Hewitt v Bayntun & Allianz Australia Insurance Ltd [2015] QSC 250

Moray & Agnew Lawyers for the first and second respondents

[1] McMeekin J: Mr Hewitt has brought proceedings for damages for negligence, he having suffered personal injury in a motor vehicle collision on 26 February 2006.

[2] The claim has been compromised. The proposed compromise is in the sum of $1,000,000.

[3] There are two issues. The first is whether it is necessary that the compromise be sanctioned pursuant to s 59 of the Public Trustee Act 1978 (Qld).

[4] The second is whether an administrator should be appointed.

[5] The solicitors for the plaintiff have applied either for a sanction of the settlement reached or in the alternative a declaration that the plaintiff is not a person under a legal disability so as to require a sanction and a declaration that the plaintiff does not have an impaired capacity regarding a financial matter relevant to receiving, investing and managing the settlement sum. Neither the solicitors nor Mr Hewitt seek a sanction. Nor does the defendant press the point. However the psychiatric evidence gathered in the course of preparation of the case has caused the solicitors on each side some concern and they have quite properly drawn the matter to the attention of the Court. Potentially, the parens patrae jurisdiction of the Court is engaged: H v Nominal Defendant (Qld) [1997] QSC 233.

[6] Mr Hewitt is of full age, currently 36 years, having been born on 27 March 1979. He was one month short of his 27th birthday at the date of this injury.

[7] Mr Hewitt suffered severe physical injuries in the subject accident. He suffered no impairment to his intellectual capacities. There is no suggestion that his ability to give instructions or otherwise understand the proposed compromise is in any way impaired.

[8] The perceived possible need to have the compromise sanctioned arises because of Mr Hewitt's use of illicit substances at an earlier time in his life (cannabis at age 14, heroin by age 17, and amphetamine use prior to the subject accident in 2006) and a concern that he remains vulnerable to relapsing.

[9] Mr Hewitt is presently on a methadone program and has been since 2008 for pain relief. He reports that he is not presently taking illicit substances and that he has not taken illicit substances for many years. The last record of such consumption was Dr Alcorn's note of Mr Hewitt's self-report on 6 November 2009 that he had been abstinent from injectable drugs for six months.

[10] Both examining psychiatrists, Dr Mulholland and Dr Alcorn, have expressed concern at the prospect that Mr Hewitt be permitted control over a large sum of money.

[11] Because of that concern the proceedings were brought in the name of a litigation guardian - Mr Hewitt's mother.

[12] That the concern I have mentioned has some reasonable basis cannot be doubted. Mr Hewitt had an accident in 1996 which resulted in a claim for damages, which was compromised in a significant sum. He wasted a substantial part of that settlement on illicit drugs. As one psychiatrist has said the receipt of the lump settlement sum then appears to have fuelled his addiction.

[13] So the issue is whether a vulnerability that is presently not causing any impairment but which might well do so at some time in the future and which, if it becomes manifest, will more than likely result in a wasting of the substantial award, requires a sanction of the compromise or the appointment of an administrator.

[14] A settlement or compromise of a claim for damages, where proceedings have been brought, requires the sanction of the court where the claim is made by "a person under a legal disability": s 59(1) of the Public Trustee Act 1978. If the plaintiff is such a person then, absent such a sanction, the compromise is not a valid one and the statute prohibits the payment of the damages "to any person other than the public trustee unless the court otherwise directs".

[15] For present purposes "a person under a legal disability" is defined in s 59(1A) as "a person with impaired capacity for a matter within the meaning of the Guardianship and Administration Act 2000."

[16] The Guardianship and Administration Act "categorises matters" into personal matters, special personal matters, special health matters, and financial matters: s. 10. A financial matter is described in s. 1 of sch 2 to the Act as "a matter relating to the adult's financial or property matters including, for example, a matter relating to one or more of the matters" set out in s. 1 of sch. 2. Section 1(o) of sch 2 provides that those matters include "a legal matter relating to the adult's financial or property matters". A "legal matter", for an adult, includes a matter relating to -

"(d) bringing or defending a proceeding, including settling a claim whether before or after the start of a proceeding" (sch. 2 s. 18).

[17] It follows that the compromise of a proceeding in which a plaintiff claims damages for personal injuries is a "matter" within the Guardianship and Administration Act.

[18] Does Mr Hewitt have an impaired capacity for that matter i.e. the compromise of his proceedings? I put the question in that way as in a series of cases the Court has taken the view that it can sanction a compromise, such as that involved here, only if the plaintiff has "impaired capacity" for "bringing or defending a proceeding, including settling a claim" and not some other "matter" that might come within the definition of "legal matter" or "financial matter": Welland v Payne [2000] QSC 431; Foran v Jalbao Pty Limited [2001] QSC 42; Morris v Clair [2004] QSC 127; Gregory v Nominal Defendant [2005] QSC 308; [2006] 1 Qd R 509 at 512. Margaret Wilson J succinctly explained why in Gregory at [14]. I agree with those decisions.

[19] It is necessary to mention the relevant definitions that are contained in sch. 4 of the Guardianship and Administration Act:

impaired capacity, for a person for a matter, means the person does not have capacity for the matter.

capacity, for a person for a matter, means the person is capable of -

(a) understanding the nature and effect of decisions about the matter; and

(b) freely and voluntarily making decisions about the matter; and

[20] Mr Hewitt understands the the nature and effect of the compromise - the decision about the matter; he has no present incapacity to freely and voluntarily make decisions about the matter; he has no difficulties in communicating his instructions. The definition of "impaired capacity" is in the present tense, not the future tense. That Mr Hewitt might at some future time, and in the grip of an addiction, not understand the nature of what he is doing or not in any meaningful way be able to freely make decisions is irrelevant.

[21] Morris v Clair [2004] QSC 127 involved somewhat similar considerations to those here. There the plaintiff had developed a psychotic illness as a result of the accident. It was episodic in nature. Margaret Wilson J summarised the plaintiff's position as follows: "If she were floridly psychotic, she would probably be incapable of making decisions about her financial affairs. However, when she is well, she does not lack that capacity." She was well at the time of the application. Her Honour declined the application for a sanction.

[22] I decline to sanction the settlement. It is a matter for Mr Hewitt whether he wishes to enter into the compromise.

[23] My power to order that an administrator be appointed depends upon my being satisfied that a sanction of the settlement is required. So much follows from the provisions of the Guardianship and Administration Act 2000 granting exclusive jurisdiction to the Queensland Civil and Administrative Tribunal (QCAT) for the appointment of guardians for adults with impaired capacity for matters (s 82) and the express limitation on the court's powers set out in s 245:

(1) This section applies if, in a civil proceeding -

(a) the court sanctions a settlement between another person and an adult or orders an amount to be paid by another person to an adult; and

(b) the court considers the adult is a person with impaired capacity for a matter.

(2) The court may exercise all the powers of the tribunal under chapter 3.

(3) Chapter 3 applies to the court in its exercise of these powers as if the court were the tribunal.

court means the Supreme Court or the District Court.

settlement includes compromise or acceptance of an amount paid into court.

[24] Absent a sanction the court has no jurisdiction to exercise the powers of the Tribunal. I think so much is perfectly plain from the statute.

[25] Whether Mr Hewitt in fact has an impaired capacity for a "matter" is a moot point. I note that included in the examples of matters that fall within "financial matters" in sch. 2 of the Guardianship and Administration Act is "otherwise preserving or improving the adult's estate" (s 1(i) of sch 2). An ever present risk of relapsing into a drug addiction, which in the past has resulted in the squandering of monies, suggests at least a potential incapacity to preserve and improve one's estate.

[26] I note too that under the legislation in place prior to the coming into force of the Guardianship and Administration Act on 1 July 2000 a "protection order", as such orders were then known, could be made if a person was "liable to be subjected to undue influence" as a result of "taking or using in excess ... any intoxicating, stimulating, narcotic, sedative or other drug": s 65(1) of the Public Trustee Act 1980. The potential to be subjected to undue influence is one of the relevant concerns here but again, under the former legislation, that needed to be predicated on a present taking, not a past taking, of drugs.

[27] It is a question for the QCAT whether an administrator or guardian should be appointed. I could transfer the matter to QCAT (eg see Margaret Wilson J's decision in Gregory (supra) and my decision in Till v Nominal Defendant [2010] QSC 121) but I do not think that course is here warranted.

[28] Where, as here, the taking or using of narcotic drugs is apparently six years in the past then it is difficult to see how the definition of impaired capacity is met. It is couched in the present tense and I think deliberately so. I am conscious of the general principles set out in Sch 1 of the Guardianship and Administration Act concerning self-reliance and a presumption of capacity. What exists here is a potential impairment not an actual one.

[29] Margaret Wilson J did not make any order transferring the matter to QCAT in Morris (supra) observing that if the plaintiff there did suffer from a florid episode in the future an application could then be made.

[30] With respect I think her Honour's approach is right. That an impairment might, but not necessarily must, manifest itself in the future is not, I think, sufficient to justify the making of such an order.

[31] That is not to say that Mr Hewitt should not give serious consideration to the concerns expressed by the psychiatrists. He could no doubt take steps to put the settlement monies in the hands of a trusted person, and so beyond his reach, in order to guard against the manifestation of his past predilection to narcotics. But I lack the power to order that. As Lee J remarked in H v Nominal Defendant [1997] QSC 223, in reference to the pre-conditions of making a protection order: "The Welfare State still permits a man to waste or give away his substance unless one or other of those conditions is fulfilled". So here.

1. I declare that the plaintiff is not a person under a legal disability so as to require a sanction of the settlement.

2. I declare that the plaintiff does not have an impaired capacity regarding a financial matter relevant to receiving, investing and managing the settlement sum.