INTERLOCUTORY JUDGMENT
1 HER HONOUR: A further discrete issue preventing final quantification of damages has arisen. It is this. In the original judgment I determined that an allowance would be made for management of the funds that the plaintiff will possess upon payment of the damages awarded. Not all components of the award of damages will form part of the amount ultimately available for investment: for example, those amounts attributable to past wage loss (at least so far as they were covered by payments under the Workers Compensation Act 1987 and are therefore subject to repayment) and for already incurred hospital and medical expenses, will be deducted from the total sum before the amount finally available for investment can be known.
2 Evidence was given concerning the rates charged by fund managers. The amount of charges actually incurred depends upon the quantum of the fund: the rates charged are a percentage of the capital amount. Thus, in order to quantify the amount to which the plaintiff is entitled by way of fund management, it is necessary to know what will be the final award of damages, other than the amount under this head.
3 I have been presented with a schedule calculating the damages payable if judgment had been entered on 11 March 2005. Of course, as further time elapses before final judgment, those amounts will vary: for example, the figure allowed for past loss of income will increase, while that allowed for future loss of income will decrease. Bearing in mind that variation, counsel for the first defendant calculated the amount that would have been available for investment on 11 March 2005 had judgment been entered on that day. I do not understand that any dispute as to the damages components included in that calculation emerged, and would accept the calculation as correct. For the purpose of the present exercise it is sufficient to note that the plaintiff will have, in his hands, a sum of about $4,000,000.
4 The issue for present determination draws upon the decision of the Court of Appeal in Government Insurance Office (NSW) v Rosniak (1992) 27 NSWLR 665. It concerns the quantification, not of what the capital will be at the outset of the investment period, but what it is likely to be at the end of the plaintiff's expected lifespan, and at points in between. In Rosniak, it was envisaged that there would be a gradual reduction of the amount available for investment as the plaintiff drew upon the fund. In that case, because of the plaintiff's circumstances (she was a woman unlikely to marry or have children, and there would therefore be no incentive for her to retain a portion of her fund to secure an inheritance for family members) the court proceeded on the basis that, by the end of her expected life, the fund would be wholly dissipated.
5 Here, it is not to be assumed that the plaintiff will live only on the interest which his funds will generate, but will, at some rate, eat into and deplete the capital. On the other hand, as counsel for the first defendant conceded, as he has a family it is to be expected that he will wish to retain some part of the fund for their benefit on his death. As the fund depletes, the amount required to meet the charges of the fund manager will reduce over that period. The question is to what extent and at what rate is it likely that the fund will dissipate. That is an exercise in future prediction of considerable complexity and speculation. Counsel for the plaintiff tendered in evidence a report of Mariano Rossetto, a director of a firm of chartered accountants. Mr Rossetto calculated the amount necessary to compensate the plaintiff for his fund management needs on the basis of three different factual assumptions. These he identified as:
"Scenario 1 - the plaintiff will make equal withdrawals monthly from his funds until he reaches his anticipated date of death on 23 March 2043, and assuming all the funds are dissipated ... ;
Scenario 2 - the plaintiff will make equal withdrawals monthly from his funds until he reaches his anticipated date of death ... and assuming only 50% of the funds are dissipated ...;
Scenario 3 - the plaintiff will make equal withdrawals monthly from his funds until he reaches his anticipated date of death ... and assuming only 30% of the funds are dissipated ..."
6 As I have indicated, counsel for the first defendant conceded (as, I think, did senior counsel for the second defendant) that, having regard to his family circumstances, scenario 1 is unlikely and should not be adopted. Counsel for the first defendant proposed a fourth scenario, and this was adopted by senior counsel for the second defendant. It involved a more complex scenario, based upon the assumed total dissipation of the amounts allowed in relation to certain heads of damages (for example, those allowed for handyman services, future medical and hospital expenses, and others allocated to a specific purpose); deferred dissipation of the amounts allowed for the cost of paid care into the future (this because I held that the plaintiff's reliance upon paid, as distinct from voluntary, care givers, is not likely to occur until a time in the future); partial dissipation of the amounts awarded under some heads (although these were not specifically identified); and no dissipation of an amount of $1.5 million. The effect of this was that counsel contended that I should assume that:
"at the end of the plaintiff's life, 30% of the capital would remain intact."
7 Initially there was some attraction in the scenario proposed. It had the appearance of a degree of logic. However, I have concluded that it is not realistic. The fact is that the plaintiff will have a fund available to him, and it is unlikely that he will compartmentalise the amounts allowed under various heads of damages. He will draw on the fund as and when he needs to. I recognise that the proposal put by the first defendant is an attempt, in a more scientific fashion, to predict what part of the funds are likely to be expended by the end of the plaintiff's projected lifespan: but the exercise of prediction in these circumstances is so beset by variables, uncertainties and the unknown, that to adopt the course proposed would be likely to be productive of error.
8 In reaching the conclusion I do, I have had regard to the evidence given in the proceedings concerning the plaintiff's family arrangements. He has the devoted care of his wife. The family is obviously close and responsible. I did not get the impression that they would be extravagant, nor seduced into extravagance by the very large sum that will be available. They will recognise that it is a fund designed to compensate the plaintiff for the loss of what would otherwise have been his earnings over a working lifetime, the superannuation he would have received at the end of his working life, and his medical and other needs. They are more likely to be frugal in their expenditure than extravagant. I therefore reject the scenario advanced on behalf of the first defendant, that the plaintiff will use his money in such a way that only 30% of it will remain at the end of his life. I also reject the scenario that he would use only 30% of the funds, leaving 70% at the end of his life. I have already noted that the first scenario, the dissipation of all funds, was not taken up by any party. If I were bound to select only one of the options contained in the scenarios in the report, I would be left with scenario 2, assuming that the plaintiff dissipated 50% of the funds and that 50% of the funds remained at the end of his life. While the decision I have to make is based upon what I know of the plaintiff and his family, this question involves me doing the best I can in what approaches a speculative fashion. My instinct tells me that it is unlikely that, over the 38 years remaining to him, he will use only 50% of the capital. Instinct also tells me, as I have mentioned, that he will use less than 70% of the fund. Doing the best I can, on the very limited information available, I have settled upon a figure of dissipation of 60% of the funds, leaving in the fund at the end of the plaintiff's projected life, a sum representing 40% of that initially available for investment.