BETWEEN : HAROLD JOSEPH MARTIN CADWALLENDER by his next friend STAVROULLA CADWALLENDER

Party under disability - Rules of the Supreme Court O 70 - Trust fund for damages recovered in District Court - Application to declare beneficiary no longer under disability - Termination of court appointed trust - Parens patriae jurisdiction - Jurisdiction of District Court to entertain application and to determine trust

Administration Act 1903

Family Law Act 1975 (Clth)

Guardianship and Administration Act 1990

Public Trustee Act (1941)

Supreme Court Act 1935

Trustees Act 1962

Order to terminate trust and distribute trust property to beneficiary

1 EM HEENAN J: The plaintiff, Harold Joseph Martin Cadwallender, was born in the United Kingdom at Birmingham on 9 March 1937. At the age of 18 he enlisted in the British Army and spent 12 years in the military at various overseas postings and for much of the time in Cyprus. It was there that he met his wife who is his next friend in these proceedings and who is also his next friend in the proceedings in the District Court, which I will describe later.

2 The couple migrated to Australia in 1975 and settled at Rockingham where Mr Cadwallender obtained a position with Alcoa of Australia Ltd at its refinery at Kwinana. On 29 August 1990 he was the driver of a car involved in a serious motor vehicle accident in which he suffered a serious head injury and other injuries. He was then aged 53 years. He had a lengthy period of hospitalisation, medical treatment and convalescence. His injuries and ensuing disabilities prevented him from returning to work at any time since then.

3 In 1991 Mr Cadwallender commenced an action in the District Court of Western Australia (7758 of 1991) against the driver of the other vehicle involved in that accident. Because of the nature and effect of his injuries, that action was brought on behalf of Mr Cadwallender by his wife as next friend because he was considered to be a person under a disability (RSC O 70 r 1) at that time. The defendant in the District Court proceedings proposed a settlement of the action offering to pay damages to Mr Cadwallender in the sum of $100,000 plus his costs of the action to be taxed. In the circumstances, it was necessary for any settlement of the action to be approved by the court - RSC O 70 r 10. The court's approval of the proposed compromise was given by order of Sadlier DCJ on 29 July 1994. On that day his Honour made an order, as follows:

"UPON the application of the Plaintiff by Summons filed the second day of June 1994 and upon hearing the solicitors for the parties, IT IS ORDERED THAT:

1. The Plaintiff have leave to accept in full satisfaction of his claim for general damages the sum of ONE HUNDRED THOUSAND DOLLARS ($100,000.00) offered by the Defendant.

2. In satisfaction of the Plaintiff's claim, the Defendant within two days after service of this order, pay to the Public Trustee in and for the State of Western Australia, the sum of ONE HUNDRED THOUSAND DOLLARS ($100,000.00) for investment on trust for the Plaintiff until further order of the Court, such investment not to be restricted to the Common Fund.

3. The Public Trustee be empowered in his discretion to apply from time to time the whole or any part of the income from the investment monies with recourse, if considered necessary by the Public Trustee, to the capital thereof for the maintenance, welfare or advancement of the Plaintiff.

4. The Defendant do pay the Plaintiff's costs of the action to be taxed including the costs of obtaining Counsel's opinions.

5. Upon payment by the Defendant of the abovementioned sum and costs, he be discharged from any further liability in respect of the Plaintiff's claim in this action.

6. There be liberty to apply in respect of the investment monies."

The $100,000 general damages, so agreed and approved by the court, was paid to the Public Trustee and invested by him for the benefit of Mr Cadwallender. I assume that the costs of the proceedings were agreed or taxed and were also paid. Since then, the Public Trustee has been administering the trust so constituted by the order of the court and has been paying the income of the fund for the maintenance, welfare or advancement of the plaintiff and, in recent years, has made at least one substantial advance from capital for his benefit.

4 Over the period of nearly nine years which has passed since this court trust was established, Mr Cadwallender has been living a near normal life in the sense that he has been managing his own financial affairs and making responsible decisions about his own, and his family's, welfare. By the originating summons issued in these proceedings on 26 June 2002, as amended by leave granted at the hearing, he seeks a declaration that he has now recovered to a sufficient extent to conduct the proceedings on his own behalf and to control all property held by the Public Trustee on trust for him pursuant to the order of the District Court of 29 July 1994. He also seeks orders that, upon finalisation of accounts, the Public Trustee be discharged from his obligations under the court appointed trust and that the moneys held by the Public Trustee should vest in the plaintiff and be transferred to him absolutely.

5 Two main issues arise for consideration on this application. The first is whether or not the court has power to make the declaration sought and to determine the trust established by the order of the District Court of 29 July 1994. This is not a difficult question, nor one upon which there is any controversy. For reasons which will emerge, it is clear that this Court does have that power. The second issue, is one of fact, and that is whether orders as sought by Mr Cadwallender should be made, in the light of the evidence adduced. This requires the court to make findings of fact and, for that purpose, affidavit and oral evidence has been adduced and Mr Cadwallender has been cross-examined.

6 A third issue has arisen from the procedure followed in the institution of these proceedings, namely, from the application for the determination of the trust by originating summons to this Court, rather than by any application to the District Court which established the trust. This raises the question of whether or not the District Court of Western Australia has the power to terminate such a trust. When the plaintiff made application earlier to the District Court for this to be done, his application was refused on the ground that the District Court no longer had any jurisdiction in the matter. In one sense, the question of the power of the District Court to deal with such applications has been side-stepped by the procedure taken to institute the application in this Court but, as there are no doubt many instances where trusts of this nature have been established by orders of the District Court, and, consequently, probably many occasions when applications of this nature will need to be made, there is an important question of jurisdiction and procedure about whether or not such applications can be dealt with by the District Court. It is convenient to address that issue in the course of this decision.

Injuries caused by 1990 accident and their consequences

7 Following the accident on 29 August 1990 Mr Cadwallender was taken to the emergency centre at Fremantle Hospital for the investigation and treatment of a head injury and was then admitted to that hospital. The diagnosis was of a head injury with concussion (possible right frontal cortex contra-coup injury) and chest infection. A chest x-ray showed some abnormality in the lower lobe of the left lung and a cerebral CAT scan was unable to exclude a basal skull fracture. His gait was normal and he was fully oriented and alert. He was later discharged, with antibiotic cover, on 3 September 1990. His management was then taken over by his general medical practitioner, Dr A M Mendis of Rockingham, who saw him first on 11 September 1990. He had no memory of any events from about 28 August until 6 September but had been taken, unconscious by ambulance, first to the Rockingham Kwinana District Hospital and from there to Fremantle Hospital. When seen again on 24 October 1990 he still had no memory of the accident. X-ray investigation revealed healing fractures of ribs 6, 7, 8 and 9 on the left side.

8 In September 1991, solicitors acting for Mr Cadwallender arranged for him to be reviewed by a clinical psychologist, Mr W A Douglas. At consultation, the history of post-traumatic amnesia was confirmed. His IQ was generally consistent with his educational and occupational history but there were some signs of brain impairment, specifically an abnormal degree of slowing of information processing as well as an indication of some degree of frontal lobe disturbance. There were also some indications of a spatial/perceptual deficit suggesting damage to the right parietal area of the brain. He was thought to have some residual permanent brain damage which diminished his prospects of employment. Intermittent psychological counselling was recommended.

9 Mr Douglas, the psychologist, carried out a reassessment in early 1993 and found that Mr Cadwallender had experienced quite substantial difficulty at times dealing with daily life and had received assistance from the Head Injury Unit. His IQ remained within the average range but there was still evidence of slowing of the speed of information processing. His non-verbal memory was quite impaired as was his problem-solving capacity. He was upset and distressed at the strain associated with the medico-legal problems besetting his claim for damages and Mr Douglas expressed some concern about his capacity to make a reasoned judgment about any financial offer of settlement. Mr Douglas reported that, given the plaintiff's degree of frontal lobe damage and the characteristic lack of insight associated with such injuries, he would have some concerns about the plaintiff's capacity to manage his financial affairs.

10 Other medical assessments confirming, or consistent with, the diagnosis of minor frontal lobe and parietal cerebral damage were provided by a vascular surgeon, Professor W M Castleden FRCS FRACS, a neurosurgeon, Dr George Wong FRACS, and Dr K Fong, a registrar in rehabilitation medicine at Royal Perth Rehabilitation Hospital. The specialist in rehabilitation medicine at RPRH, Dr John K Ker FRCS, FACRM reported, in December 1992, that with the severity of the applicant's cognitive impairment it was unlikely that he would recover sufficiently to perform gainful work in the future and Dr Ker urged repetition of the psychometric testing.

11 A detailed examination and assessment was carried out by a psychiatrist, Dr David Lord DPM, FRANZCP, on 8 December 1992. In his report of that date Dr Lord did not find any major psychiatric disorder. He observed, however, that Mr Cadwallender's presentation very strongly suggested that he has residual brain damage consequent upon the head injury. The main clinical features were disturbances of attention, concentration and memory associated with problems in information processing and change in personality as evidenced by moodiness, irritability, impaired interpersonal relationships and social isolation. Mr Cadwallender only had limited understanding and acceptance of this but such lack of insight was consistent with the nature of the damage.

12 Later, after he had seen the reports of Mr J K Ker FRCS, FRACM and Mr Douglas, Dr Lord elaborated upon his earlier advice and, in a report of 28 January 1993, said:

"In my opinion, Mr Cadwallender is not legally capable of managing his own affairs. Mr Cadwallender lacks insight. That is, he does not fully understand or comprehend circumstances. His judgment is impaired and he is therefore unable to make informed and carefully considered decisions. These problems can be understood in the context of cerebral deficits brought about by head injury."

And, again, in a later report to the applicant's solicitors, dated 16 February 1993, Dr Lord advised:

"In my opinion, it is quite clear that Mr Cadwallender is not capable of managing his affairs. It therefore may well not be in his best interests for any monies arising from the finalization of his claim to be paid to him for his control.

My understanding, from Mr Cadwallender, was that a degree of strain existed in regard to his marital relationship. Accordingly, an Administrator or Guardian assisting Mr Cadwallender with the management of his affairs probably ought to be an independent person rather than his wife."

Then, by a report of 2 April 1993, Dr Lord described how neither Mr Cadwallender nor his wife appeared to be able to grasp the extent of the brain damage from which the applicant suffered or the disability which it produced. Both wanted him to revise his original assessment and make a statement that would allow Mr Cadwallender to remain fully in control of his own affairs. While sympathetic to this outlook, Dr Lord could not accept the request. He wrote:

"Whilst I understand the stress, the strain, the frustration and the disappointment that Mr and Mrs Cadwallender are experiencing, nevertheless, I cannot change my opinion. I have to say that Mr Cadwallender sustained a serious head injury. Brain damage resulted. This has led to mental disability. Psychometric testing has confirmed that Mr Cadwallender's higher mental functioning is impaired. These impairments undoubtedly place his general wellbeing at risk given the potential adverse effect upon decision making processes.

There is certainly less risk attached to ordinary, every day activities such as, for example, household expenditure. Much more risk, however, attaches to major life decisions and financial management.

It may prove to be the case that Mr Cadwallender does not, in the future, make an impulsive decision or error of judgment. However, should he do so, because he has failed to comprehend and grasp issues as they pertain to him and his wellbeing, then major disaster could follow. Whilst this is a risk for all of us, the extent of Mr Cadwallender's brain damage and disability renders him much more vulnerable and therefore makes such an unfortunate eventuality much more likely to occur in his case.

I left it with Mr and Mrs Cadwallender that there would have to be a difference between my opinion and their opinion. If it would be of assistance to them then an additional psychiatric opinion may be helpful."

Application for declaration that plaintiff is no longer under a disability

13 Fortunately, Mr Cadwallender has survived the last nine years quite well and without any significant social, family or financial mishap. While the proceeds of his damages have been controlled and protected by the Public Trustee under the court appointed trust, other aspects of the family life have suggested that the more serious consequences feared by Dr Lord have not materialised. In late 2001 his solicitors arranged for a further consultation with Dr Lord in order to consider whether or not Mr Cadwallender then had the capacity to manage and control his own affairs. He was seen on 22 November 2001 and Dr Lord prepared a comprehensive report following that consultation later that day. After reporting on the background and the results observed on that occasion, Dr Lord expressed the opinion that Mr Cadwallender demonstrated testamentary capacity and could make a will. He added:

"It is also my opinion that Mr Cadwallender has demonstrated, since sustaining serious head injuries, the ongoing capacity to satisfactorily manage his affairs - including financial matters. At this point in time it may well be appropriate for him to resume full control of his financial affairs. Failing that, it is very clearly Mr Cadwallender's wish for a family member (such as his wife) to take over the Guardianship role."

Again, by a report dated 22 March 2002 to the family solicitors, Dr Lord repeated his opinion, based on the consultation of 22 November 2001, that Mr Cadwallender was then capable of managing his own affairs.

14 In support of this present application, Mr Cadwallender swore an affidavit on 26 June 2002 which sets out the background which I have already recited and annexes the medical reports which I have summarised. He deposes that since the order of 29 June 1994 he has been dealing with the Public Trustee in relation to his own affairs to the best of his ability but has experienced certain difficulties in obtaining funds for particular purposes. He describes how he has sought funds from the Public Trustee to maintain his home at 10 Farris Street, Rockingham, to repaint and refurbish the swimming pool and to repaint and refurbish the home. Objections have been raised to this expenditure by the Public Trustee on the grounds that the home is in the joint names of Mr Cadwallender and his wife and that such expenditure will confer a benefit on his wife. Not unnaturally, Mr Cadwallender rejects this reasoning claiming that if the money is not spent on what he considers to be his own interests, such as looking after the material needs for himself and his family, this will probably result in the money being preserved until after his death, when it will inevitably go to his wife or to other beneficiaries rather than be enjoyed by him personally. He gives an instance of another difficulty experienced with the Public Trustee when it came to renew the motor vehicle insurance on his car in 1997. He was informed by the insurer that the insurance on his vehicle had lapsed and when he telephoned to enquire the reason, the insurance broker sent him a copy of a letter received from the Public Trustee which had advised the insurer, wrongly of course, that Mr Cadwallender had died on 9 September 1994. To put it mildly, this reduced the confidence which the plaintiff had in the administration of his affairs by the Public Trustee.

15 In November 2001 Mr Cadwallender was diagnosed to be suffering from a cancerous growth and subsequently underwent radical surgery at Fremantle Hospital. While he has made a good recovery and evidently enjoys a good prognosis, he is taking the view that he wishes to enjoy his remaining years of life and to travel and assist his family. In 1996 he had approached the Public Trustee for an advance of the funds in order to pay for dental braces for his 13-year-old son (possibly his grandson), but the request was refused. Mr Cadwallender understands and accepts the reasons for this refusal but points out that if he had been working and had an income from wages or savings he would be free to use such moneys for the welfare of members of his family. This appears to me to be a legitimate observation. None of the examples given by Mr Cadwallender of where the Public Trustee has declined to advance moneys to him at his request appears to constitute improvident, unwarranted or unjustified expenditure, notwithstanding that the proposed expenditure may not have been exclusively for his own benefit.

16 Mr Cadwallender sought the assistance of his general medical practitioner, Dr Nicholas, to prepare the forms which might lead to him making an application to the Guardianship Board to remove the Public Trustee. However, on enquiry he learned that the Guardianship Board had no power to remove the Public Trustee and this realisation led him to engage his solicitors who made this present application. He considers himself to be capable of managing his own affairs and wishes to have access to the trust funds so that, having regard to his current medical condition, during the last years of his life he may do the things which he feels are for his benefit. The Public Trustee has no objection to Mr Cadwallender's application and has indicated, both in writing to the plaintiff's solicitors in February 2002 and again in submissions at this hearing, that he is willing to abide by the decision of the court.

17 In giving evidence Mr Cadwallender presented well. He was neatly dressed, alert and attentive and responded appropriately to the circumstances and to the questions directed to him. In demeanour and speech he was respectful, self-possessed, at ease and focused. He gave a good account of his early life, his education, his military service, the reasons for his immigration to Australia and his life in this State both before and after his accident. Although he has not been working in recent years he has occupied himself with leisure and family activities and has a number of pastimes which keep him stimulated. He was at pains to reject, as mistaken, any impressions of others that there was any rift between himself and his wife. Mrs Cadwallender accompanied her husband to the court and, although not asked to give evidence, obviously supported him.

18 Mr Cadwallender showed a good appreciation of his financial circumstances and requirements. He obtains annual statements from the Public Trustee showing the amount standing to his credit in the trust. He believes that there is approximately $62,000 held at present, after he had withdrawn $17,000 for himself and his wife to go on a holiday to the United Kingdom and Cyprus where he stayed with family members. He receives a Veterans Affairs pension and an old age pension from the United Kingdom and his wife also receives a pension. In aggregate, the couple receive approximately $500 per month from the United Kingdom pensions. His wife receives approximately $300 a fortnight and this is used for the family expenditure. His pension is left in the bank and is accumulated. Mr Cadwallender has, and operates, his own bank savings account with the ANZ Banking Corporation Ltd upon which he receives interest in the vicinity of 3.5 per cent to 4 per cent per annum. That account is in credit to the amount of $46,135.05 and represents the accumulated savings from his pension, plus the balance of the money withdrawn from the Public Trustee for the recent holiday. The holiday expenditure had been met from this account which was later replenished when the advance was received from the Public Trustee. Mr Cadwallender has a further investment in the United Credit Union in the joint names of himself and his wife in the amount of $55,692.04. Again, this is the product of mutual savings over the years.

19 If Mr Cadwallender is permitted to have control of the moneys presently held in the court appointed trust by the Public Trustee it is his intention to invest the $60,000 or so in a fixed term investment with the United Credit Society where he has been informed that he would be entitled to interest at 4.8 per cent per annum.

20 Mr and Mrs Cadwallender have two sons. One is living in Spearwood and the other in Rockingham. They each have regular contact with him and he sees them two or three times per week. There is a good relationship between them all and they help him with odd jobs, gardening, mowing lawns and like activities.

21 When explaining why he wishes to have the control of his own affairs, Mr Cadwallender said that he was back to being normal and does not like to have to rely on other people. He claims that he has never been one for relying on others and that he does not see why he should have to go and ask permission to have something that he considers he might need, stressing that he has always been independent.

22 In response to questions from the court, Mr Cadwallender advised that he and his wife bought their existing home in Rockingham in 1976 and that it is now about 30 or 40 years old. It is registered in their two names as joint tenants and there is no money owing upon it. Indeed, and very proudly, Mr Cadwallender said that he did not owe money to anyone, would not use credit or hire purchase and only bought things if he had the money and considered there was a need.

23 On the recent travel to the United Kingdom and Cyprus, the couple flew by Malaysian Airlines to Kuala Lumpur and from there to England and Cyprus. Mr Cadwallender handled all the bookings, with the aid of a travel agent, and, when necessary, purchased and negotiated foreign currency by going to a bank. He pays all the household bills by cheque. He claims to watch television and follow current affairs regularly and demonstrated a reasonable acquaintance with current world events. With his wife, he travelled extensively in the United Kingdom staying at various places, making all the necessary travel accommodation and financial arrangements in the process.

24 For Mr Cadwallender to have conducted the proceedings in the District Court in 1991 by his next friend, Mrs Cadwallender, when he was not an infant nor a "represented person" within the meaning of the Guardianship and Administration Act 1990 suggests that at some stage of those proceedings, there was, or should have been, a declaration by that Court that he was incapable of managing his affairs in respect to those proceedings. No such declaration was tendered in evidence nor alluded to by the Public Trustee or by the applicant. Nevertheless, it seems to be axiomatic that such a declaration must have been made and, if so, it was probably prompted by the reports of Dr David Lord FRANZCP of 28 January and 16 February 1993, previously mentioned. I consider that I should proceed on the basis that such a declaration was made and that it applied to Mr Cadwallender's condition over the period from 1990 to July 1994 and for the short to medium term after that.

25 The evidence which I have recounted satisfies me that now, in the year 2003, Mr Cadwallender does have the capacity to manage his own affairs and is capable of making responsible decisions about his own welfare and future and the use and disposition of his property. That he has managed the moneys in his ANZ banking account and in the joint account at the United Credit Union for so long shows that he has a very responsible and frugal attitude towards his money. His capacity to amass savings of that dimension from the pensions which comprise the only joint income of himself and his wife is impressive. His proposals for the use of the money presently held by the Public Trustee under the protective trust established by the order of the District Court are cogent. His rationale for having access to the money and independence at his time of life, having regard to his health condition and the family support which he obviously enjoys, is natural and compelling. His plans are for a practical and convenient means of managing the money.

26 Accordingly, so far as questions of the personal interests of Mr Cadwallender arise because of past concerns that the proceeds of the settlement might have been in jeopardy because of his condition, I consider that those natural apprehensions are no longer of any significant concern. The passage of time and Mr Cadwallender's current health, behaviour and character are such that he has the capacity to receive and manage this money. I consider that it is in his interests that he should be permitted to do so. How that may be achieved, having regard to the procedures followed in the past, is the next issue.

27 The practice and procedure of courts which requires that a disabled person should sue by a next friend, defend by a guardian ad litem and only be bound by any compromise of the litigation if the proposed settlement is first approved by the court to ensure that it is in the interests of the disabled person, have their origins in the jurisdiction of the Crown to protect those who are, or may, be unable to do so themselves. This is the so-called "parens patriae" of the Crown and it extends to the interests of infants, persons disabled because of unsoundness of mind or other reasons, to unborn interests contingently affected by trusts, wills or other dispositions of property, to the devolution of property in cases of intestacy, to the welfare and guardianship of infants and to the protection of charitable trusts and charities. In certain areas, this jurisdiction of the Crown has resulted in specific legislation and, where it has, and to the extent to which the legislation applies, the jurisdiction has become statutory. Examples of this are the laws with respect to adoption of children (Adoption Act 1994), guardianship and administration (Guardianship and Administration Act (1990)), succession and intestate distribution (Administration Act 1903), the custody and guardianship of children (Family Law Act 1975 (Cth)) and a variety of court appointed and other trusts - the Public Trustees Act (1941).

28 Historically, the jurisdiction was exercised by the Court of Chancery and it has been expressly conferred upon the Supreme Court under the provisions of the Supreme Court Act (1935) s 16(1)(d) and s 23. Recently, McLure J described the jurisdiction as deriving from a delegation of the prerogative of the Crown: T'Hart & Anor v Director-General of the Department for Community Development & Ors [2002] WASC 245 at [19]. Her Honour demonstrated that the origin of the jurisdiction had been explained in Carseldine v Director of the Department of Children's Services [1974] HCA 33; (1974) 133 CLR 345, especially by McTiernan J at 349 - 351 and Mason J at 363, and that it could not be removed or diminished except by clear and unequivocal statutory provision - Johnson v Director General of Social Welfare (Vic) [1976] HCA 19; (1976) 135 CLR 92.

29 It is important to appreciate the broad nature of the jurisdiction and its capacity to respond to any necessitous circumstance involving persons unable, for reasons of disability, to care for themselves. One should not treat the jurisdiction as having any rigid components or applying differentially to situations where an infant or disabled plaintiff is seeking, or has recovered, damages for personal injuries. However, in the latter context, this jurisdiction has been noticed frequently in recent times by this Court. In Morris v Zanki (1997) 18 WAR 260 at 261 the Court recognised that the jurisdiction was enlivened when it came to the choice of a trustee to be appointed to hold and control a large award of damages in a fund for an injured infant. The historical development of the court's role was traced in Wood v The Public Trustee of Western Australia (1995) 16 WAR 58. The jurisdiction was also exercised in Jones v Moylan (1997) 18 WAR 492 where the Full Court appointed, as the protective trustee, the trustee considered most appropriate in all the circumstances. This was confirmed in Jones v Moylan (No 2) [2000] WASCA 361; (2000) 23 WAR 65 in relation to the power of the court to authorise payment from the trust fund to the parents or the guardian of a disabled person of some part of the allowance for damages which had been assigned at a trial or settlement to "gratuitous services" as representing the value of the services provided voluntarily by the injured person's carers or parents.

30 There are many other instances of the jurisdiction being examined, especially in relation to the welfare jurisdiction over children in family or matrimonial disputes. The origin of the jurisdiction was also discussed by Mason CJ, Dawson, Toohey and Gaudron JJ in Marion's Case (Secretary, Department of Health and Community Services v JWB and SMB (1992) 175 CLR 281) where it was held that the parens patriae jurisdiction of the court did not extend to authorise a non-therapeutic sterilisation of a severely intellectually handicapped young girl. When speaking of the jurisdiction at 254, their Honours said:

"As already mentioned, the welfare jurisdiction conferred upon the Family Court is similar to the parens patriae jurisdiction. The history of that jurisdiction was discussed at some length by La Forest J in Re Eve [1986] 2 SCR at 407 - 417; (1986) 31 DLR (4th) at 14 - 21. His Lordship pointed out that 'the Crown has an inherent jurisdiction to do what is for the benefit of the incompetent. Its limits (or scope) have not, and cannot, be defined'. In Wellesley v Duke of Beaufort (1827) 2 Russ. 1 at 20; 38 ER 236 at 243, Lord Eldon LC, speaking with reference to the jurisdiction of the Court of Chancery, said:-

'It belongs to the King, as parens patriae, having the care of those who are not able to take care of themselves, and is founded on the obvious necessity that the law should place somewhere the care of individuals who cannot take care of themselves, particularly in cases where it is clear that some care should be thrown round them'.

When that case was taken on appeal to the House of Lords, Lord Redesdale noted, Wellesley v Wellesley (1828) 2 Bli NS 124 at 131; 4 ER 1078 at 1081,

Lord Somers resembled the jurisdiction over infants, to the care which the court takes with respect to lunatics, and supposed that the jurisdiction devolved on the Crown, in the same way.'

Lord Redesdale went on to say that the jurisdiction extended 'as far as is necessary for protection and education'.

To the same effect were the comments of Lord Manners who stated that 'It is ... impossible to say what are the limits of that jurisdiction'. The more contemporary descriptions of the parens patriae jurisdiction over infants invariably accept that in theory there is no limitation upon the jurisdiction (see In Re X (A Minor) [1975] Fam 47 at 51 - 52, 57, 60 - 61, 61 - 62.) That is not to deny that the jurisdiction must be exercised in accordance with principle. However as appears from the authorities discussed earlier, the jurisdiction has been exercised in modern times so as to permit medical operations on infants which result in sterilisation."

Other examples of the recognition of the jurisdiction in a variety of circumstances are provided by: P v P [1994] HCA 20; (1994) 181 CLR 583, another case, also concerning non-therapeutic sterilisation of a severely handicapped young woman and the extent of the powers conferred on the Family Court of Australia by the Family Law Act (1975) (Clth); AMS v AIF (1999) 199 CLR 160, see per Gaudron J at 189, a case dealing with the origin and extent of statutory powers of guardianship and welfare over ex nuptial children, (see also ZP v PS [1994] HCA 29; (1994) 68 ALJR 554).

31 The conduct of proceedings in this Court, and in the District Court of Western Australia, where there is a party under a disability are covered generally by RSC O 70 which, as explained in Morris v Zanki (supra) at 286 - 287, needs to be read and applied having regard to the nature and purpose of the jurisdiction rather than as a code. Rule 12 of that Order deals with the control of moneys recovered on behalf of a disabled person and provides:

(a) in any proceedings money is recovered by or on behalf of or is adjudged or ordered or agreed to be paid to or for the benefit of a person under a disability; or

(b) in any proceedings money paid into court is accepted by or on behalf of a plaintiff who is a person under a disability; or

(c) in an application under rule 11(1) the court has ordered the payment into court or investment of any moneys relating to a settlement or compromise,

the money shall, unless otherwise ordered by the court, be paid to the Public Trustee for investment on behalf of the person under a disability, and if the court so orders may be invested by the Public Trustee in investments outside the common fund.

(2) The court may at any time, and from time to time, give directions for the application of the income or of the capital and income of the investment for the maintenance, welfare, advancement or otherwise for the benefit of the person under a disability."

Variation or determination of court appointed trusts

32 Despite the large number of court appointed trusts established by judgments or settlements in favour of disabled persons resulting from the recovery of damages for personal injuries, there seems to be much uncertainty about the jurisdiction and grounds for the variation or discharge of orders establishing such court appointed trusts. The present application is made to this Court by an originating summons without expressly identifying the statutory provisions or other source of power relied upon for the application - that is, in disregard of RSC O 58 r 14(5). Counsel for the plaintiff at the hearing submitted that the application was brought pursuant to the equitable jurisdiction of the court conferred under s 16 of the Supreme Court Act. This lack of particularity may be disconcerting but I have gained the impression that, if pressed to identify the source of the jurisdiction relied upon, counsel would have difficulty doing so having regard to the uncertainty in the practice and in the manner in which comparable applications have been considered in the past.

33 An occasion where a somewhat similar issue was examined by the Full Court arose in the case of Perpetual Trustees (WA) Ltd v Naso [1999] WASCA 80; (1999) 21 WAR 191. In that litigation, a young man, still an infant, had recovered a very large settlement of his claim for damages for catastrophic injuries sustained when a small boy rendering him quadriplegic and ventilator dependent. The $5,750,000 which he had recovered was ordered to be paid to a private trustee company by an order of the District Court, made after the approval of the settlement of the action, "to be held by [the trustee] on trust for the first plaintiff until further order with the trustee to have all the powers of investment and otherwise conferred by the Trustees Act 1962 including the power to make advances out of income or capital for the welfare, education or advancement of the first plaintiff". The injuries sustained by the young man were so great that he had never been able to complete a conventional education, was wheelchair bound and needed the attention of nurses and carers 24 hours a day. He had never had any opportunity to develop personal independence and had little, if any, experience of financial affairs or the considerations needed for the investment and management of such a large capital sum. Notwithstanding this, shortly after reaching his majority, he applied for the discharge of the trustee and the payment to him of the whole of the trust fund, making that application, not to the District Court which had established the trust, but to this Court by an originating summons seeking a declaration that the trust constituted by the order of the District Court was at an end. However, the trustee, entertaining concerns over the claimant's mental capacity and, in particular, whether or not he might have been acting at the influence of his father, sought an order in the proceedings requiring the compulsory psychiatric examination and assessment of the claimant pursuant to RSO O 28 r 1. A Master refused this application and the trustee appealed from that refusal to the Full Court. The claimant asserted that, having come of age, he was entitled to demand the transfer to him of the whole of the corpus of the trust property, there being no other beneficiary, pursuant to the rule in Saunders v Vautier [1841] EngR 629; (1841) 4 Beav 114; 49 ER 282. However, the Full Court allowed the appeal, gave leave to the trustee to require the claimant to undergo compulsory medical examination, including psychiatric assessment as proposed, and then stayed further proceedings on the originating summons until further order. The basis for the stay was that the court concluded that the order of the District Court establishing the trust was intended to be binding beyond the claimant's eighteenth birthday and, that as that order had not been revoked, varied, discharged or appealed, the current proceedings should be stayed with a view to the applicant applying to the District Court for an order varying or discharging the order establishing the trust.

34 This decision has since been seen as an example of an exclusion of the Saunders v Vautier (supra) principle or, at least, an instance of where an order establishing a court appointed trust is expressed to operate until a further order, means that the beneficiary is not absolutely entitled or, at least, if the order is not so expressed, where the purposes of the legislation under which it was made, can be seen to exclude the Saunders v Vautier principle in some circumstances as where an award of compensation is intended to provide for the care of the plaintiff with continuing physical injury.

35 The sequel to the appeal in Perpetual Trustees (WA) Ltd v Naso can be seen in the subsequent decision of Nisbet DCJ in the District Court in Naso v Cottrell [2001] WADC 7 where the claimant Max Naso sought the discharge of the court appointed trustee by claiming to be sui juris and entitled to manage his own affairs. By a series of amendments, the relief sought was enlarged to include the appointment of a different trustee. After a comprehensive examination of the facts and the authorities, Nisbet DCJ decided that, as part of the parens patriae jurisdiction, conferred upon the Supreme Court, and then upon the District Court by s 50(2) and s 55 of the District Court Act (1969) he had the power and the obligation to consider whether or not the claimant was capable of managing his own affairs. Having done so, his Honour was satisfied that Max Naso did not have that capacity and that the court appointed trust should, therefore, continue.

36 The jurisdiction of the court to terminate such a trust was also examined by McKechnie J in Newton v The Public Trustee [1999] WASC 179, unreported, 23 September 1999. In that case a plaintiff who had been awarded damages as an infant, applied to this Court on coming of age for an order terminating the trust so established. One of the questions which McKechnie J addressed was whether or not that issue could have been dealt with by the District Court itself under the liberty to apply reserved by the order establishing the trust. McKechnie J considered that this could not be done, observing:

"In the present matter as can be seen, there is liberty to apply in respect of the invested money.

I do not consider that this liberty would extend the power of the court to discharge the order vesting the property in the Public Trustee. It is general liberty to apply for either the plaintiff or the Public Trustee to seek specific directions as to the nature of investments and related matters.

Apart from that liberty the order has been perfected. There is no further jurisdiction in the District Court with respect to the trust.

Consequently, in my opinion, the appropriate course for the plaintiff to determine the trust is through an originating summons in this Court. Accordingly, these proceedings are competent."

His Honour concluded that, by reason of the decision of the Full Court in Perpetual Trustees (WA) Ltd v Naso (supra), he was bound to hold that a trust created by a court cannot be brought to an end simply by a demand from the beneficiary to the trustee in circumstances where, expressly or impliedly, the court appointed trust was intended to continue for so long as the beneficiary remained disabled. His Honour also concluded that, in such circumstances, the Supreme Court had jurisdiction under s 16(1)(d)(i) of the Supreme Court Act to decide whether or not the trust had been validly determined or whether it should be determined and could receive evidence on those issues. His Honour observed that:

"On the other hand, where the incapacity is not a temporary one such as age, there is a requirement to decide the extent, if any, that any incapacity might have on the ability of the beneficiary to manage the funds which would become his or her property. To this extent, although the provisions of the Guardianship and Administration Act (WA) offer a useful and simple method of resolving the question, while protecting the rights of the beneficiary, this Court is not absolved by that Act from deciding the controversy in accordance with equitable principles to do justice in a particular case."

Later, in Newton v The Public Trustee [2000] WASC 118, unreported, 14 April 2000, after having heard evidence, McKechnie J was satisfied that the applicant had the mental capacity to give a valid discharge to the trustee and had sufficient mental competence to manage his own affairs. His Honour then ordered the court appointed trust to be terminated so that the corpus could be transferred to, and thereafter dealt with without restrictions by, the beneficiary.

37 In supplementary written submissions counsel for Mr Cadwallender in this case has submitted that the Supreme Court has the power to act under s 93 of the Trustees Act 1962 or to make a vesting order pursuant to s 78 of that Act. While accepting that s 93 of the Trustees Act contains a power upon which the court may act, I do not consider that it is the only such power or jurisdiction which this Court possesses and that, the power recognised by McKechnie J under s 16 of the Supreme Court Act conferring the parens patriae jurisdiction continues.

38 I have already noted that the solicitors for Mr Cadwallender originally applied to the District Court of Western Australia for orders terminating this trust and declaring that Mr Cadwallender was competent to take over the control of the proceeds of the judgment from the Public Trustee absolutely. This application was rejected, by Healy DCJ, apparently on the basis of the decision in Newman v The Public Trustee (No 1) (supra) that the District Court no longer had any jurisdiction in the matter. I accept that, in the light of Newman's case, Healy DCJ was bound to reach that decision but I am, with all respect, by no means satisfied that that is really the case. If the District Court originally had jurisdiction to hear and determine a cause of action brought by a disabled person acting through a next friend, and to approve a compromise of that action on terms which provided the proceeds of the settlement should be held on trust by an independent trustee for the benefit of the plaintiff until further order and with liberty being reserved to apply to the court in respect to the invested moneys, it is difficult to understand why that is not a continuing jurisdiction with respect to all matters arising under the court appointed trust. Indeed, the decision of the Full Court in Perpetual Trustees (WA) Ltd v Naso (supra) seems to depend entirely upon that view, as does the subsequent jurisdiction of Nisbet DCJ to consider and refuse the application by Naso to determine the trust.

39 As set out earlier in these reasons, the powers conferred on the court approving a compromise and establishing the court appointed trust include powers of control over the money recovered under RSC O 70 r 12 which expressly includes the following sub-rule which I shall here repeat:

"12(2) the court may at any time, and from time to time, give directions for the application of the income or of the capital and income of the investment for the maintenance, welfare, advancement or otherwise for the benefit of the person under disability."

40 That sub-rule expressly recognises a far reaching continuing jurisdiction by the court in respect of all matters concerning the administration of the trust which, in my view, continues for as long as the trust remains in operation. As it includes a power to give directions for the application of the capital and income of the trust, including advancements from income and capital, I consider that it also includes a power to terminate the trust in appropriate circumstances.

41 The rules of court are explicit that if a person becomes disabled during the course of the proceedings an application must be made to the court for the appointment of a next friend or guardian as the case may be - RSC O 70 r 3. It is equally well accepted that if the only reason for disability is minority, and the party comes of age during the course of the proceedings, he or she may take over the proceedings by filing a notice that he or she adopts the proceedings and demonstrating the attainment of full age. While not expressly mentioned in the rules it seems to me to follow that, if a person is under a disability for some other reason, such as transient physical or mental incapacity, but recovers full capacity, then, upon proof of the recovery of capacity and of a wish to adopt the proceedings, that person will become entitled to take over and conduct the proceedings on his or her own behalf. So much is obvious during the continuation of the proceedings and I do not see any reason why the situation should change once the proceedings have terminated in a judgment or settlement so long as the court retains any jurisdiction over the parties, such as it does in the case of moneys held in a court appointed trust where there is power to apply to the court in respect of matters concerning the administration of that trust.

42 As it is the parens patriae jurisdiction which confers the power on the court to supervise the trust and to deal with questions arising from its administration, then that same jurisdiction must empower the court to determine whether or not the circumstances which have prompted the necessity for the establishment of the trust have disappeared so that the person, whose interests the court was until that point protecting, may take over the control of property which has been held under supervision for his or her benefit. It is difficult to see how this could be anything but the last act in the exercise of that protective jurisdiction.

43 Furthermore, as the court has established the trust for the recipient of the award of damages and, because of his or her disability continues to have supervision of that trust, the nature of this jurisdiction can readily be seen from the protective role which the court is exercising. This needs to be viewed while focusing upon the special nature of the trust so established. There can be no doubt that, with a court appointed trust to hold the proceeds of an award of damages recovered by a disabled person, the sole beneficiary is the disabled person. In the present case, and in any such case, there is no room for any suggestion that the spouse or children of the deceased or any other persons have an interest in the trust fund or any part of it. It is clear that, in Australia, as opposed to the position in England, the moneys which are recovered are not held by the claimant on trust for any person or persons who may have provided gratuitous services - Kars v Kars [1996] HCA 37; (1996) 187 CLR 354 which expressly did not follow the decision of the House of Lords to contrary effect in Hunt v Severs [1994] UKHL 4; [1994] 2 AC 350 at 363. This is so notwithstanding that a moral claim to payment by the provider of the gratuitous services may be recognised by the trustee holding a fund created by the damages recovered for the disabled person: Jones v Moylan (No 2) (supra). This explains why a court or a trustee dealing with such a claim for payment of the value of gratuitous services to the provider of them might, but because of other factors not necessarily must, authorise payment of something less than the full value of the services provided or even decline any such payment at all.

44 Another significant feature is that the award of damages is intended to provide compensation for the claimant to be enjoyed and applied during his or her lifetime, rather than establish a capital sum which will be kept intact for the remainder of his or her life and then be passed on to others. Hence, any management of the fund created by the damages should proceed by recognising that the money is intended for the use and enjoyment of the claimant, both as to capital and income, and that it is not objectionable for the capital to be progressively reduced over time. Again, the administration of the trust will vary according to the disabilities and needs of the disabled person and the various factors which were recognised by the court when awarding the damages or approving the settlement which created the fund. Accordingly, an award of damages which provides compensation for pain and suffering and loss of amenities alone may call for a different exercise of the powers and discretions of a trustee than an award which contains components not only for pain and suffering and loss of amenities, but for loss of past and future earning capacity and for the costs of ongoing medical, nursing and other therapeutic care. In the latter instance, a prudent trustee should manage the fund having regard to the need for future medical, nursing and therapeutic care and in the knowledge that the beneficiary's earning capacity has been lost or reduced so that he is dependent upon the fund and its income for basic necessities. This range of examples again confirms the earlier conclusion that the trust fund is for the use of the claimant and for no others. It is an asset to which the claimant is beneficially entitled and, assuming that the beneficiary has retained testamentary capacity, or has made a valid will before the onset of his disability, will be disposed of in accordance with any such testament on his death or, if he dies intestate, according to the rules of intestate distribution adopted by the Administration Act and not by the terms of the order establishing the trust.

45 It follows from these considerations that the only justification for the legal estate in the trust fund to be held and administered by the trustee is the protection of the disabled person rendered necessary by his or her own incapacity. Such an incapacity deemed to exist by reason of infancy alone will disappear on the beneficiary attaining the age of majority and then the beneficiary will be entitled to call for the transfer of the entire corpus of the trust estate. However, where the disability is due to the presence of some other incapacity then the reason for the trust will continue so long as the incapacity continues but not longer. If and when the beneficiary is able to establish that he is no longer disabled because that incapacity has passed or he has recovered from it, then there is no longer any basis to withhold the absolute enjoyment of the trust property. In such cases, however, adequate proof of recovery from the disability must be shown but, once it is, there does not appear to me to be any justification to continue the trust or to withhold the transfer of the corpus to the beneficiary absolutely. As I have previously observed, the exercise of determining whether or not this is the case seems, inescapably, to be a part of the administration of the trust and of the protective role which the court retains in its supervision.

46 In Perpetual Trustees (WA) Ltd v Naso (supra) and in Newman's case there was discussion of whether or not the rule in Saunders v Vautier [1841] EngR 629; (1841) 4 Beav 114; 49 ER 282 applies to such a court appointed trust and there were some judicial dicta to the effect that the express or implied terms of the order of the court establishing the trust may exclude the operation of that rule. In Newman's case McKechnie J, however, seemed inclined to the view that if the beneficiary were no longer under any disability he would be entitled to invoke that rule and to seek an order that the court terminate the trust and direct the payment of the proceeds to him, but that the court retained the responsibility of determining whether or not the disabling condition had ended, or had reduced sufficiently for the beneficiary to have control of the corpus. With respect, I consider that this is the proper formulation.

47 In Queen Street Hotels Pty Ltd v Byrne [1980] CLC 34,094 (40-611), the Full Court of the Supreme Court of Queensland approved a statement of the rule in Saunders v Vautier (supra), contained in Jacobs: Law of Trusts in Australia (4th ed) in the following terms:

"Where a sole beneficiary's interest in the trust property is vested and he is sui juris, he may put an end to the trust by directing the trustees to transfer the trust property to him or his nominee, notwithstanding any directions to the contrary in the trust instrument."

There is another closely associated rule, of similar derivation, that an unlimited absolute gift of income established by any trust or other instrument is a gift of the capital from which the income is derived and one of immediate effect - Congregational Union of NSW v Thistlethwayte [1952] HCA 48; (1952) 87 CLR 375 at 438 - 440. Both rules proceed from the conclusion that if there is no subsequent residuary, or substitutional, gift or disposition of any part of the property whether actual or contingent, held on trust for that beneficiary, there can be no reason to withhold the immediate and absolute enjoyment by the beneficiary of that part of the trust estate held for him.

48 There can be no doubt that, under a typical court appointed trust to hold the proceeds of a claim for damages for personal injuries for a disabled person, the beneficiary takes a fully vested interest in the trust estate from the moment the trust is established. There is no possibility of a contingency arising which would deprive the beneficiary of his or her entitlement to the funds and it is only the real or deemed incapacity to manage the funds which accounts for the fact that the property is then vested in interest but not in possession. The rule in Saunders v Vautier (supra) may only be invoked by a beneficiary who is sui juris, that is of full age and without incapacity, but if sui juris, I see no reason why such a beneficiary should not be entitled to apply to the court which established the trust at some time in the past when he or she was disabled, and on proof of the passing of that disability, demand, as of right, the termination of the trust and the transfer absolutely of the trust property.

49 There can be no doubt that the District Court of Western Australia had jurisdiction to entertain and determine Mr Cadwallender's original action for damages for negligence causing the personal injuries sustained in his motor vehicle accident. That was a personal action for damages in respect of the death of, or bodily injury to a person, in respect of which jurisdiction was granted to the District Court specifically by s 50(2) of the District Court of Western Australia Act (1969). As it was an action within the civil jurisdiction of the court, the court had power to grant such relief, redress or remedy or combination of remedies either absolute or conditional, and to make any order that could be made in relation to any such action and to give such and like effect to every ground of defence or counterclaim equitable or legal in full and ample a manner as might be done in the like case by the Supreme Court - s 55. If such an action had been brought in the Supreme Court, this Court would have all the powers conferred by s 16 and s 23 to make provision for the representation and protection of the interests of infants and disabled persons. Indeed, that is the purpose which authorises the rules contained in O 70, including the provisions obliging a disabled person to sue by a guardian ad litem, requiring prior approval of any compromise of a disabled person's claim before it will be binding, and then stipulating for the control of moneys recovered by payment to a trustee appointed by, and subject to the direction of the court. This jurisdiction and these powers are, therefore, all ancillary to a claim directly within the civil jurisdiction of the District Court and no issue can possibly arise that, not being ancillary to the principal claim, they are outside the scope of that court's equity jurisdiction such as led to the decision in Commercial Developments Pty Ltd (t/as Don Rogers Motors Pty Ltd) v Mercantile Mutual Insurance (Workers Compensation) Ltd (1991) 5 WAR 208.

50 I consider that it is desirable that issues concerning the administration of such court appointed trusts, and, in particular, applications for the termination of the trusts and transfer to the beneficiary of the trust property, should be brought in the court which ordered the establishment of the trust and in the proceedings in which that was ordered. Not only has that court already exercised the protective parens patriae jurisdiction in respect of the particular claimant, but it will have the direct experience and record relating to the composition of the fund which created the trust, the details of the damages suffered by the claimant and the nature of his or her disability which will make it the more convenient and better equipped forum to deal with the issue than a court which has no previous acquaintance with the litigation that led to the establishment of the trust.

51 I return to the question of whether this Court has power in the present case, and in other like cases, to make the orders sought by Mr Cadwallender in circumstances where the trust was created by an order of another court which retains the jurisdiction to supervise that order. The short answer to this question is that such a power is expressly conferred upon this Court by s 93 of the Trustees Act 1962. However, the authorities cited plainly establish that the court also has the "parens patriae" jurisdiction which also enables it to determine the application. This being the case, I am satisfied that this Court can and should accede to the relief being sought on behalf of Mr Cadwallender although, in future cases, despite the existence of such a jurisdiction in this Court, I consider that it would generally be preferable for such applications to be brought in the court whose order established the trust in question.

52 While I will hear counsel as to the particular form of orders which should be granted, I would be prepared to grant the following relief:

(1) Declare that Harold Joseph Martin Cadwallender is no longer a person under a disability within the meaning of that term in RSC O 70.

(2) Declare that Harold Joseph Martin Cadwallender at all times since 26 June 2002 when this originating summons was issued, has had the capacity to conduct these proceedings on his own behalf without the need for a next friend.

(3) Amend the title of the proceedings to delete the reference to the next friend Stavroulla Cadwallender leaving Harold Joseph Martin Cadwallender as the sole plaintiff.

(4) Order that the defendant, The Public Trustee of Western Australia, do all things necessary to wind up the trust upon which he holds moneys or any other property for the plaintiff pursuant to the order of the District Court of Western Australia made in action No 7758 of 1991 on 29 July 1994 and to transfer the whole of the proceeds of the moneys or other property held on trust, after payment of all proper expenses and allowances, to the plaintiff whose receipt shall be a sufficient discharge for the defendant thereof.

(5) Order that the Defendant shall prepare and deliver to the plaintiff accounts of receipts, payments or other expenses made from the trust property and the plaintiff shall have 21 days from the date of receipt of those accounts, or such further time as this Court might allow, to object to the accounts or any part of them. In the event of any objection or objections being made which cannot be resolved by agreement within such further time as the Court may allow, the defendant shall pass its accounts for the administration of the trust before a Registrar of this Court.

(6) There shall be liberty to apply in relation to any matter arising from the accounts or the passing of these accounts.

(7) The cost of this application and of the preparation and passing of the accounts of the defendant, to be taxed if not agreed, shall be paid from the trust fund.