SULLIVAN (by her next friend LEANNE CAHILL) -v- KALINA
[2009] WADC 57
•9 APRIL 2009
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS
LOCATION: PERTH
CITATION: SULLIVAN (by her next friend LEANNE CAHILL) ‑v- KALINA [2009] WADC 57
CORAM: DAVIS DCJ
HEARD: 30 & 31 MARCH 2009
DELIVERED : 9 APRIL 2009
FILE NO/S: CIV 778 of 2009
BETWEEN: SAMANTHA SULLIVAN (by her next friend LEANNE CAHILL)
Plaintiff
AND
DAVID JOHN KALINA
Defendant
Catchwords:
Practice and procedure - Compromise of action of plaintiff under a disability - Whether settlement funds may be deposited with private trustee in place of Public Trustee - Turns on own facts
Legislation:
Rules of the Supreme Court 1971, O 70 r 10, O 70 r 12
Result:
Leave to compromise granted
Appointment of nominated private trustee granted
Representation:
Counsel:
Plaintiff: Mr K S Pratt
Defendant: Mr A S Gliddon
Solicitors:
Plaintiff: Vertannes Georgiou
Defendant: Lavan Legal
Case(s) referred to in judgment(s):
Jones 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
DAVIS DCJ: The plaintiff in this action was born on 27 August 1987. At the age of 17, on 16 February 2005, she suffered severe injuries, including head injuries, in a motor vehicle accident. The accident occurred when the plaintiff was driving with friends in her car and was turning right from a parking area at her local TAFE campus into a main street. When she had almost completed the turn, the plaintiff's car was struck on the right hand side by the defendant's vehicle, which had been travelling down the main street, approaching the plaintiff's vehicle.
This action was commenced and a chamber summons issued for leave to compromise the plaintiff's action pursuant to the Rules of the Supreme Court 1971, O 17 r 10.
Initially the application for leave to compromise indicated that the compromise reached was payment of the sum of $3,000,000 with an additional sum of $250,000 to be paid by way of trustee's management fees and expenses, plus reimbursements of amounts to Centrelink and Medicare Australia. The sum of $3,000,000 had been offered taking into account an allowance for contributory negligence. This offer was provisionally accepted by the plaintiff's solicitors in December 2008.
Upon a reading of the papers filed in support of the application including the affidavits of the plaintiff's solicitor sworn 16 March 2009 and 27 March 2009 and the affidavit of the plaintiff's mother and next friend sworn 26 March 2009, which annexed a number of documents including the independent counsel's opinion, it became apparent that advance payments had already been made to the plaintiff totalling $132,402.60.
During the hearing of the application on 30 March 2009 I requested the parties to clarify whether the compromise amount of $3,000,000 was inclusive or exclusive of the advance payments and I also questioned the position concerning special damages. I was advised that the sum of $3,000,000 was exclusive of the advance payments and that a further advance payment of $15,000 had been made. There were issues with the proposed orders sought including the amount of the judgment and special damages and I invited the parties to return the following day, 31 March 2009, with a fresh minute of proposed orders setting out the amount for which judgment ought to be entered for the plaintiff.
Taking into account the trustee's fees which the defendant had offered to pay in the sum of $250,000 and the Medicare Australia reimbursement which the defendant also had agreed to pay amounting to $1,639.50, it appeared that the total settlement sum for the plaintiff's claim, exclusive of special damages, amounted to $3,384,042.10.
At the hearing on 31 March 2009, however, I was advised that the correct judgment sum should be $3,369,042.10. This was because as at the date of the offer of compromise the advance payments which had been made totalled only $117,402.60 and not $132,402.60. The advance payment of $15,000 had been made after the offer of compromise and ought to be deducted from the $3,000,000 figure, leaving an amount to be paid of $2,895,000 plus the trustee's fees of $250,000. As none of these figures had been properly accounted for in the papers filed in support of the application for leave to compromise and the independent counsel's opinion had proceeded on a slightly different basis, I requested that the plaintiff's solicitors file further affidavits recording what had actually been agreed, what had occurred in relation to special damages and confirming that counsel's opinion was still that this offer of compromise should be accepted.
Three affidavits, two sworn by the plaintiff's solicitor and another affidavit sworn by the plaintiff's mother and next friend, were filed on 2 April 2009. The affidavit of the plaintiff's next friend has annexed a supplementary opinion of counsel. I am satisfied that the position has now been adequately explained and the total amount for which the compromise has been reached is $3,369,042.10 made up as follows:
1.Offer made by the defendant in December 2008 $3,000,000.00
2.Advance payments made before the offer $117,402.60
3.Trustee's fees $250,000.00
4.Medicare Australia reimbursement $1,639.50
The plaintiff's solicitor has confirmed that all accounts from medical and other service providers have been paid by the defendant's insurer, the Insurance Commission of Western Australia, except for one account for $29.95 which, for the sake of convenience, the plaintiff's next friend will pay. There are no other outstanding special damages.
With the resolution of these details I now turn to consider the two issues which arise on this application, which are:
1.The approval of the compromise, pursuant to the Rules of the Supreme Court, O 70 r 10; and
2.The approval of the appointment of a nominated private trustee, other than the Public Trustee, pursuant to the Rules of the Supreme Court, O 70 r 12.
Approval of application for leave to compromise
On whether the proposed compromise ought to be approved, I have taken into account the information on the affidavits including the opinions of independent counsel, who is experienced counsel. I am satisfied that all the relevant facts have been considered by the plaintiff's solicitors and that the settlement is supported by the opinions of independent counsel. The first opinion of counsel sets out in detail the nature and extent of the plaintiff's injuries, the facts necessary to deal with the issue of contributory negligence, the facts necessary to make an assessment of the quantum of damages for the plaintiff's injuries and details of the amounts calculated in respect of each head of damage for those injuries. The settlement which has been reached, as now confirmed, is within the range of damages considered and accepted as reasonable by counsel in that first opinion. By the second opinion counsel has also confirmed that a judgment for $15,000 less than the proposed settlement of $3,000,000 considered in his first opinion was still in the best interests of the plaintiff. I am satisfied that both opinions of counsel have both been considered and understood by the plaintiff's next friend.
The Court should be slow to disagree with a settlement which is supported by independent counsel, having regard to the risk of litigation: Sosa v Carter [1978] WAR 123. This is particularly so in a personal injuries case like this one where there is an issue not only about quantum but also the amount by which that quantum should be reduced for contributory negligence. The assessment of a plaintiff's likely award of damages for the purpose of settlement negotiations is frequently difficult. The apportionment of liability in a case where contributory negligence is in issue involves the exercise of a discretion and it is not a precise science.
In my view the proposed compromise is in the interests of and for the benefit of the plaintiff and should be approved.
Appointment of a nominated private trustee
The plaintiff has also sought orders that, after disbursements to meet repayments to Centrelink, Medicare Australia and after taking into account the advances which have been already made to the plaintiff, being the sums of $117,402.60 and the amount of $15,000, the balance of the monies be paid to National Australia Trustees Limited ("NAT") for investment, rather than the Public Trustee.
The factors to take into account in deciding where to authorise the deposit of settlement funds were set out by O'Brien DCJ in Martin v Castelanelli (1999) 23 SR (WA) 18 at 21. These are:
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;
5.the level of fees likely to be charged by the trustee.
I have considered the affidavit of Darryl Francis Hughes sworn 19 March 2009 in relation to this part of the application, as well as the affidavit of the plaintiff's mother and as next friend. Mr Hughes is the manager of Trustee Services for the Perth office of NAT.
The evidence of Mr Hughes is that NAT is an authorised trustee company, registered under the provisions of the Trustee Companies Act 1987 (WA). NAT is also a wholly owned subsidiary of the National Australia Bank Limited, but it has a majority of directors who are independent to those of the National Australia Bank Limited. NAT is experienced in management of funds under administration, with over $8 billion in funds under administration. Mr Hughes oversees the management of all trusts in Western Australian where the court has appointed NAT to manage the fund. Having regard to these facts, I am satisfied as to the long term financial security of NAT: see also Morris v Zanki (1997) 18 WAR 260 at 293, Martin v Castelanelli (supra) at 21.
I am satisfied, particularly having regard to the fact that NAT is an authorised trustee company subject to all of the fiduciary duties and responsibilities of a trustee and oversees other funds pursuant to court orders, that NAT is aware of its duty to ensure that at all times the plaintiff's interests are protected: see Morris v Zanki (supra) at 295.
Both Mr Hughes and the plaintiff's next friend depose to the fact that they have met and discussed issues relating to the investment and there is a good rapport between Mr Hughes, the plaintiff and the plaintiff's next friend. I must also have regard to the wishes of the plaintiff's next friend, as set out in her affidavit, to invest these monies with NAT rather than the Public Trustee. The rapport with the proposed Trustee and the next friend's wishes are both important considerations. The plaintiff's next friend is the main carer for the plaintiff and as the plaintiff is now aged 22 and is expected to achieve normal life expectancy, the trust arrangement is to last for a very long time. It is in the plaintiff's best interests if there is harmony and a good working relationship between the trustee and the plaintiff's next friend: Morris v Zanki at p 294; Jones v Moylan (1997) 18 WAR 492 at 500 and 501.
Details of NAT's fees structure and charges applicable to the investment have been annexed to the affidavit of Mr Hughes. For NAT's services there is an initial establishment fee of $15,000. The ongoing management fee is then 1.00 per cent on the first $1,000,000, 0.62 per cent on the next $1,000,000 and 0.42 per cent on the balance. Based on a settlement amount of $3,000,000 and assuming that the plaintiff's life expectancy is 84 years of age, the expected management fees to be charged by NAT over that period total $330,401 in today's dollar terms. There are no additional fees should a property for the plaintiff be purchased or built and the fees include all investment portfolio reviews and regular meetings with the plaintiff and the plaintiff's next friend. Mr Hughes has confirmed in his affidavit that NAT will not increase its fees for the life of the trust, subject to any change in legislation increasing GST or other fees imposed by legislation. In addition there will be a fee of approximately $450 per year for the preparation of a tax return, which will be tax deductible.
Unfortunately it is not possible to compare NAT's fees with the fees charged by the Public Trustee. The plaintiff's next friend has given evidence that she considered investment with the Public Trustee but the fees to be charged could not be established because at the time when inquiries were made, the Public Trustee's fees structure was under review. Overall, however, I consider the fees to be a less significant consideration in light of the other considerations which I have already addressed and the fact that the settlement reached includes a sum of $250,000 towards these fees.
Taking into account all of the relevant factors, I am satisfied that it is in the interests of the plaintiff that the balance of the settlement sum be invested with NAT.
Orders
I therefore grant leave to the plaintiff to accept the total sum of $3,369,042.10 (exclusive of special damages already paid) in settlement of the plaintiff's claim, and to invest the balance of the judgment sum, after deduction of payments made or to be made by the defendant, with NAT. I make orders in terms of the revised Minute of Consent Orders dated 31 March 2009 and signed by both the solicitors for the plaintiff and the defendant, with one amendment in relation to the proposed order 6, relating to the plaintiff having liberty to apply for special costs orders in respect of the action. There ought to be a time limit within which the plaintiff must apply for special costs orders, so at the end the proposed order 6 I add the words "within 30 days of the date of this Order".
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