JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA

CITATION : JASON TERENCE COLLINS by his next friends LEE MARION COLLINS and DALE JOHN COLLINS -v- R L & B BURNS NOMINEES PTY LTD [2002] WADC 242

BETWEEN : JASON TERENCE COLLINS by his next friends LEE MARION COLLINS and DALE JOHN COLLINS

Compromise of personal injury claim - Disabled plaintiff - National Australia Trustee Ltd approved as trustee

Guardianship and Administration Act 1990

Trustee Companies Act 1987

Leave granted to invest settlement sum with trustee company

Jones & Anor v Moylan (1997) 18 WAR 492

Martin v Castelanelli (1999) 23 SR (WA) 18

Morris v Zanki (1997) 18 WAR 260

Sosa v Carter [1978] WAR 123

1 COMMISSIONER GILES: On 10 March 1999 the plaintiff, Jason Collins, suffered a catastrophic accident. He was just about to turn 20 at the time and had recently completed his apprenticeship with the defendant as a tyre fitter.

2 On the day in question Mr Collins was attempting to remove a Goodyear wheel from a tractor, when the inner tube of the tyre exploded. The explosion caused him severe injury.

3 In a writ of summons and statement of claim dated 16 August 2000 the plaintiff sought damages from the defendant for negligence, breach of statutory duty and breach of contract. A compromise was eventually reached between the parties. An application has now come before the Court for an approval of the compromise pursuant to O 70 r 10(2) of the Supreme Court Rules.

4 The court had evidence before it that on 9 June 1999 the Guardianship and Administration Board granted orders under the Guardianship and Administration Act 1990 that Mr Collins' parents be joint plenary administrators of the estate of their son.

5 The plaintiff through his next friends, sought the approval of the court of a settlement payment to him of $1,639,918.53 and costs of $120,000 inclusive of disbursements.

6 The plaintiff also sought an order that the settlement sum be paid to National Australia Trustees Limited ("NAT Ltd") for investment on trust for the plaintiff until further order of the court.

7 There are two issues before the court. The first of these is whether the settlement sum reached between the parties is reasonable and in Mr Collins' best interests. The second issue is whether the court should permit payment to NAT Ltd in preference to the Public Trustee.

10(1) No settlement or compromise, and no acceptance of money paid into court, whenever entered into or made, in any cause or matter (other than an appeal to the Full Court) in which there is a claim by or on behalf of or against a person under disability, shall be valid unless it is approved by the Court.

(2) An application for approval under paragraph (1) -

(a) if made before the hearing of a cause or matter, shall be by summons in chambers;

(b) if made during the trial of an action or issue shall, be to the trial Judge on motion,

and shall be supported by affidavit and by the opinion of an independent counsel; but the Court or Judge may dispense with the necessity of obtaining counsel's opinion.

(3)

In this Rule 'settlement' includes an acceptance of an offer to consent to judgment."

9 In Sosa v Carter [1978] WAR 123, the Full Court considered it's role in the approval of a compromise pursuant to O 70 r 10. The then Chief Justice, Burt CJ said as follows:

"Expressed in general terms this court ought not and indeed cannot approve the proposed settlement unless it be of the opinion that it will be for the benefit of the infant plaintiff. But that cannot, I think, mean that the court is in effect to hear the application as if it were itself the appeal and then to give or to withhold its approval by comparing the offer with the judgment which it would have given on appeal. In my view what the court is called upon to do is to satisfy itself that all the facts relevant to the plaintiff's claim have been brought together and considered by her legal advisers and, unless the requirement be dispensed with, that the settlement is supported by the opinion of independent counsel. It should itself consider the opinion given and the reasons for it. If having done that it appears that all aspects of the case have received proper consideration it should be slow to disagree with the opinion particularly upon such a matter as the assessment of damages for personal injuries. The court should be aware of the risks of litigation in an area in which reasonable men can reasonably reach different conclusions and hence slow to force the infant to take a risk which the court is unable to underwrite. It should, too, satisfy itself that the opinion of counsel has been considered and understood by the infant's guardian and it should give proper weight to the fact that the guardian, as is necessarily the case, wishes to accept the settlement." (at 124)

10 The proposed compromise entails the following:

11 The court had Mr Zilko's written opinion dated 29 October 2002, under cover of an affidavit of Ms D Percy sworn on 1 November 2002. In this opinion, Mr Zilko SC described his involvement in the matter since April 2002, the course of the negotiations between the parties over the past six months and his opinion that the proposed settlement sum would be sufficient to meet the plaintiff's reasonable needs in the future.

12 Mr Zilko SC expanded on this advice in his oral submissions. He advised that the amount for loss of future earning capacity agreed between the parties is based on an estimate of the plaintiff's future earnings as a tyre mechanic until retirement, with a deduction of 7 per cent for contingencies and with no deduction for any retained capacity. This seems to me to be reasonable, having read the compendious medical reports annexed to Mr Zilko's opinion.

13 The other major single component of the compromise was future day to day care costs of $521,000. I am advised that this figure represented a compromise reached between the parties, based on 21 hours per week of care during the course of Mr Collins' lifetime.

14 This agreement was reached against a background of differing views expressed by Dr Fong, specialist in rehabilitation medicine on the one hand, and the views of Mr Dunn and Ms Bishop on the other. Mr Dunn and Ms Bishop are, as I understand it, experts on the specialised care needs of people with disabilities. I do not have Mr Dunn's report, but have considered the lengthy and detailed reports of Ms Bishop formerly of Brightwater Young Disabled Consulting Services, and now an independent consultant, dated 14 January 2002 and 23 October 2002. Ms Bishop recommends high levels of future care for the plaintiff. I have also considered the nine reports of Dr Fong dated between October 1999 and August 2001 and the document entitled "Substance of Evidence of Dr Kim Fong" (undated) filed on behalf of the defendant. Dr Fong recommends that the plaintiff would require no more than 10 hours per week personal care assistance. On the basis of this material an allowance of 21 hours care per week seems entirely reasonable.

15 Mr Zilko SC further advised in his opinion that allowances in the settlement have been reached for further plastic surgery to improve the plaintiff's facial appearance, other anticipated future medical expenses, future physical rehabilitation costs and travel overseas and interstate, including costs of a travel companion.

16 I am also informed that the $120,000 agreed for the plaintiff's legal costs and disbursements will meet the actual costs and disbursements incurred and no further contribution from the plaintiff will be required.

17 It is clear from the book of medical reports annexed to Mr Zilko's opinion, that the plaintiff's solicitors have investigated the plaintiff's level of disability, any residual ability and his need for future support in painstaking detail. Opinions have been obtained from numerous specialist doctors and other professionals who specialise in the care of people with disabilities. It is clear that the negotiations for settlement of Mr Collins' claim have taken place in the light of these opinions, and particularly in the light of the differing views as to the plaintiff's need for future day to day care.

18 I also have the affidavit of the plaintiff's mother Lee Marion Collins, sworn 1 November 2002 attesting that she has discussed the proposed compromise in detail with Mr Percy, her solicitor and Mr Zilko SC and is satisfied that the offer is reasonable in the circumstances. The views of the plaintiff's guardian as to the amount of the compromise is of course important, as is recognised by the Court in Sasa v Carter (supra).

19 Having considered this material, and the opinion of counsel as supplemented by Mr Zilko's oral submissions in court, I am prepared to approve the settlement sum agreed between the parties, as being reasonable and in the plaintiff's best interests.

20 The plaintiff seeks an order that the settlement sum be paid to NAT Ltd for investment on trust for the plaintiff until further order of the court.

21 Order 70 r 12 of the Rules of the Supreme Court provides:

(a) in any proceedings money is recovered by or on behalf of or is adjudged or ordered or agreed to be paid to or for the benefit of a person under disability; or

(b) in any proceedings money paid into court is accepted by or on behalf of a plaintiff who is a person under disability; or

(c) in an application under Rule 11(1) the court has ordered the payment into court or investment of any moneys relating to a settlement or compromise,

the money shall, unless otherwise ordered by the Court, be paid to the Public Trustee for investment on behalf of the person under disability, and if the Court so orders may be invested by the Public Trustee in investments outside the Common Fund.

(2) The Court may at any time, and from time to time, give directions for the application of the income or of the capital and income of the investment for the maintenance, welfare, advancement, or otherwise for the benefit of the person under disability."

22 This rule has been considered in a number of decisions of the Full Court of the Supreme Court including Jones & Anor v Moylan (1997) 18 WAR 492 and Morris v Zanki (1997) 18 WAR 260.

23 In Morris v Zanki it was held that while there was a pre-disposition towards the Public Trustee, "it is no more than a pre-disposition". The court held (at 286):

"The court has a duty to consider the future management of the verdict moneys and it has a discretion. The governing consideration is 'what is best to be done for the [person under the disability]'. The discretion must be exercised judicially. It cannot be determined arbitrarily. Where the court is asked to exercise the power to place funds with a private trustee rather than the Public Trustee the judge must examine all of the circumstances and decide what is in the best interests of the person for whose benefit the funds are to be held. This will, of necessity, require a consideration of available options and alternatives. But this is not to say that a pre-disposition towards the Public Trustee is an impermissible fetter on the discretion. It serves a number of purposes. It indicates that the onus is on the person seeking the exercise of the discretion in his or her favour to establish grounds on which the order should be made. It means that if no application is made or if no good reason is shown for preferring a private trustee, the Public Trustee will assume the role. We have chosen the adjective 'good' (in relation to the reasons that are advanced in support of the application) quite deliberately. We would avoid other possible descriptions such as 'cogent' or 'special' or 'exceptional' ".

24 In Martin v Castelanelli (1999) 23 SR (WA) 18 at 21 her Honour Judge O'Brien set out the factors to take into account in deciding where to authorise the deposit of settlement funds as including:

1. the financial security of the fund in the long term;

2. the necessity to have some independent entity or person in a position to ensure that at all times the plaintiff's interests are protected;

3. the wishes of the family - particularly if the plaintiff is to be placed in an institution and family members are involved with her on a daily basis;

4. the harmonious relationship between the family and the trustee;

5. the level of fees likely to be charged by the trustee.

25 I have before me a number of documents concerning the suitability of the proposed trustee, NAT Ltd.

26 In the affidavit of Dale John Collins, the plaintiff's father, sworn 1 November 2002, he attests that he has personal experience in the finance industry in that he worked for the R & I Bank in WA between 1961 and 1977, including holding positions as senior accountant and relieving manager. This involved providing financial advice to customers as well as most aspects of lending, borrowing and investment.

27 Mr Collins attests that about four years ago he came into contact with Kim Bailey, financial planner with Godfrey Pembroke, financial consultants in Perth. Through becoming friendly with Mr Bailey, Mr Collins made enquiries of NAT Ltd and in approximately May 2001, spoke with Darryl Hughes, manager of the Trustees Services in WA for NAT Ltd.

28 Since that time Mr Hughes has provided Mr Collins with information concerning the services which NAT Ltd can offer in the capacity of trustee. Based on his enquiries, Mr Collins is of the view that NAT Ltd provides superior services and expertise to that of the Public Trustee. Representatives of NAT Ltd will meet with Jason Collins and his parents regularly to ensure that his needs are being met. In Mr Collins' view NAT Ltd has a more rigorous assessment of the performance of investment portfolios than the Public Trustee.

29 He notes that the fees charged by NAT Ltd are higher than those charged by the Public Trustee. However, he states as follows:

"I believe that it is in Jason's best interests for the monies to be placed with National Australia Trustees Ltd.

Both myself and my wife Lee Marion Collins would prefer the appointment of National Australia Trustees Ltd rather than the Public Trustee."

30 Annexed to Mr Collins' affidavit is a letter from the Public Trustee dated 30 October 2002 setting out an estimate of fees applicable to a $1.5 million trust over 49 year period. Also annexed is a letter dated 25 October 2002 and attachment from Darryl Hughes, Manager Trustees Services WA outlining the service that would be offered by NAT Ltd. Unfortunately, these proposals are not easily comparable. However it is generally clear, apart from the cost of an establishment fee, that the charges imposed by NAT Ltd are higher than those proposed by the Public Trustee.

31 Attached to Mr Hughes' proposal are two schedules of investment projections for Mr Collins' damages award, invested with NAT Ltd, over time. The first projection is based on an initial capital sum of $1.5 million. The second is based on an initial capital of $1.28 million. The second projection is a more realistic one given that it is agreed that $250,000 of Mr Collins' settlement sum will be spent in the near future on the purchase of a house for him in which he can live independently from his parents, with the remainder to be invested on his behalf.

32 This is predicated on a number of factors which are difficult to predict, involving of necessity an estimate of factors and their behaviour in the future. These include income yield which is estimated at 4 per cent, capital growth rate, also estimated at 4 per cent and assumed inflation rate at 2.75 per cent. The projection does however give the court some indication that the settlement sum contemplated for Mr Collins, if managed wisely will be adequate for his needs.

33 NAT Ltd was the subject of the application considered by the Full Court of the Supreme Court in Morris v Zanki and by O'Brien DCJ in Martin v Castelanelli. This is of assistance to me because there is no evidence before me in this application concerning the security of the fund in the long run, apart from the fact that the trustee company is associated with the National Australia Bank. I also note in the fine print of one of NAT's brochures, which was annexed to Mr Dale Collins' affidavit, that "National Australia Bank Limited does not, however guarantee the performance of National Australia Trustees Ltd".

34 When the issue of security of NAT Ltd was considered by the Full Court in Morris v Zanki it said (at 293):

"With the Public Trustee and other entities whose existence is recognised by the Trustee Companies Act 1987 (WA) there are at least some additional safeguards. The list of entities beyond those that have statutory recognition but in whose favour the discretion could properly be exercised must necessarily be very small indeed. In this case, NAT is a wholly owned subsidiary of one of this country's largest banking organisations. There was evidence to support the contention that it was financially and structurally secure. NAT is a company to which the Trustee Companies Act applies ...

... NAT would stand in a fiduciary relationship to the respondent and would be subject to all of the duties and responsibilities of a trustee in its dealings with the respondent. We can appreciate what his Honour had in mind concerning the Public Trustee's role in protecting the interests of the respondent. However, we think it overlooks the fact that NAT (as a protective trustee) would be able to play a role as an entity independent of the family to guard against any unwarranted interference with the rights of the respondent. NAT would be a trustee along with Mr and Mrs Zanki. All trustees must concur in the exercise of the powers conferred on them with reference to the trust estate."

35 In Martin v Castelanelli, her Honour Judge O'Brien made similar comments regarding the security of NAT Ltd. She said:

"I am satisfied as to the long term financial security of NAT. This is a matter of the utmost importance when exercising a discretion as to the placement of the settlement fund."

36 Morris v Zanki was decided in 1997 and Martin v Castelanelli was decided in 1999. The material relied on by the court in those cases therefore is somewhat out of date. However, I see no reason to doubt that NAT Ltd remains financially secure and able to look out for Mr Collins' best interests. This is a issue I have given anxious consideration, particularly in the light of recent corporate collapses. But there is nothing to suggest that NAT Ltd is affected by any of these matters. I am also influenced by the fact that Mr Collins has accumulated 16 years working in the finance industry and is of the view that the services and expertise offered by NAT Ltd are superior to those provided by the Public Trustee.

37 I also note that NAT Ltd is still listed in Schedule 1 to the Trustee Companies Act 1987, as a trustee company under that Act and subject therefore to the controls imposed by that Act. I also note the protection offered by O 70 r 12(2) of the Rules of the Supreme Court, and the proposed order to allow liberty to apply to the court.

38 I am also influenced by the clearly expressed view of both of Mr Collins' parents, as outlined in Mr Dale Collins' affidavit, that they would rather deal with NAT Ltd than the Public Trustee. This is a significant factor. The relationship between Mr Collins' parents on the one hand and the body responsible for managing the fund on the other is crucial. I would not want to burden Mr and Mrs Collins with a relationship in which they have no confidence, particularly when they already have to bear the daily stresses and strains of caring for their badly disabled son. This would not be in Jason Collins' best interests.

39 Pursuant to O 70 r 12(1) I am prepared to order that the settlement sum be paid as requested by the plaintiff to National Australia Trustees Ltd to be invested and held in trust for his future care.

40 The Court orders as follows:

1. There be judgment for the plaintiff against the defendant in the sum of $1,639,918.53 and costs in the sum of $120,000 inclusive of disbursements.

2. The plaintiff be given leave pursuant to O 70 r 12(1) of the Rules of the Supreme Court 1971 for the settlement sum to be placed under the control of the National Australia Trustees Ltd.

3. In satisfaction of the plaintiff's judgment the defendant shall within seven days of service of this judgment pay to the National Australia Trustees Ltd the sum of $1,639,918.36 for investment on trust for the plaintiff until further order of the court.

4. There be liberty to apply in respect of the investment and application of the funds.

5. Upon payment of the judgment and costs the defendant be discharged from any further liability in respect of the action.