(b) when an appropriate amount has been calculated representing the capital sum needed to provide for the annual cost described in (a), that amount should itself be added to the sum of $ 2,700,000 and a final calculation of the reasonable cost of fund management should be made on the basis that it will be the augmented fund which will be managed.
7 Both the steps envisaged on behalf of the plaintiff were challenged by the second and third defendants (whom I shall call "the defendants").
8 As to step (a) the defendants accepted the reasonableness of the figure of 1.1% per annum; it was the additional 0.5% that was disputed. The argument was the fees prescribed in the Regulation exhibited mere duplication and, to the extent something additional was involved, this was not a cost of fund management proper to be included in an assessment of damages, but an excessive cost of advice on investment such as any person with an asset might choose to seek. The difficulty with these contentions seems to me to be that it was as a direct consequence of his injury caused by the defendants' negligence that the plaintiff both required the compensatory sum and at the same time lost the ability to make any meaningful choices as to its use. Both the charges described in (a) and (b) will be incurred as a result.
9 The principle upon which the court, in an appropriate case, allows a plaintiff the cost of fund management was considered by the High Court of Australia in The Nominal Defendant v Gardikiotis (1996) 186 CLR 49. In the joint majority judgment of Brennan CJ, Dawson, Toohey and Gaudron JJ it is stated (at 52) that "the question whether a need results from an accident is essentially a question of common sense", and their Honours made it plain an allowance should be made "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". McHugh J, in a separate judgment, held (at 57) that it was the full cost of fund management "necessitated by disabilities resulting from the defendant's negligence", so that "the plaintiff's money must be managed by others", the plaintiff having "no choice as to how he or she will use the verdict moneys", that should be allowed. For Gummow J, also in a separate judgment, quoting (at 67) King CJ in Campbell v Nangle (1985) 40 SASR 161, what is required is an allowance of "the amount which [the plaintiff] will be required to pay to a manager by reason of his incapacity".
10 In my opinion, in a case such as the present where the fees are fixed by regulation and the evidence is they will be charged, the court should, in the absence of cross-examination or evidence to the contrary, accept the regulation as imposing reasonable fees which the plaintiff will in fact have to bear. The defendants' criticism of the formulation of the charges by the language of the regulation does not alter the reality that these amounts will have to borne.
11 For the defendants, reference was made to the decision of the Queensland Court of Appeal in Willett v Futcher [2004] QCA 30. There a verdict had created a fund of $3,250,000 and the question was what amount should be added for fund management. The fund was to be managed, not by an official such as the Protective Commissioner of New South Wales, but by a private trustee company, which had quoted to provide a range of investment services for various separate fees. The court ruled, in para [26] of its joint judgment, that the "question [was] whether all of the services for which fees are claimed will be necessary to enable [the trustee company] to perform its obligations". It then held it was open to the trial judge to find a number of these services were unnecessary. Special leave to appeal to the High Court was granted, and an appeal has been heard but not yet determined.
12 In my opinion, Willett v Futcher is distinguishable from the present case on the facts; for I hold that the Protective Commissioner will need to perform the services for which the relevant charges will be made in order to manage properly the plaintiff's fund.
13 I turn to the second question, that raised by the plaintiff's contention to the effect I should add the amount required to meet the cost of fund management to the fund, and recalculate what is required, because any amount allowed will swell the fund and therefore be reflected in the charges ultimately made. Theoretically, this process could go on forever, although the plaintiff's counsel do not push the point so far. It is, indeed, a point reminiscent of the ancient mathematical fallacy of the hare and the tortoise: if, it was said, the hare can run ten times as fast as the tortoise, which has a ten yards start, while the hare runs the ten yards, the tortoise will go one, and while the hare runs that, the tortoise will go one tenth and so on, so the hare will never quite catch the tortoise! But, in my opinion, there is a simpler answer to the plaintiff's contention, which is not fallacious. The calculation of damages is not mathematically exact. It involves estimations. To strive for the precision the argument seeks in respect of the cost of the management of a fund components of which are themselves broad assessments of reasonable sums that are beyond calculation, such as damages for pain and suffering and the loss of the amenities of life, would just be incongruous. Furthermore, while a calculation utilising the figure of $ 2,700,000 in some way seems inescapable, it must be recognized, as McHugh J pointed out during the argument in Willett V Futcher, that even that basic step will lack precision, since a change in market conditions (a steep rise or fall in the share market, for instance) could, within a little time, change greatly the figure to which the Protective Commissioner's percentages will be applied, or, it may be added, a change in the regulation itself may intervene during the life expectancy of the plaintiff. It is, and must be, all a question of reasonable estimate which will determine the amount to be allowed. In my opinion, a sum calculated in the manner I have already indicated is the reasonable amount to allow in the present case.
14 Accordingly, I decide question (a) in favour of the plaintiff and question (b) in favour of the defendants, and I direct the plaintiff to bring in, on a date to be fixed, short minutes of orders appropriate to be made in the light of these reasons.
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I certify that this and the preceding 5 pages are a true copy of the reasons for Judgment herein of The Honourable Acting Justice Burchett
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Associate
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