H v H

THE RELATIONSHIP BETWEEN COMMON LAW COMPENSATION PROCEEDINGS AND THE PROTECTIVE JURISDICTION

1. In administration of the Court's protective jurisdiction a constant, practical concern, of general importance, is interaction between that jurisdiction and the jurisdiction exercised by the Court, or (as in this case) the District Court of NSW, in the conduct of a common law action for personal injury compensation. This judgment is published with that general concern, and recent experience across a range of cases, in mind.
2. There is need of general observations about the relationship between common law compensation proceedings and the Court's protective jurisdiction.
3. A due administration of the protective jurisdiction requires, inter alia, vigilance against the possibility that those involved in the conduct of common law compensation proceedings may be tempted, by a premature but strategically timed application for protected estate management orders, to influence the course of the common law proceedings in circumstances in which (as established by Willett v Futcher (2005) 221 CLR 627, recently considered in Gray v Richards [2014] HCA 40; 88 ALJR 968; 313 ALR 579) protected estate management costs may be recoverable as a (not insubstantial) head of damages on a claim for personal injury compensation.
4. An application for protected estate management orders affecting a claimant for personal injury compensation whose only substantial asset is whatever cause of action he or she might have in the compensation proceedings is generally to be regarded as premature if made before a determination of the compensation proceedings: Re W and L (Parameters of Protected Estate Management Orders) [2014] NSWSC 1106; Re K, an incapable person in receipt of interim damages awards [2014] NSWSC 1286 at [40]-[47].
5. The office of a tutor, appointed in and for the purpose of compensation proceedings, is generally best calculated to manage those proceedings, and to do so in a manner that operates fairly to the party, or parties, against whom an award of compensation is sought.
6. The Court has a supervisory jurisdiction over the appointment, and conduct, of tutors (Re P [2006] NSWSC 1082, approved in Bobolas v Waverley Council [2012] NSWCA 126 at [60]-[62]; Uniform Civil Procedure Rules 2005, rule 17.18; Maria Saravinovska v Krste (Chris) Saravinovska (No 5) [2015] NSWSC 128) that can be called upon if required; but, save in exceptional circumstances, the conduct of compensation proceedings is best left to those directly engaged in their conduct, without an overlay of protected estate management orders made before their determination: Re W and L (Parameters of protected estate management orders) [2014] NSWSC 1106 at [37]-[53].
7. This approach is consistent with that applied across the spectrum of protective jurisdiction cases (as explained in E (Mrs) v E (also known as Re Eve) [1986] 2 SCR 388 at 411; 31 DLR (4th) 1 at 17), reserving the jurisdiction for cases in which it is necessary, leaving ordinary processes of adjudication to take their course: P v NSW Trustee and Guardian [2015] NSWSC 579 at [111]-[116], citing, inter alia, Re Victoria [2002] NSWSC 647; 29 Fam LR 157 at [37]-[40] and Re Frieda and Geoffrey [2009] NSWSC 133; 40 Fam LR 608.
8. An "exceptional circumstance" warranting an exercise of protective jurisdiction may occur in a case in which an award of "interim damages" is made under section 82 of the Civil Procedure Act 2005, necessitating orders moulded to the facts of the particular case, designed to enable an integrated management of compensation moneys (by a protected estate manager) and the ongoing common law proceedings (by a tutor): Re K, an incapable person in receipt of interim damages awards [2014] NSWSC 1286.
9. As these reasons for judgment are at pains to record, a determination of personal injury compensation proceedings (particularly if effected by an agreement for compromise) upon an assumption, or finding, that the claimant for compensation is incapable of managing his or her affairs does not, of itself, determine whether any (and, if so, what) protected estate management orders should be made upon an exercise of protective jurisdiction.
10. There is, in the abstract, no universal, necessary or directly proportionate connection between: (a) a loss of physical or mental capacity compensable in a common law action for personal injury compensation against another party; and (b) a finding of an incapacity for management of property, or person, warranting an appointment of a protected estate manager, or a guardian, upon an exercise of protective jurisdiction affecting a person entitled to compensation at common law.
11. In common law proceedings for an award of damages for personal injury, the claimant (with or without a tutor appointed to have carriage of the proceedings on behalf of the claimant) asserts an adversarial claim of right, with a focus on a loss which may, or may not, have an immediate manifestation in an incapacity for self-management.
12. A person against whom an award of damages is sought, or made, may have a commercial interest (but is unlikely, as a respondent to the common law claim, to have a legal interest) in, or a right to be heard on, the question whether the claimant may be found to be an incapacitated person upon exercise of protective jurisdiction.
13. Although personal injury compensation proceedings may be conducted, decided or settled upon an assumption, or finding, that the person claiming damages is incapable of managing his or her affairs and, in due course, is likely to be made the subject of protected estate management orders, an exercise of the Court's protective jurisdiction is not driven by the same dynamics as those that may operate in the common law proceedings.
14. In pursuit of compensation in common law proceedings, experience in exercise of the Court's protective jurisdiction suggests that, from time to time, a claimant for damages (not intended, here, to be conflated with the defendant in the current proceedings personally) may succumb to a temptation to magnify indicators of incapacity (in order to inflate the level of damages recovered) only to find that success in the common law jurisdiction may be attended by inconvenient constraints imposed according to imperatives of the protective jurisdiction.
15. Those who claim personal injury compensation, emboldened by a prospect of an award of damages enlarged, inter alia, by protected estate management costs in anticipation of a declaration of incapacity for self-management and the appointment of a manager, should be careful what they wish for.
16. Subjection to a regime for protected estate management, however necessary or benign, may quickly come to be seen by a protected person and his or her family as burdensome. Protected estate management orders, once made, may not readily be revoked. On balance, experience of protected estate management costs may outstrip any anticipatory award of compensation made to cover them. The costs of protected estate management are not confined to any anticipatory allowance for them made in compensation proceedings, however much the Court (and the NSW Trustee, with an administrative appeal to the NSW Civil and Administrative Tribunal) may endeavour to ensure that they do not exceed the fair and reasonable: Ability One Financial Management Pty Ltd and Anor v JB by his Tutor AB [2014] NSWSC 245 at [290]; Re Managed Estates Remuneration Orders [2014] NSWSC 383.
17. It is possible, although not routine experience, that, notwithstanding a determination of common law personal injury proceedings on the footing that a claimant awarded damages is, or may in the future be, incapable of managing his or her affairs, upon a proper exercise of protective jurisdiction the Court may decline to make protected estate management orders. CJ v AKJ [2015] NSWSC 498 provides a recent, benign illustration of that phenomenon, as well as (in combination with P v NSW Trustee and Guardian [2015] NSWSC 579) a reappraisal of the meaning, and operation, of the concept of incapacity for self-management.

THE NATURE OF THE PROTECTIVE JURISDICTION

1. The Court's protective jurisdiction is governed by the purpose it serves; namely, the (protective) care of those who are not able to take care of themselves: Secretary, Department of Health and Community Services v JWB and SMB (Marion's Case) (1992) 175 CLR 218 at 258-259, citing Wellesley v Duke of Beaufort (1827) 2 Russ 1 at 20; 38 ER 236 at 243 and Re Eve [1986] 2 SCR 388 at 414 et seq; 31 DLR (4th) 1 at 14 et seq.
2. Of critical significance is the functionality of management capacity of the person said to be incapable of managing his or her affairs, not: (a) his or her status as a person who may, or may not, lack "mental capacity" or be "mentally ill"; or (b) particular reasons for and incapacity for self-management: PB v BB [2013] NSWSC 1223 at [5]-[9] and [50].
3. The focus for attention, upon an exercise of protective jurisdiction, is upon protection of a particular person, not the benefit, detriment or convenience of any other person: CJ v AKJ [2015] NSWSC 498 at 27.
4. There is a strong public interest element that operates, in such proceedings, to displace adversarial imperatives of the kind commonly encountered in common law proceedings.

THE MEANING OF INCAPACITY FOR SELF-MANAGEMENT IN PROTECTIVE PROCEEDINGS

1. The expression "incapable of managing his or her affairs" (found throughout legislation governing the historical, protective function of the Crown, now identified with the State) is to be accorded its ordinary meaning, able to be understood by the broad community (lay and professional) it serves, informed by the purposive character of the protective jurisdiction and principles governing an exercise of the jurisdiction: CJ v AKJ [2015] NSWSC 498 at [27]; P v NSW Trustee and Guardian [2015) NSWSC 579 at [304]-[305].
2. In the context of a determination to be made under section 41 of the NSW Trustee and Guardian Act 2005 NSW (as in the present proceedings), those principles include the general principles set out in section 39 of the Act.
3. Chief amongst those statutory, general principles, and consistent with the purposive character of the protective jurisdiction historically derived from that exercised by the Lord Chancellor in England, is "the welfare principle" embodied in section 39(a): "the welfare and interests [of a protected person] should be given paramount consideration."
4. Following the judgment of White J in Re R [2014] NSWSC 1810 at [84]-[94], and my own judgments in CJ v AKJ [2015] NSWSC 498 and P v NSW Trustee and Guardian [2015] NSWSC 579, it may be taken that the "affairs" the subject of an inquiry about capacity for self-management, in the context of section 41 of the NSW Trustee and Guardian Act, are the affairs of the person whose need for protection is under scrutiny, not some hypothetical construct.
5. That inquiry, as to whether a person is or is not capable of managing his or her affairs, requires a strong emphasis on risk management: P v NSW Trustee and Guardian [2015] NSWSC 579 at [256], [309] and [319].
6. That emphasis is reflected in the need for the Court, when making a decision under section 41, to focus not merely on the day of decision, but also upon the reasonably foreseeable future: McD v McD [1983] 2 NSWLR 81 at 86C-D; EB & (Ors v Guardianship Tribunal & Ors [2011] NSWSC 767 at [136].
7. A determination whether a person is or is not capable of managing his or her affairs requires that the Court exercise an independent judgement. The protective jurisdiction is not a "consent jurisdiction": M v M [2013] NSWSC 1495 at 50. An order for the appointment, removal or replacement of a protected estate manager is not be made merely because a party, or some other person, seeks it, consents to it or acquiesces in it.
8. The public interest element in the making of such a decision, coupled with the possibility, if not the fact, that a person in need of protection lacks the mental capacity requisite to informed decision-making, reinforces the independence of judgement required.
9. That said, upon an exercise of protective jurisdiction under section 41 of the NSW Trustee and Guardian Act 2009, it is incumbent upon the Court to take into account, if not actively to consult, the views of the person said to be in need of protection and those personally close to him or her.
10. Recognition that: (1) the concept of incapacity for self-management bears the ordinary meaning of language used to describe it, informed by the purpose and principles of the protective jurisdiction, rather than the "objective test" formulated by Powell J in PY v RJS [1982] 2 NSWLR 700 at 702B-E by reference to "the ordinary routine affairs of man"; and (2) the "affairs" against which an individual's capacity for self-management is to be measured are those of the particular individual rather than a hypothetical construct, has four important, practical implications: 1. first, any "test" of incapacity for self-management (such as those canvassed in CJ v AKJ [2015] NSWSC 498 at [30]-[42]) must be accommodated to standards prevailing in the community of the particular person said to be in need of protection, as well as his or her particular need. 2. secondly, the utility of any formulation of a "test" of incapacity for the purpose of an exercise of protective jurisdiction depends on whether (and, if so, to what extent) it is, in the particular case, revealing of reasoning justifying a finding that a person is or is not (as the case may be) capable of managing his or her affairs, having regard to the protective purpose of the jurisdiction being exercised and established principles including, especially, the welfare principle: CJ v AKJ [2015] NSWSC 498 at [40]. 3. thirdly, in conformity with the general law (expounded in Gibbons v Wright (1954) 91 CLR 423 at 434-438), the level of capacity required of a person for a due exercise of protective jurisdiction is relative to the particular business to be transacted by that person, and the purpose of the law (in the present context, the protective jurisdiction) served by an enquiry into the person's capacity. 4. fourthly, although a decision about whether a particular person is, or is not, capable of managing his or her affairs may be powerfully informed by an expression of a medical opinion, based upon articulated observations of fact and accompanied by an exposition of technical medical terms, a determination about capacity for self-management made upon an exercise of protective jurisdiction is not, in essence, the province of medical expertise but of independent judgement by the Court applying established criteria to particular facts.
11. Experience of the protective jurisdiction makes a judge wary of medical opinions, unaccompanied by an articulation of primary facts based on empirical observation, but forensically convenient to the application of the moment. It is for that reason, for example, that medical opinions expressed in support of an application for revocation of management orders (under section 86 of the NSW Trustee and Guardian Act) are routinely measured against earlier opinions expressed in support of an application for section 41 orders. The Court may take comfort from an opinion, but it must look primarily to facts, especially in close-run cases in which opinions may fairly differ. If in doubt, there is no substitute for a direct, personal engagement with the person whose capacity for self-management is under consideration, and those closely associated with him or her in daily living.

THE PRESENT PROCEEDINGS : AN APPLICATION FOR PROTECTED ESTATE MANAGEMENT ORDERS CONSEQUENT UPON AN AWARD OF PERSONAL INJURY COMPENSATION

1. The present proceedings involve an application for protected estate management orders under section 41 of the NSW Trustee and Guardian Act, and an order under section 77 of the Civil Procedure Act 2005 for the payment out of court of moneys paid into court, following the successful outcome of a common law claim for personal injury compensation made in the District Court of NSW by the plaintiff acting as tutor for his 30 year old son, the defendant in the present proceedings.
2. On or about 24 March 2015 the District Court, in the common law proceedings, approved a settlement which provided for the claimant (the present defendant) to obtain a judgment for $2,250,000 inclusive of funds management expenses, plus costs, subject to adjustments. On 20 May 2015 the sum of $1,934,847.38 was paid into court, on his account, pursuant to that judgment.
3. The plaintiff's application to this Court for protected estate management orders is made with the overt support of his wife (the mother of the defendant) and the express consent of the defendant.
4. I declined to deal with the application in chambers, as routine protective business is conducted, because of doubts on my part as to: (a) whether the defendant can properly be characterised as a person incapable of managing his affairs; and (b) whether, if he can be so characterised, protected estate management orders are likely, truly, to benefit him and to be in his interests.
5. Whatever is done, or not done, upon an exercise of protective jurisdiction must generally be measured against what is in the interests, and for the benefit, of the person in need of protection: Holt v Protective Commissioner (1993) 31 NSWLR 227 at 238 D-F and 241G-242A; GAU v GAV [2014] QCA 308 at [48].
6. When, in chambers, I read the evidence (including the medical evidence) filed in support of the plaintiff's application for protected estate management orders I was not satisfied, on that material alone, that the defendant is (within the meaning of section 41(1) of the NSW Trustee and Guardian Act 2009) "a person… incapable of managing his… affairs". At least some of the doctors consulted during the course of the District Court proceedings shared such a doubt.
7. It was the need of the Court to exercise an independent judgement about the defendant's capacity that caused me to invite the plaintiff, his wife and the defendant to appear before me on a formal hearing of the plaintiff's section 41 application.
8. On that occasion, with the support of his wife and in the presence of their son, the plaintiff outlined, in his own words, the factual foundations for his considered opinion that the defendant is (and is likely to be for the foreseeable future) incapable of managing his affairs, including (particularly) a cash fund of the order of $2 million.
9. In essence, the plaintiff says that, having suffered the injuries from which he has received compensation, the defendant has exhibited impulsive, reckless behaviour that renders him liable to exploitation and likely to dissipate any substantial amount of money within his immediate control.
10. I accept the plaintiff's heartfelt explanation of the case, plainly stated with the support of his wife and their son, with the benefit of advice from senior counsel.
11. The defendant's parents demonstrated a considered, rational and responsible assessment of his capabilities, prognosis and needs.
12. Despite limitations on his functionality described by his parents, the defendant presented himself to the Court as a reasonable, rational young person. In that mode, he acquiesced in his parents' assessment of his capacity for self-management, acknowledging that he has displayed a pattern of erratic behaviour since his injury inconsistent with reliance upon him to manage a large sum of money in his own best interests.
13. Armed with medical evidence and the family's elaboration of foundational facts, I am satisfied that the defendant is presently incapable of managing his affairs and that it is expedient to appoint a protected estate manager to manage them on his behalf.
14. Having been given an opportunity to consider whether the parents could usefully be appointed joint managers of their son's protected estate, all three members of the family (but particularly the plaintiff and the defendant) spoke in favour of the appointment of an independent, institutional protected estate manager.
15. Nevertheless, with the benefit of observations by each member of the family, and submissions made on their behalf by senior counsel, I conclude that, in making protected estate management orders, the Court should allow for: 1. a review mechanism to be embedded in the orders, to require that active consideration be given, in not more than about three years' time, to whether the orders should be discharged or varied; and 2. the defendant's manager to keep under active consideration whether, by an instrument under section 71 of the NSW Trustee and Guardian Act, it should (with the approval of the NSW Trustee) authorise the defendant to deal with part of his estate under its supervision.
16. Undue formality should not attend the proposed process of review. Its object is principally to focus attention on an immediate, and continuing, need to shepherd the defendant towards management of his own affairs in due course.
17. I suspect that, when the family's traumatic experience of the common law proceedings recedes in memory, and the defendant's personal and financial arrangements settle down into a stable, established pattern, a more robust view may be taken of his capacity for self-management.
18. In making orders affecting the defendant, I record that, as presently advised, I incline to the view that, with the continued nurturing care provided by his parents, he may be likely, in the not too distant future, to be able to manage his own affairs. If and when that occurs, the management orders made today can, and should, be revoked without unnecessary delay.

ORDERS

1. I make orders to the following effect: 1. DECLARE, pursuant to section 41(1)(a) of the NSW Trustee and Guardian Act 2009 NSW, that the defendant is incapable of managing his affairs. 2. ORDER that the estate of the defendant be subject to management under the NSW Trustee and Guardian Act 2009. 3. ORDER that [a specified licensed trustee company] be appointed manager of the estate of the defendant subject to the orders and directions of the NSW Trustee. 4. that [the Trustee Company] may not do anything in reliance on its appointment as manager of the estate of the defendant until the NSW Trustee has authorised it to assume management of the defendant's estate. 5. ORDER, pursuant to s68 of the NSW Trustee and Guardian Act, that [the Trustee Company] give such, if any, security in respect of its management of the defendant's estate as the NSW Trustee may determine to be appropriate. 6. ORDER, subject to any further order of the Court or any order or direction of the NSW Trustee, that, upon its being authorised by the NSW Trustee to assume management of the defendant's estate, [the Trustee Company] may apply to the District Court of New South Wales for payment out to it, as manager of the estate of the defendant, of funds presently held in court, on the account of the protected person, in [the relevant proceedings] in the District Court of New South Wales, including accrued interest. 7. ORDER (without prejudice to the right of the defendant to apply at any time for these protected estate management orders to be discharged or varied) that the plaintiff and the manager of the estate of the defendant remind the defendant in writing, six months prior to the expiration of three years from the date of these orders, of his right to apply to the Court to seek a revocation of the declaration and orders subjecting his estate to administration as a protected estate. 8. ORDER (without prejudice to the right of the defendant to apply at any time for these protected estate management orders to be discharged or varied) that the manager of his estate provide a report to the Court (including a medical assessment as to his then capacity), two months prior to the expiration of three years from the date of these orders, in relation to whether or not he has sufficient capacity to manage his own affairs and whether or not these management orders should or should not be revoked or varied. 9. ORDER that the costs of the plaintiff and the defendant be paid out of the estate of the defendant on the indemnity basis. 10. ORDER that the plaintiff provide a copy of these orders to: 1. the Trustee Company; 2. the NSW Trustee; 3. the defendant personally; and 4. the mother of the defendant. 1. Order that the plaintiff, at the same time as providing a copy of these orders to the NSW Trustee, also provide to the NSW Trustee a copy of the evidence in support of the summons. 2. ORDER that all parties be at liberty to apply as they may be advised.

Amendments 09 July 2015 - split paragraph [1] into two paragraphs with paragraph [2] commencing at 'An award of' paragraph 1 - changed 'that' to 'a statement about law and practice:' 16 July 2015 - Paragraph 1: amended by the deletion of the word "that" after the words "provides an occasion upon which to record" and the insertion of the words "a statement about law and practice:" 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: 16 July 2015