Duffell v Duffell
[2015] ACTSC 123
•26 May 2015
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | Duffell v Duffell |
Citation: | [2015] ACTSC 123 |
Hearing Date(s): | 27 March 2015 |
DecisionDates: | 27 March and 26 May 2015 |
Before: | Refshauge J |
Decision: | A 27 March 2015 1. That the compromise set out in the General Form of Consent Judgment handed up and signed by the solicitor for the plaintiff on 26 March 2015 and the solicitor to the defendant on 27 March 2015 be approved. 2. Judgment be entered for the plaintiff in the sum of $2,750,000.00, inclusive of funds management plus costs to be agreed or assessed, such costs not to include the plaintiff’s costs incurred on occasions where costs orders made in favour of the defendant. 3. It be noted that the judgment sum in order 2 is inclusive of all payments paid by Insurance Australia Limited trading as NRMA Insurance pursuant to s 83 of the Motor Accidents Compensation Act 1999 (NSW). 4. The defendant is authorised to deduct and/or pay from the judgment sum any monies payable or repayable by the plaintiff to any person or body, whether in respect of workers compensation, social services, sick leave payments, make-up pay, accident pay or any amount payable to the Commonwealth under the Health and Other Services (Compensation) Act 1995 (Cth) or otherwise and whether in respect of any statute, regulation, award or agreement or otherwise concerning which any demand or notice has been served on or given to the defendant or their solicitor or insurer either before, on or after the date hereof. 5. It be noted that the plaintiff undertakes and agrees to pay out of the judgment sum any monies repayable by the plaintiff to any person or body in respect of Workers Compensation, social services, sick leave payments, make-up pay, accident pay or any amount payable to the Commonwealth under the Health and Other Services (Compensation) Act 1995 (Cth) or otherwise which may not have been deducted by the defendant pursuant to order 4 hereof and also to pay to the parties entitled all outstanding medical, hospital, ambulance and other out-of-pocket expenses. 6. It be noted that the plaintiff acknowledges that the defendant and its insurer have informed the plaintiff under to s 22(1)(a) of the Health & Other Services (Compensation) Act 1995 that the plaintiff may be liable to pay amounts under that Act or the Health & Other Services (Compensation) Care Charge Act 1995 as a result of the settlement being made and that the Insurer has given the prescribed notice of its intention to make an advance payment in accordance with that Act. The defendant or its licensed insurer is authorised to deduct from the judgment sum and to forward to the Health Insurance Commission an amount equivalent to 10 percent thereof or the amount stated in a current Certificate issued in accordance with s 21 of the Health & Other Services (Compensation) Act 1995, as amended. 7. It be noted that the plaintiff undertakes to inform the defendant of any amount repayable by him under the Social Security Act 1991 (Cth), and also authorises the defendant to inform Centrelink of the payment and to ascertain whether any amount is repayable under that Act. If the payment of the settlement sum is made to the plaintiff by the defendant or insurer prior to Centrelink notifying the parties that an amount is repayable under that Act, the plaintiff undertakes to repay this amount and indemnifies the defendant and insurer for any liability for any such payment. 8. No interest shall be payable in respect of the advance payment referred to above nor in respect of the judgment herein if same be paid within 28 days from the date of judgment, within 28 days after the receipt of an Authority to Receive satisfactory to the defendant and a copy of the Judgment duly signed or initialled by the Registrar, or in the event an advance payment is not made, within 28 days after receipt by the defendant or its insurer of a final notice under the Health & Other Services (Compensation) Act 1995, or in the event of a Notice of Charge being received form Centrelink, within 28 days after the receipt by the defendant or its Insurer of notification in writing from Centrelink of the amount to be paid to the plaintiff, whichever is the later. 9. It be adjudged that the plaintiff recover against the defendant the sum of $2,750,000.00, inclusive of funds management plus costs to be agreed or assessed, such costs not to include the plaintiff’s costs incurred on occasions where costs orders made in favour of the defendant. B 26 MAY 2015 1. The plaintiff be heard as to the orders to be made in accordance with these reasons. |
Category: | Principal Judgment |
Catchwords: | PRACTICE AND PROCEDURE – Application for approval of settlement – Persons with legal disability – Involvement by the litigation guardian – Arrangements for funds management – Appointment of trustee – Public Trustee – Proposed appointment of a trustee company |
Legislation Cited: | Financial Management Act 1996 (ACT) Health and Other Services (Compensation) Act 1995 (Cth), ss 21 22(1)(a) Court Procedures Rules 2006 (ACT), rr 1617, 1618, 282 |
Cases Cited: | Clement v Basset (1987) 46 NTR 36 Elderfield (by her litigation guardian Virentin v Transport Accident Commission (2010) 55 MVR 206 |
Texts Cited: | Williams, Civil Procedure Victoria (LexisNexis looseleaf: Sydney) [I 15.08.05] |
Parties: | Jon Duffell by his litigation guardian Jane Derrin (Plaintiff) James John Duffell (Defendant) |
Representation: | Counsel Mr A J Bartley SC and Mr S J Longhurst (Plaintiff) Mr D Wilson (Defendant) |
| Solicitors Porters Lawyers (Plaintiff) Curwoods Lawyers (Defendant) | |
File Number(s): | SC 112 of 2007 |
Refshauge J:
On 23 January 2005, the plaintiff applicant, Jon Duffell, was involved in a motor vehicle accident on the Kings Highway, near Braidwood, New South Wales.
As a result of the accident, Mr Duffell suffered very serious injuries which included a traumatic brain injury assessed by Dr Stephen Buckley, Consultant Physician in Rehabilitation Medicine, as in the “extremely serious” range with consequent cognitive and behavioural deficits. He also suffered a number of orthopaedic injuries to his left forearm, wrist and hand, his left knee and humerus, his right foot and ankle and to his sternum, ribs and collarbone. He suffered nervous shock, post-traumatic amnesia and stress and psychological injury.
This has left him with a wide-range of disabilities which I do not need to catalogue.
Because of his disability caused by the brain injury, he commenced proceedings by his mother, Jane Derrin, as his litigation guardian, for recovery of compensation for the damages, loss and injuries he had suffered. The Originating Claim was filed on 22 February 2007. The defendant was the driver of the vehicle in which Mr Duffell was a passenger and which collided with other vehicles on the Kings Highway. The defendant was said to be culpably negligent in his driving and that negligence caused the injuries, loss and damage sustained by Mr Duffell.
The defendant admitted in his defence that he was negligent, but did not admit that he was responsible for the loss and damage sustained by Mr Duffell. The trial, accordingly, was directed only to the question of damages, liability having been admitted.
The trial commenced on 1 December 2014 before the Master (now Associate Judge) and continued for ten days before being adjourned when directions for compulsory mediation were made. That mediation was conducted on 6 February 2015 and was successful in that both parties agreed on terms under which they were prepared to settle Mr Duffell’s claim.
As, however, Mr Duffell was a person under a disability, r 282 of the Court Procedures Rules 2006 (ACT) requires that the court approve such settlement. If the settlement is not approved, then the proceedings would resume to judgment.
Naturally, the Associate Judge would not be the judicial officer to approve the settlement as his Honour would be required to complete the hearing, were the settlement not to be approved.
The court, when considering the approval of a claim such as this, will, in addition to information about the case and the adequacy of the proposed settlement as compensating Mr Duffell for the losses and injuries suffered, require some detailed explanation of the weaknesses or difficulties in the plaintiff’s case, as well as its strengths and it would be quite inappropriate for the judicial officer, who, if the settlement is not approved, must hear and determine the claim, to be made aware of such matters.
As a result, the matter was referred to me. I heard the application on 27 March 2015.
The application – Law and Practice
The principles and practice to be applied in such applications are well-known. After considering the authorities, I summarised them in Singh (by her next friend Singh) v Calvary Hospital ACT Inc (2008) 164 ACTR 44 (Singh (No 1)) at 46-8, [3]-[20]. Such an application is, as explained by Rothman J in Fisher v Marin [2008] NSWSC 1357 at [29], an exercise of the protective jurisdiction of the court.
The application is made by Application in Proceedings supported by affidavits sufficient to show the nature and extent of the injuries, damages and loss suffered by Mr Duffell and evidence from the litigation guardian of his or her views and understanding of the proposed compromise.
If there is no proceeding on foot when the settlement is reached, it may be desirable that proceedings are commenced in the ordinary way so that the court can decide exactly what is being settled. That is, however, not always necessary. See Sergi by his next friend Solowicz v Sergi [2012] WASC 18 at [55]. It may be that an Originating Application could be filed with a supporting affidavit which, in itself, or in an annexed Deed, sets out with sufficient clarity the cause of action that is being compromised so that what is being resolved is clear. This is clearly permitted under the rule which refers to “proceedings” as well as to “proposed proceedings”, under which the latter would fall.
Thus, an Application in Proceedings was filed seeking approval of the compromise and entry of judgment. The affidavit in support of the application was here made by a solicitor employed by the firm of legal practitioners acting for Mr Duffell. I read it. It helpfully set out a summary of the accident, details of the injuries Mr Duffell sustained, his consequent disabilities and his current employment and annexed medical reports from a consultant psychiatrist, a consultant physician in rehabilitation medicine, three occupational physicians and an orthopaedic surgeon as well as reports from a neuropsychologist, two occupational therapists and psychologists. These also addressed his ongoing medical and other needs into the future.
An advice from senior and junior counsel was also provided. It was properly contained in a sealed envelope. See Singh No 1 at 46; [4].
A key component of such applications is formal advice on the propriety of the settlement. In matters of complexity or where the settlement sum is substantial, an advice of counsel is almost invariably required.
In Singh (No 1), I emphasised that such an opinion was to be provided by counsel. That was a matter of significance. That is not quite how it was expressed in Karvelas (by her next friend) v Chikirow (1976) 11 ACTR 22 at 23 (Karvelas) when Blackburn J set out the procedure which should be, and has generally been, followed since then and on which I based my remarks.
His Honour said:
In every such case, the considered opinion of an experienced practitioner, based on full instructions, should be placed before the court. Where the sum involved is a large one, the opinion of counsel should be exhibited to an affidavit. In a smaller claim (such as this one) it may not be necessary to get the opinion of counsel, and the opinion of the plaintiff’s solicitor may be sufficient. If the opinion is an exhibit, it can be withheld from the defendant; if it is expressed by a solicitor in an affidavit, the copy affidavit should not be delivered to the defendant’s advisers.
With respect, I entirely agree. There are many experienced practitioners on whose opinion, for smaller claims, it is entirely appropriate for the court to rely without the cost and expense of retaining counsel. This is the approach taken elsewhere. See Clement v Basset (1987) 46 NTR 36 at 38 and Mayer (by his next friend Mayer) v Mayer [2015] VSC 2 at [5]. It has, since Karvelas, been the approved practice in this Territory.
It is obviously not possible to set out a fixed rule as to when counsel’s advice may be required and when an opinion of an experienced solicitor is acceptable; what is a “smaller claim” and what is not. A reasonable rule of thumb would probably be that, where the settlement was for more than $50,000, counsel’s advice would be required, though if the claim was originally for $500,000 and the settlement was for $50,000, counsel’s advice as to why such a reduced amount was to be accepted may then be required. There may also be complexities which would require counsel’s advice.
In Pfitzner v Sergeant [1941] SASR 286, Murray CJ held that the opinion could not be made by a member of the firm of solicitors for the plaintiff. I have not been able to find any decision that refers to that decision. The case was a settlement for a claim for damages by a widow, on behalf of herself and her children, for the negligently caused death of her husband. Thus, the amount claimed would likely have been significant. The circumstances of legal practice at the time in South Australia would also be relevant, the first set of barrister’s chambers being established in that State in 1964. I am not satisfied that Pfitzner v Sergeant remains good law, at least in this Territory.
In particular, Blackburn J referred in Karvelas to “the plaintiff’s solicitor” as a possible provider of written advice as to such a compromise and I consider that this is appropriate, so long as the solicitor has the experience, disclosed in the affidavit, to give the opinion.
There is no doubt that the opinion, whether from counsel or an experienced solicitor, must ordinarily be in writing. See Page v Rodgers (1977) 16 ALR 40 at 41; Robertson v Whitefield (1988) 90 FLR 311. The more careful consideration that reducing the opinion to writing inevitably brings is an important element in the protection required when the court is exercising what is a protective jurisdiction.
A written opinion will also assist the court to be assured that all of the matters that need to be brought to the court’s attention have been addressed. Burt CJ, with whom Wallace and Brunsden JJ agreed, pointed out in Sosa v Carter [1978] WAR 123 at 124 that the court should be slow to disagree with the opinion expressed.
The case before me was a very significant one, the settlement being for the sum of $2,750,000 as a judgment in Mr Duffell’s favour. I had most helpful advice from senior and junior counsel and senior counsel also appeared and helpfully addressed me.
Of course, the affidavit of the solicitor for Mr Duffell and counsel’s opinion should not be served on the defendant, as noted by Blackburn J in Karvelas at 23, for the reasons well-expressed by the court in Fowler v Gray [1982] Qd R 334 at 352.
I followed the practice I had adopted in Singh (No 1) at 47; [10], and requested counsel for the defendant and his instructor and client to leave the court after addressing me on the terms of the settlement and any issues he wished to raise. They did leave the court during the hearing of the balance of the application, but not before providing a helpful table, which I received and on which I relied, and making reference to the fact that the defendant had filed an affidavit annexing detailed reports from medical practitioners, being a psychiatrist, two neurologists and an orthopaedic and spinal surgeon as well as from an occupational therapist and a clinical psychologist. I read that affidavit.
The question to be asked by the court was identified by Blackburn CJ in Elliott v Diener (1978) 21 ACTR 21 at 22 as follows:
The solicitor says in his affidavit that he has considered what would be for the benefit of the infant; but that is not enough. The test of benefit to the infant is not whether the sum is adequate and reasonable. The matter is not to be decided by the plaintiff’s own solicitor as if he were a judge awarding damages after a contested hearing. The question which counsel or solicitor for the plaintiff has to decide, when considering a compromise of an infant’s claim is whether the prospect of getting a greater sum by rejecting the present offer is good enough to outweigh, significantly, the risk of not getting any more. There may be various factors in such a decision, sometimes present and sometimes not; for example, the importance of termination of the proceedings may be great for some plaintiffs and insignificant for others. The question of costs, also, will usually be significant. The decision is peculiarly one for experienced counsel and solicitors.
The identification of the correct issue is important for it would not be in the interests of a disabled plaintiff to be refused approval of a compromise on the basis that the settlement is inadequate if the refusal required the plaintiff to proceed with litigation where the risk of receiving an even smaller sum (and thus one less adequate), or worse, nothing, was great.
In the Northern Territory, the position may be different. In Clement v Basset, at 38, Kearney J said, after referring to the above passage in Elliott v Diener:
However that may be, in this jurisdiction the test of benefit is whether the compromise is proper, and reasonably in the interests of the plaintiff.
That may be a different way of expressing what ultimately is the same test. Thus, Rothman J in Fisher v Marin at [29], described the “overriding principle” to be that the court must form the view as to whether the compromise is or is not beneficial to the interests of the person under the disability, but then cited Karvelas and Elliott v Diener as the test to be applied. See also Elderfield (by her litigation guardian Virentin v Transport Accident Commission (2010) 55 MVR 206 at 208-9; [18]-[20]. I will follow what Blackburn CJ said in Elliott v Diener.
In Mayer (by her next friend Mayer) v Mayer, Croft J cited with approval the statement in Williams, Civil Procedure Victoria (LexisNexis looseleaf: Sydney) [I 15.08.05] where the authors summarised the position as follows:
The major consideration is the degree to which the person under disability is at risk that if the proceeding went to trial the result would be less favourable than what is offered in settlement. The court will hesitate to withhold its approval where that risk is not insignificant.
That approach seems to me to accord with the approach in this jurisdiction as I have outlined it and it is the approach I consider should be taken, and has been taken, in this jurisdiction.
I was greatly assisted by the opinion of counsel in this matter and Senior Counsel’s frank and helpful submissions, as well as the contribution of counsel for the defendant. The detailed affidavit of Mr Duffell’s solicitor was very important in setting out the injuries, disabilities and future needs of Mr Duffell.
I also head from the litigation guardian. In Karvelas at 23-4, Blackburn J explained the position of the litigation guardian (then referred to as the plaintiff’s next friend) as follows:
The views of the plaintiff’s next friend, approving the compromise, are not necessarily of any weight, especially if the next friend is a parent who is maintaining the plaintiff and bearing the primary liability for the costs of the action. The question is always, and only, what is in the interests of the infant. The views of a parent may be relevant, and may help to clarify the matter, if they are genuinely related to that question and that question only. Unless they are so related, they are irrelevant and may be misleading.
The evidence of Ms Derrin, the litigation guardian, was helpful in understanding the disabilities suffered by Mr Duffell and how they were addressed. Her evidence also addressed the issue of the management of the judgment sum to which I turn below.
In my view, it is desirable to have at least an affidavit from the litigation guardian in which he or she confirms that the opinion as to the appropriateness of the settlement has been read and understood, that the proposed settlement is in the best interests of the plaintiff and that the litigation guardian consents to it. I have addressed this in Singh (No 1) at 47-9; [12]-[23] in some detail. Carefully considered, the approach I there took does not seem to me to be inconsistent with what Blackburn J held.
If the parties wish, the litigation guardian could be called to give that evidence orally. The litigation guardian only needs to be present if he or she is to give such oral evidence, is to be cross-examined on any affidavit made, or if the plaintiff is present.
In other jurisdictions, such as the UK (see Re Barbour’s Settlement [1974] 1 All ER 1188 at 1191), and NSW (see Permanent Trustee Co (NSW) Ltd v Cather (1901) 18 WN (NSW) 160) the opinion of the litigation guardian is commonly sought and considered. In WA (Sosa v Carter at 124) it is necessary to show that the litigation guardian has considered and understood counsel’s advice. Given the role of the litigation guardian that latter obligation seems to me to be necessary and not inconsistent with the views of Blackburn J, to which I have referred above (at [35]).
Mr Duffell was present in court. That will be highly desirable where there is an issue, such as scarring or significant physical disability which the court can view. In other circumstances, it may not be necessary. I found it to be helpful.
The opinion and the submissions of senior counsel for Mr Duffell addressed the relevant issues and supported the position that the proposed compromise was, in the sense in which I have described it above (at [29]-[33]), for the benefit of Mr Duffell. The evidence was helpful in assessing the issues I have to decide. As a result, I found that the proposed compromise was in the interests of Mr Duffell.
There were important challenges which faced Mr Duffell in obtaining a greater sum than that offered, though it was by no means inevitable that he would not. There were, however, real evidentiary difficulties that he faced.
The proposed compromise, however, did, it seemed to me, on the material which was tendered, adequately provide for his likely future care and maintenance in the light of his present disabilities and likely prognosis.
It is also relevant that the litigation, which has now been on foot for eight years, would not otherwise be completed in less than six months at best. In the absence of a system in this court of interim payments (a matter that the legislature may well wish to consider as a desirable reform) there is ongoing pressure on Mr Duffell.
I must also take into account the stress that litigation obviously poses for a plaintiff in such proceedings.
Nevertheless, the principal issue is the question of whether Mr Duffell is reasonably likely to secure a greater judgment sum than that sum which is the subject of the compromise. The other matters simply provide a context for the extent to which the court assesses the adequacy of the settlement in the light of the reasonable likelihood of achieving a greater sum in judgment.
In my opinion, it is likely that, should the proposed compromise not be approved and the litigation proceed, there is a substantial risk that Mr Duffell would not receive a greater sum than that offered in the compromise and a significant risk that he would receive less.
In Fowler v Gray at 354, the court held that it is neither necessary nor appropriate that the court state publicly in detail its reasons for refusing to approve to sanction a settlement, for that may result in prejudice to one or more of the parties.
It has also not been the practice, nor, in my view, is it necessary, for the court to set out in detail its reasons for approving the compromise. While it is unlikely that the proceedings would be taken further, that is always possible. In any event, the matter is one where the two parties are ad idem on the result, which is the compromise. Part of the reason for non-publication of detailed reasons is that there may be personal considerations which the family of a litigant would prefer to keep confidential, but which the frank disclosure required by the court must play a part. See Rattray v Forman [2003] NSWSC 228 at [9].
In New South Wales, it seems that more extensive reasons may be published from time to time (or in Fairhurst (by his tutor NSW Trustee and Guardian) v Fairhurst [2012] NSWSC 388) though a more general summary may be likely to be all that is required (as in Institoris by his next friend Institoris v Falconer [2012] NSWCA 298) if reasons are to be published at all.
Accordingly, I approved the compromise. I asked the defendant’s counsel and solicitor to return to the court and made the formal orders.
Management of the Judgment Funds
Mr Duffell, however, also sought that the judgment sum be paid into a trust administered by National Australia Trustees Ltd. I had an affidavit by the litigation guardian, Ms Derrin, and by Shivan Singh, an authorised officer and Associate Principal, Personal Trusts NSW of that company.
I set out in Singh (by her next friend Singh) v Calvary Hospital ACT Inc (No 2) (2009) 3 ACTLR 247 (Singh (No 2)) the principles on which the court acts when considering such an application. I shall apply them in deciding the issue.
The background to this issue is as follows.
Rule 1617 of the Court Procedures Rules requires that an amount of damages recovered by a person under a disability, such as Mr Duffell, whether under a judgment or otherwise, including by virtue of a compromise approved by the court, must be paid into court. Rule 1618 then provides:
1618 Person with legal disability—orders about recovered amounts etc
(1) The court may make an order directing how an amount recovered, awarded or agreed to be paid in a proceeding in relation to the claim for relief of a person with a legal disability (the claimant) must be dealt with.
Note An amount ordered to be paid to a person with a legal disability must be paid into court and, unless the court otherwise directs, be paid out to the public trustee (see Public Trustee Act 1985, s 25).
(2) Without limiting subrule (1), the court may, by order, direct—
(a) the payment of all or part of the amount to—
(i) the claimant or the claimant’s litigation guardian for—
(A) expenses incurred by or paid for the claimant; or
(B) the maintenance or benefit of the claimant; or
(ii) the claimant’s solicitor for costs; or
(b) the investment of all or part of the amount for the claimant in the way stated in the order; or
(c) the investment of all or part of the interest received from an investment under this rule for the claimant in the way stated in the order; or
(d) the changing of an investment made for the claimant under this rule; or
(e) the sale of securities in which an amount is invested for the claimant under this rule at the time, and on the conditions, stated in the order; or
(f) the payment of all or part of the amount, or the transfer of a security or investment under this rule (including an account with an authorised deposit-taking institution), for the claimant.
(3) In this rule:
amount includes an amount of damages.
Note Pt 6.2 (Applications in proceedings) applies to an application for an order under this rule.
The Public Trustee Act 1985 (ACT), however, provides in s 25 for the default position that such moneys be paid out to the Public Trustee. That section is in the following terms:
25 Payment of money etc to public trustee on behalf of person under disability
(1) Where, in the proceedings, it is adjudged or ordered, or it is agreed, that money, not being money to which subsection (3) applies, be paid to a person under disability (whether or not that person is a party to a cause or matter), the money—
(a) shall be paid into court; and
(b) shall, unless the court otherwise directs, be paid out to the public trustee.
(2) Where money, not being money to which subsection (3) applies—
(a) is paid into court—
(i) before the commencement of this Act; or
(ii) after the commencement of this Act under a judgment, order or agreement given, entered or made before the commencement of this Act; and
(b) the money is being held in court on behalf of a person under disability; the court may, by order, direct that the money be paid out to the public trustee.
(3) Where—
(a) money payable as compensation under the Workers Compensation Act 1951 is paid into court, whether before or after the commencement of this Act; and
(b) the money is being held in court on behalf of a person under disability; the court may, by order, direct that the money be paid out to the public trustee.
(4) Where, as a result of a direction given under subsection (1), money in court is not paid out to the public trustee, the court may, by order, direct that the money be paid out to the public trustee and may make such other order as it thinks fit.
(5) Where a court adjudges or orders that property (whether real or personal) be delivered up or transferred to a person under disability (whether or not that person is a party to a cause or matter), the court—
(a) may order that the property be delivered up or transferred to the public trustee on behalf of that person; and
(b) may give such directions for the service of the order on the public trustee as it thinks fit.
(6) Where an order under subsection (5) is served on the public trustee, the public trustee shall accept delivery or transfer of the property to which the order relates and the acceptance of the property shall be a sufficient discharge to the person delivering or transferring the property.
(7) Nothing in this section applies in relation to—
(a) money ordered or agreed to be paid in proceedings in the Magistrates Court, being money due to a person who has not attained full age as salary, wages or otherwise in respect of the person’s employment; or
(b) money payable as compensation under the Workers Compensation Act 1951 by way of a weekly payment.
In Singh (No 2) at 254; [24], I referred, by reference to Morris v Zanki (1997) 18 WAR 260 at 286, to the “predisposition in favour of the Public Trustee” as the trustee for such funds. Nevertheless, as also stated in that case, the court has a discretion.
I then said in Singh (No 2) at 256; [33]-[35]:
There is no doubt that the court may instead appoint a trustee company (Smith v Reynolds (No 2), Morris v Zanki).
When considering whether to appoint such a company, one of the important issues about which the court needs to be informed is the financial and structural security of the company. As noted in Morris v Zanki at 293, satisfactory evidence is required.
Nevertheless, the court can take notice of the fact that such companies are regulated. Safeguards in such legislation is relevant and should be noted by the court (Jones v Moylan at 496). The regulation may include the regulation of fees and charges (Willett v Futcher at 637-9).
I note that in Hulanicki (by her next friend Hulanicki) v Walton [2014] ACTSC 17 at [177], Burns J identified the following factors that support the appointment of the Public Trustee:
· the Public Trustee is a public servant (s 5 of the Public Trustee Act);
· this results in direct supervision and control of the Public Trustee by the Crown in its parens patriae jurisdiction;
· the Territory effectively indemnifies the Public Trustee for any liability arising out of any act or omission (s 12 of the Public Trustee Act);
· the Territory also indemnifies members of the Public Trustee’s Investment Board in certain circumstances (s 53F of the Public Trustee Act).
I have not heard submissions on these matters. They are relevant, though I am not satisfied that the Crown does exercise the relevant supervision of the Public Trustee in the way suggested. It may do. I have not heard such submissions or seen authority or evidence that suggests that there is any greater supervision for the Public Trustee, especially by the Crown, than matters such as the regulatory structure of the Public Trustee Act, the arrangements under the Financial Management Act 1996 (ACT) and the overall obligation of the Attorney-General as the official who acts for the Crown as parens patriae, as the proper officer in respect of the superintendence of all charitable trusts, private and public: Wellbeloved v Jones (1822) 1 Sim & St 40 at 42-3; 57 ER 16 at 17.
The affidavit of Mr Singh set out the structure and governance of the proposed trustee, the approach it takes to trusteeship, its regulatory framework and the details of fees charged.
I note that the proposed trustee, National Australia Trustees Ltd, is a wholly owned subsidiary of the National Australia Bank Ltd, though a majority of the directors of the proposed trustee are independent to the Bank. The proposed trustee has $4.6 billion in funds under administration.
The proposed trustee is regulated by the Australian Prudential Regulation Authority and the Australian Securities and Investments Commission and holds relevant licences and approvals to conduct its trustee, custody and administration activities in accordance with applicable legislation.
The proposed trustee has provided a formal fee estimate for the administration of the trust and states that it will not increase the fees (which, for agency’s fees, are expressed as a percentage of the funds under management), subject to legislative changes which would, for example, increase the Goods and Services Tax.
Mr Singh also deposed that:
[The proposed trustee] has a relationship with Capital Private Wealth Pty Ltd (ABN 69 151 336 846, Authorised Representative of Hillross Financial Services – ABN 77 003 323 055 AFSL 232705). Capital Private Wealth Pty Ltd (‘CPWPL’) is a wealth management firm focused on providing specialist services to people with high support needs following a serious injury settlement.
Hillross Financial Services Ltd is a financial advisor consulted by the litigation guardian for Mr Duffell as to appropriate investments and administration of the judgment sum.
I am satisfied that the proposed trustee’s financial and structural security are sufficiently sound to justify its appointment in place of the Public Trustee.
The details of the fees charged were set out in some detail. It was compliant with the approach required by the High Court in Gray (by her Tutor Gray) v Richards (2014) 313 ALR 579. Those fees appeared reasonable and competitive.
Annexed to Mr Singh’s affidavit were appendices which set out the company’s Investment Management process, details of the statutory “Prudent Person Rule” applied by the company, and a statement about the relationship between risk and return and the importance of diversification. These were helpful in understanding the general investment strategy that the proposed trustee would pursue. It also described generally the safeguards to be applied.
There are, however, two other considerations that need to be addressed. The first is that I have not seen the arrangements under which the funds are to be managed, whether under a special trust or otherwise. As is clear from Singh (No 2) at 257-8; [41]-[48], issues such as the nature and tenure of the trust arrangement, the relationship between the trustee, Mr Duffell and any guardian or carers for him, the proposed investment strategies and the safeguards to protect the corpus of the fund need to be addressed.
The second is that the proposed trustee is, as I have noted, a wholly-owned subsidiary of a large bank which is involved in the financial services sector. That involves the bank in providing investment opportunities which may or may not be appropriate for the investment of part or all of the trust funds to be managed.
It seems to me that it is desirable for the guardian or manager who will assist Mr Duffell in dealing with these issues should have a source of independent advice on the appropriate investment strategy to be adopted by the trustee.
Since I have not heard submissions on this issue, I shall provide for that opportunity before making a final order. I am not aware of the consequences of requiring such independent advice and should not make such an order before I have submissions that could address that issue.
Otherwise, I am satisfied that the funds may be paid to National Australia Trustees Ltd.
I shall invite further submissions on these issues I have identified.
| I certify that the preceding seventy-five [75] numbered paragraphs are a true copy of the Judgment of his Honour Justice Refshauge. Associate: Date: 26 May 2015 |
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Amendments
26 May 2015 Replace Elliott v Deiner (1978) 21 ACTR 21 with Elliott v Diener (1978) 21 ACTR 21 ‘Cases cited’ and paragraphs [28], [30] and [31]
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