Public Trustee Act 1985 (ACT), ss 25, 25(1)(b), 25(4), 25A, 55(2), 57(b)

Guardianship and Management of Property Act 1991 (ACT), ss 7, 8, 9(5)

Damages (Infants and Persons of Unsound Mind) Act 1929 (NSW), s 5(1)

Court Procedures Rules 2006 (ACT), rr 275, 1015

Singh bhnf Singh v Calvary Hospital (ACT) Inc and Anor [2008] ACTSC 118; (2008) 220 FLR 352

Wood v (WA) Public Trustee (1995) 22 MVR 369; 16 WAR 58

Jones bhnf Jones & Anor v Moylan (1997) 18 WAR 492

Willett v Futcher [2005] HCA 47; (2005) 221 CLR 627

Cadwallender v The Public Trustee [2003] WASC 72

Smith v Reynolds [1989] VicRp 25; [1989] VR 309

Re Eve [1986] 2 SCR 388

Fowler v Gray [1982] Qd R 334

Renehan v Leeuwin Ocean Adventure Foundation Ltd and Anor [No 4] [2006] NTSC 28; (2006) 17 NTLR 124

In re S [1951] NZLR 122

Re ES & the Mental Health Act 1958 [1984] 3 NSWLR 341

Tate v Western Australian Government Railways Commission [1966] WAR 169

Smith v Reynolds (No 2) [1990] VicRp 35; [1990] VR 391

Re L [2000] NSWSC 721

Cutcheon and Anor v Davis and Anor [1964] QWN 4

Jones and Jones v United Collieries Pty Ltd and Anor [1956] QWN 3

Singh bhnf Singh v Calvary Hospital ACT Inc and Anor [2008] ACTSC 118; (2008) 220 FLR 352

JJK and Anor v APK (1986) Aust Tort Reports 80-042

Phillips v Munro [1957] St R Qd 427

Morris v Zanki bhnf Zanki (1997) 18 WAR 260

Wood v Public Trustee (WA) (1995) 14 WAR 251

Secretary, Department of Health and Community Services v JWB and Anor [1992] HCA 15; (1992) 175 CLR 218

Spencer v Williams [1984] VicRp 9; [1984] VR 120

In Re NC [1956] NZLR 259

1. The plaintiff in these proceedings is a child born significantly and permanently disabled who sued to recover damages for the disabilities she suffered at her birth, claimed to have been caused by the negligence of the defendants. Accordingly, she was required to bring the proceedings by a litigation guardian (r 275 of the Court Procedures Rules 2006 (ACT) (the Rules)); initially it was her father but later her mother. On 20 October 2008, I approved a compromise made between the parties which settled the litigation and brought it to an end. See Singh bhnf Singh v Calvary Hospital (ACT) Inc and Anor [2008] ACTSC 118; (2008) 220 FLR 352. In so doing, I was exercising the inherent jurisdiction of the court, though under the framework provided for by the rules and statutes: Wood v (WA) Public Trustee (1995) 22 MVR 369 at 372-3; 16 WAR 58 at 62-4.

2. Rule 1015 of the Rules requires that the moneys recovered by a party under a legal disability must be paid into court. That is also required by the Public Trustee Act 1985 (ACT) which also deals with the disposition of the moneys. Section 25 of that Act provides:

1. Payment of money etc to public trustee on behalf of person under disability

(1) Where, in the proceedings, it is adjudged or ordered, or it is agreed, that money, not being money to which subsection (3) applies, be paid to a person under disability (whether or not that person is a party to a cause or matter), the money -

(a) shall be paid into court; and

(b) shall, unless the court otherwise directs, be paid out to the public trustee.

(2) Where money, not being money to which subsection (3) applies -

(a) is paid into court:

(i) before the commencement of this Act; or

(ii) after the commencement of this Act under a judgment, order or agreement given, entered or made before the commencement of this Act; and

(b) the money is being held in court on behalf of a person under disability;

the court may, by order, direct that the money be paid out to the public trustee.

(3) Where -

(a) money payable as compensation under the Workers Compensation Act 1951 is paid into court, whether before or after the commencement of this Act; and

(b) the money is being held in court on behalf of a person under disability;

the court may, by order, direct that the money be paid out to the public trustee.

(4) Where, as a result of a direction given under subsection (1), money in court is not paid out to the public trustee, the court may, by order, direct that the money be paid out to the public trustee and may make such other order as it thinks fit.

(5) Where a court adjudges or orders that property (whether real or personal) be delivered up or transferred to a person under disability (whether or not that person is a party to a cause or matter), the court -

(a) may order that the property be delivered up or transferred to the public trustee on behalf of that person; and

(b) may give such directions for the service of the order on the public trustee as it thinks fit.

(6) Where an order under subsection (5) is served on the public trustee, the public trustee shall accept delivery or transfer of the property to which the order relates and the acceptance of the property shall be a sufficient discharge to the person delivering or transferring the property.

(7) Nothing in this section applies in relation to -

(a) money ordered or agreed to be paid in proceedings in the Magistrates Court, being money due to a person who has not attained full age as salary, wages or otherwise in respect of the person's employment; or

(b) money payable as compensation under the Workers Compensation Act 1951 by way of a weekly payment.

3. In this case, the plaintiff's litigation guardian wished that the moneys not be managed by the Public Trustee but be paid into a trust fund especially established for that purpose. That is permitted under ss 25(1)(b) and 25(4) of the Public Trustee Act 1985 (ACT) which, although it makes payment to the Public Trustee the default and apparently preferred recipient of the funds for protection and management of them for the benefit of the person under disability, also permits the moneys to be dealt with otherwise.

4. Accordingly, an application was made to me for the funds in court to be paid to the trustees of the Jaspreet Singh Trust ("the Trust", "the Trustees"). The application was supported by an affidavit of the plaintiff's solicitor, Mr B Collaery.

5. In his affidavit, Mr Collaery deposed that he had made inquiries about the services provided and fees charged by the Public Trustee, a private investment adviser and the Commonwealth Private Bank and set out, with extensive annexures, the results of those inquiries.

6. He also referred to a similar arrangement which had followed a similar settlement of a personal injury claim by a disabled plaintiff in this Court at an earlier time whereby the moneys paid into court were paid out to a trust established in a similar fashion to the Trust.

7. He further exhibited the deed establishing the Trust, together with details of the three Trustees and their qualifications and experience. One was the plaintiff's mother and litigation guardian, one was an experienced accountant and the third was a senior Commonwealth public servant with extensive experience in the not-for-profit disability sector and who was also a trustee of a similar trust.

8. The affidavit also included some comments about the appropriate investment strategy for the funds. This showed that careful thought had been given to the management of the funds. This would, of course, ultimately be a matter for the Trustees, who may seek advice but who would not necessarily be bound by what was said in the affidavit.

9. The application was made by the plaintiff through the plaintiff's mother, as litigation guardian, and who wished the application to be made. While I was able to take the plaintiff's mother's support for it, from the way the application was brought, it would have been preferable if that had been expressed more clearly.

10. The material in support of the application was of the kind that attracted some critical comment by Murray J (at 508-9) in Jones bhnf Jones & Anor v Moylan (1997) 18 WAR 492 (Jones v Moylan) as to its sufficiency. I note, however, that the majority nevertheless held that the material had been sufficient that in that case to justify an order that the funds recovered under the compromise be paid to a trustee company. With some protections to which I will later refer, I considered that the material in this case was sufficient to order that the moneys be paid to the Trust.

11. The regime constituted by r 1015 of the Rules and s 25 of the Public Trustee Act 1985 (ACT) is, in part, a statutory enactment of a portion of the parens patriae jurisdiction of the Crown which is exercised by the Court to protect those persons under a legal disability, such as infants and persons under an intellectual disability, who are vulnerable: Willett v Futcher [2005] HCA 47; (2005) 221 CLR 627 at 636. A useful summary of this jurisdiction is set out in the judgment of Heenan J in Cadwallender v The Public Trustee [2003] WASC 72 at [27]- [31]. See also Smith v Reynolds [1989] VicRp 25; [1989] VR 309 at 310 and the cases and other materials there cited. For much interesting and helpful detail on the history and circumstances of the parens patriae jurisdiction, see the decision of La Forest J in Re Eve [1986] 2 SCR 388 at 407-17.

12. Some parts of this jurisdiction have been statutorily transferred to the ACT Civil and Administrative Tribunal: ss 7 and 8 of the Guardianship and Management of Property Act 1991 (ACT). This has, as would be expected, left unaffected the court's jurisdiction to approve the compromise of legal proceedings involving plaintiffs under a disability and the disposition of the damages recovered under such a compromise or otherwise.

13. There are now varying regimes in different States and Territories to give effect to this jurisdiction. For example, it would appear that in Queensland, the court is not involved in the exercise of any discretion as to the identity of the manager of funds recovered by judgment by a disabled plaintiff (Fowler v Gray [1982] Qd R 334) as opposed to under a compromise (Willett v Futcher). In the Northern Territory, there are no statutory provisions requiring judgment moneys payable to a person under a disability suing by a litigation guardian to be paid into court: Renehan v Leeuwin Ocean Adventure Foundation Ltd and Anor [No 4] [2006] NTSC 28; (2006) 17 NTLR 124 at 143.

14. Subject to such variations, there appear to be three options that the court has in exercising its discretion as to how it might deal with its responsibility to ensure that the damages awarded are managed appropriately. In doing so the paramount consideration must, of course, be the interests of the disabled plaintiff: In re S [1951] NZLR 122 at 132; Re ES & the Mental Health Act 1958 [1984] 3 NSWLR 341 at 343.

15. The three options were identified by Jackson J of the Supreme Court of Western Australia in Tate v Western Australian Government Railways Commission [1966] WAR 169 at 170. They were: for the funds to be invested by the court, to be paid out of court or to be transferred to trustees.

16. Again, there are some variations. In Victoria, for example, there has been an extensive regime for the investment of such moneys by the Court: Smith v Reynolds (No 2) [1990] VicRp 35; [1990] VR 391 at 393-4, 398. In New South Wales, it appears much more common for moneys to be administered by private trustees: Re L [2000] NSWSC 721 at [6]- [7].

17. In this Territory, though the court continues to have the powers of the Court of Chancery over the estate of disabled persons (Wood v (WA) Public Trustee at 374), it is now uncommon for the Court to exercise the power of investment of such moneys, particularly having regard to the powers of the Public Trustee and the legislative remit under s 25 of the Public Trustee Act 1985 (ACT).

18. It would also be rare and very exceptional for the moneys simply to be paid out of court to the disabled person. That is not to say that some of the moneys would not be paid out; thus, the medical expenses incurred and paid by the litigation guardian or other family members would be paid out in reimbursement: Cutcheon and Anor v Davis and Anor [1964] QWN 4. A sum amounting to the costs of the plaintiff's solicitor would usually also be paid out: Jones and Jones v United Collieries Pty Ltd and Anor [1956] QWN 3. Similarly, there may be a payment of a sum representing the gratuitous domestic services provided to the plaintiff: Singh bhnf Singh v Calvary Hospital ACT Inc and Anor. Ordinarily, those sums might not be paid into court but be paid directly, probably as a term of the compromise.

19. Nevertheless, it may be paid to the plaintiff to form part of his or her estate and to be managed, for example, by a guardian or manager already appointed. This may be more appropriate where the sum is relatively small, as in the cases of Cutcheon and Anor v Davis and Anor; JJK and Anor v APK (1986) Aust Tort Reports 80-042 at 67,882. There is, of course, the problem to be surmounted that a person under a legal disability cannot give a good discharge for such payment: Phillips v Munro [1957] St R Qd 427 at 430.

20. Instead of payment out to the disabled person, the third option would more usually be chosen, namely to pay the sum to trustees to be managed for the plaintiff's benefit. In some ways, this may not be so very different from payment to the plaintiff where it would be managed by a manager duly appointed. Nevertheless, there are legal obligations of trustees and, in some cases, a regime of supervision and management that gives particular protection, such as in the form of investments that may be made. There are, of course, some other differences between the role of a manager of the property of a disabled person and that of a trustee administering a large award of damages.

21. So far as trustees are concerned, there is power to appoint the Public Trustee, a trustee company or an individual private trustee (or trustees). The first option is a statutory one; indeed, it is said that there is a predisposition in favour of the appointment of the Public Trustee: Jones v Moylan at 496. See also Morris v Zanki bhnf Zanki (1997) 18 WAR 260 at 284-286.

22. The reasons for this are set out by Owen J in Wood v Public Trustee (WA) (1995) 14 WAR 251, where his Honour said (at 256-7):

It is the fact that the "norm" (as the trial judge put it) is that in these circumstances the moneys are held by the Public Trustee. This is a recognition of the role of the Crown as parens patriae (see Phillips v Munro [1957] St R Qd 427 at 430), the Public Trustee being a statutory office holder under the Crown. In Payne v Egan (1967) 86 WN (Pt 1) (NSW) 64 at 68 Moffit J [sic] enunciates a number of the reasons why the Public Trustee is appointed:

A further cogent reason why the court would be slow to exercise any power it may have to appoint some person other than the Public Trustee to act as trustee of the infant's money is that the Damages (Infants and Persons of Unsound Mind) Act 1929 (NSW) taken with the Public Trustee Act 1913 (NSW) provides its own flexible scheme appropriate to protecting the infant's funds and at the same time to provide a wide discretion subject to some supervision by the court to make provision for the education, maintenance and advancement of the infant.

To frame the problem in this context is not to suggest that the application is in any way a competition between a commercial trustee on the one hand and the Public Trustee on the other. The bona fides and expertise of both of them as fund managers is not, and never was, in issue. It is simply to emphasise that the power under [the equivalent provisions to r 1015 and s 25] is a significant one.

23. In this Territory, there may be some modification to this approach considering the provision of s 9(5) of the Guardianship and Management of Property Act 1991 (ACT) which provides:

(5) The public advocate, the public trustee or a trustee company must not be appointed as a manager of a person's property if an individual who is otherwise suitable has consented to be appointed.

24. Nevertheless, it is necessary for the court to have regard to what has been clearly described as the predisposition in favour of the Public Trustee and to proceed in the way described by the Western Australian Supreme Court in Morris v Zanki in the passage I have referred to at [21] above.

25. Nevertheless, as the Court observed in Morris v Zanki (at 286):

... it is no more than a predisposition... The court has a duty to consider the future management of the verdict moneys and it has a discretion. The governing consideration is "what is best to be done for the [person under the disability]". The discretion must be exercised judicially. It cannot be determined arbitrarily. Where the court is asked to exercise the power to place funds with a private trustee rather than the Public Trustee the judge must examine all of the circumstances and decide what is in the best interests of the person for whose benefit the funds are held. This will, of necessity, require a consideration of available options and alternatives. But this is not to say that a predisposition towards the Public Trustee is an impermissible fetter on the discretion. It serves a number of purposes. It indicates that the onus is on the person seeking the exercise of the discretion in his or her favour to establish grounds on which the order should be made. It means that if no application is made or if no good reason is shown for preferring a private trustee, the Public Trustee will assume the role. We have chosen the adjective "good" (in relation to the reasons that are advanced in support of the application) quite deliberately. We would avoid other possible descriptions such as "cogent" or "special" or "exceptional".

Some of the difficulties that can arise where there is a manager appointed under guardianship legislation and the Public Trustee administers a large damages award can be seen in Wood v (WA) Public Trustee.

1. There are said to be three reasons for there to be a predisposition in favour of the Public Trustee. There are briefly stated by Wallwork J in Jones v Moylan at 496-7:

The court noted that some of the reasons for this predisposition are briefly the role of the Crown as parens patriae, the fact that the Public Trustee is a statutory office holder established specifically to administer estates which require protection, and the existence of flexibility within schemes for disabled persons.

27. These are worth considering briefly in turn. The position of the Crown as parens patriae was expressed by the High Court in Secretary, Department of Health and Community Services v JWB and Anor [1992] HCA 15; (1992) 175 CLR 218 (Marion's Case) in the following way (at 258-9):

No doubt the jurisdiction over infants is for the most part supervisory in the sense that the courts are supervising the exercise of care and control of infants by parents and guardians. However, to say this is not to assert that the jurisdiction is essentially supervisory or that the courts are merely supervising or reviewing parental or guardian care and control. As already explained, the parens patriae jurisdiction springs from the direct responsibility of the Crown for those who cannot look after themselves; it includes infants as well as those of unsound mind. So the courts can exercise jurisdiction in cases where parents have no power to consent to an operation, as well as cases in which they have the power (footnote omitted).

While this case related to a child, the same principles apply to disabled persons.

28. The elements of direct responsibility and appropriate supervision are clearly met in the exercise of the jurisdiction by the Crown itself and, to the extent to which the Public Trustee is an emanation of the Crown (about which I express no view), this would justify the predisposition referred to earlier.

29. It does not, however, mandate that no other appointment may be made but raises these factors as ones which need to be addressed when considering whether an alternative should be considered. The court's appropriate role in any such appointment and in supervision, for example, would be relevant matters to be taken into account.

30. Similarly, the establishment of the Public Trustee as a statutory office holder to administer such estates is also relevant. In itself, this is partly the discharge of the Crown's role as parens patriae. Despite the likely legislative intent to prefer that such estates be administered by the Public Trustee, the statute expressly gives the court a discretion which can be exercised in appropriate circumstances.

31. Finally, the flexibility within schemes for such estates has given me a little more trouble to understand. The relevant provisions of the Damages (Infants and Persons of Unsound Mind) Act 1929 (NSW) to which Moffitt J referred in Payne v Egan (1967) 86 WN (Pt 1) (NSW) 64 (see above at [22]), namely s 5(1), does certainly give the NSW Public Trustee flexibility in the management of such funds. It is a little more flexible than the power given to the ACT Public Trustee under s 25A of the Public Trustee Act 1985 (ACT). It is, however, not clear to me why a private trustee would not have at least the same flexibility. Perhaps the point is that the stereotypical view of the rigidity of a public sector regime does not, in fact, pertain under this legislation and this may be said to reinforce the predisposition.

32. It is clear, for example, that by order of the court, the Public Trustee may invest outside the common fund: s 55(2) of the Public Trustee Act 1985 (ACT). The court considered the merits and demerits of a common fund in Spencer v Williams [1984] VicRp 9; [1984] VR 120 at 124-6. Indeed, the capacity to invest outside the common fund in accordance with directions may be a ground to prefer the Public Trustee over a private trustee: Van der Helm v Berry [1967] Tas SR (NC) N23. Such investments must be made in accordance with directions: s 57(b) of the Public Trustee Act 1985 (ACT). The need for such directions, however, may be a reason for preferring another strategy where a large sum to support a disabled person for a long period is concerned. The capacity of the court to give directions that would be appropriate may mean that it would have to be involved quite closely in such supervision and that could be problematic.

33. There is no doubt that the court may, instead, appoint a trustee company: Smith v Reynolds (No 2); Morris v Zanki.

34. When considering whether to appoint such a company one of the important issues about which the court needs to be informed is the financial and structural security of the company as noted in Morris v Zanki at 293. Satisfactory evidence is required.

35. Nevertheless, the court can take notice of the fact that such companies are regulated. The safeguards in such legislation is relevant and should be noted by the court: Jones v Moylan at 496. The regulation may include the regulation of fees and charges: Willett v Futcher at 637-9.

36. There appears presently, however, to be a wish in some circles for private trusts to be appointed in preference to the Public Trustee or a trustee company. This is certainly permissible: Lenehan v Leeuwin at 145; Payne v Egan at 66. Even in Phillips v Munro, Philp J accepted the possibility (at 430) though he considered it should only be done in "very exceptional circumstances".

37. One of the relevant factors is, of course, the identity of the trustee to be appointed. There has been proper reluctance to appoint a member of the family to the position. This reluctance is based on two grounds which need to be carefully considered.

38. In many cases, a family member may not have the skills or knowledge to be able to manage such a fund, especially if the damages award is a large one and has to provide for the disabled person for many years to come. See Phillips v Munro at 430 and JJK and Anor v APK at 67,878.

39. In addition, there is the issue of a conflict of interest where a family member is the trustee: See JJK and Anor v APK at 67,882. The funds may erroneously be regarded as "family money" and not the separate property of the disabled person (Phillips v Munro at 430). For such a reason, where a private trustee is sought to be appointed in preference to the Public Trustee, it may be preferable to appoint a trustee company. See Phillips v Munro at 430.

40. Nevertheless, there are advantages in having as at least one of a number of trustees, a family member who can be sensitive to the daily and personal needs of the disabled person. It is not an irrelevant factor nor always negative: JJK and Anor v APK at 67,881. It involves what may be a desirable element of personal involvement: In Re NC [1956] NZLR 259 at 261. The appointment of other trustees together with the family member would be an appropriate check of any perceived conflict of interest: In Re NC at 262. That the family members are the main care providers would also be a relevant factor to permit their participation or, at the very least, to ensure that their views be respected: Jones v Moylan at 498.

41. Before a court will entertain such an appointment of a private trustee of this kind, it needs to be satisfied of a number of matters. It may no longer be appropriate, in the current context, for such an appointment to be made only in very exceptional circumstances, but a court would need to be circumspect about such an appointment.

42. There needs to be evidence of the structural and financial security of the trustee. This was emphasised in Morris v Zanki at 293 and is an important factor, especially where a large sum is involved and which will need to support the disabled person for a long period of time, the two often coinciding. Indeed, it may well be that the disabled plaintiff could outlive the initial trustees, including any family member. Of course, if that happens, a trustee company could, if willing, be appointed as trustee of the trust.

43. It is desirable also for the court to be satisfied that the trustee has thought through how to invest the funds: Re L at [20]-[24].

44. The court must ensure that there are appropriate safeguards in place to protect the corpus of the fund, the investment strategy and the probity of the trustees and trust dealings, bearing in mind that the Public Trustee and the trustee companies recognised by the relevant legislation are subject to such safeguards: Jones v Moylan at 496.

45. The relevant inquiries to be made and considerations are set out usefully in Morris v Zanki at 286 and Jones v Moylan at 497-500. These would include the expressed wishes of the litigation guardian and other family members, the comparative skills and experience of the likely appointees, the comparative considerations between the alternative options, such as the approach to investment and disbursement, the management of the funds invested, the efficiencies and competitive advantage of the alternative trustees, the rates of return, investment mix and fees and charges imposed, the likely relationship between the trustee and the family or other caregivers and the factors that would impact on that, which are, of course, the structural and financial security and safeguards of the options.

46. Having considered the material before me carefully, in the light of the matters I have set out above, I formed the view that in this particular case, it was appropriate that the funds be paid to the Jaspreet Singh Trust and not to the Public Trustee. No real suggestion of payment to a trustee company was canvassed.

47. The decision was not an easy one and the materials before me were not as comprehensive or complete as I would have wished, though they did satisfy me of the appropriateness of the decision. It would clearly be preferable for any future applications to take into account the matters I have set out in detail above.

48. When the matter first came before me, however, I was concerned about the terms of the Trust Deed, a copy of which was exhibited before me. While it was in general terms unexceptional, it did not seem to me to have the necessary safeguards that were needed for the long term protection of the disabled person.

49. Accordingly, I indicated that until the Trust Deed was amended, I would not order payment of the damages award to the Trust. The amendments I required encompassed the following matters:

(i) no further amendment to the Trust Deed could be made without the approval of the Supreme Court;

(ii) the appointment of attorneys for the Trustees to act for them in management or administration of the Trust was also to be subject to the approval of the Supreme Court;

(iii) the power of the appointor to replace the Trustee or to appoint a new Trustee was similarly to be subject to the approval of the Supreme Court;

(iv) a requirement was to be made for the Trustees to receive written advice from an independent registered financial advisor at least once each year;

(v) a firm of independent chartered accountants in addition to the auditors was to be appointed to provide advice on the efficiency of the investments and to comment on the nature of any expenditure, loss or liability incurred by the Trustee that might adversely affect the interests of the beneficiary, in which case such comment had to be provided directly by the firm to the Supreme Court within seven days of its receipt by the Trustees.

50. In my view, this sufficiently discharged the supervision obligation of the court in its parens patriae jurisdiction and provided appropriate protection for the security of the disabled person.

51. Accordingly, once the Trust Deed had been amended in this way, I ordered that the moneys paid into court be paid out to the Jaspreet Singh Trust.

I certify that the preceding fifty-one (51) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Justice Refshauge.