JACKSON: Your Honour, I appreciate that the notice of appeal, for example, says the amount that we should get is X dollars or such other sum as the Court thinks fit and in the sense of nominating a sum, I suppose one could call it special damages, but really what we are seeking is an award which is based upon what the evidence was. It does not have to be exactly the same.
McHUGH J: But is not the better way of putting your case to say that these fees are special damages payable in the same way as, say, nursing expenses are payable. They are created by the need – the statute imposes obligations on the trustee and the trustee charges because of those special obligations. They have to exercise due care and skill. I am not sure that the trustee can discharge its functions simply by saying, “I will put these in 5 per cent long‑term bonds”.
MR JACKSON: Your Honour, I just did not want to get caught up in a debate with your Honour about the meaning of “special” but simply to indicate the question of quantification is one that ultimately is the one that, in our submission, is important. The point I am seeking to make – and I do not think I can say any more about it really – is to say that the question of the precise number of dollars that one would be likely to arrive at, taking into account all the matters that the trustee is permitted to charge for, so far as Perpetual was concerned, is one that has not been put.
McHUGH J: The view of the courts below, and in some other cases, seems to proceed on the theory that you are not entitled to any fees over and above that that would be payable to obtain the equivalent of the discount rate for the general damages. That seems to be the theory they are proceeding on.
MR JACKSON: Your Honour, I am not sure, with respect, that is quite so, but may I come to that.
McHUGH J: Yes.
MR JACKSON: Your Honours, I was seeking to go to the underlying legal framework in relation to entitlements of this kind and, your Honours, the order that was made by Justice Byrne does reflect the holding by this Court in Nominal Defendant v Gardikiotis (1996) 186 CLR 49 that where an injured plaintiff, in consequence of the injuries, lacked capacity to manage the moneys which would otherwise be the judgment sum, damages were payable in addition to represent the costs of managing those moneys.
May we seek to identify the principal passages in the reasoning in Gardikiotis. The principal judgment was that of your Honour Justice Gummow and, with those reasons, Chief Justice Brennan and Justices Dawson, Toohey and Gaudron adopted that. Your Honours will see the adoption of that at page 52, point 2. Could we take your Honours to page 52 at about point 2 for just a moment ‑ ‑ ‑
GUMMOW J: There is an error in the headnote by the way. It is corrected later. I am not sure when the corrigendum came out. Yes, 186 xii.
MR JACKSON: Your Honour, may I not refer to the headnote. At page 52 at about point 2 your Honours will see that the joint judgment says:
We agree with his Honour . . . that the respondent should not have been awarded damages for management of the fund constituted by the verdict which she obtained. We note that no claim was made that, as a result of her physical disabilities, the respondent will incur additional expense in managing her financial affairs.
They went on to say in the next paragraph, second line:
the question whether a need results from an accident is essentially a question of common sense . . . 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 –
such as the present plaintiff –
who is intellectually impaired as a result of a defendant’s negligence or by reason of some pre‑existing disability.
Your Honours, Justice Gummow’s reasons commence relevantly at page 65 at about point 9 on the page, where your Honour said – I am looking at the last three lines now:
What, with respect, appears to have received insufficient consideration . . . is the need to find the necessary link between the need for provision of fund management costs and the negligent act of the defendant. Reference also should be made to the treatment of the subject –
and your Honour then referred to the Canadian case. In the first half of page 66 your Honour regarded as inapposite reliance on the notion that the defendant took the victim as he found the victim.
It is interesting to note, your Honours, that about halfway down page 66 your Honour referred to the fact that:
There has been no finding that the respondent is of such a low level of intelligence that she either is unable to manage her own affairs or that she lacks the acumen to invest the funds awarded to produce the requisite rate of return.
Now, your Honour then referred to two passages from a South Australian case Campbell v Nangle and, your Honours, I will not read out the passages of course. The first at the bottom of page 66 was that of the trial judge, Justice Zelling, and your Honours will see particularly the reference in that passage in the last couple of lines:
with a large fund of this kind, a skilled manager -
It was foreseeable that a skilled manager would be necessary -
whose fees must be paid for -
and the passage at the top of the next page from Chief Justice King, page 67. I refer your Honours to the whole of the passage, but could I refer to a couple of matters in particular. The first, your Honours, and this is about five lines into the passage:
The fundamental principle upon which damages are assessed is the principle of compensation that the plaintiff is to be placed, so far as possible, in the same position financially as he would have been if he had not sustained the wrong for which he receives the damages . . . the plaintiff has been rendered . . . incapable of managing his affairs so that -
someone has to manage on behalf of the plaintiff the fund constituted by the damages -
the fees payable to the manager will reduce the real return from its investment.
Your Honours, could I just pause to say that what one sees in the present case in Mr Gallagher’s affidavit at the top of page 182, paragraph 24(vi), is that he is saying:
The fees will not adversely impact on the value of the trust fund or the income available to meet –
it and, your Honours, necessarily in awards of this kind the award is to meet the costs so that the other aspects of the award are not diminished by reference to considerations other than those on which the making of them was based.
HAYNE J: Does one get to the same answer if you start in the Guardianship Act? Is not the result for which you contend a result that follows from the Guardianship Act and, in particular, the intersection of sections 245 and 12 in this sense, that 245 is engaged on a court, the Supreme Court, sanctioning a settlement for a person with impaired capacity relevantly for a financial matter which takes you back to section 12 which, although cast in terms of “The tribunal may”, by operation of 245, becomes “the court may”, becomes, when you work through 12, “the court should” appoint because 12(1)(c) “the adult’s needs” relevantly, needs to manage a financial sum of money that will be generated by the settlement “will not be adequately met” and, I would have thought, the interests of the adult would “not be adequately protected.”
MR JACKSON: Your Honour, could I just say this. Subject to the question whether, in looking at section 12, the expression “impaired capacity” for the matter, which I am conscious is defined, if that applies only to impaired capacity brought about by the tort, that is one thing. If it were to apply to a case where the impaired capacity existed absent the tort, then the same situation would apply – sorry, in the latter case one would be looking to see – I am sorry. I will start again.
What your Honour puts to me one might accept in a sense – and I will come back to it in a moment – in a case of this kind, there may be difficulties in treating this provision as giving rise to a claim for damages in respect of that head where there is the ability to obtain money by cause of a settlement or judgment in a matter, but the impaired capacity does not arise from the ‑ ‑ ‑
HAYNE J: Where the impaired capacity is tortiously caused, the statute in these events requires an outcome.
MR JACKSON: Yes, your Honour.
HAYNE J: Section 12, and one of the outcomes that may be considered is the appointment of a professional administrator, and thus the engagement of section 48, but we are back to where we began, and I move from that at once.
MR JACKSON: Well, your Honour, what one sees is that pursuant to section 245, the court may appoint a person in circumstances of the present kind. If the court does, then the person so appointed has to be paid, and the entitlement to fees and remuneration is dealt with by the statutory provisions. Now, that entitlement is one which follows from the appointment.
Now, your Honour, undoubtedly one can say – and I would not shrink from saying so – that this is a question to which one can say the origin is to be found now in the provisions of the statute. Having said that, one can say too the entitlement is to be found in the provisions of the statutes, and the statutes, relevantly, are those which either govern the Public Trustee or other trustees. Your Honours, having said that it becomes a question of endeavouring to work out what the appropriate amount is.
We are happy to accept that the origin of it may now be treated as statutory. The fact that it can be treated as statutory gives rise – sorry, your Honours, may I start again in relation to that. The fact that there is a statutory base, however, does not entirely resolve how one quantifies the amount that is to be obtained because in relation to that there remains the question whether – and the question raised by our learned friends really – that they say, “Well, part of this is just wealth management. Anyone would have to pay that.” Our submission would be that these are things brought about by the accident, and they are something that is recoverable on that basis. Your Honours, I was referring to page ‑ ‑ ‑
HAYNE J: What underlies my question is this that the principle is one which, if expressed purely in terms of the common law without regard to the differing arrangements made throughout the States for administering funds of persons who are infirm, runs a risk of overstating it. What I have in mind particularly of course is the Victorian system where the funds are administered by the court.
MR JACKSON: Yes, your Honour, I understand that. I am not seeking to say that one leaves the statutes aside. What I am seeking to say is that in circumstances where questions arise about what is the ambit of the entitlement to damages because of the need to deal with it in one way or another, one does need to look a little at the discussion of it in the common law cases.
Your Honours, could I just go on to say that at pages 67 to 69 your Honour Justice Gummow went on to discuss a number of earlier cases. Your Honours will see, going back to page 67, that immediately after the quotation from Chief Justice King your Honour said:
The statement of principle by King CJ in my view correctly represents the law.
The other reasons in the case, your Honours, were those of Justice McHugh. Your Honours will see they commence at page 53. Your Honour set out the first issue immediately after the commencement of those reasons and then at page 54 your Honour began to set out the relevant principles. Could I go very briefly to a number of extracts from that. First of all, page 54 in the first five lines or so:
for any damage that is causally connected . . . and that ought to have been reasonably foreseen . . . Is the expense of fund management causally connected to the negligence of the defendant? . . .
If a defendant’s negligence results in the plaintiff being so mentally or physically incapacitated that she is unable to manage day‑to‑day tasks, the basic principles of compensation for tortious conduct entitle the plaintiff to damages both for the disability and the expense of managing those tasks.
A little further down, about point 7, the sentence commencing “Similarly”, then the conclusion your Honour arrived at at the bottom of that page:
Damages may therefore be awarded for the expense of managing a plaintiff’s verdict moneys when the plaintiff’s disabilities prevent him or her from managing those moneys and the disabilities are the foreseeable consequence of the defendant’s negligence. Damages may also be awarded for the expense of investment advice where, as the result of the defendant’s negligence, the plaintiff is no longer able to make adequate decisions concerning his or her own financial affairs. In both cases, damages are payable by the defendant because the expense is the necessary product of the defendant’s negligence and is not the result of the free, informed and voluntary act of the plaintiff . . .
But a different area is reached when the plaintiff seeks damages . . . for an expense arising merely from the size of an award of damages and the exercise of a choice by the plaintiff as to how to invest those damages.
Your Honours will see the words immediately preceding that at the start of the first new paragraph on page 55:
But a different area is reached when the plaintiff seeks damages, not for expense necessarily incurred as the result of a disability caused by the defendant’s negligence –
Then further down the same page, about point 7 or 8 on the page:
Consequently, unless a defendant’s wrong has caused a disability that requires the plaintiff to obtain assistance in managing his or her verdict moneys, the cost of such assistance is not caused by the defendant’s negligence and is not recoverable as damages from the defendant.
Now, we would refer also, your Honours, to the fact that your Honour rejected specifically the proposition which appears to have been accepted at first instance in this case, that a “differential”, if I could put the word in inverted commas, figure was to be adopted. Your Honours will see that at the bottom of page 56 first of all.
McHUGH J: Was that what I called the allowance figure, was it?
MR JACKSON: Yes, I think so, yes, your Honour. Your Honours will see the quotation from Justice Clarke in Treonne and the correct approach, it was said, was to include within the damages an allowance for fund management which reflects the probable difference between the expenditure likely to be incurred and your Honours will see the remainder of that quotation. Your Honour then said at page 57, from about point 1 through to point 8, that the decision in the New South Wales Court of Appeal in:
GIO of NSW v Rosniak correctly overruled Treonne on this point.
Your Honours, I will not take your Honours to the detail of GIO v Rosniak, but your Honours will see the essential passages set out there. In that case it had been held that a deduction should not be made for the costs of management and advice that an ordinary person would have incurred in circumstances where a person was injured and incapable of managing their affairs because of the accident and because of the injury; that the whole of the costs of management, proper costs of course, were to be recoverable as damages and there should not be a deduction for the amount that would have been expended by a person not so injured in relation to their affairs.
Your Honours, I will just give your Honours a reference to the passages in the case that deal specifically with that issue. That is in 27 NSWLR 665, Justice Kirby at page 675C through to page 676B. Justice Mahoney discusses the issue at some length at pages 683 to 692 and Justice Meagher at page 693 to the conclusion of his reasons for judgment.
Your Honours, could I just say – and I will come back to another decision dealing with the same topic in just a moment - whilst with Nominal Defendant v Gardikiotis that there may be an inconsistency, if I may say so, with respect, in two parts of your Honour’s reasons for judgment in that case, or an apparent inconsistency, your Honours.
McHUGH J: No, I think that is a fair criticism because I approve what was said in the South Australian case.
MR JACKSON: Yes. Your Honour, page 57 about point 8, your Honour referred to Campbell v Nangle and in Campbell v Nangle there had been one of two sums allowed and your Honours will see that referred to in the last sentence of the first paragraph on page 58. Your Honours, that observation of your Honour there, if intended to convey that Campbell v Nangle was correct in that regard, does not seem to fit well with the fact that your Honour treated, at page 57, Treonne as correctly overruled, and it does not fit, your Honours, with the passage at the bottom of page 54 and the top of page 55.
McHUGH J: Yes.
MR JACKSON: Could I refer your Honours also to the observations of the Full Court in Western Australia in Morris v Zanki (1997) 18 WAR 260. In that case the approach to be taken was dealt with in passages commencing at page 288. In particular, towards the bottom of that page your Honours will see a submission in the last paragraph:
Counsel for the appellant submitted that recurrent fund management costs will be incurred because the respondent wishes to achieve a higher return on his capital. Looked at in this way, the costs are a result of a choice made by the respondent rather than because of his disability.
Two sentences further on your Honours will see the court did not accept that submission and said that it seemed to be a case that fell squarely within Gardikiotis, saying:
Before the accident he had no mental impairment. After the accident he was incapable of managing his money and financial affairs. That inability is a direct result of the appellant’s negligence. Because of the disability his money must be managed by a protective trustee. This is not a choice that he has made. It is one which follows as a consequence of the finding that he is under a disability.
Your Honours will see the remainder of that page and then the sentence that is the last sentence on the page:
In our opinion there must be an allowance for those costs if the respondent is “to receive the full restitution –
Now, your Honours, on the next page, in the passage which goes from the first new paragraph on the page right through to the end of the next paragraph, about F, there is a discussion of the quantification. Your Honours will see a reference between A and B to:
a normal life expectancy and . . . the funds will be held for a very long time. There will be calls on the fund to provide for the day to day needs –
There is a reference, your Honours, just below B to the court accepting the proposition that:
the money should be invested by the trustee in a portfolio of investments which will provide long term capital growth in addition to regular income.
Your Honours will see at about C:
In the modern commercial environment ordinary business prudence would demand periodic reviews of investment portfolios and a consideration of the potential for capital –
and your Honours will see that there is a reference to the provisions of Trustees Act (WA) which, in effect, mirror those of the Trusts Act (Qld) in section 24. Then your Honours will see at about D:
The danger is that if the fund is not properly managed . . . the available funds may be exhausted or severely diminished before the respondent’s life expectancy expires . . . If an appropriate spread of investments is to be achieved and the portfolio is to be made the subject of periodic reviews it is highly likely that the fund manager . . . will charge fees.
Now, your Honours, if I could move over from that to page 295. There had been a contest between the NAT company on the one hand, which is a bank trustee company for a bank, and the Public Trustee in Western Australia. Your Honours will see in the paragraph commencing between D and E headed “Finally” what was said was that whilst NAT, in effect, was to be the trustee, the amount allowed for damages would be the amount that the Public Trustee would have charged, and they were not insubstantial figures.
Morris v Zanki are mentioned in passing as a case that was cited to the Court of Appeal in this case but was not referred to in the reasons for judgment. The argument on behalf of the respondent contends that the amounts which were disallowed by the Court of Appeal were those that related to forms of wealth creation and would be incurred by anyone who chose to use the services of Perpetual or the Public Trustee. Could I say ‑ ‑ ‑
HAYNE J: Or chose to use the services for what, for management of a large fund?
MR JACKSON: For management of a large fund ‑ ‑ ‑
HAYNE J: A fund which would not exist but for – avoid the “but for” reference, a fund which comes into existence only because it is awarded as damages.
MR JACKSON: No, your Honour. The argument, as we would apprehend it, would include a fund coming into being because it is damages. It would also include someone winning, say, $3.5 million in the lottery or someone getting that from selling a property and wanting to invest it with the Public Trustee or with Perpetual, and that Perpetual or Public Trustee would utilise the moneys endeavouring to do the best they could for that person. So what is said is that the items – and I will come to them in a little more detail in a moment – that were A and B in both lists were ones that were recoverable but the other ones fell within that wealth creation area.
Your Honours, could we say a couple of things about that proposition. The first is that it really does not properly represent the situation which obtains, and does not do so in this way. A non‑brain‑damaged person has a choice on whether to utilise the services of the Public Trustee or another professional trustee. A brain‑damaged plaintiff does not. The expenses of using a trustee have been brought about by the negligence of the tortfeasor.
In this regard and to that extent, the Court of Appeal in this case was correct in not agreeing with the view taken by the primary judge. The Court of Appeal’s passage relevantly is at page 435, paragraphs [22] through to [25]. Your Honours will see in paragraph [22] that they refer to the approach taken by the primary judge. In paragraph [23] their Honours refer to the fact that:
a necessary product of the defendant’s negligence was the appointment of a trustee with statutory and other legal obligations . . . the need to perform those obligations is . . . the product of the defendant’s negligence the cost of which is recoverable from the defendant.
The reason for that is that the cost of performance by Perpetual of such services . . . is not a cost in the expenditure of which the plaintiff has, or had at any time, a choice –
Then your Honours will see the reason they ascribe to it and they adopt a passage of your Honour Justice McHugh in Gardikiotis. Then in paragraph [25] they say specifically:
Where the standard of services which a plaintiff is obliged to accept, as a matter of law, as a necessary product of the defendant’s negligence, is higher than the standard which would be provided by the unassisted decision‑making of an adult of no particular skill, training or interest, the defendant is liable to pay the cost of those services at that higher standard.
Your Honours, pausing there, the second thing we would say about the contention that the wealth creation aspects of it are not recoverable is that unless the damages include those costs, the brain‑damaged plaintiff will not have received full compensation.
McHUGH J: You can test it this way. If Mr Packer was seriously injured in an accident, one would think what is recoverable as part of his damages would be the cost of a trustee or administrator who had to manage his wealth.
MR JACKSON: Yes, your Honour, that is so. Could I endeavour to put this in a slightly different way, I think, from the way in which it is sometimes put, and it is this. Your Honours, the loss of capacity which is brought about by the negligence of a defendant includes the loss of capacity to manage one’s own affairs. The damages which a plaintiff receives for the other losses of capacity – for example, the inability to use an arm or something of that kind – are based on the assumption that the plaintiff retains the capacity to deal with, and to do as best he or she can, with the sum of money which represents the other lost capacities. But if, in addition, the plaintiff has lost the capacity to deal with the moneys that are received in respect of the other capacities, that loss of capacity itself has to be compensated for.
McHUGH J: You seem to treat this claim as a claim for general damages then as opposed to special damages.
MR JACKSON: Your Honour, that is true in a way because one always runs into some definitional problems with respect to special and general damages. What one is doing in the particular case – if I can just go to the quantification aspect, your Honour. What one has is it is not a case where one is saying, “This will cost X or Y and it is a one-off” ‑ ‑ ‑
McHUGH J: It is, in a sense, is it not, because what is being calculated is the present value of the stream of expenses over the next 59 years?
MR JACKSON: Yes. Your Honour, it is special in the sense that one can endeavour to put a figure on it which is not something which is pure estimation one would arrive at as for pain, suffering and loss of amenities. So, in that sense, that is so. But, your Honour, I am not seeking in saying what I am saying about capacity to seek to say it was one form or the other but it is simply something that needs to be compensated for and the method of ‑ ‑ ‑
McHUGH J: Another way of looking at it is to say it is an expense that is derived from the loss of capacity.
MR JACKSON: That is what I was going to say, your Honour. I was going to finish off by saying that what it is is a loss of capacity which will inevitably produce financial loss because the plaintiff has to be looked after in relevant respects.
Your Honours, the third aspect we want to say in relation to this part of the matter is that the quantification of the loss is the amount which the brain‑damaged plaintiff will be charged for doing the things which the plaintiff might have done. If one takes this case where, if one leaves aside Perpetual altogether, the Public Trustee’s fees fixed pursuant to statue are X, why should the damages not include an amount reflecting that actual cost? To take a particular example, why should they exclude the six‑monthly reviews that were referred to by the Court of Appeal at page 431, paragraph [7]? It seems, with respect, a pretty funny thing to say that you can have the costs of ‑ ‑ ‑
HEYDON J: The Court of Appeal said it was because - and I do not necessarily agree or disagree - that was caught up in B. That was category C and it was caught in B and therefore should ‑ ‑ ‑
MR JACKSON: I am coming to that, your Honour.
CALLINAN J: I must say it looks like a duplication to me, Mr Jackson,
of what they are already ‑ ‑ ‑
MR JACKSON: Well, your Honour, I am going to come to the evidence in a moment. What has happened, I think it is probably right to say, is that the particulars that were given, which is what the Court of Appeal has referred to, perhaps themselves inaccurately described the fees, but the evidence was clearer on the issue. That is what I am going to come to if I may now, your Honours.
GUMMOW J: Well, sooner or later we are going to have to face up to the orders you seek from us at page 441.
MR JACKSON: Yes, your Honour.
GUMMOW J: Order 5 does not look all that attractive at the moment.
MR JACKSON: Well, your Honour, I recognise the possibility the matter might require to be dealt with by another court, but may I come to that.
HAYNE J: Ordinarily, it would require passing of accounts by a trustee, but there we are. Well, hours of innocent amusement are to be had doing that, Mr Jackson.
MR JACKSON: Well, your Honour may be right, your Honour may be incorrect, but it is a ‑ ‑ ‑
GUMMOW J: We could make a declaration as to the principle I suppose, if that were possible, but I do not think we would get into the accounting.
MR JACKSON: No, your Honour, I would have to say it would not surprise me if that were the case. But may I go on to deal with what the evidence was relevantly and then endeavour to show that the Court of Appeal was in error in the course that it adopted? Now, your Honours, the evidence was of fees which might be charged by either of the two bodies to which I have referred. The financial effect of them was similar and they had been brought to a basis where they could be compared by Mr Day, who is a senior fund manager and an actuary with Queensland Investment Corporation. His affidavit is at page 289. Now, your Honours will see that at paragraph 4 he said that it was:
misleading to make a direct comparison between each set of charges.
He then, paragraph 5 -
recalculated the estimated fees . . . using an explicit calculation -
and your Honours will see what he did there. Your Honours will see also in paragraph 6 he categorised them into the - the Public Trustee fees and charges into the Perpetual categories listed in the affidavit. Your Honours will see there that the Perpetual list is in the middle column, in effect, the Public Trustee on the right. In paragraph 7 he said that:
Due to different fee structures, the categorisations may not be extremely precise but do offer a fairer comparison than before. In particular, the Public Trustee do not seem to distinguish between advisory charges and fund manager charges so that category C and D for Perpetual . . . C for Public Trustee and there is no category C charges for the Public Trustee.
What the means is that your Honours will see that the Public Trustee column has fund management fees and that is the equivalent of C and D in the Perpetual column.
Now, your Honours will see in paragraph 8 he introduced ongoing brokerage fees to make an appropriate comparison. Then at paragraph 11 he said:
The results of my calculations of an estimate for the present value of fees and charges using the more accurate assumption of continual fee charging is presented in the table below.
Your Honours will see the table at the top of page 293.
GLEESON CJ: These fees presumably are diminishing over the years because of assumption 5(a).
MR JACKSON: Yes, your Honour. Your Honour, that is made clear in some of the background material. What your Honours will see, although one is speaking for 59 years, the amounts involved at the end would be very small. Your Honours will see that the total of items A and B in both cases is similar, the total of items C and D in the Perpetual side compared with C in the Public Trustee side is similar, and the amounts for E and F are broadly speaking of the same order.
HAYNE J: Now, at this point of the analysis, does this demonstrate any more than that net present value of the fees Perpetual would charge is smaller than net present value of the fees Public Trustee would charge?
MR JACKSON: It really shows two things, I suppose, your Honours. It shows what would be charged by the Public Trustee, and there is no debate about that. It shows also what Perpetual would expect to charge.
HAYNE J: Now, are Public Trustee charges dealt with in this affidavit? Are they wholly statutorily based?
MR JACKSON: Yes, your Honour, they are. The statutory provisions pursuant to which they are based are set out in the appeal book.
HAYNE J: And Perpetual’s fees are simply the fees which Perpetual would choose to charge; is that right?
MR JACKSON: Yes, they are fees which are published fees.
HAYNE J: I understand that, but ‑ ‑ ‑
MR JACKSON: Yes, they are the fees which they would say they had agreed upon with the persons then being the guardians of the plaintiff. So one sees those fees referred to at the top of page 293 and, your Honours, one point I would seek to make about it is that the figures are high, but what has happened, of course, in relation to Public Trustees is that these days they tend to have fees which cover a large number of items and, as with a lot of other governmental bodies, are expected to make a profit so far as they can.
CALLINAN J: Mr Jackson, there was not an unconditional contract for these fees entered into with Perpetual.
MR JACKSON: Your Honour, I do not have the detail of the contract. Your Honour will appreciate this issue arose yesterday and I have not had the ability to do more than explore it fairly quickly. The details of any contract I have not seen and they are not before the Court.
CALLINAN J: But who would be the parties to any such contract on behalf of your client?
MR JACKSON: The then guardians, the parents.
CALLINAN J: And what about the role of the Public Advocate? I do not know anything about that, I hasten to say, but I see the Public Advocate appeared and ‑ ‑ ‑
MR JACKSON: Yes. The Public Advocate, your Honour, I think supports the contention which we advance and the amounts.
CALLINAN J: I am just wondering about the role of the Public Advocate.
MR JACKSON: Yes, I cannot tell your Honour what role, if any, the Public Advocate played.
CALLINAN J: I think the Public Advocate may have a kind of a supervisory role where it can come in and intervene in matters.
MR JACKSON: Yes, that is so, your Honour.
CALLINAN J: We really need to know that.
MR JACKSON: Well, your Honour, the provisions in the Guardianship Act are – I can take your Honours to those, and perhaps I could do that a little later if I may – but it is also a question of what role was in fact played I suppose, which I am not able to tell your Honour about now apart from the fact that the Public Advocate appeared at both levels in this case below.
CALLINAN J: I ask you that question about guardianship or about a contract because before Griffiths v Kerkemeyer, I think in the Queensland Supreme Court Justice Gibbs, as he then was, referred to the need for evidence to establish that the money would be paid to the carer, a view from which his Honour seems to have departed in Griffiths v Kerkemeyer, but it may be a view that is still open in relation to this sort of question, that the court might need to be satisfied that the expense actually claimed would in fact be incurred.
MR JACKSON: Your Honour, there are really two levels in a sense. One is the fact that Perpetual had been appointed the administrator. So it was the administrator an expense would be incurred. The question whether the amount of the expenses would exceed that to which it was entitled was a question that has not been litigated in any sense that brings it before your Honours now. No doubt, it could not engage in conduct which was unlawful, but the suggestion that its conduct has been unlawful, or may have been, is not one that has been litigated except to the extent it was raised by the question that the Court asked yesterday.
CALLINAN J: These are maximum fees though. There is no evidence of any bargaining or attempt to get them to lower their fees, to get hold of what would be really a very simple estate to administer because the establishment fee of $21,000, for example, seems to me to be rather high just to receive the money and set up a book of accounts. I think the Public Trustee’s fee is $3,000 or something of that order.
MR JACKSON: Well, could I just say in relation to it – sorry,
I missed what your Honour put to me really.
CALLINAN J: I think you are going to suggest and really go into detail it was not litigated. Is that what you are saying?
MR JACKSON: Yes, I was. Your Honour, may I come back to it because I have some instructions being passed around ‑ ‑ ‑
CALLINAN J: I am sorry.
MR JACKSON: It is a little difficult keeping track of what is going on, particularly when I cannot read it. Your Honours, could I say that our instructions are – and I am sorry this may differ from what I said before – that there is not any formal contract or agreement. What the position was that the litigation guardians gave instructions to seek Perpetual, not the Public Trustee, and Justice Byrne accepted that in full knowledge of the scope of the fees. I cannot really take the matter ‑ ‑ ‑
HAYNE J: Is Perpetual Trustees Queensland Limited a company that is a trustee company for the purposes of the Queensland 1968 Act?
MR JACKSON: I believe so, your Honour, yes.
HAYNE J: That is to say, it is a company that would necessarily have two rack rates. It would have a scale of fees and charges it proffers in this case, but also by operation of 41(1) it would at least have the capacity to charge fees according to the statutory scheme.
MR JACKSON: I expect so, your Honour, yes.
HAYNE J: Thus the appointment of Perpetual by order 2 of Justice Byrne, did that leave open any question whether, as between Perpetual and the administrators or between the court in its role in sanctioning this compromise or in the subsequent consideration of the matter, to deal further with the question of Perpetual’s fees, or did the bare appointment by clause 2 of the order accept the rack rate proffered by Perpetual?
MR JACKSON: Your Honour, so far as the situation is concerned, what one had was a proceeding in which there had been a settlement upon the terms that are referred to in paragraph 1(a) of the order. That included that there be a sum by way of damages in respect of reasonable management fees. A question which arose was a question of who should be appointed administrator, and that was the issue that was resolved by order 2.
GUMMOW J: Order 2 has to be read with order 10, does it not?
MR JACKSON: Yes, your Honour, it does. Your Honours will see in relation to – order 11 I think your Honour is referring to. I think it is overprinted.
GUMMOW J: It is obscured, yes. I meant order 11.
MR JACKSON: So there was material before the court in relation to the question of what would be an appropriate sum. What the court was doing – I do not know that I can take it further – was seeing what the evidence was in relation to what charges trustees would make.
HAYNE J: But in fixing that sum, under order 11 is there any capacity in the court on the further consideration that is there reserved to say to Perpetual, “I know that’s what you want, but no, you can’t have it”?
MR JACKSON: Your Honour, there is nothing to stop the court saying, “The fees that you say are appropriate fees are ones that the court considers you’re not entitled to”. There would be nothing to stop anyone saying before the court and the court itself saying, “The fees charged by the Public Trustee are fees which the Public Trustee’s not entitled to charge”, but your Honours will appreciate that when one saw that the fees proposed to be charged, or the fees which the Public Trustee would charge according to its statutory provisions, were ones that were significantly higher than those which were the subject of the proposal by Perpetual, that the issue was one that in a sense it did not need to go further into and particularly with the view taken by the judge.
McHUGH J: But what we have to keep in mind is that this exercise is concerned with the sum that the defendant should pay to you based on your predicted expenses over the next 59 years, which may or may not turn out to be anywhere near accurate. If the market goes up 70 per cent in a particular year, then you will be paying .55 per cent in terms of a portfolio fee on that money, which will be a lot more in a particular year. If it goes down, you will still be paying a certain sum. To try and estimate the present value of anything 59 years out on something as variable as this sort of asset allocation portfolio is almost a mathematical impossibility.
MR JACKSON: It is very difficult, your Honour; there is no doubt about that. What one does see is that the evidence suggested that the figures were of the same order.
McHUGH J: But there may be two separate questions. It may be one thing for you to recover from the defendant the amount that you claim, but there may be an ongoing supervision of the fees actually charged by the trustee. They have to act in accordance with the statute.
MR JACKSON: Yes, your Honour. I have referred also to the fact that there is some liberty to apply in paragraph 13 of the judge’s order at page 3 in respect of the administration of the trust fund. Your Honours, going back to what was done in the courts below, the amount which was allowed by Justice White was the sum of $180,000. Effectively, that involved allowing damages for items A and B at the top of page 293 but for nothing else. Your Honours, will see, if one adds together A and B in the case of each of the two bodies, that one is a little below, one is a little above $180,000. The primary judge adopted that, of course ‑ ‑ ‑
HEYDON J: How does that fit in with the table at the top of page 431, where the sum of the figures is about $140,000 for A and B? That is a table which was said to be the scope of Perpetual services yet it seems to be quite different from 293. Is there some element of just rougher estimate for ‑ ‑ ‑
MR JACKSON: That is so, your Honour. I think if one adds ‑ ‑ ‑
HEYDON J: Paragraph [5] says the sum allowed $180,000, one-off fee, A and B. It just does not add up.
MR JACKSON: Your Honour, the figures at the top of page 431 are figures that were given in the particulars rather than the evidence and they preceded Mr Day’s affidavit.
HEYDON J: I see.
McHUGH J: So they are irrelevant, those figures on 431?
MR JACKSON: In the end, your Honour, yes.
McHUGH J: So the real figures we are looking at are 291 through to 293.
MR JACKSON: Yes, your Honour, that is as I understand the position.
HEYDON J: Page 424 is where the judge sets out the table that Mr Day published.
MR JACKSON: Yes. Your Honour, what the judge says there is said to have come from paragraph 4 of Mr Day’s affidavit but it just does not seem to be paragraph 4 of that affidavit. I have had some difficulty in trying to find exactly where that comes from. You will see that the figure, the $902,000 for the Public Trustee, is different from the figure in his ‑ ‑ ‑
HEYDON J: It comes from 293, does it not?
MR JACKSON: Yes, a different figure at 293.
HAYNE J: Except item |C seems different.
MR JACKSON: Yes, it is item C, your Honour. That is the difference there.
McHUGH J: So far as the Public Trustee is concerned it is different.
MR JACKSON: Yes. Now, could I say, your Honours, that the course adopted by the judge in arriving at $180,000 appears to have been taken for three reasons. The first is at page 412 at line 13640 and, in particular, around line 13645 where her Honour said:
The acceptance of passages in Campbell v Nangle by both McHugh J and Gummow J where the distinction had been made at trial and on appeal and did not allow recovery of a fee for investment advice strictly, suggests that such fees, if able to be isolated, are not recoverable.
I do not think your Honour Justice Gummow, with respect, touched on the particular issue in Gardikiotis at all. So that view, your Honours, was overruled in the Court of Appeal. The second feature, your Honours, was at page 414 at about line 13755. Her Honour said:
Difficulties arise in isolating the costs for those services provided “in-house” which are outside the range of unassisted decision‑making which an able adult of no particular skill, training or interest in the subject would make. But if they can be, it is at that point that the compensatory principle ends.
The difficulty in answering that question . . . is that none of the evidence adduced was directed towards it –
but they seem to answer it.
CALLINAN J: You would say that there was evidence, and page 56 is an example of that evidence.
MR FRASER: Yes, your Honour. There were particulars which said, “Yes, category B comprehends it”. Mr Gallagher gave evidence that it did, and Mr Marles said, “Well, the other categories are not referable to her disability.” Your Honour, if you then – and I have taken the Court to paragraph [28], and then the explanation in this sort of different, perhaps more tortuous route, it may be in paragraph [29] on page 437 where their Honours:
If the services provided in category B covered the services necessary to be provided by Perpetual . . . as the quoted statements seem to imply, then in our opinion the fees . . . are not recoverable. Moreover a perusal . . . appears to indicate, with greater specificity, the kinds of things which a professional trustee would be required to do under B ‑ ‑ ‑
CALLINAN J: One of the problems for you is that the order, Justice Byrne’s order, does not talk about “necessary services”.
MR FRASER: But it ‑ ‑ ‑
CALLINAN J: “Reasonable” is used, but there is no reason to suppose that these additional fees that are charged on the state of the evidence are unreasonable, particularly in the light, for example, of section 28 of the Trustees Companies Act 1968, which gives the trustee power to do all these things including in (g) to:
consult with and employ such persons as the trustee company deems expedient ‑ ‑ ‑
MR FRASER: There was some evidence that the discretionary fees included the accessibility of in-house persons who were well versed in these ways, and one would expect that would be so. Again, it is an assessment of damages – and I have endeavoured to explain in response to your question, your Honour Justice Gummow, that in the end it seems that the members of the Court of Appeal got to the same result.
It may perhaps be said that when they refer to the broking fees – and that is in 31 – that they must have overlooked the evidence to which I have drawn the Court’s attention about that and maybe their Honours were thinking of this in some earlier cases where there was some reference to recoverability of broking fees. I have not drawn the Court’s attention to it but I am aware that in an earlier version broking fees were something that was thought to be recoverable.
Your Honours, what I wanted to do in taking the Court, if I may, to Gardikiotis was to seek to draw the illustration, or at least to take up the illustration which appears from the citation of the judgment of Justice of Appeal Clarke at page 68 of Gardikiotis, your Honours. This is from the Treonne Case. If your Honours read through the distinction which is sought to be made there, we submit – and it is the same distinction – that the circumstance that a plaintiff is under a disability permits recovery of expenditure of money upon the management of the verdict moneys as damages which compensates for a loss flowing from the tort, but the expense incurred and the investment of the moneys is not so caused, it remains a consequence of the fund but not of the tort. That seems to be, with respect, a principled distinction that is made and was, with respect, apparently endorsed at page 68 in the report.
GUMMOW J: No, it is not endorsed because you have to read page 69. We have been down this track, Mr Fraser. We are not going to solve this case by scratching around in Gardikiotis it seems to me.
MR FRASER: No, your Honour. Well, that is where the Courts of Appeal have traditionally gone, so ‑ ‑ ‑
GUMMOW J: That is why we are here. But having got here and lifting up the stone, there seems to be a lot of activity going on that is very curious at the moment.
HAYNE J: Just before you go on, do you read paragraph 1(a) of Justice Byrne’s order, when it speaks of “a sum by way of damages in respect of reasonable management fees” as if it was intended to convey, “together with a sum by way of damages for management fees to the extent that they are of a kind recoverable and reasonable”?
MR FRASER: I do not know that we need to go that far, your Honour. I think we read it as being a direction to provide for the damages in respect of reasonable management fees in a reasonable sum.
HAYNE J: Your argument seems to be founded on the proposition that in part these sums are not allowable as damages; not that they are unreasonable because they go beyond industry standard or anything of that kind, but they are not allowable as a head of damage.
MR FRASER: They are not damages, yes. So we submit that there is a qualification in relation to damages which is necessarily involved in that respect.
HAYNE J: It is a pity the compromise was not more clearly expressed.
MR FRASER: It is always a pity if we end up in the ultimate court of the land because something has not been as clearly done as it might. Your Honours, I wanted then to really perhaps summarise by referring to the issue of a lack of choice – and in our outline we have referred to Kars v Kars and I will not take the Court to that principle which seeks to place a limitation upon the reach of the underlying recovery of damages for a need which is not productive of financial loss. But we do submit that the approach of simply saying the plaintiff has no choice is something which is addressed by the principle which applies in relation to betterment.
We have said something about it in our outline and we do not really need to say anything more. But we do make the submission that the learned trial judge appreciated that the expenses identified were required to be differentiated between those necessitated as a consequence for the appellant’s injuries and those associated with the investment of the funds they created. We have made the submission that those conclusions are supported by the evidence.
Your Honours, to the extent that there is a difference between types of fees which are recoverable as damages, we submit that is the correct result in the case. Your Honours, those are the matters that I wish to raise.
GLEESON CJ: Thank you, Mr Fraser. Yes, Mr Jackson.
MR JACKSON: Your Honours, may I mention two questions that were adverted to when I was addressing the Court earlier. The first concerns order 1(a). Your Honours, we too are perfectly happy to consent to the words “settlement sum” moved to an appropriate place and will seek to do so with our learned friends in the Supreme Court. That is the first thing.
The second thing, your Honours, concerned section 59 of the Public Trustee Act. I do not know if your Honours have copies of that now. We have provided some to the Court. What your Honours will see is that in section 59(1A) there is a definition of “appropriate person” which includes in paragraph (a):
an administrator for the person under the Guardianship and Administration Act –
and in paragraph (c) –
the public trustee.
Your Honours will then see in subsection (1), if I could take your Honours to the words that are germane to cases of this kind and omit the others:
In any cause or matter in any court in which money or damages is or are claimed by or on behalf of a person under a legal disability . . . no settlement or compromise . . . shall . . . be valid without the sanction of a court or the public trustee, and no money or damages recovered or awarded . . . shall be paid . . . to any person other than the public trustee unless the court otherwise directs.
So the money goes – any settlement money would go to the Public Trustee unless the court otherwise directs it. Then your Honours, subsection (2):
Any claim for money or damages by or on behalf of a person under a legal disability . . . may be settled or compromised out of court . . . with the sanction of the public trustee, but no money or damages agreed to be paid . . . shall be paid to any person other than the appropriate person –
which your Honours will recall is defined in subsection (1A) –
unless by direction of a court upon application made in that behalf.
Your Honours, one would then see in subsection (4):
All money or damages paid to the public trustee under this section shall, subject to –
court directions –
be held and applied by the public trustee on trust for the person under a legal disability.
Now, your Honours, those seem to be the essential parts of ‑ ‑ ‑
GUMMOW J: But was subsection (1) or (2), or both, engaged here?
MR JACKSON: Well, your Honour, subsection (1) appears to have been engaged so far as the proceeding before Justice Byrne was concerned, yes. Now, your Honours, that is the second matter to which I wished to refer. The third concerns the evidence that was referred to of Mr Marles. My learned friend referred to that in some detail. That evidence, your Honours, does not seem to have been warmly received by the primary judge. May I in that regard refer to her Honour’s reasons at page 425 in paragraph [41] of her reasons for judgment. She said, in the third line, having referred to Mr Day:
The observations of Mr Marles are noted but he admitted to little or no experience as a trustee for a person under a disability . . . I thought the estimated transaction based approach of the Public Trustee more attractive conceptually -
So that, your Honours, Mr Marle’s evidence seems to have made no favourable impression upon her Honour.
Your Honours, could I then deal with a matter about how the Public Trustee came into it, as it were. That is referred to in a narrative part of the written submissions that were before the primary judge. They appear at page 4 on behalf of the plaintiff and in the paragraph which is the last paragraph on page 5 there is a reference to Mr Schneidewin’s affidavit and to material dealing with the position of the Public Trustee.
Now, your Honours, what appeared from that material - and I put it very shortly - was that the fees that the Public Trustee had been indicating were fees that would be charged by the Public Trustee were of the order of 136,000 and which your Honours will see referred to in paragraph 2. However, when the Public Trustee was pressed in relation to what fees would be charged, it appears from the correspondence which is attached to that affidavit, that there was a very significant additional amount, hundreds of thousands of dollars, reflecting fees that actually would be charged in relation to various transactions and other matters in accordance with the scale.
That is why one sees – I should say that was, in effect, winkled out, as it were, by Mr Gallagher of Perpetual working out and it then being put to the Public Trustee that Mr Gallagher’s figures applying the various schedules that were apposite to the Public Trustee would, in fact, result in the Public Trustee being entitled to receive a great deal more than $136,000‑odd. That in the end eventuated and your Honours will have seen what results – your Honours can see that correspondence and then the consequence in Mr Day’s affidavit.
So that really in a sense provided a reason – I speak not of a legal reason but rather a practical reason – why the Public Trustee had some interest in the matter. Your Honours, will then see, if I could go back to page 8, it was said in paragraph 3 – this matter was put to the Public Trustee and your Honours will see then going through paragraphs 3, 4 and 5 – and your Honours will bear in mind that these are submissions – they indicate how it came about that the Public Trustee came to be in the matter and there was a direction to that effect which was given. It is at some point which I just cannot quite find by Justice Byrne that the Public Trustee becomes a party to the proceedings. Mr Schneidewin’s affidavit is at page 119 and following. Your Honours will see that there.
Reliance has been placed, your Honours, upon the contention that the money, in fact, will if invested by Perpetual be money which earns a greater rate, 8.2 per cent, and therefore is involved in some kind of asset gathering. Could we say two things about it. The first thing is at page 276. It is in the second affidavit of Mr Gallagher. Then your Honours will see at the top of page 276 in paragraph 4 he says:
In the Financial Management Plan . . . I calculated a present value of Perpetual Trustees Queensland’s fees. In doing so I made the following assumptions:
. . .
·Where fees are ongoing through the life of the portfolio we have assumed a portfolio diminishing to zero over the life expectancy.
Your Honours will see then in paragraph 5 he did the same when calculating the Public Trustee’s funds. That is the first thing I would seek to say about it. The second is this. If one goes back to page 53, your Honours will see at the top of that page the reference to the attempt to generate 8.2 per cent by Perpetual.
Now, that is dealt with in a number of passages. The first is, your Honours, on the preceding page between lines 18 and 32, what is referred to there is:
the need to balance the risks associated with investing and not restricting it to one particular asset class.
That is one reference to it. One sees also, your Honours, if one goes to page 71, a discussion of the government bond rates, dealt with between about line 5 through to about line 40, where the undesirability of having property – all the property in one set of investments is discussed, and it is a hardly surprising result.
MR FRASER: With respect, your Honours – and I hesitate to rise because the Court has not stopped - but this seems to be going well beyond a matter of reply. We are just being taken to passages of the evidence.
GLEESON CJ: Well, you will have an opportunity to say anything you wanted to further.
MR FRASER: Thank you.
MR JACKSON: Your Honours, the last matter to which I wish to refer was our learned friend’s contention in relation to the acceptance, or so it was said, by Mr Gallagher of the terms of the particulars. Could I refer your Honours to page 55 where that passage is to be seen. What your Honours will see at page 55, commencing at about line 10, is the reference to:
discretionary portfolio management fee is of the order of $8,938 –
It is then asked in the question:
and in the particulars that you’ve referred to in your affidavit you identify what’s entailed by describing it as – it includes the following specific services. Do you remember those particulars or would you like to see them?--I remember them, but---
All right. There are two dot points. What other services are included in the discretionary portfolio management fee?--I might have a look at those two dot points -
There is a third page, and then he was asked, and agreed. He said:
Essentially, that summarises what is involved in the discretionary aspect of the portfolio management.
Now, your Honours, the discretionary aspect of the portfolio management is of course the thing that includes two aspects – I went through that earlier. The second thing, your Honours, is the document that is referred to there, that he is being referred to, is at page 302, paragraph 6. If I can go to paragraph 5, you will see the figure of $8,938 in the second item in the table on that page. You will see at paragraph 6 the reference to the particulars.
Now, your Honours, those are the matters I wish to make some submission about. My learned friends have indicated they seek to make a
submission in response to the Court’s questions and your Honours may we do so, not necessarily in reply, but on the same topic.
GLEESON CJ: Both the parties can do that within 14 days.
MR JACKSON: I have mentioned a second affidavit of Mr Day. I now have copies of that for the Court and perhaps if I could give that to the Court Officer and your Honours could get them in due course.
GLEESON CJ: Thank you, Mr Jackson.
MR FRASER: Sorry, your Honours, there was one housekeeping matter. I did say I would give a copy of the passage that I referred to from Ford and Lee before lunch and I have five copies of that for the Court.
GLEESON CJ: Yes, thank you very much.
MR FRASER: And the only matter that emerges from the factual reference that is in the record that you were provided by our learned friend is that there is another reference which I should draw the Court’s attention to. At appeal book page 58, point 2070, there is a reference to:
Because she’s not able to speak for herself, because we’re responsible for her financial matters; that’s the discretionary part of it.
GLEESON CJ: Thank you, we will reserve our decision in this matter and we will adjourn until 10.15 tomorrow morning.
AT 3.54 PM THE MATTER WAS ADJOURNED
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