Aron Steven Whyte an infant by his next friend and Administrator Dawn Whyte v Jodrell

[2001] WADC 181

JURISDICTION     :   DISTRICT COURT OF WESTERN AUSTRALIA

IN CIVIL

LOCATION:   PERTH

CITATION:   ARON STEVEN WHYTE an infant by his next friend and Administrator DAWN WHYTE & ANOR -v- JODRELL [2001] WADC 181

CORAM:   COMMISSIONER GREAVES

HEARD:   22 JUNE & 4 JULY 2001

DELIVERED          :   3 AUGUST 2001

FILE NO/S:   CIV 4834 of 1998

BETWEEN:   ARON STEVEN WHYTE an infant by his next friend and Administrator DAWN WHYTE

First Plaintiff

DAWN WHYTE
Second Plaintiff

AND

GEOFFREY ANDREW JODRELL
Defendant

Catchwords:

Compromise of action - Whether settlement funds may be deposited with private trustee in place of Public Trustee - Difference in projected fees - Exercise of discretion - Weight to be given to projected difference in fees given wishes of primary carer

Legislation:

Rules of the Supreme Court, O 70 r 12(1)

Result:

Appointment of nominated private trustee granted

Representation:

Counsel:

First Plaintiff                :     Mr K F Sleight

Second Plaintiff            :     In Person

Defendant:     Ms K M Appleyard

Solicitors:

First Plaintiff                :     Mayberry Hammond

Second Plaintiff            :     In Person

Defendant:     John G Staude

Case(s) referred to in judgment(s):

Morris v Zanki (1997) 18 WAR 260

Case(s) also cited:

Nil

1. COMMISSIONER GREAVES:  On 22 June 2001, the court ordered:

   1.The first plaintiff have leave to accept in full satisfaction of his claim for damages the sum of $5,000,000 and judgment be entered accordingly.

   2.The defendant, within seven days after service of an order by this Court appointing a protective trustee, do pay to such protective trustee the sum of $5,000,000 for investment in trust for the first plaintiff.

2. The court adjourned the application of the second plaintiff pursuant to O 70 r 12 for an order appointing National Australia Trustees Limited as protective trustee of the first plaintiff's estate.  The adjourned application came on for hearing before me on 4 July 2001.

3. In support of the application, the second plaintiff relied upon her affidavits sworn 25 May 2001 and 4 July 2001 as well as the affidavit of Darryl Hughes sworn 13 June 2001 and the affidavits of Stephen Charles Taylor sworn 18 June 2001 and 2 July 2001.  The second plaintiff, Mr Hughes and Mr Taylor also gave evidence before me.

4. Order 70 r 12(1) provides:

   "12(1) Where –

   (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."

5. The proper application of O 70 r 12(1) was considered by the Full Court in Morris v Zanki (1997) 18 WAR 260. At p 286 the court observed:

   "In our opinion it is appropriate to start from the position that there is a pre‑disposition towards the Public Trustee.  In Wood v Public Trustee (1995) 14 WAR 251 at 256 ‑ 257 Owen J set out some of those reasons by reference to the decisions in Phillips v Munro [1957] QSR 427 at 430 and Payne v Egan (1967) 86 WN (Pt 1) (NSW) 64 at 68.  Briefly they are, the role of the Crown as parens patriae, the fact that the Public Trustee is a statutory office holder established specifically to administer estates that require protection and the existence of flexibility within schemes for disabled persons.

   However, it is no more than a pre‑disposition.  Counsel for the respondent submitted that as the duty had its roots in the ancient protective role of the Crown (a proposition that we accept) the discretion was fiduciary in character and could not be fettered by a rule such as O 70, r 12 construed in this way.  We do not think that is correct.  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'."

6. At p 294 of the decision, the Full Court referred to the fact that in that case, as in this case, family members were to be the main carers of the plaintiff.  In this case, the first plaintiff also is not in an institution.  He is at home under the day to day care and control of his mother.  Likewise in this case the trust arrangement is to last for a very long time and it is in the first plaintiff's best interests if there is harmony and a good working relationship between the trustee and the second plaintiff.

7. In this case, I have formed the opinion that the second plaintiff's preferences deserve particular consideration.

8. The Full Court made it clear that the level of fees likely to be incurred is a factor that can, and should, be taken into account but is likely to be a less significant consideration where the circumstances dictate that investments outside the common fund are probable.

9. The comparison table of fees at p 59 of the Book of Documents demonstrates the projected difference in fees which may be charged over the term of the protective trust.  Given the term of the protective trust, these projections themselves must be uncertain.  As counsel observed, the great difficulty in trying to fairly compare one trustee against another is that in their projections each has embarked upon the difficult task of trying to foresee the return from investments over a very lengthy period of time.  It seems to me that in those circumstances the projected difference in fees in the circumstances of this case is due less weight than might otherwise be the case.

10. Accordingly, I am of the view that the second plaintiff's wishes should prevail and that she has shown good reason for preferring the private trustee.  I will hear counsel on the orders to be made.