Supreme Court of Queensland re-visits Maggs v RACQ Insurance Limited

In addition to Supreme Court’s inherent jurisdiction, the Courts are conferred with extensive legislative powers to protect the interests of minors. In damages claims, this jurisdiction is most commonly exercised in the sanction of settlements.

Section 59 of the Public Trustee Act 1978 provides that:

1. no settlement of any claim by a minor will be valid without the sanction of a court or the Public Trustee; and
    
2. any monies or damages must be paid to the Public Trustee, or another Trustee ordered by a court, to be held on trust for the minor until they reach eighteen years of age.

It necessarily follows that the minor has no choice but to incur fees for the Public Trustee, or another Trustee, to administer and manage their damages.

In the normal course of events, these fees do not present an issue as they are recoverable as a separate head of damage.  This is because:

1. it is a well-established legal principle that where “a defendant has negligently injured a plaintiff, the common law requires the defendant to pay a money sum to the plaintiff to compensate that person for any damage that is causally connected to the defendant's negligence and that ought to have been reasonably foreseen by the defendant when the negligence occurred”[1]; and
    
2. there is a long line of authority that a Trustee’s administration and management fees are damage that is causally connected where the claimant “was intellectually impaired as a result of the defendant’s negligence or by reason of some pre-existing disability” [2].

These well-established principles were examined by the Queensland Supreme Court earlier this year in its decision in Maggs v RACQ Insurance Limited[3].  This was a decision in which the Court ordered that a minor in need of a Trustee to administer her settlement monies was nonetheless not entitled to recover the administration and management fees she would incur as a head of damage.

By way of very brief background, the Applicant was just over a year old when both parents were killed in a motor vehicle accident. 

Pursuant to section 64 of the Civil Proceedings Act 2011 (CPA), Maggs was able to pursue a claim for damages for the loss of financial and other support of her parents (known as a dependency claim).  More particularly, section 64(3) CPA provides that:

…a court may award to the members of the deceased person's family the damages it considers to be proportional to the damage to them resulting from the death.

The damages which usually compromise a dependency claim include:

1.    the portion of the parents’ income which would have been for the dependent’s benefit (e.g.. living and education expenses); and

2.    the commercial value of services the parents would have provided to the dependent (i.e. assisting with activities of daily living).

In arriving at the view that a Trustee’s fees were not recoverable, Boddice J drew a distinction between “damages to [a claimant] resulting from death” (see section 64(3) CPA) and “any damage (such as a Trustee’s fees) that is causally connected to the defendant’s negligence” (as espoused in the High Court decision of Gardikiotis).  Put another way, the Trustee’s fees were something which arose after, rather than as a result of, the death.

The practical outcome of this decision would be that the Trustee’s fees would be paid from the damages awarded to the minor for her loss of dependency rather than her having the direct benefit of all of those damages to provide for her in the absence of her parents.

This issue came before the Supreme Court again on 30 September 2016 in Case & Anor v Eaton & Anor.[4]

The Applicants, Camilla Case and her three month old daughter, Kristeena, applied for an order sanctioning the settlement of a claim for damages arising from the death of their husband / father, Andrew Hill, when he had been struck by a police car in 2003.     

In 2003, the statute giving rise to Ms Case’s entitlement to seek damages was the now repealed Supreme Court Act 1995 (SCA) rather than the CPA.  Although it had slightly different wording to section 64(3) CPA, section 18(1) SCA allows a Court to “…give such damages as the court may think proportioned to the injury resulting from such death to the parties…” (emphasis added).

Although Henry J agreed with Boddice J in Maggs, that “the statutory entitlement limits the recoverable damages”, he reached a different decision about the recoverability of administration and management fees.  Central to Henry J’s decision was the High Court’s reasoning in Gardikiotos, in which it was held that administration and management fees were recoverable where the need for them arose from a disability existing at the time of the accident.[5]

Justice Henry held that, because of her age, Miss Case was under a legal disability at the time of her father’s death.  Accordingly, the Respondent had to take Miss Case as it found her.  That is, as “a minor whose need for assistance in managing any fund awarded was foreseeable at the time of her father’s death and occasioned by the same event entitling her to such an award.”[6]

His Honour then went on to distinguish Maggs on the basis that the two single judge decisions it considered were decided before Gardikiotos and those decisions “…went to arguably foreseeable causative events and needs in the future, not to a certainty existing from the outset of the loss”.[7]  Whereas, for Miss Case, “[i]t… was never a matter of future choice for [her] as to how she might choose to use the sum awarded to her. The need to manage that sum for her was a cost imposed upon her because of her father’s death when she was so young.”  

That is, administration and management costs were damages Miss Case would inevitably incur, given she was a minor (and therefore under a legal disability) at the time of the accident.   

What does the decision mean?

Given the divergent decisions in Case and Maggs, it is unclear how the Court might interpret section 64(3) CPA when it next considers whether to award damages for the administration or management fees in dependency claims where the claimant is under an incapacity.  The issue seems destined for further litigation in the absence of consideration by the Court of Appeal or legislative amendment.

Steve Herd – Partner, MurphySchmidt Solicitors

Sebastian Olsen – Senior Associate, MurphySchmidt Solicitors

[1] Nominal Defendant v Gardikiotos (1995) 186 CLR 49, [4].

[2] See Nominal Defendant v Gardikiotos (1995) 186 CLR 49 at p 52 and also Willett v Futcher (2005) 221 CLR 627 and Bell v Pfeffer [2009] QSC 209.

[3] [2016] QSC 41.

[4] [2016] QSC 239.

[5] Nominal Defendant v Gardikiotos (1995) 186 CLR 49, 52.

[6] Case & Anor v Eaton & Anor [2016] QSC 239, [10].

[7] Case & Anor v Eaton & Anor [2016] QSC 239, [15].