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[2011] QSC 279
General information, not legal advice.
Supreme Court of Queensland
2011-09-19
Ann Lyons J
Original judgment source is linked above.
[1] Ben McKinlay who is currently 30 years of age has a claim for damages for personal injury arising out of a motor vehicle collision on 18 April 2006. He was 24 years of age at the date of this injury. There is no doubt that Ben McKinlay sustained a severe head injury as a result of the accident however due to the circumstances surrounding the accident liability was contested.
[2] The claim for damages was settled on the basis that the second respondent pay the applicant damages in the sum of $640,000 together with funds management fees plus standard costs and outlays. The settlement requires a sanction of the court pursuant to s 59 of the Public Trustee Act 1978 (Qld). The test for the approval of a compromise is whether in all of the circumstances, acceptance of the offer is for the benefit of the person under a disability. In other words, whether it would or would not be in the interest of the plaintiff to reject the offer, to continue the action in the hope of obtaining a larger amount. Having read the affidavit material there is no doubt that liability in this case is firmly contested by the second respondent. I am satisfied that the proposed settlement is in the interests of the plaintiff. Accordingly, I am satisfied that there should be an order sanctioning a compromise of the proceedings in the sum proposed.
[3] The next question that needs to be determined is whether Mr McKinlay has impaired capacity in relation to the management of the settlement sum.
[4] Section 245 of the Guardianship and Administration Act 2000 (Qld) provides as follows:
(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.
(4) As soon as practicable after a court makes an order under this section, the registrar of the court must give a copy of the order to the tribunal.
(5) Also, after the order is made, the registrar must, if requested by the tribunal, give the tribunal a copy of the part of the record of proceedings that is relevant to making the order.
(6) A fee is not payable to the court for a copy of part of the record of proceedings under subsection (5).
court means the Supreme Court or the District Court.
settlement includes compromise or acceptance of an amount paid into court."
[5] Section 245 therefore provides that where a court sanctions a settlement and the court considers the adult is a person with impaired capacity for a matter, the court may exercise all of the powers of QCAT under Chapter 3 of the Act. Chapter 3 applies to the court in its exercise of those powers as if the court were the tribunal. Chapter 3 of the Guardian and Administration Act deals with the appointment of guardians and administrations.
[6] There is no doubt that the Court has power to appoint an administrator for an adult pursuant to s 12, s 15 and s 245 of the Guardianship and Administration Act if the Court is satisfied that the adult lacks capacity to make decisions about financial matters.
[7] Capacity is defined in the Guardianship and Administration Act as requiring three elements to be present:
"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
[8] Dr Scott Campbell, a neurosurgeon, in his report dated 12 December 2008 indicates that Mr McKinlay has cognitive deficits, speech difficulties, chronic headaches and left ear tinnitus. He stated that the cognitive deficits manifested as poor short term memory and fatigue. He was also forgetful of names, addresses and appointments and frequently misplaced personal items. He also had daily headaches which were associated with decreased concentration and irritability.
[9] Dr Shelley Keane, a clinical neuro psychologist, also indicated that he had specific areas of weakness which included attention and concentration as well as information processing speed, verbal learning, executive functioning and fatigue.
[10] Dr Anderson, a neuro psychologist, also noted that Mr McKinlay had difficulties at maintaining a rapid speed of performance when sustained performance was required and that he demonstrated ongoing language difficulties and moderate to severe difficulties on unstructured complex memory tasks. She also indicated that there were moderate difficulties with planning responses in advance.
[11] Dr Flanagan, a psychiatrist, also diagnosed that Mr McKinlay suffered from an adjustment disorder with depressed mood and social anxiety. He also diagnosed dementia due to the brain injury. He stated that the brain injury and resultant cognitive defects would not improve.
[12] I am satisfied that given the extent of Mr McKinlay's incapacity, he is not able to understand the nature and effect of decisions in relation to the management of a large settlement amount. I am satisfied that an administrator needs to be appointed to manage the fund.
[13] The draft Order also seeks payment of $20,000.00 in respect of past personal care and assistance provided by the plaintiff's brother, Peter McKinlay, in the sum of $12,560.00 to Keryn Mayer in respect of expenses and costs associated with caring for Mr McKimlay.
[14] Before such an Order is made, there should be evidence of:
3. The risk that the payments may unacceptably diminish the fund and impact upon the plaintiff's future needs.
[15] The affidavit of Peter McKinlay sets out the care that he provided for Ben during the course of his time residing with him. Ms Mayer has sworn to the costs associated with caring for Ben and the expenses incurred.
[16] The plaintiff submits, in the circumstances, that payments out for past care and expenses are reasonable. The affidavit of Mr McKenzie notes that Ms James, a licensed financial adviser and lawyer, has expressed the view that the payment out will not have a significant adverse effect on the funds n the long term.
[17] Section 12 of the Guardian and Administration Act provides that the Tribunal may by order appoint an administrator for a financial matter and s 14 sets out the pre-requisites for such an appointment.
(1) The tribunal may, by order, appoint a guardian for a personal matter, or an administrator for a financial matter, for an adult if the tribunal is satisfied -
(a) the adult has impaired capacity for the matter; and
(b) there is a need for a decision in relation to the matter or the adult is likely to do something in relation to the matter that involves, or is likely to involve, unreasonable risk to the adult's health, welfare or property; and
(i) the adult's needs will not be adequately met; or
(ii) the adult's interests will not be adequately protected.
(2) The appointment may be on terms considered appropriate by the tribunal.
(3) The tribunal may make the order on its own initiative or on the application of the adult, the adult guardian or an interested person.
(4) This section does not apply for the appointment of a guardian for a restrictive practice matter under chapter 5B."
[18] The appointment may be in terms considered appropriate by the Tribunal.
[19] Section 14 of the Act provides that the Tribunal may appoint a person as administrator only if the requirements of the section are satisfied:
"14 Appointment of 1 or more eligible guardians and
(1) The tribunal may appoint a person as guardian or administrator for a matter only if -
(i) a person who is at least 18 years and not a paid carer, or health provider, for the adult; or
(b) for appointment as an administrator, the person is -
(i) a person who is at least 18 years, not a paid carer, or health provider, for the adult and not bankrupt or taking advantage of the laws of bankruptcy as a debtor under the Bankruptcy Act 1966 (Cwlth) or a similar law of a foreign jurisdiction; or
(ii) the public trustee or a trustee company under the Trustee Companies Act 1968; and
(c) having regard to the matters mentioned in section 15(1), the tribunal considers the person appropriate for appointment.
(2) Despite subsection (1)(a)(ii), the tribunal may appoint the adult guardian as guardian for a matter only if there is no other appropriate person available for appointment for the matter.
(3) Subject to section 74, no-one may be appointed as a guardian for a special personal matter or special health matter.
Note - The tribunal may consent to particular special health care - see section 68 (Special health care).
(4) The tribunal may appoint 1 or more of the following -
(a) a single appointee for a matter or all matters;
(c) a person to act as appointee for a matter or all matters in a stated circumstance;
(d) alternative appointees for a matter or all matters so power is given to a particular appointee only in stated circumstances;
(e) successive appointees for a matter or all matters so power is given to a particular appointee only when power given to a previous appointee ends;
(f) joint or several, or joint and several, appointees for a matter or all matters;
(g) 2 or more joint appointees for a matter or all matters, being a number less than the total number of appointees for the matter or all matters.
(5) If the tribunal makes an appointment because an adult has impaired capacity for a matter and the tribunal does not consider the impaired capacity is permanent, the tribunal must state in its order when it considers it appropriate for the appointment to be reviewed.
[20] Section 15 then sets out the appropriateness considerations as follows:
(1) In deciding whether a person is appropriate for appointment as a guardian or administrator for an adult, the tribunal must consider the following matters (appropriateness considerations) -
(a) the general principles and whether the person is likely to apply them;
(b) if the appointment is for a health matter - the health care principle and whether the person is likely to apply it;
(c) the extent to which the adult's and person's interests are likely to conflict;
(d) whether the adult and person are compatible including, for example, whether the person has appropriate communication skills or appropriate cultural or social knowledge or experience, to be compatible with the adult;
(e) if more than 1 person is to be appointed - whether the persons are compatible; (f) whether the person would be available and accessible to the adult; (g) the person's appropriateness and competence to perform functions and exercise powers under an appointment order.
(2) The fact a person is a relation of the adult does not, of itself, mean the adult's and person's interests are likely to conflict.
(3) Also, the fact a person may be a beneficiary of the adult's estate on the adult's death does not, of itself, mean the adult's and person's interests are likely to conflict.
(4) In considering the person's appropriateness and competence, the tribunal must have regard to the following -
(a) the nature and circumstances of any criminal history,
whether in Queensland or elsewhere, of the person including the likelihood the commission of any offence in the criminal history may adversely affect the adult;
(b) the nature and circumstances of any refusal of, or removal from, appointment, whether in Queensland or elsewhere, as a guardian, administrator, attorney or other person making a decision for someone else;
(c) if the proposed appointment is of an administrator and the person is an individual -
(i) the nature and circumstances of the person having been a bankrupt or taking advantage of the laws of bankruptcy as a debtor under the Bankruptcy Act 1966 (Cwlth) or a similar law of a foreign jurisdiction; and
(ii) the nature and circumstances of a proposed, current or previous arrangement with the person's creditors under the Bankruptcy Act 1966 (Cwlth), part 10 or a similar law of a foreign jurisdiction; and (iii) the nature and circumstances of a proposed, current or previous external administration of a corporation, partnership or other entity of which the person is or was a director, secretary or partner or in whose management, direction or control the person is or was involved.
(b) an attorney under an advance health directive or similar document under the law of another jurisdiction.
(a) a general power of attorney made under the Powers of Attorney Act 1998; or
(c) a power of attorney made otherwise than under the Powers of Attorney Act 1998, whether before or after its commencement; or
(d) a similar document under the law of another jurisdiction."
[21] The plaintiff's mother and litigation guardian is the person currently proposed as the financial administrator. It is proposed that the funds would be managed by Ms Mayer in conjunction with IPAC Securities Pty Ltd (IPAC) a firm which provides financial and investment advice to administrators.
[22] The Head of Personal Injury Client Services with IPAC, Kassie James, has sworn an affidavit which states that she is a licensed financial advisor and a lawyer. She states that IPAC is a financial advice and investment management firm and that a specific division of that firm, Personal Injury Client Services, provides financial and investment advice to clients who have suffered personal injury and have obtained damages awards. She swears that the division currently has approximately 140 clients, with damages ranging from between $100,000.00 to $9,000,000.00.
[23] In addition to financial advice and investment, Ms James states that IPAC assists clients with other issues such as identifying and engaging carers, treatment providers and the purchase of a home, vehicle and equipment. She swears that in approximately 50 matters they partner with a Trustee company in the management of the funds and in another 40 matters they work with a family member who has been employed as administrator or manager.
[24] Ms James states that where IPAC works with a family member as administrator, their role is to ensure that the person understands the nature of their responsibilities and obligations as administrator and to take appropriate steps to ensure that the funds are appropriately invested and managed. Because the funds are typically invested through superannuation, there is an added level of protection that they cannot be withdrawn with ease or lack of visibility that may exist if the moneys were invested in a bank account.
[25] Ms James indicates that she has had discussions with Keryn Mayer about her obligations as an administrator. From the settlement funds, it is hoped that a house could be purchased and the sum of $250,000.00 has been set aside for that purpose. The balance leaves approximately $290,000.00 for management. Ms James states $50,000.00 will be held in a mix of cash, being a 12 month term deposit, and the balance will be invested in a selection of managed funds. The funds will be invested in superannuation so as to maximise Mr McKinlay's entitlement to Centrelink benefits.
[26] Ms Keryn Mayer is the litigation guardian and the mother of Ben McKinlay. In her affidavit sworn 16 September Ms Mayer states that Ben currently lives in a one bedroom unit which is part of a complex for aged and disabled persons in Churchill, Victoria. The unit is provided by the Department of Human Services. She states that he has been residing in that unit since May 2010. Ms Mayer states that she lives with her husband, (Ben's stepfather) and two half sisters about four doors away.
[27] Ms Mayer states that she is familiar with the obligations of administrator under the Guardianship and Administration Act and has reviewed the documentation prepared by QCAT as is necessary for the appointment of an administrator. She has had discussions with Ms James and has been advised of her obligations as administrator.
[28] She states that she is willing to undertake those obligations. Ms Mayer swears that after the purchase of a house there will be a small fund left which will need to be carefully managed. She is willing to manage the orderly administration of his settlement funds. She states that she has never been a bankrupt and has never been charged with a criminal offence. She is currently employed and has been employed for some time with Wolf Phones, Post Office Place, Traralgon. She is employed as a Business Development Manager. She handles her own finances, in conjunction with her husband and is currently paying off their own home. She states that she is familiar with financial matters generally and is otherwise competent to assist in the management of Mr McKinlay's funds.
[29] Ultimately the question is whether Ms Mayer should be appointed as the administrator for Mr McKinlay. She is aware of her obligations, she is very engaged in her son's care, she has some business skills and she has sought professional advice in relation to the management of the settlement funds. She will pay an ongoing fee for the provision of that professional advice.
[30] This question of when it is appropriate to appoint a family member to manage a fund was considered by President Kirby in the decision of Holt v Protective Commissioner[2]:
"5. Ordinarily, a person who would face a conflict of interest and duty would not be appointed a manager of a protected person's estate. However, in some family situations, inter-related property interests may present such conflicts. Sometimes they will be more apparent than real. They do not necessarily present an absolute bar to appointment as a manager for otherwise this would exclude from consideration a range of family members in every other way appropriate;
(a) to the appointment of the Protective Commissioner, the following advantages:
(i) the manifest independence of his statutory once;
(ii) the advantages of a dispassionate and neutral approach where there is a potential for family conflict and sharply divided views concerning the best interests of the protected person;
(iii) the expertise of his staff, their experience in managing estates, the know how accumulated by them over time and their impeccable reputation; and
(iv) the security provided to the estate against loss or damage; and
(b) to the appointment of a family member, the following advantages:
(i) the size and complexity of the estate: in a smaller estate it may often be appropriate to appoint a family member who will be entirely familiar with the assets and liabilities and readily able to manage them with greater economy and possibly free of cost to the protected person. The Protective Commissioner is entitled to and ordinarily does recover fees under the Act;
(ii) the capacity of the protected person, if disabled, to interact with his or her manager so that, so far as possible, within the disability which has led to the appointment, such person may remain in charge of, or at least able to influence, the broad directions of the management of the estate;
(iii) the ingredient of love and affection and unquestioning devotion to the protected person which an appropriate family member can add to the task of management. Whilst the office of manager is, by its definition, concerned with proprietary and financial matters and involves the prudent control of the property and like interests of the protected person, in the nature of things the manager of the estate of a protected person is more likely than a general trustee or receiver to become involved in decisions which affect the protected person's quality of life. A lifetime knowledge of the person and a devotion to his or her interest may contribute to that quality. It may more readily be secured by the appointment as manager of a family member with the requisite knowledge and motivation;
(iv) any special features of the case which may' require particular attention. Thus, in the instant case there was the special feature that, since the original appointment, the marriage between Mr Michael Holt and his wife has been dissolved, a large damages verdict has been recovered and new arrangements have been made for the daily care of Mr Michael Holt; and
(v) any special qualities of the applicants to act as managers will be relevant. Although professional training does not necessarily guarantee good management, the fact that one of the present appellants is a chartered accountant and the other a medical practitioner suggests, at least, the possibility that they would not be unfamiliar with the management of large sums of money.
7. Different considerations may affect the management of an estate comprised of few liquid assets when contrasted to one which enjoys substantial and regular income. The court, appointing a manager from the family of the protected person, should satisfy, itself that the income and (where necessary) the capital assets of that person's estate are devoted to the protected person's interests. Especially where (as here) the bulk of the estate is made up of a verdict calculated by reference to the protected person's expectation of life and as compensation for injuries, disabilities, pain and suffering and loss of the enjoyment of life it is appropriate that the capital and income should be expended, as intended, to advance the quality of life of the protected person rather than to increase in due course the assets of the protected person's family."
[31] In the circumstances of this case it is clear that once a home has been provided for Ben McKinlay the size and complexity of the estate is quite small. Ms Mayer indicates that she intends to purchase a property worth approximately $250,000 where Ben will live by himself. It is also clear that Ms Mayer has made appropriate arrangements for the investment of those moneys. Ms Mayer lives four doors away from where Mr McKinlay currently resides and aims to purchase accommodation for him nearby to where she lives so that she can assist in his day to day life.
[32] The affidavit of Ms Mayer sets out her qualifications and experience. She has an Associate Diploma in Welfare from Monash University and a Certificate in Occupational Studies and Social and Community Work from Gippsland College of TAFE. She also completed various certificates in management through her previous employment with Telstra. She is currently employed in Traralgon as a business development manager and she has completed certificates in retail management. She manages her own financial affairs and has been managing her son's limited funds to date.
[33] At the hearing on 14 September 2011 I expressed some concerns in relation to the management of the funds in the short term particularly before the proposed management plan had been approved by QCAT. Ms Mayer provided a further affidavit in relation to the management of the fund between the appointment of administrator and the commencement of oversight by QCAT and proposed the following:
"(a) that Ben's settlement funds be paid by the insurer to Maurice Blackburn lawyers and then to IPAC Securities Pty Ltd (subject to the matters referred to below) to be invested in Ben's name;
(b) that within 30 days of the sanction of the settlement, I will file a Financial Management Plan with QCAT and lodge an application with VCAT to have the Court order appointing the administrator registered in Victoria."
[34] Ms Mayer proposes pending the approval of the management plan by QCAT she will receive approximately $500 per week for three months to assist in Mr McKinlay's day to day expenses whilst awaiting the final orders from QCAT and VCAT.
[35] It is clear that it will also be necessary to have the Queensland Order registered in Victoria to enable the plaintiff to purchase property in Victoria. Once the Order is registered in Victoria the administrator will initially be under the supervision of both QCAT and VCAT. Once the plaintiff has purchased a home in Victoria it is the intention of the administrator to have an application brought in QCAT to have the Queensland Order vacated so as to avoid having to submit two sets of accounts.
[36] Having considered the affidavit material I am satisfied that Ms Mayer is an appropriate person to be appointed as administrator. Her general proposals in relation to the management of the settlement fund in the long and short term also seem to me to be entirely appropriate. It is also clear that Ms Mayer will lodge a more detailed management plan for approval by QCAT within 30 days. That plan will be scrutinised by the tribunal. Ms Mayer's appointment will also be subject to regular reviews initially by QCAT and ultimately by VCAT. I am satisfied that the interests of Ben McKinlay have been appropriately protected and that there are strategies in place to ensure ongoing compliance by the administrator with the requirements of the Act.
[37] I am satisfied that the Practice Direction has been complied with.
[38] Accordingly I consider that there should be an appointment of Keryn Mayer as the administrator of the settlement fund in the terms proposed.
(a) That the second respondent pay the applicant damages in the sum of $754,136.00, being primary damages in the sum of $640,000.00, together with further damages in the sum of $114,136.00 for management fees ("the compromise sum");
(b) That the second respondent pay the applicant his costs, of and incidental to this proceeding, including the cost of this Application, to be assessed on the standard basis.
(a) To any statutory body having a charge over the compromise sum, the amount necessary to satisfy the charge;
(b) To Peter McKinlay the sum of $20,000.00 on account of past care and assistance and to Keryn Mayer the sum of $12,560.00 on account of past care and expenses;
(c) To the solicitors for the applicant, the balance;
whose receipt shall in each case be a sufficient discharge for the respondents.
(a) Provide a copy of this Order and copies of the Affidavits read on this Application to the principal Registrar of the Queensland Civil & Administrative Tribunal forthwith; and
(b) Place the opinion of counsel in a sealed envelope marked "Not to be opened without an Order of the court".
[1] Grevett v McIntyre [2002] QSC 106 at paragraph [6]; Huet v Irvine [2003] QSC 387.
[2] (1993) 31 NSWLR 227 at 242-243.
Keryn Mayer as litigation guardian for Ben David McKinlay
Mahoney & Anor [2011] QSC 279
(1993) 31 NSWLR 227