Background: Ben McKinlay’s Head Injury and $640k Settlement
On 18 April 2006, Ben McKinlay sustained personal injuries as a consequence of a motor vehicle accident. Whilst it was not disputed that Mr McKinlay sustained a severe head injury due to the incident, liability was “firmly contested” by the second respondent, QBE Insurance (Australia) Limited.
An agreement to settle was reached in the matter, with the second respondent to pay damages in the sum of $640,000.000 plus financial management fees and standard costs and outlays. The compromise required sanction of the court pursuant to s 59 of the Public Trustee Act 1978 (QLD). Section 59 of the Public Trustee Act 1978 (QLD) provides that: –
59 Compromise of actions by or on behalf of persons under a legal disability claiming moneys or damages valid only with sanction of court or public trustee
(1) In any cause or matter in any court in which money or damages is or are claimed by or on behalf of a person under a legal disability suing either alone or in conjunction with other parties, no settlement or compromise or acceptance of money paid into court, whether before, at or after the trial, shall, as regards the claim of such person under a legal disability, be valid without the sanction of a court or the public trustee, and no money or damages recovered or awarded in any such cause or matter in respect of the claims of any such person under a legal disability, whether by verdict, settlement, compromise, payment into court or otherwise, before or at or after the trial, shall be paid to the next friend of the plaintiff or to the plaintiff’s solicitor or to any person other than the public trustee unless the court otherwise directs.
Sanction of the compromise was required given the extent of Mr McKinlay’s injuries which affected his capacity to understand the nature and effect of decisions in relation to the management of a large settlement sum. This was confirmed by a number of specialists who assessed Mr McKinlay in relation to the claim for damages, including a neurosurgeon, neuropsychologists, and a psychiatrist. Based on this evidence, the court was satisfied that Mr McKinlay did, in fact, lack capacity.
The court was required to consider whether the proposed compromise was “a reasonable one, and [was] for the benefit of [Mr McKinlay], having regard to all of the circumstances of the case, including the risks of litigation, the desire of the parties to settle, and the disinclination of the plaintiff to go to trial” – see Stephenson v Geiss [1998] 1 Qd R 542.
Orders were also sought, pursuant to s 12 of the Guardianship and Administration Act 2000 (QLD) (‘the Act’), for Mr McKinlay’s mother, Keryn Mayer, to be appointed administrator for Mr McKinlay, to receive and manage the balance of the nett settlement sum.
Reasons
The Court was satisfied that an order sanctioning the compromise of the proceedings in the proposed sum was appropriate.
The Court then turned to the question of Ms Mayer’s appointment as administrator.
The Court’s power to appoint an administrator for an adult is contained within ss 12, 15, and 245 of the Act. The circumstances in which an appointment can be made are detailed at s 12 of the Act, which relevantly provides that: –
“12 Appointment
(1) The tribunal may, by order, appoint a guardian for a personal matter, or an administrator for a financial matter, for an adult if the tribunal is satisfied –
(a) the adult has impaired capacity for the matter; and
(b) there is a need for a decision in relation to the matte or the adult is likely to do something in relation to the matter that involves, or is likely to involve, unreasonable risk to the adult’s health, welfare or property; and
(c) without an appointment –
i. the adult’s needs will not be adequately met; or
ii. the adult’s interests will not be adequately protected.
(2) The appointment may be on terms considered appropriate by the tribunal.”
Having established that the appointment of an administrator was necessary, that the court had the power to make such an appointment, and the circumstances in which an appointment could be made, the Court turned its attention to the appropriateness of Ms Mayer being appointed. Considerations that the Court must have regard to prior to a proposed administrator’s appointment are detailed at s 15 of the Act, and include the nature and circumstances of any criminal history of the person; whether the person has previously been refused appointment as, or removal from appointment as, a guardian, administrator, or attorney; and whether the person is or has been bankrupt, amongst other things.
The Court also made reference to President Kirby’s comments in the decision of Holt v Protective Commissioner (1993) 31 NSWLR 227, insofar as they related to when it is appropriate to appoint a family member to manage a fund. President Kirby identified a number of further relevant factors that may be considered when deciding to appoint a family member, including the likelihood of reduced management costs, the “ingredient of love and affection and unquestioning devotion” to the person, and the professional qualifications of the proposed appointee.
In the subject application, the Court looked favourably upon several factors relating to Ms. Mayer’s proposed appointment, including: –
(a) Ms Mayer had sought professional advice in relation to the management of the settlement funds, with her intention being that she would manage the funds in conjunction with IPAC Securities Pty Ltd, a firm that provided financial and investment advice to administrators;
(b) Ms Mayer was familiar with the obligations associated with being an administrator under the Act, including her reporting obligations to QCAT;
(c) Ms Mayer had never been bankrupt, nor charged with a criminal offence;
(d) Ms Mayer’s familiarity with financial matters generally, as well as her employment as a Business Development Manager and her tertiary qualifications;
(e) The relatively modest sum of the nett settlement proceeds following an intended purchase of a residential property for Mr McKinlay; and
(f) Ms Mayer’s engagement with the management of Mr McKinlay’s finances and care prior to the proposed compromise being agreed upon (i.e. her appointment as administrator would represent a continuation of the status quo in some respects). Ms Mayer also swore that she intended to continue to reside within close proximity to Mr McKinlay and would continue to attend to his daily care.
Having considered all of the affidavit material, Lyons J opined that Ms Mayer was an appropriate person to be appointed as administrator and ordered as such. In relation to this appointment, Lyons J commented that “the interests of Ben McKinlay have been appropriately protected and that there are strategies in place to ensure ongoing compliance by the administrator with the requirements of the Act.”
A number of further orders were made by Lyons J in respect of the sanction of the compromise, as well as procedural steps that the parties were to undertake given the sanction. These included the process for payment of the settlement monies by the Second Respondent, as well as steps that Ms Mayer was required to take as a newly appointed administrator.
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