Supreme Court rules fund management fees are not recoverable in dependency claims10 March 2016 Topics: Insurance
In the recent case of Maggs v RACQ Insurance Limited  QSC 41, the Supreme Court of Queensland ruled that fund management fees are not recoverable damages as part of statutory claims brought under the Civil Proceedings Act 2011 (Qld) (‘CPA’).
The applicant in this case was a four-year-old girl, who brought a claim pursuant to section 64 of the CPA after her parents died of injuries sustained when their parked vehicle was struck by another vehicle. While the quantification of damages was agreed in a settlement sum, the applicant’s age meant the funds would be placed on trust until she was 18 years of age, which meant that fees for administration of the trust funds would be incurred.
At issue was whether the fund administration fees fell within the damages resulting from the death of the applicant’s parents. The applicant submitted that damages ought to include the inevitable administration costs of any damages fund as they are a plainly foreseeable consequence.
The respondent accepted that fund management fees are recoverable at common law for a tort of negligence; however this was a statutory claim under the CPA. Justice Boddice accepted the respondent’s argument that the CPA creates a statutory entitlement to damages in relation to losses suffered by a dependent child as a consequence of the wrongful death of a parent. Neither this nor the provisions of the Public Trustee Act 1978 (Qld) supported a conclusion that these fees were recoverable in a statutory claim.
His Honour considered a number of cases on the measure of damages in a Lord Campbell’s Act claim. His Honour cited the definition arising from Horton v Byrne (1956) 30 ALJ 583 at 585, that ‘the compensation should represent the balance of the loss, reduced to terms of money, which the deceased’s relatives incur in consequence of his death after deducting the pecuniary gains which on the other hand accrue to them from that event’.
Justice Boddice approved statements made by Justice Thomas in Fox v The Commissioner for Main Roads (1988) 1 QdR 120 and Justice Badgery-Parker in Rouse v Shepherd (1994) 35 NSWLR 250 to the effect that costs associated with the management of funds fall outside the scope of recoverable damages. These fees are not directly caused by the death so as to be recoverable; rather they are a matter that arises after the assessment of damages.
While both decisions were made before the commencement of the CPA, his Honour concluded that there was nothing in explanatory notes, second reading speech or in the CPA itself that revealed an intention to change the types of damages available. Therefore, these observations based on Lord Campbell’s Act claims were applicable to similar claims for damages under the CPA.
Justice Boddice concluded the CPA created a statutory entitlement to damages in these circumstances proportional to damage resulting from the death. It does not extend to damage not resulting from the death arising after the assessment of those damages, such as fund administration fees.
This finding has the potential to apply to all Lord Campbell’s Act type statutory dependency claims in Queensland, including those under Workers’ Compensation and Rehabilitation Act 2003 (Qld) and the Personal Injuries Proceedings Act 2002 (Qld) as well as the Motor Accident Insurance Act 1994 (Qld).