Financial incapacity: Relationship between compensation claim and management orders

In H v H [2015] NSWSC 837, the court noted at [15] that there is  is, in the abstract, no universal, necessary or directly proportionate connection between a loss of physical or mental capacity compensable in a common law action for personal injury compensation against another party; and a finding of an incapacity for management of property, or person, warranting an appointment of a protected estate manager, or a guardian, upon an exercise of protective jurisdiction affecting a person entitled to compensation at common law.

However against that background the following somewhat blunt observations of the court are of interest:

19 In pursuit of compensation in common law proceedings, experience in exercise of the Court’s protective jurisdiction suggests that, from time to time, a claimant for damages (not intended, here, to be conflated with the defendant in the current proceedings personally) may succumb to a temptation to magnify indicators of incapacity (in order to inflate the level of damages recovered) only to find that success in the common law jurisdiction may be attended by inconvenient constraints imposed according to imperatives of the protective jurisdiction

20 Those who claim personal injury compensation, emboldened by a prospect of an award of damages enlarged, inter alia, by protected estate management costs in anticipation of a declaration of incapacity for self-management and the appointment of a manager, should be careful what they wish for.

21 Subjection to a regime for protected estate management, however necessary or benign, may quickly come to be seen by a protected person and his or her family as burdensome. Protected estate management orders, once made, may not readily be revoked. On balance, experience of protected estate management costs may outstrip any anticipatory award of compensation made to cover them. The costs of protected estate management are not confined to any anticipatory allowance for them made in compensation proceedings, however much the Court (and the NSW Trustee, with an administrative appeal to the NSW Civil and Administrative Tribunal) may endeavour to ensure that they do not exceed the fair and reasonable: Ability OneFinancial Management Pty Ltd and Anor v JB by his Tutor AB [2014] NSWSC 245 at [290]; Re Managed Estates Remuneration Orders [2014] NSWSC 383.

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