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Accident Compensation Cases

Mitchell-Price v Accident Rehabilitation Compensation & Insurance Corporation (HC, 08/06/01)

Judgment Text

Hammond J
Susannah Lee Mitchell-Price suffered a brain injury at the time of her birth on 14 April 1981. 
Subsequently, a claim was made on Susannah's behalf for cover under the Accident Compensation Act 1982 (“the Act”). 
The Corporation accepted that claim. Susannah was thereafter entitled to compensation under the 1982 Act, including attendant care pursuant to s 80(3) of that Act. Susannah required, and will continue to require constant personal attention. 
The Accident Compensation Corporation subsequently accepted that Susannah had not been paid her full entitlement to attendant care under s 80, for the period between May 1981 and March 1994. A calculation of the appropriate level of attendant care that she would have been entitled to, was therefore undertaken. 
On 18 April 1998 the Corporation made an offer to pay Susannah additional attendant care compensation of $750,441.39. I think it unnecessary to recite all the details of that calculation — they have properly been disclosed to the Court. In short form, they cover a period from the date of Susannah's discharge from hospital on 2 May 1981 through to 1 March 1994. The periods for which the care was payable have been calculated, as has the relevant weekly rates payable. The amount that the Corporation owes for all of the relevant periods has been calculated at $524,652.13. Certain adjustments had to be made for the school holiday periods, of $26,665.78. That brought up a total of $551,317.92. When inflation adjusted, that came to the figure which was offered. 
This offer was accepted in principle on Susannah's behalf by her mother, Sonya Rae Mitchell. Those monies were paid to Norris Ward, Solicitors, of Hamilton, as stakeholder. 
Under s 125 of the Act, statutory entitlements are to be paid to the insured only. But this is subject to regulations authorising payments to other persons, and to s 126 and 127 of the Act which relate to payment to an insured who is under sixteen years of age, or who is deceased. The Corporation now accepts, as do all counsel, that Susannah was entitled to receive the funds directly. 
However, the Accident Compensation Corporation took the view that it was appropriate for a trust to be established on Susannah's behalf to receive the payment, given her age and mental incapacity, and to ensure that the funds were appropriately applied. It also took the view that it was necessary that an application be made to this Court to accept the settlement on Susannah's behalf, and to provide proper receipt for the payment. 
Susannah's advisers agreed, and proceedings were therefore filed in this Court under the Minors Contracts Act 1969. On an application for directions, Penlington J queried whether an application was required to be made under the Public Trust Office Act 1957, for the approval of the settlement. That then resulted in the application which is presently before me. I have dealt with the proceeding “on the papers”
The application as lodged is for the following orders: 
“Approving settlement on Susannah's behalf of a claim on ACC for attendant care compensation in the sum of $750,441.39 together with any interest accrued on such sum ('the settlement fund'). 
Approving payment of the settlement fund to a trust established for Susannah — the Susannah Lee-Mitchell-Price Trust ('the trust'), and approving the terms of the Trust. 
That all costs incurred by counsel for Sonya Mitchell, counsel for Susannah namely, Jenny Screech and Warren Scotter since the offer made by ACC be paid out of the settlement fund. ”
The grounds of the application are: 
“Susannah is not of full mental capacity and is unable to manage her own affairs.” 
“The Accident Compensation Corporation requires the approval of this Court prior to authorising payment of the settlement fund to the trust.” 
The application is expressed to be made in reliance on s 66 of the Public Trust Office Act 1957; and RR382, 437, 438 and 458D of the High Court Rules. 
Mr Scotter was appointed as counsel for Susannah. There is, therefore, representation of Susannah, of her mother (as Property Manager), and of the Corporation. Service on Susannah's father was dispensed with. To the Corporation's knowledge, he is the only other person who could potentially have had an interest in the settlement, as he was present in the home for some relevant period, and may have provided some care. 
I should perhaps add, that Sonya Mitchell was appointed Property Manager for Susannah pursuant to s 31 of the Protection of Personal and Property Rights Act 1988 by an order of the Family Court dated 12 October 2000. 
Ms Sonya Mitchell, Mr Scotter for Susannah, and the Corporation all support the proposed settlement. 
The issue here is whether the offer made by the Accident Compensation Corporation appropriately recognises Susannah's entitlement for attendant care. I have already outlined in short form the basis on which the offer was computed. The offer identifies the relevant periods; the relevant hourly wage rates at night or sleep-over rate; and the figure arrived at has been adjusted upwards, using an inflation factor recommended by the New Zealand Institute of Economic Research. That inflation factor is based on the Labour Cost Index published by Statistics New Zealand. I am satisfied that this is an appropriate settlement for Susannah's entitlement. 
The trust has been exhibited. The settlor is Sonya Mitchell and the trustees are to be Mr Scotter, Sonya Mitchell and Ms Gillian Spry, a Hamilton solicitor. During Susannah's lifetime, the trustees are enabled to pay all or any of the income from the trust for that year to Susannah, or any secondary beneficiary. A “secondary beneficiary” is Sonya Mitchell and any other care providers who are relatives of Susannah Mitchell-Price. Any undistributed income is to be added to the net income of the trust. The trustees can also pay capital to Susannah Mitchell-Price or to a secondary beneficiary. 
The trust enures until 31 March 2080. There are winding up provisions as to capital and income in terms of clauses 7 and 8 of the trust deed. The two independent trustees cannot be beneficiaries of the trust. There are provisions for amending the trust and appointing new trustees. 
The trustees are given very wide powers. Of distinct importance, there is a specific provision in the Trust Deed that priority must be given to the interests of Susannah Mitchell-Price, to the exclusion of the interests of any other beneficiaries, when administering the trust fund, and when the trustees are exercising their discretion. 
I am satisfied that the mechanism employed and the terms of it — the Susannah Lee Mitchell-Price trust — are proper and appropriate. 
I turned my mind to the trusteeship. I consider it is appropriate for Sonya Mitchell to be a trustee. She is the Property Manager; she has had the care of Susannah for many years now; and under the Deed she cannot prefer her interests over those of Susannah because of the presence of the two independent trustees. Mr Scotter is a senior and respected counsel. Ms Spry has experience in family law matters. 
There will be orders in terms of Clauses 1 and 2 of the application. 
As to the costs incurred by counsel for Sonya Mitchell and the counsel for Susannah since the offer was made by ACC, I accept in principle that those costs should be paid out of the settlement fund. Counsel should submit a note of their costs to me, through Mr Roach — preferably jointly — and I will approve those costs, by Minute. Whilst I do not require detailed bills of costs, I think the costs should be scutinised on Susannah's behalf, and specifically approved by the Court. 
I would not wish to depart this judgment without expressing my appreciation for the assistance of counsel. 
Judgment accordingly. 

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