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Injury Liability Gazette
Case Note
Gray v Richards
[2014] HCA 40
Assessment of Damages
The High Court held that an incapacitated plaintiff is entitled to recover the expenses
associated with managing the costs of the lump sum award of damages however, is not
entitled to recover costs associated with managing the predicted future income of the
managed fund.
The facts
This was an appeal from the Court of Appeal of New
South Wales which held that costs are not recoverable
for managing an incapacitated plaintiff’s management
fees and the future income of the fund.
The plaintiff (appellant on appeal to the High Court)
sustained a traumatic brain injury when a motor
vehicle driven by the defendant (respondent on appeal
to the High Court) collided with a motor vehicle in
which she was a passenger. As a result of her injury,
she was left with a significant intellectual impairment
and requires constant care. She has no prospects of
future employment.
Issues
1. Whether the incapacitated plaintiff is entitled to
recover costs associated with managing the cost
of managing the lump sum (
fund management
fees on fund management damages
).
2. Whether an incapacitated plaintiff is entitled to
recover costs associated with managing the
predicted future income of the managed fund
(
fund management on fund income
).
Both these questions were answered in the negative
by the Court of Appeal.
The primary judgment
It was not in dispute that the Trust Company would
charge fund management fees, what was in dispute
was the fees charged on these fees. The defendant
argued that while fund management damages would
need to be managed, no allowance should be made
for that.
The primary judgment answered affirmative to both
issues, indicating that an award for damages reflecting
the cost of managing fund income was necessary to
preserve the longevity of the fund. They explained the
logic of the claim by the following explanation:
‘[I]f the cost of managing a damages award of
$10m over the relevant term were, for example,
$2m (20% of the corpus), the total verdict would
be $12m, to be received today and managed over
