Case & Anor v Eaton & Anor

This important recent decision addressed whether the second applicant, a child who was party to a claim for damages for loss of dependency following the death of her father, was entitled to recover damages for the cost of managing the amount otherwise to be paid to her as damages.  Her claim for loss of dependency had been settled subject to the sanction and directions of the court pursuant to s 59 of the Public Trustee Act 1978. [1], [2].

That step was necessary given the applicant was under a legal disability. [3]. At issue was whether the court should order that the second respondent pay further damages for management fees in respect of the primary damages order, estimated at  $11,309, which represented the fees likely to be incurred in managing her funds. [4]. The resolution of that issue turned upon two conflicting decisions, one a Supreme Court judgment, Maggs v RACQ Insurance Ltd (2016) QSC 41 and the other the High Court judgment of Nominal Defendant v Gardikiotos (1995) 186 CLR 49. [5].

As to the former, it resolved the issue adversely, with the respondent successfully arguing that the statutory entitlement did not allow recovery of fund management fees as damages. [6].

In Nominal Defendant v Gardikiotos (1995) 186 CLR 49, the High Court clarified the circumstances in which an injured plaintiff might recover, as a head of damage in a claim for damages for personal injury, the costs of managing a fund where they were reliant upon the skills of an external funds manager in order to invest the funds.  It found that management fees should not be recovered where a Plaintiff had not suffered any incapacity to manage her settlement monies, describing such a scenario as “contrary to common sense”. However, it further observed that “it would be otherwise” had the defendant’s negligence caused the plaintiff to suffer from a legal disability or where the plaintiff had a pre-existing legal disability. [9].

Noting the second applicant’s disability, which would result in the need for an independent party to carry the cost of managing her money until she was 18, [10] his Honour concluded that management fees were recoverable in this instance. In forming that view he noted that in Maggs v RACQ Insurance Ltd (2016) QSC 41, his Honour Justice Boddice’s reasoning relied upon two single-judge decisions and a number of earlier decisions [12], [13], all of which preceded Nominal Defendant v Gardikiotos (1995) 186 CLR 49 and could be differentiated from the present matter. Accordingly, albeit acknowledging his Honour Justice Boddice’s “formidable reputation as a lawyer”, [16] it was concluded that the second applicant was indeed entitled to management fees and it was ordered accordingly. [20].