Keryn Mayer as litigation guardian for Ben David McKinlay v Mahoney & Anor [2011] QSC 279

Her Honour Justice Lyons of the Supreme Court of Queensland recently looked at the requirements of the Guardianship and Administration Act 2000 (Qld) when appointing a family member as administrator of settlement money paid to an injured Plaintiff with impaired capacity.

It was observed at the hearing that neither Justice Lyons nor Counsel for either party knew of a similar appointment (a family member) having previously been made by the Supreme Court in Queensland.1

Background Facts

The Plaintiff was seriously injured in a Pedestrian v Motor Vehicle accident on 18 April 2006.

It was common ground on the medical evidence (and subsequently accepted by the Court) that as a result of head injuries sustained in the accident, the Plaintiff lacked capacity to understand the nature and effect of decisions in relation to the management of a large settlement amount and any settlement would require the sanction of the Court and appointment of an administrator to manage the settlement funds.

The Plaintiff’s claim was settled at Mediation for $640,000 plus costs and fund management fees. This sum reflected a significant reduction to the agreed quantum of the claim to reflect the Plaintiff’s own contributory negligence. The Court was satisfied that on the evidence the settlement was in the interests of the Plaintiff and therefore sanctioned the settlement in accordance with s59 of the Public Trustee Act 1978 (Qld).

At the time of sanction, the Plaintiff was 30 years of age and therefore had an anticipated life expectancy of approximately 55 years. Due to the relative paucity of the settlement funds comparative to the Plaintiff’s life expectancy, the Plaintiff’s mother applied to be appointed as financial administrator of the settlement funds with the assistance of a financial and investment firm IPAC Securities Pty Ltd.

It was noted by Her Honour that in sworn evidence before the Court, IPAC assists a number of clients in similar situations throughout Australia, where a family member is appointed as administrator, by ensuring that the person understands the nature of their responsibilities and obligations as well as providing financial and investment advice.

It was also noted that the management plan devised by the administrator would be the subject of scrutiny and continued supervision by QCAT2 or its Victorian equivalent VCAT3 (where the Plaintiff now resides).

The Decision

After a detailed consideration of the relevant requirements for the appointment of an administrator under the Guardianship and Administration Act 2000 (Qld) and the background of the applicant, Justice Lyons concluded that the Plaintiff’s mother was aware of her obligations, was engaged in her son’s care, has some business skills and has sought professional advice in relation to the management of the settlement funds.

Her Honour was therefore satisfied that the Plaintiff’s mother was an appropriate person and appointed her as administrator of the settlement funds. Incidental Orders were made as to the immediate distribution of funds including a direction that a management plan be submitted to QCAT for approval within 30 days.

Discussion

Traditionally, the Court has been known to exercise a preference for appointing a body such as the Public Trustee of Queensland or a commercial fund manager as administrator of an injured Plaintiff’s settlement funds.

While in the majority of cases this will remain the most appropriate option, the present case encapsulated a situation where a small settlement sum to be managed over a significant period of time can result in disproportionately high fund management fees which threaten to whittle away the subject damages.

The scenario proposed by the Plaintiff’s mother, whereby she would administer the funds herself with some guidance from a nominated financial advisor and under the supervision of the Tribunal, resulted in significantly lower fund management costs than those proposed by alternative fund managers.

While there has never been a question as to whether the Court has the power to appoint a family member as an Administrator, as previously noted this was not something that Counsel for either party or Justice Lyons herself were aware of the Supreme Court in Queensland having done previously.

This decision will therefore serve as a useful guide to practitioners in this area who are looking to ask the Court to consider an ‘outside the box’ scenario on funds administration and it may ultimately result in significant cost savings for those tasked with the payment of fund management fees, such as defendant insurers.

A copy of the decision can be found here.