Dear Colleagues;
The decision of the High Court of Australia today in Gray v Richards [2014] HCA 40 (15 October 2014) http://www.austlii.edu.au/au/cases/cth/HCA/2014/40.html deals
with complex issues to do with calculation of a damages award in a personal injury claim where the plaintiff will need money administered by a fund due to an inability to manage the money herself created by the tortious act. I hesitate to go into detail because
some aspects of the decision make my brain hurt, especially comments about the need to provide the costs of managing the fund, and then the need to provide the costs of managing that amount of costs, etc etc in an infinite regression.. See [22] quoting the
trial judge. (I gather there is some fancy accounting technique for valuing this amount!)
But the bottom line seems to be:
- The costs of managing a fund in these circumstances are damages that should be recoverable, as they relate to a need created by the tort. In this case there was some debate occasioned by the fact that the management would be done by a private trustee company as opposed to the government Trustee, but the court said that so long as the decision to choose the trustee company was not totally unreasonable the amounts were recoverable; see [47]:
- The real question is whether the management arrangement with the Trust Company was so unreasonable in its terms that it could not be regarded, as a matter of common sense, as a consequence of the appellant's injury. If the fund management expense component of an award reflects actual market conditions, and is not contrary to any statutory control, then it may be seen, as a matter of common sense, as an expense consequent upon the tortfeasor's wrong and, therefore, compensable.
2. However, the court should not award damages representing the cost of managing the future income to be derived from the fund.
The "cost of managing the income predicted to be earned on, and reinvested as part of, the funds under management” (defined in [16]) was not a legitimate
part of a damages award.
Regards
Neil
NEIL FOSTER
Associate Professor
Associate Professor
Newcastle Law School
Faculty of Business and Law
Faculty of Business and Law
Further details: http://www.newcastle.edu.au/profile/neil-foster
The University of Newcastle (UoN)
University Drive
Callaghan NSW 2308
Australia
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