EWJ June 2024 web - Journal - Page 72
Guidance on Use of a Personal Injury
Trust for an Infant Claimant who is
Expected to have Capacity as an Adult
GWS and others v St Thomas Becket Catholic Primary School [22.12.2023]
In his Judgment, Master Brown provided helpful
consideration of the appropriateness of setting up a
bare trust in a claim where the infant claimant would
have capacity upon turning 18 years old. The Application, brought on behalf of the claimant, was rejected.
Investment opportunities
It was argued that the trust option would offer almost
“unlimited investment options”, compared to the limited CFO option. However, Master Brown noted the
Special Account rate provided by the CFO option
“currently pays 6% interest” and it was difficult to see
how the claimant could do better than that. Even if
this did reduce, the timeframe for money held would
be relatively short due to the constant need to pay out
to meet expenses, so this would not cause substantial
prejudice.
Background
Liability was admitted for life threatening injuries
when the infant claimant attended his school carol
concert and his costume accidentally set on fire. He
suffered full thickness burns to 45% of his body surface
area, leaving him with substantial scarring and
requiring extensive treatment.
Cost effectiveness
The claimant contended that although the management of the CFO option is free there are substantial
solicitors’ costs associated with it, in managing administering and assessing interim payments. It was argued
that much, if not all of this work, would be avoided if
the trust were set up to deal with interim payments.
Master Brown rejected this argument; he did not accept the assertions as to the high costs associated with
the CFO options or that with the trust option he
would be simply “able to pass over responsibility for
dealing with interim payment to the trustees”. To the
contrary, he expressed that “the costs of managing a
trust involving the sort of sums which appear to be in
contemplation look high to me”, accepting he did not
have anything to make a comparison with. In addition, he was concerned to note the lack of mechanism
by which the costs could reasonably be controlled.
A risk was established of emerging psychological
reaction as he reached adolescence, which had a potentially significant impact on the level of damages,
and so quantum assessment was stayed. Interim damages payments were made to the claimant totalling
£430,000 for the allowance of therapies, transport and
educational fees, leaving approximately £140,000
(taking into account outstanding payments) for the
claimant in the solicitors’ client account. The claimant
requested permission from the court to set up a bare
personal injury trust to administer and manage any
further payment paid to the claimant. There was no
suggestion that the claimant would lack capacity when
he turned 18 years of age.
Weighing up the options
Master Brown considered there were essentially two
options: 1. Creation of a bare trust, as requested by
the claimant (the bare trust) and 2. Payment into
Court Funds, in particular the Special Account (the
CFO option). In response to the claimant’s arguments
in favour of the bare trust, Master Brown considered
the advantages and disadvantages of both in his Judgment. By way of a summary (with reference to paragraphs 30 to 64 of the Judgment):
Stress/inconvenience of CFO option
Master Brown felt it was “highly unlikely that attendance at court would be required for approving the
release of funds on an interim basis”. Written communication from a junior fee earner, with supportive
written evidence, was usually sufficient. The idea that
the CFO option would cause considerable stress to the
family was therefore rejected.
Alleged delays with the CFO option
The claimant argued there were significant delays in
accessing funds from the Court Funds Office and
there was a risk that the claimant’s rehabilitation
would suffer due to this delay. Master Brown rejected
this argument. He did not agree there was any such
delay and noted no evidence had been provided in
support of this assertion. In any event, he noted that
steps could be taken to minimise delays.
Trust at 18 years of age
It could not be wholly discounted that the claimant
“would want to hold his damages in trust” when he
reached 18. If the costs of setting up the trust were
“offset by the costs of any modifications which would
be necessary to the trust when the Claimant turns 18”
, then this is the only obvious cost saving Master
Brown could find in setting up a bare trust. However,
the Master queried why he would want that in light of
the high costs associated with it, when he could enlist
the help of a financial advisor instead
State benefits
One advantage to a bare trust for adults is that it might
“protect entitlement to benefits which (would otherwise be lost)”. However, the claimant was a child and
so he was not expected to receive benefits as a minor.
Master Brown therefore rejected this as a justification
for setting up the trust now.
EXPERT WITNESS JOURNAL
Purchase/adaptation of property
An argument was advanced regarding property
purchases and protecting the claimant’s interests.
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