(1968 122 CLR 649
Casey v Pel-Air Aviation Pty Ltd
Helm v Pel-Air Aviation Pty Ltd [2015] NSWSC 566
Gray v Richards [2014] HCA 40
Source
Original judgment source is linked above.
Catchwords
(1968 122 CLR 649
Casey v Pel-Air Aviation Pty LtdHelm v Pel-Air Aviation Pty Ltd [2015] NSWSC 566
Gray v Richards [2014] HCA 40
Judgment (3 paragraphs)
[1]
Judgment
I gave judgment in this matter in May 2015 finding for Ms Casey and Dr Helm (see Casey v Pel-Air Aviation Pty Ltd; Helm v Pel-Air Aviation Pty Ltd [2015] NSWSC 566). There were a number of outstanding issues between the parties as to the calculation of Ms Casey's damages for funds management.
Over the course of discussions which continued even during and after the hearing in December 2015, those issues were in large measure resolved. What then remained was the question of whether those damages should be calculated by reference to what Ms Casey may be charged for funds management by National Australia Trustees Limited, in which case the figure agreed was $872,000, or by reference to what the NSW Trustee and Guardian may charge for such management.
The parties had engaged experts to give evidence about this, but it is not necessary finally to deal with that evidence. In February 2016 the calculation of the order which would be made if it was concluded that damages had to be calculated by reference to what the NSW Trustee would charge, was also finally agreed. That figure was $515,173.
As discussed in Gray v Richards [2014] HCA 40; (2014) 253 CLR 660 at [4], in a case such as this, where Pel-Air's negligence so impaired Ms Casey's intellectual capacity as to put her in need of assistance in managing the lump sum she was awarded as damages, expenses associated with obtaining that assistance is also a compensable consequence of her injury. Such management expenses are a loss flowing directly from its wrong and are thus recoverable as damages, in order to ensure that she receives full restitution for the losses she has sustained.
In Gray there was also an issue as to the quantum of fund management expenses, given the rates charged by a private trustee, as opposed to the rates charged by the NSW Trustee (see at [25]). In that case there was evidence led as to the tutor's preference for a manager other than the NSW Trustee. That was found at trial to have been entirely reasonable in the circumstances. That was not challenged on appeal and so, in the High Court the matter proceeded on the unchallenged assumptions that a manager other than the NSW Trustee should have been appointed to manage the appellant's damages and that the amount to be allowed for the fund management component of the appellant's damages should be assessed by reference to the fees charged by that manager.
There was also in Gray no evidence, or suggestion, that another private fund manager could have been engaged at a lower cost, or that such a manager would have charged for its services otherwise than as a percentage of the total funds under management.
On 12 June 2015, Lindsay J made orders on the application of Ms Casey's mother Ms de Brouwer, her tutor, appointing National Australia Trustees Ltd as her manager. It is subject to the oversight and control of the NSW Trustee, as discussed by Lindsay J in Ability One Financial Management Pty Limited and Anor v JB by his Tutor AB [2014] NSWSC 245 at [31] - [32].
In these proceedings the parties led expert evidence as to the calculation of Ms Casey's damages for fund management, by reference to fees charged by the NSW Trustee, the Perpetual Trustee Company Limited and National Australia Trustees. There was no evidence led from Ms de Brouwer as to the reason for selecting National Australia Trustees, but there was no suggestion that the decision to appoint National Australia Trustees as manager was unreasonable.
Nevertheless, relevant to the question of the assessment of these damages is that the fees which the National Australia Trustees charge will be considerably more than those which the NSW Trustee would charge, if it had been appointed Ms Casey's manager.
As Lindsay J discussed in Ability One Financial Management, both the NSW Trustee and National Australia Trustees have a statutory "right to charge fees" in relation to its management of a protected estate, if appointed manager. In the case of a private manager, not being a licensed trustee company, that is a right conferred on the manager by an order of the Court, such as that which Lindsay J made on Ms de Brouwer's application, in accordance with s 41(1) of the NSW Trustee and Guardian Act 2009 (NSW), or upon an exercise of the Court's inherent jurisdiction.
Such private managers operate under the oversight of the NSW Trustee and the Australian Securities and Investment Commission. They are also subject to the constraints of the Court's protective jurisdiction. As Lindsay J discussed in Ability One Financial Management at [12], the remuneration paid to the manager from the estate under management must be "just and reasonable". It is open to review by the Court, to ensure that it serves the best interests, and is for the benefit of the protected person. Lindsay J observed at [30] - [35]:
"30 In another judgment, written with these proceedings in mind, attention was drawn to institutional and social changes which seemed then, and still seem, to point to a fundamental shift (since the seminal judgment of the Court of Appeal in Holt v Protective Commissioner (1993) 31 NSWLR 227) in the mindset of government about the optimal administrative framework for the administration of protected estates in New South Wales: M v M [2013] NSWSC 1495 (11 October 2013)
31 At paragraph [46] of that judgment I made the following observations:
"If I am not mistaken [the NSW Trustee's] current attitude to estate management... includes a working assumption that, although ever present to serve as manager of any protected estate management of which is committed to it, [it] should endeavour to facilitate deployment of private managers and to focus attention on its supervisory function in the monitoring of management of protected estates by private managers. Whereas once the Protective Commissioner [a predecessor of the NSW Trustee] may have been viewed as a manager of 'first resort', the NSW Trustee is more inclined to see itself as a manager of 'last resort'".
32 In the course of these proceedings, the NSW Trustee expressly embraced those observations as accurate.
33 This underscores the importance of the Court, in consultation with affected interests, working out how best to adapt to change. In a decision-making environment undergoing a process of change, attention needs to be given to identification of what can change, and what must remain constant, to serve the ends for which decisions are made.
34 With that objective in mind I set out in M v M, at [50], a series of propositions as non-exhaustive "guidelines" that might be consulted upon a consideration by the Court of questions about the identity of a manager of protected estate."
His Honour then at [35], adopted the following propositions as non-exhaustive "guidelines", that might be borne in mind when the Court is called upon to make a decision about the identity of a manager of a protected estate, or the substitution of one manager for another:
"(a) First, the jurisdiction the Court is called upon to exercise is not a 'consent jurisdiction'. An order for the appointment, removal or replacement of a particular manager is not to be made merely because a party, or some other person, seeks it, consents to it or acquiesces in it: JJK v APK (1986) Australian Torts Reports 80-042 at 67, 881 (first guideline); JMK v RDC and PTO v WDO [2013] NSWSC 1362 at [60]-[62]. The Court is bound to exercise an independent judgment because of the public interest element in the decision to be made and the possibility, if not the fact, that the protected person lacks the mental capacity requisite to informed decision-making.
(b) Secondly, the governing purpose of the jurisdiction exercised by the Court is protection of the welfare and interests of the particular protected person concerned: Holt v Protective Commissioner (1993) 31 NSWLR 227 at 238B-C and 241A-B and F-G.
(c) Thirdly, any decision made affecting the welfare or interests of a protected person must be made in a manner, and for a purpose, calculated to be in the best interests, and for the benefit, of the protected person: Holt v Protective Commissioner (1993) 31 NSWLR 227 at 238D-F and 241G-242A.
(d) Fourthly, care needs to be taken in all decision-making affecting a protected person to focus on the facts of the particular case, preferably with due consultation with the protected person, his or her family and carers who may be well placed to inform the Court of the protected person's particular circumstances: Holt v Protective Commissioner (1993) 31 NSWLR 227 at 238C-239B, 240D, 241B-F and 243E-F; Re L [2000] NSWSC 721 at [10].
(e) Fifthly, in the choice of a manager consultation of the welfare and interests of a protected person may favour appointment of a member of his or her family over the appointment of an institutional manager: Holt v Protective Commissioner (1993) 31 NSWLR 227 at 238G-239B.
(f) Sixthly, decisions need to be made in the context of a prudential management regime that can be administered, without strife in the simplest and least expensive way, in the interests of the protected person: HS Theobald, The Law Relating to Lunacy (Stevens and Sons, London, 1924), pp 380 and 382.
(g) Seventhly, regard needs to be had to the value and nature of the property comprising a protected person's estate in deciding upon the identity of a manager or an appropriate management plan: Holt v Protective Commissioner (1993) 31 NSWLR 227 at 242E and 243D-F.
(h) Eighthly, recognition needs to be given to the status and obligations of a manager of a protected estate as the holder of a fiduciary office. This means that the Court, managers and other affected persons need to be alive to the importance of avoiding, or at least minimising, exposure of a protected person to dangers associated with a manager having a conflict between a duty owed to the protected person and the manager's personal interests: Holt v Protective Commissioner (1993) 31 NSWLR 227 at 239B and 242B-C; Re L [2000] NSWSC 721 at [12]. Nevertheless, it must also be recognised that the liability of a manager of a protected estate to account may differ from that of a trustee of an ordinary trust to the extent necessary to accommodate the protective purpose of the manager's appointment: Countess of Bective v Federal Commissioner of Taxation (1932) 47 CLR 417 at 420-423.
(i) Ninthly, in conformity with fiduciary law, the office of a manager of a protected estate must generally be regarded as a gratuitous one unless, by an order of the Court or by legislation, a special arrangement to the contrary is made: Gell v Gell (2005) 63 NSWLR 547 at 553-554 [21]-[23]; Macedonian Orthodox Community Church St Petka Incorporated v Bishop Petar (2008) 237 CLR 66 at 93 [69].
(j) Tenthly, in deciding whether, when and on what terms a manager of a protected estate is to be allowed remuneration out of the estate, care needs to be taken not to shift the focus of decision-making from what is in the best interests, and for the benefit, of the protected person to a perceived "right" on the part of any, or any prospective, manager to remuneration. If a manager is to be allowed remuneration, a decision to that effect must be driven by the perspective of the protected person, not the perspective of the manager: Fletcher, Ex parte (1801) 6 Ves Jun 427; 31 ER 1127; Re Walker (1848) 2 Phil 630; 41 ER 1087; Re Westbrooke (1848) 2 Phil 631; 41 ER 1087; G v B (Powell J, 27 May 1992) BC 9201855 at 13.
(k) Eleventhly, the primacy given to the protective purpose of the Court's jurisdiction carries with it, as a correlative, the absence in any manager (public or private) of a legal entitlement to be, or to remain, manager of a particular protected estate: Holt v Protective Commissioner (1993) 31 NSWLR 227 at 237F-238F.
(l) Twelfthly, a decision about whether a manager should be replaced may need to be approached differently from one made about the identity of an appointment as an initial manager because of a perceived need to identify an acceptable reason (ie, one governed by the purpose of the protective jurisdiction and consideration of the best interests of, and benefits available to, the protected person) for change. Depending on the facts of the particular case this may, but will not necessarily, involve recognition that an applicant for change bears, at least, a forensic onus to establish a case for change: Holt v Protective Commissioner (1993) 31 NSWLR 227 at 237F, 238B-F, 239C-G and 242A-B.
(m) Thirteenthly, a manager, or prospective manager, of a protected estate needs to have given thoughtful attention (in the case of a private manager, in consultation with the NSW Trustee and, in the context of the Corporations Act, the Australian Securities and Investments Commission) to the development, and operation, of a plan for management of the protected person's estate: Re L [2000] NSWSC 721 at [11]-[12]; Re McL [2001] NSWSC 280 at [3]-[5].
(n) Fourteenthly, although disputes about the management of a protected estate may at times need to be determined in an adversarial setting, an exercise of protective jurisdiction is not inherently, or necessarily, adversarial in nature. That reality finds expression in the Court's approach to orders for costs in protective list proceedings. The Court ordinarily exercises its discretion, not by reference to a rule that costs follow the event, but having regard to what, in all the circumstances, seems proper: CCR v PS (No 2) (1986) 6 NSWLR 622 at 640.
(o) Fifteenthly, part of the role of the Court in its exercise of protective jurisdiction is to give consideration to the manner and form of a decision-making process calculated to ensure that the protective purpose of the jurisdiction is duly served.
(p) Sixteenthly, in the context of the current legislative and administrative regime for management of protected estates, the Court will ordinarily require that any substantial decision it may be called upon to make affecting a protected estate, beyond the routine, is made on notice to the NSW Trustee, allowing the NSW Trustee to be heard in an appropriate case and inviting its assistance where necessary."
In Re Managed Estates Remuneration Orders [2014] NSWSC 383, Lindsay J dealt with the question of orders being made so that the NSW Trustee might authorise, in defined circumstances, a private manager of a managed estate taking remuneration out of an estate, given its role in the management, or monitoring, of the estates of managed persons in this state.
In this case, the application of the above considerations resulted in the appointment of National Australia Trustees as Ms Casey's manager. The fees it charges will be subject to the oversight Lindsay J described in the above authorities. There was no suggestion, however, that the NSW Trustee, had it been appointed Ms Casey's manager, could not also have managed her estate in her best interests and it appears, at considerably lesser cost. It follows that its appointment would also have been a reasonable one.
Ms de Brouwer, however, preferred National Australia Trustees as Ms Casey's manager and that was an appointment which Lindsay J accepted ought to be made, in exercise of the Court's discretion.
It was argued for Ms Casey that it would be accepted that in New South Wales the starting point for an assessment of damages would now be that it would be a private manager who would be appointed manager in a case such as hers, not the NSW Trustee, given Lindsay J's observations earlier referred to. Ms Casey had now incurred the costs she pursued by way of damages, pursuant to the order that Lindsay J had made and accordingly, she was entitled to have them reflected in the damages she was awarded. Reliance was also placed on the observations in Gray, where it was observed at [46] - [48]:
"46 In addition, the question of reasonableness of fund management expenses is not at large as a matter of judicial discretion. The court does not make an open‑ended judgment about the reasonableness of the fund management expense component of damages. The court is not concerned to regulate the market for the provision of fund management services. The court's concern is to ensure that the plaintiff's actual loss is compensated. There is, for example, no scope for the court to say that the amount is simply "too much" as a matter of intuition or impression if the plaintiff has no practical ability to bargain for a lesser charge.
47 The real question is whether the management arrangement with the Trust Company was so unreasonable in its terms that it could not be regarded, as a matter of common sense, as a consequence of the appellant's injury. If the fund management expense component of an award reflects actual market conditions, and is not contrary to any statutory control, then it may be seen, as a matter of common sense, as an expense consequent upon the tortfeasor's wrong and, therefore, compensable.
48 One can understand the concern which weighed with Bathurst CJ and Basten JA that, notwithstanding the requirement of s 79 of the CPA that the fund be held by the manager and applied as part of the protected estate, a reasonable accommodation must be made, as between the plaintiff and the manager, in relation to the management of the fund. It may be that where a reasonable arrangement is not made, the expense in question can fairly be seen, not as a loss consequential on the plaintiff's injury, but as a loss attributable to an unreasonable bargain with the manager. But in the present case there was no issue as to whether the appointment of the Trust Company sanctioned by the order of White J was a reasonable response by the appellant (or those representing her) to the need to engage a manager of her estate; and there was no evidence that the Trust Company, in charging its management fees on the whole of the fund, was not acting in accordance with the practice of the market, or that its rates of charge were outside the market. Nor was there any suggestion that the Trust Company's charges were contrary to any statutory provision regulating such fees."
Evidence was called from Mr Navakas, of Hillross Financial Services Limited. He is a certified financial planner. He met with Ms Casey and her mother some four or five times before the funds were invested and he had met with Ms Casey once afterwards, at her home.
Mr Navakas explained that Hillross "provides financial advice support and funds management skill set for National Australia Trustees, including fund management recommendations". He explained that Ms Casey's funds had been dealt with by means of a superannuation mechanism, after opinions had been obtained from specialist doctors. That, on his evidence, had involved additional fees. Hillross charges no separate fee for its services. It receives 50 per cent of the fees charged by National Australia Trustees. Perhaps this explains the difference in the amount of the fees charged by the two Trustees, but that was not made clear by the evidence.
Mr Navakas has taken numerous calls, he said at least ten, from Ms Casey, including at nights and weekends, since the appointment of National Australia Trustees, out of concern for her mental state, including when she wanted to "vent on about anything". She had also called his office on some 10 occasions. He explained that when she had requests, a cost analysis was undertaken and a recommendation made to the Trustee, to ensure that she did not run out of funds during her lifetime.
There was no suggestion, however, that the assistance which Ms Casey requires would not be available to her from the NSW Trustee. It appears that both trustees could provide such services, but those provided by the National Australia Trustees involves significantly greater costs.
The question which thus now arises to be determined is whether that result provides a proper basis for an award of damages of some $872,000, calculated by reference to the assessed fees of the National Australia Trustees, or whether instead, Ms Casey's damages should be calculated by reference to the assessed fee which the NSW Trustee would charge, of some $575,173, were it appointed manager.
The answer, it seems to me, must be found in an analogy. If a plaintiff such as Ms Casey had suffered physical injuries which required that a modified vehicle be purchased, so that she could be transported to her medical appointments and there were two vehicles reasonably available to her tutor to purchase which were both suitable, and which could each be safely used to transport her, but with one costing considerably more than the other, could the award of damages justly rest on the cost of the more expensive vehicle, simply because of the preference of the plaintiff's tutor for that vehicle?
It seems to me that the answer must be no. As discussed in Arthur Robinson (Grafton) Pty Ltd v Carter [1968] HCA 9 at [23], damages cannot be assessed by reference to "expenditures which would be ideal in a situation where money was no object." It may be entirely reasonable for a tutor to prefer the more expensive option, but it does not follow that an order for damages can rest on such a decision, without the reasons for the preference being revealed. In the event that there is an issue between the parties as to the proper measure of such damages, there must be an evidentiary basis established for the damages awarded. A defendant is entitled to understand, and if necessary, test the basis of the decision to choose the more expensive option. The mere fact that a decision has been made to incur the greater expense, is not a sufficient basis for an award of damages, in the case of such a contest.
In this case the cost of the assistance Ms Casey requires to manage the damages she has been awarded, is a compensable consequence of her injury. Such assistance is available to her from the NSW Trustee and other managers operating in the market, including National Australia Trustees. There is no suggestion that there is any reason why the NSW Trustee could not adequately provide the assistance which Ms Casey requires, such as the value and nature of the property which comprises her estate, or the nature of her conditions, or that it could not devise or implement an appropriate management plan in Ms Casey's best interests, as the National Australia Trustees has no doubt sought to do. It was not suggested that a decision to appoint the NSW Trustee could not reasonably be made in Ms Casey's circumstances.
There is simply no evidence as to the reason for Ms de Brouwer's preference for National Australia Trustees, at such very significant additional cost. Her affidavit evidence explained why neither she nor other members of Ms Casey's family were able to take on the role of her manager; that she had received advice from Mr Navakas; and that she had decided to appoint National Australia Trustees, but why she came to that decision was not disclosed.
Presumably it was the result of advice which she received. Perhaps there were other reasons for her preference, but they have not been disclosed.
In my view a simple, unexplained preference for a more expensive manager, without more, when there is no question that the NSW Trustee could also be appointed by the Court and that it could also properly perform the work Ms Casey requires, cannot be a just basis upon which the calculation of this head of damage can rest.
The evidence established that the services which Ms Casey requires are available to her at considerably less cost from the NSW Trustee. She will incur significant additional expenses because of Ms de Brouwer's decisions to engage a considerably more expensive manager and to seek approval for its appointment from the Court. Unlike in Gray, the reasons for her decisions have not been explained. They can be revisited. Any change in manager approved by the Court could conceivably result in either higher or lower charges than those which National Australia Trustees charges. An obvious reason which might drive such change is the considerable savings which would result, if the NSW Trustee were to be engaged.
On Ms de Brouwer's evidence she was aware of the difference in the trustee's charges, but no evidence was led from her to explain why she preferred the more expensive service, even though there was an issue lying between the parties as to the quantum of this head of damages. Mr Navakas' evidence shed no light on the reasons for her decision. The evidence certainly did not permit the conclusion that the NSW Trustee could not provide Ms Casey with the services she requires.
In the result there was simply no evidentiary basis on which an award of damages for a sum greater than that which the parties agreed the services Ms Casey requires were available to her from the NSW Trustee, could justly rest.
It follows that on account of this head of damage, Ms Casey must be awarded the sum of $515,173, that being the figure which the parties finally agreed reflected the quantum of damages for funds management, if the conclusion I have reached was arrived at.
[2]
Orders
The parties should now file the final orders reflecting the conclusions reached as to this outstanding head of damage, including as to costs, part of which has already been dealt with.
They should approach if they wish to be heard on costs otherwise those orders should be filed within 7 days.
[3]
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 11 March 2016
Parties
Applicant/Plaintiff:
Casey by her manager the National Australia Trustee Limited