Ryan v Kivits - [2022] WADC 67

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS

LOCATION:   PERTH
CITATION:   RYAN -v- KIVITS [2022] WADC 67
CORAM:   EGAN DCJ
HEARD:   ON THE PAPERS
DELIVERED          :   1 AUGUST 2022
FILE NO/S:   CIV 4749 of 2018
BETWEEN:   ADAM DAVID RYAN
Plaintiff
AND
KAREL CHRISTOPHER LUCIEN KIVITS
Defendant

Catchwords:

Practice and procedure - Compromise of action where plaintiff under a disability - Turns on own facts

Legislation:

District Court of Western Australia Act 1969 (WA)
Fatal Accidents Act 1959 (WA)
Law Reform (Miscellaneous Provisions) Act 1941 (WA)

Result:

Leave to compromise granted

Representation:

Counsel:

Plaintiff	:	No appearance
Defendant	:	No appearance

Solicitors:

Plaintiff	:	Stephen Browne Lawyers
Defendant	:	Hall & Wilcox (Perth)

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

Benfield (By His Next Friend The Public Trustee) v Australian National Railways Commission (1992) 8 WAR 285
Debra Lorraine Maas as Next Friend of Matthew James Maas v Helen Mary O'Neill in her capacity as the Executrix of the estate of the late Michael O'Neill [2013] WASC 379; (2013) 11 ASTLR 525
Elderfield (by her litigation guardian Visentin) v Transport Accident Commission [2010] VSC 116; (2010) 55 MVR 206
Fairhurst (bht NSW Trustee and Guardian) v Fairhurst [2012] NSWSC 388
Farrell v Allregal Enterprises Pty Ltd [No 3] [2011] WASCA 247
Holland by his next friend Roberta Ashworth Holland v Leach [2000] WADC 18
Layne Carmel Dixon by her Next Friend Andrew Nigel Dixon v Clarke [2017] WASC 310
Morris v Zanki (1997) 18 WAR 260
Payne v Egan [1967] 2 NSWR 775; (1967) 86 WN (Pt 1) (NSW) 64
Perpetual Trustee Co Ltd v Cheyne [2011] WASC 225; (2011) 42 WAR 209
Phillips v Munro [1957] St R Qd 427
Scaffidi v Perpetual Trustees Victoria Ltd [2011] WASCA 159; (2011) 42 WAR 59; (2012) 28 BCL 135
Scandolera (by his next friend Robinson) v State of Victoria (Department of Education and Early Childhood Development) [2015] FCA 1451; (2015) 331 ALR 525
Sosa v Carter [1978] WAR 123
Stephens-Sidebottom v State of Victoria (Department of Education and Early Childhood Development) [2011] FCA 893
Verge v Mitchell (Unreported, WADC, Library No 970278, 12 September 1997)
Wood v Public Trustee (1995) 14 WAR 251
Wood v Public Trustee of Western Australia (1995) 16 WAR 58; 22 MVR 369

EGAN DCJ:

The plaintiff, who was born on 5 September 1985, commenced this action by writ of summons dated 18 December 2018 seeking damages pursuant to the provisions of the Fatal Accidents Act 1959 (WA) and Law Reform (Miscellaneous Provisions) Act 1941 (WA) arising out of the death of his de facto partner Shannon Louise Anne Davey (Shannon) on 12 June 2017, which followed shortly after the death of their son Lucas Davey (Lucas) in a motor vehicle accident on 8 April 2016. The plaintiff commenced the proceedings for his benefit as well as the benefit of his and Shannon's four children, Kayla Janet Ryan (Kayla) born 19 December 2005, Chelsea Lillian Ryan (Chelsea) born 19 May 2007, Charlotte Emily Ryan (Charlotte) born 28 September 2008 and Chace Aiden Brock Ryan (Chace) born 26 September 2012 (collectively, the children).
By statement of claim filed 27 July 2020 the plaintiff alleges, in effect, that as a consequence of the death and loss of Lucas, Shannon was not only unable to cope psychologically but also attempted to take her life on a number of occasions, ultimately committing suicide on 12 June 2017. The plaintiff further alleges that the death of Lucas was caused by the negligence of the defendant, and that Shannon would not have died but for Lucas' death.
By chamber summons filed 1 April 2022 the plaintiff seeks orders pursuant to O 70 r 10 of the Rules of the Supreme Court 1971 (WA) (RSC) to compromise the action on terms set out in the chamber summons.
The chamber summons is supported by affidavits of the plaintiff (sworn 21 February 2022), Victoria Mary Isobel Branson, solicitor, (sworn 18 February 2022) and Darryl Francis Hughes (sworn 17 February 2021). In addition, some other materials have been filed with the court in the form of medical reports from each of Dr A J Mander and Ms Helen Fowler. Those materials were not annexed to any affidavit but rather are described as forming part of the book of documents for the judge.

The law

Annexure A to these reasons is my summary of the law to be applied on an application for leave to compromise an action where a plaintiff is under a disability.

Analysis

Generally

The affidavit of Ms Branson, solicitor for the plaintiff, attaches an independent opinion from Mr David Bayly of counsel concerning liability, loss and damage, apportionment and the risks of proceeding to trial. Following a detailed discussion of those matters, Mr Bayly recommends that the sum offered in compromise of the action is in the best interests of the children.
In her affidavit Ms Branson states that she has discussed Mr Bayly's opinion with the plaintiff, and that in her view the sum offered in compromise of the action is a reasonable one and beneficial to the children.
In his affidavit the plaintiff states, relevantly, that he has read Mr Bayly's opinion, discussed the matter with Ms Branson, and supports the proposed compromise of the action.
Based on the above and the materials filed with the court I am satisfied that the merits of the claim and compromise have received proper consideration. I am also satisfied that the risk of litigation has been taken into account and considered.

Investment with Australian Executor Trustee

By the chamber summons the plaintiff seeks an order that the settlement funds the subject of the compromise be managed by the Australian Executor Trustee (AET).
Order 70 r 12(1) of the RSC provides:
Where … in any proceedings money is … ordered or agreed to be paid to or for the benefit of a person under a disability … the money must, 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 Account …
The principles to be applied in exercising the court's discretion in deciding the appropriate trustee of settlement funds are set out in Morris v Zanki(1997) 18 WAR 260, 286:
… it is appropriate to start from the position that there is a predisposition 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'.
The onus is therefore on the plaintiff to establish grounds on which the order for the placement of funds with AET should be made: see Morris v Zanki(286).
The factors to take into account when deciding where to authorise the deposit of settlement funds include:
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;
4.The harmonious relationship between the family and the trustee; and
5.The level of fees likely to be charged by the trustee.
See Verge v Mitchell (Unreported, WADC, Library No 970278, 12 September 1997) (Yeats J).
In his affidavit Mr Hughes states, amongst other things and in effect, that he is a senior business development manager of private client services with AET; that AET is one of the largest and most experienced private trustee firms in Australia with offices in various capital cities including Perth; that AET has over $2 billion currently in trust and over 700 compensation and charitable trusts in operation across Australia; that AET holds an Australian Financial Services Licence and not only offers a full range of trustee services, but maintains profession indemnity and other insurances that are appropriate for the provision of trustee and management services; that AET is an authorised trustee company pursuant to the Trustee Companies Act 1987 (WA); and that AET is currently regulated by a number of regulatory bodies, namely the Australian Prudential Regulatory Authority, the Australian Securities and Investments Commission and the Australian Taxation Office.
Mr Hughes also states that he has had discussions with the plaintiff concerning the proposed appointment of AET, the provision of trustee services, the management of trust monies, the means by which funds might be accessed, and AET's estimated fees. In addition, Mr Hughes states that based on discussions with the plaintiff's solicitors, he understands that the plaintiff has agreed to AET being appointed as trustee of the funds the subject of the offer to compromise.
Whilst the plaintiff in his affidavit does not specifically discuss the appointment of AET as trustee, he does swear his affidavit in support of the chamber summons which expressly refers, at proposed order 7, to AET being appointed as the trustee. As such, I am satisfied that the plaintiff is agreeable to AET being appointed as trustee.
Based on the above and the evidence before the court, I am satisfied as to the long‑term financial security of AET, and that there is presently a harmonious relationship between the plaintiff and AET.
Details of AET's fees, structure and charges applicable to the management of the trust monies are annexed to the affidavit of Mr Hughes. In this regard, by four separate letters addressed to the plaintiff's solicitors dated 6 September 2021, Mr Hughes provides estimates for each of the sums that AET would charge for trusts established for the children until they attain 18 years of age. In addition, Mr Hughes states, in effect, that for each trust there would be a one‑off establishment fee of $1,650, an ongoing fee of 0.66% per annum of the trust fund amount (subject to a minimum annual fee of $1,650) and an annual fee allowance in the order of $300 for preparing essential tax returns. Unfortunately, it is not possible to compare AET's fees with those charged by the Public Trustee as no evidence was provided in this regard.
In his letters to the plaintiff's solicitors Mr Hughes also states that the term of the trusteeship for Kayla would be 2.25 years; for Chelsea would be 3.5 years; for Charlotte would be 5 years and for Chace would be 9 years. Those periods are of course calculated from 6 September 2021 being the date of Mr Hughes' letters. Although there is no evidence which indicates that those letters have been provided to the plaintiff, the offer of compromise contemplates that separate payments will be made to AET as trustee on account of its management fees for the sums on trust for each of the children.
I am satisfied that the fees proposed to be charged by AET in relation to the settlement amounts are reasonable and in any event, as I have indicated, the terms of the proposed compromise contemplate separate payments will be made directly to AET for managing each of the children's funds.
Taking into account all of the above, I am satisfied that it is in the interests of the children that AET be appointed as trustee for each of the sums contemplated by the offer of compromise.

Orders

I therefore grant leave to the plaintiff to accept the sum of $575,000 plus trustee fees and legal costs and disbursements (to be taxed if not agreed) in settlement of the plaintiff's claim, and to invest the various sums for each of the children with AET. I make orders in terms of the agreed minute of proposed orders dated 22 February 2022, which has been agreed by the defendant.

Annexure A

Order 70 rule 10 - settlement of action by plaintiff under disability:

Summary of the law

1.In personal injuries claims, the District Court exercises the same jurisdiction as the Supreme Court: District Court of Western Australia Act 1969 (WA) s 50(2). It follows that this court has the statutory power, inherent in the Supreme Court, to approve or withhold approval of a proposed settlement where a party is a person under a disability: Wood v Public Trustee of Western Australia (1995) 16 WAR 58, 62; 22 MVR 369, 372; Holland by his next friend RobertaAshworth Holland v Leach [2000] WADC 18 [8] (Nisbet DCJ).
2.Order 70 of the RSC proscribes the procedure for 'a person under a disability' to bring a claim and to defend a claim, including, in O 70 r 10, the procedure for making an application for court approval of a settlement. Order 70 provides a framework for this court to exercise the power to determine an application to approve a proposed settlement: Debra Lorraine Maas as Next Friend of Matthew James Maas v Helen Mary O'Neill in her capacity as the Executrix of the estate of the late Michael O'Neill [2013] WASC 379 [13]; (2013) 11 ASTLR 525, 528.
3.In summary, O 70 of the RSC provides:
(1)A 'person under [a] disability' is defined by RSC O 70 r 1 to include: an infant; a person subject to a guardianship order or an administration order made under the Guardianship and Administration Act 1990 (WA) (ie a 'represented person'); and a person who by reason of 'mental illness, defect or infirmity' is declared to be incapable of managing their affairs.
(2)Provision is made for the appointment (and removal) of a next friend (or a guardian ad litem), including, in the case of a represented person, the appointment of the guardian or administrator named in an order made under the Guardianship and Administration Act: RSC O 70 r 2, O 70 r 3.
(3)The next friend (or the guardian ad litem) of a person under a disability must or may do anything that is required for the ordinary conduct of proceedings: RSC O 70 r 2(2). The next friend (or the guardian ad litem) must act by a solicitor: RSC O 70 r 2(3).
(4)Court approval of a settlement of a claim by or against a person under a disability is assessed against criteria depending upon whether the settlement is: before the commencement of a case (see RSC O 70 r 11); after commencement (and before judgment) (see RSC O 70 r 10); or by a party to an appeal to the Court of Appeal (see RSC O 7O r 10A).
(5)Subject to an order of the court, monies paid to a person under a disability must be paid to the Public Trustee. The Public Trustee may, if authorised by court order, invest the monies outside the 'Common Account' created by statute: see RSC O 7O r 12(1); Perpetual Trustee Co Ltd v Cheyne [2011] WASC 225; (2011) 42 WAR 209.
(6)The court may give directions for the application of the invested monies for the maintenance, welfare, advancement, or otherwise for the benefit of the person under disability: RSC O 70 r 12(2).

4.Order 70 r 10 of the RSC states:
10.Settlement etc. of action by person under disability
(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 Court of Appeal) 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 subrule (1) -
(a)if made before the hearing of a cause or matter, must be by summons in chambers;
(b)if made during the trial of an action or issue, must be to the trial judge on motion,

and must be supported by affidavit and by the opinion of an independent counsel; but the Court 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.

5.The application for approval must be 'supported by … the opinion of an independent counsel' unless the judge dispenses with this requirement: RSC O 70 r 10(2) (emphasis added).
6.The significance of the word 'independent' in O 70 r 10(2) was considered in Layne Carmel Dixon by her Next Friend Andrew Nigel Dixon v Clarke [2017] WASC 310 [11] - [16]. The rule, in effect, may require the opinion of a lawyer with no prior association with the proceedings, which would, by definition, be 'independent'. Alternatively, the lawyer for a party may proffer an 'independent opinion' in furtherance of the lawyer's primary duty to assist the court and not in furtherance of the co‑existing duty to the lawyer's client. If there is a concern that the interests of a next friend are not truly independent of the interests of the person under a disability or if there is a perception of a close relationship between the next friend and the lawyer for the next friend, it will be preferable to obtain the opinion of a lawyer with no prior association with the case: Farrell v Allregal Enterprises Pty Ltd[No 3] [2011] WASCA 247 [18] - [19].
7.Ultimately, no final view on the meaning of 'independent' was reached in either Layne Carmel Dixon by her Next Friend Andrew Nigel Dixon v Clarke or Farrell v Allregal Enterprises Pty Ltd [No 3]. In both cases, the court held that, if necessary, it would exercise the power to dispense with the requirement for an opinion of independent counsel in circumstances where very experienced counsel for one party had dealt comprehensively with matters of fact and law necessary for the court to be satisfied that all aspects of the case have received proper consideration: Layne Carmel Dixon by her Next Friend Andrew Nigel Dixon v Clarke [16]; Farrell v Allregal Enterprises Pty Ltd [No 3] [19].
8. There is no exhaustive list of criteria by which the purpose of court approval will be achieved: Fairhurst (bht NSW Trustee and Guardian) v Fairhurst[2012] NSWSC 388 [36]. Each case must be assessed on its merits. However, a number of authorities have emphasised the following factors when assessing an application for approval:
(1)The overriding principle is that the court will base the approval or disapproval upon the formation of an opinion that the settlement is or is not beneficial to the interests of the person under a disability: Benfield (By His Next Friend The Public Trustee) v Australian National Railways Commission (1992) 8WAR 285, 292, 295; Scaffidi v Perpetual Trustees Victoria Ltd [2011] WASCA 159 [51]; (2011) 42 WAR 59, 72; (2012) 28 BCL 135.

(2)The purpose of court approval is, principally, to protect the person under a disability: Fairhurst (bht NSW Trustee and Guardian) v Fairhurst [37]. The court is concerned to ensure that the settlement is fair and reasonable and that the solicitors for the party under a disability are paid only their proper costs. The approval is also the (only) means by which the other party can obtain a valid discharge of a claim by a person under a disability: Scaffidi v Perpetual Trustees Victoria Ltd [51].
(3)The weight accorded to the views of the solicitors, the next friend and the opinion of counsel reflects the fact that they 'have opportunities which the court lacks for' consideration of the settlement and strength and weakness of each side of the case. The court is required to rely to 'a considerable extent on the views of those whose opportunities of weighing the matter have been so much greater': Stephens‑Sidebottom v State of Victoria (Department of Education and Early Childhood Development)[2011] FCA 893 [12].
(4)If it appears that the merits of the case have received proper consideration, the court will be 'slow to disagree with the [independent] opinion particularly upon such a matter as the assessment of damages for personal injuries'. The 'risks of litigation' and the fact that reasonably different conclusions are open have the result that the court will be slow to force a person under a disability to take a risk which the court is unable to underwrite. However, the court must determine for itself whether the compromise will be beneficial to the person under a disability: Sosa v Carter [1978] WAR 123, 124.
(5)The court does not assess the merits of the plaintiff's case and then give or withhold approval by comparing the proposed settlement with the likely judgment. Nor does the court decide whether the proposed settlement is the settlement that the court would have made. Rather, the court considers the proposed settlement from the perspective of the person under a disability in order to determine whether the settlement is fair and for the person's benefit: Debra Lorraine Maas as Next Friend of Matthew James Maas v Helen Mary O'Neill in her capacity as the Executrix of the estate of the late Michael O'Neill [13]; Fairhurst (bht NSW Trustee and Guardian) v Fairhurst[37].
(6)In assessing a proposed settlement from the perspective of a plaintiff under a disability, it is necessary to weigh the risk of foregoing an agreed amount, against the possibility, if the case were to go to trial, of receiving more than the agreed amount or less than the agreed amount: Elderfield (by her litigation guardian Visentin) v Transport Accident Commission [2010] VSC 116 [20]; (2010) 55 MVR 206, 209.
(7)Consideration will also be given to the fact that, absent a settlement, taking the case to judgment carries: the risk of an appeal; the prospect of further costs; and the likelihood of emotional strain upon a person under a disability: Scandolera (by his next friend Robinson) v State of Victoria (Department of Education and Early Childhood Development)[2015] FCA 1451 [29]; (2015) 331 ALR 525, 531.

I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.
KG
Associate to Judge Egan
1 AUGUST 2022