I agree with Eoin, if I understand him correctly, that the plaintiff ought to be able to recover even when the inability to manage large sums stems from inexperience rather than as a consequence of the injury.
Para [47] quoted by Neil was actually obiter because, as the Court said several times, the reasonableness of the charges was not in issue in the High Court, although it had been in the courts below. In the High Court, the defendant argued that it was all part and parcel of the discount rate. The High Court expresses no view on the question raised below as to whether it was for the plaintiff to prove that the charges were reasonable or whether the defendant was required to prove that they were unreasonable because it really raised an issue of failure to mitigate.
More significantly, the reversion to “common sense” as solving issues of causation must have several members of this list wringing their hands in despair. As part of the tort law reforms of 2002, the provisions on causation in the Civil Liability Act 2002 (NSW) were made applicable to the Motor Accident Compensation Act 1999 (NSW), a fact often overlooked by counsel and here by the High Court, possibly because other parts of the Civil Liability Act were excluded from applying to motor accidents (see, eg, Mikaera v Newman Transport Pty Ltd [2013] NSWCA 464 (20 December 2013) at [31]-[32] ; Nominal Defendant v Green [2013] NSWCA 219 (17 July 2013) at [31]-[32]). Those provisions were designed to encourage transparency in dealing with issues of remoteness by requiring the court to divide causation into “factual causation” and “scope of liability”, and with regard to the latter “to consider (amongst other relevant things) whether or not and why responsibility for the harm should be imposed on the negligent party”. According to Wallace v Kam [2013] HCA 19 (8 May 2013),
23 In a novel case, however, s 5D(4) makes it incumbent on a court answering the normative question posed by s 5D(1)(b) explicitly to consider and to explain in terms of legal policy whether or not, and if so why, responsibility for the harm should be imposed on the negligent party. What is required in such a case is the identification and articulation of an evaluative judgment by reference to "the purposes and policy of the relevant part of the law"[footnote omitted]. Language of "directness", "reality", "effectiveness" or "proximity" will rarely be adequate to that task. Resort to "common sense" will ordinarily be of limited utility unless the perceptions or experience informing the sense that is common can be unpacked and explained.
This is ignored in the present case, where the judgment appears to have been rushed out in just over a month. The Court also overlooks the statutory requirement that “In proceedings relating to liability for negligence, the plaintiff always bears the onus of proving, on the balance of probabilities, any fact relevant to the issue of causation.” Or does it believe that to speak of “consequence” rather than “cause” avoids this?
Regards,
Harold.
Harold Luntz
Professor Emeritus
Law School
University of Melbourne
Dear All,
Compensation to cover the cost of professional investment management of personal injury awards has been a part of Canadian compensation awards for some time. The practice was endorsed by the Supreme Court of Canada in Mandzuk v. Insurance Corporation of British Columbia [1988] 2 SCR 650 per Sopinka at [5]
A plaintiff seeking to recover either a management fee or an investment counselling fee should provide a factual basis to the trier of fact, including:
(i) evidence that management assistance is in fact necessary;
(ii) evidence that investment advice is in fact necessary in the circumstances;
(iii) evidence as to the cost of such services.
And again endorsed by the same court in Townsend v. Kroppmanns [2004] 1 SCR 315 AT [6]
The same underlying rationale guides the attribution of management fees and tax gross-up. The law aims at ensuring that the value of the amounts awarded to victims is maintained over time. In tort law, victims of personal injuries are awarded management fees when their ability to manage the amount they receive is impaired as a result of the tortious conduct. The purpose of this segment of the award is to ensure that amounts related to future needs are not exhausted prematurely due to the inability of the victims to manage their affairs. Depending on the needs of the victims, more or less extensive help is required.
In addition to including an amount to the lump sum award for management fees, some courts have changed the discount rate by lowering by a half percent.
Cheers,
Jeff
Professor Jeff Berryman
Faculty of Law
University of Windsor
Windsor, Ontario
Canada N9B 3P4
519-253-3000 ext. 2965
e-mail jberrym@uwindsor.ca
From: "Eoin.Quill" <Eoin.Quill@ul.ie>
To: Neil Foster <neil.foster@newcastle.edu.au>
Cc: "obligations@uwo.ca" <obligations@uwo.ca>
Date: 2014/10/15 08:23 AM
Subject: [Spam?] RE: Fund management costs as part of a damages award in the HCA
Neil (& all ODGers), the Irish decision in Ward v Walsh Unrep. SC, 31 July 1991 allowed a small amount for investment advice also. It hasn’t come up in any judgments here since then, as far as I am aware.
Personally I think it is reasonable to allow such a head of damages, as plaintiffs with long term injuries are forced into dealing with a method of long term financial planning that they are not really prepared for. As most victims (and the bulk of society in general) are accustomed to managing on a periodic income (of varying degrees of stability and predictability), the shift to a large single lump sum with no prospect of revisiting its suitability (which is the case in jurisdictions with lump sum once and for all awards) is a dramatic change and it is not unreasonable to seek expert help in adjusting. As long as the cost involved is reasonable, it’s ok; clearly if the injury impairs the victim’s ability to adapt and cope, the level of assistance will be greater and may run for a lengthy period of time, but that is the same for any head of damages – remoteness principles determine recoverable types of loss and quantum is a matter of luck.
Eoin Quill
School of Law
University of Limerick
From: Neil Foster [mailto:neil.foster@newcastle.edu.au]
Sent: 15 October 2014 01:15
To: obligations@uwo.ca
Subject: ODG: Fund management costs as part of a damages award in the HCA
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:
1. 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]:
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
Newcastle Law School
Faculty of Business and Law
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