Dann by his litigation guardian Sullivan v Commonwealth of
[2023] ACTSC 137
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | Dann by his litigation guardian Sullivan v Commonwealth of Australia |
Citation: | [2023] ACTSC 137 |
Hearing Date: | 2 June 2023 |
DecisionDate: | 2 June 2023 |
Before: | McWilliam J |
Decision: | See [28] |
Catchwords: | NEGLIGENCE – SETTLEMENT – plaintiff with a legal disability – settlement approved – whether private trustee should be appointed – where proposed trustee is the wife of plaintiff and appointed carer holding an enduring power of attorney – where plaintiff resides in Queensland – where settlement funds primarily to be used for future nursing residential accommodation – order for private trustee made |
Legislation Cited: | Court Procedures Rules (2006) (ACT) rr 282, 1617 Public Trustee and Guardian Act 1985 (ACT) s 25 Powers of Attorney Act 1998 (Qld) ss 66, 87 |
Cases Cited: | Duffell v Duffell [2015] ACTSC 123 Elliott (by his next friend) v Diener (1978) 21 ACTR 21 Williams v Hoang [2019] ACTSC 144 |
Parties: | Colin Peter Dann by his litigation guardian Marjorie Dianne Sullivan ( Plaintiff) Commonwealth of Australia (Defendant) |
Representation: | Counsel D Campbell SC; J Ronald ( Plaintiff) M Peake ( Respondent) |
| Solicitors Porters Lawyers ( Plaintiff) Clayton Utz ( Defendant) | |
File Number: | SC 28 of 2023 |
McWILLIAM J (EX TEMPORE REVISED):
The parties to the present litigation have been involved in a claim arising out of historical childhood sexual and physical abuse suffered by the plaintiff when he was stationed at HMAS Leeuwin in Western Australia in 1969, and during subsequent postings in 1970 and 1971. The plaintiff was 15 years old when he enlisted in 1969. The statement of claim alleges that the plaintiff developed post-traumatic stress disorder as a result of the abuse.
Following a stroke suffered in April 2021, the plaintiff’s cognitive condition declined. Due to the consequent onset of dementia, he is now considered to be a person under a cognitive disability. A compromise has been reached between the litigation guardian on behalf of the plaintiff, his wife, Ms Marjorie Dianne Sullivan and defendant, the Commonwealth, in the amount of $300,000, plus costs as agreed or assessed.
On 5 May 2023 the litigation guardian filed an application in proceeding seeking the Court’s approval of the settlement, pursuant to r 282 of the Court Procedures Rules (2006) (ACT).
The Court’s jurisdiction and approach
In deciding whether to approve a settlement involving a person under a disability, the Court is exercising a protective jurisdiction, commonly described as the inherent parens patriae jurisdiction of the Court: Veal (by his next friend Watson) v Hehir [2018] ACTSC 330 (Veal) at [21], cited more recently in Ryan v Larkham [2022] ACTSC 151 (Ryan).
In Veal, I described the Court’s jurisdiction at [21]-[23]:
21.The rule reflects the inherent protective jurisdiction of the Court (described as the court’s parens patriae jurisdiction), exercised under the framework provided for by the rules and statutes: Singh (by her next friend Singh) v Calvary Hospital Act Inc (No 2) [2009] ACTSC 57; 3 ACTLR 247 at [11]; Duffel v Duffel [2015] ACTSC 123 at [11].
22.The parens patriae jurisdiction is ancient, wide-ranging and far-reaching. It extends as far as necessary for the protection of children and those persons who from their legal disability cannot look after themselves and are in need of protection: Secretary, Department of Health and Community Services v JWB and SMB [Marion’s Case] (1992) 175 CLR 218 at 258–9 per Mason CJ, Dawson, Toohey and Gaudron JJ, 278–80 per Brennan J.
23.… r 282 … reflects the Court’s power to protect the interests of a person under a legal disability, by maintaining full control over any settlement compromising their claim: Dietz v Lennig Chemicals Ltd [1969] 1 AC 170 at 189 per Lord Pearson.
The applicable principles in the Territory have been considered in cases such as Elliott (by his next friend) v Diener (1978) 21 ACTR 21 (Elliott) at 22, Duffell v Duffell [2015] ACTSC 123 (Duffell) at [28]-[33], and Singh (by her next friend Singh) v Calvary Hospital Incorporated (2008) ACTSC 118; 220 FLR 352 (Singh).
The exercise of the equivalent jurisdiction has also been the subject of repeated and detailed consideration in New South Wales. A useful summary is contained in Fairhurst (bht NSW Trustee and Guardian) v Fairhurst [2012] NSWSC 388 (Fairhurst). As part of a comprehensive discussion of the authorities and principles, Hallen AsJ (as his Honour then was) stated at [30]-[32] (emphasis added):
30.The jurisdiction of the court and its procedure is protective in nature. It is akin to the inherent parens patriae jurisdiction of the court under the common law. Relevantly, the Court must act so as to protect the interests of infants: Yu Ge v River Island Clothing Pty Ltd [2002] NSWSC 28; (2002) Aust Torts Reports 81-638 at [28].
31.In Permanent Trustee Co Ltd v Mills [2007] NSWSC 336; (2007) 71 NSWLR 1, Hammerschlag J said, in relation to such approval:
"[29] The principle is that for the Court to grant approval for a compromise to be entered into by the disabled person it must form the view that it is beneficial to his or her interests. The compromise should be assented to by the tutor and there should be opinions from his or her legal advisers that they consider it to be so: Re Birchall. The Court will consider for itself whether the compromise will be beneficial to the disabled person: Re Ley's Trusts [1964] 1 WLR 640."
32. In Fisher (by her tutor) Fisher v Marin [2008] NSWSC 1357, Rothman J said:
"[29] The jurisdiction of the Court is protective in nature and the overriding principle is that the Court will base the approval or disapproval upon the formation of an opinion that the agreement is or is not beneficial to the interests of the person under the incapacity. It is for the Court, not the parties, to determine whether the compromise will be beneficial to the person under an incapacity: Re Ley's Trusts [1964] 1 WLR 640; Permanent Trustee v Mills [2007] NSWSC 336.
...
[41] Ultimately, the principle that I apply is whether the settlement that has currently been reached (and the amount thereof) is in the interests of the plaintiff. In that regard, bearing in mind the risk that, liability being in issue, the plaintiff would receive nothing from any hearing that may occur, the test may be described as whether the risk to the plaintiff, of losing that which is already agreed, is outweighed by the possibility of receiving more if the matter were to go to hearing."
In Institoris by his next friend Maria Institoris v Falconer [2012] NSWCA 298 at [2], Allsop P (as his Honour then was) referred to the discussion in Fairhurst as a “helpful recitation of authority”, the principles of which his Honour then took into account. His Honour went on in the same paragraph to say:
…There are no guidelines as to the exercise of the Court’s discretion to approve or disapprove terms of settlement. The principle is whether the settlement is in the best interests of the minor or is beneficial to the minor.
Statements to similar effect have also been made recently in this jurisdiction in Ryan, where McCallum CJ stated at [41]:
…the overriding principle in exercising the discretion whether to approve a settlement is for the Court to consider whether the proposed compromise is or is not beneficial to the interests of the person under the incapacity … that decision is uniquely one for the Court and not for the parties.
Drawing from those authorities, the question to be asked by the Court is whether the settlement sum is in the interests of, or for the benefit of, the person under the disability. However, the test of “benefit” is not merely whether the settlement sum is adequate and reasonable. As stated by Blackburn CJ in Elliott at 22, the matter is not to be decided as if the judge were awarding damages after a fully contested hearing.
A significant consideration is the degree to which the person under the disability is at risk that if the proceeding went to trial, the result would be less favourable than what has been offered in the settlement. Where such a risk exists, the Court will hesitate to withhold its approval of a settlement which provides certainty (described in Duffell as a “not insignificant” risk: see [32]-[33] and the authority there-cited).
Is the compromise in the interests of the plaintiff?
In the present case, the application in proceeding was supported by two affidavits, being those of the solicitor with carriage of the matter, Mr Jason Dean Parkinson (sworn 21 April 2023) and an affidavit of the litigation guardian (affirmed 29 May 2023).
The application was also supported by the confidential detailed opinion of Mr Campbell SC, and Mr J Ronald, both of whom are well experienced in the jurisdiction and the particular type of case which is presented before the Court.
Without trespassing on that confidentiality, the Court has taken into account the various issues arising on liability and quantum there set out, and the advice given about the evidence and the likely range of the claim, were it to proceed to trial. I accept the opinion of counsel.
During the hearing I was also provided, by way of an aide-memoire, with the deed of settlement, which disclosed certain terms relevant to whether the Court would make an order entering judgment, if satisfied of the test set out above. Additionally, during the hearing, the litigation guardian gave further oral evidence in relation to matters concerning the management of any settlement fund that would result from approval of the settlement.
The cognitive condition of the plaintiff is an important matter for any trial that would take place. His present inability to give competent oral evidence or be cross-examined, and the risks associated with that fact, strongly favour settlement due to the certainty to be achieved in relation to a claim that arises out of conduct that occurred many decades ago.
Taking those matters into account, I am satisfied that the settlement of the case for the amount proposed is in the plaintiff’s interest.
Should the Court appoint a private trustee?
That leaves the question of who should manage the funds. Section 25 of the Public Trustee and Guardian Act 1985 (ACT) concerns the payment of monies on behalf of a person under disability. The relevant sub-section is s 25(1), the material parts of which are as follows (emphasis added):
(1)Where, in the proceedings, it is adjudged or ordered, or it is agreed, that money...be paid to a person under disability (whether or not that person is party to a cause or matter), the money –
a)Shall be paid into court; and
b)Shall, unless the court otherwise directs, be paid to the public trustee.
...
The question here is whether the Court should ‘otherwise direct’, so as to cause the settlement monies to be paid to a different trustee. The same test applies, with the paramount consideration being what is in the interests of the plaintiff.
In Singh at [25], Refshauge J referred to the Western Australian decision of Morris v Zanki (1997) 18 WAR 260 (Morris), where it was stated at 286 (emphasis added):
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 of the funds are held. This will, of necessity, require a consideration of available options and alternatives. But this is not to say that a predisposition 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”.
In the present case, neither the appointment of a private trustee, nor the trustee proposed, namely, the litigation guardian, was opposed. Given that position, it suffices to refer only briefly to the various considerations, which are set out in more detail in Williams v Hoang [2019] ACTSC 144 at [7]-[11].
The proposed trustee already has an enduring power of attorney in respect of the plaintiff. That responsibility carries with it broadly the same fiduciary obligations as would arise in respect of the management of the settlement sum for the benefit of the plaintiff. Further, the plaintiff and his wife now reside in Queensland. In that jurisdiction, the Powers of Attorney Act 1998 (Qld) applies, s 66 of which requires the attorney to exercise the power honestly and with reasonable diligence to protect the principal’s interests. There are also statutory presumptions that arise if the attorney derives a benefit for herself (see s 87).
The litigation guardian gave evidence of all the things that she does for the plaintiff. The tasks, support and care that he requires, and that she provides for him, is a daily, full-time job and she is his formal full-time carer. The evidence of the litigation guardian was that she proposes to continue to support his needs with the funds in the same way that she is currently doing through the enduring power of attorney.
The majority of the settlement sum will be preserved for the future care of the plaintiff, in the event that his dementia deteriorates to the point that she can no longer care for him without nursing assistance or if the litigation guardian is unable to care for him through illness herself.
When examining the other available options, the obvious alternative is that provided by the statute, being the Public Trustee and Guardian of the ACT. Given where the plaintiff now lives and his high level of care required, the inconvenience of dealing on a regular basis with a public trustee in a different state renders that option the less preferable of the two. I gave consideration to requiring the money to be paid to the plaintiff’s local equivalent trustee, the Public Trustee of Queensland. Again, when the plaintiff’s wife is already bearing the burden for the plaintiff’s constant care needs, that would require her to be in frequent contact seeking funds from the public trustee and justifying the purpose of the request each time. It would impose a greater burden on the plaintiff’s wife than is necessary to protect the plaintiff’s interests.
An additional consideration in favour of appointing the litigation guardian as private trustee is that she would not charge any fee for the service rendered to her husband, thus preserving more of the settlement sum for the benefit of her husband.
In all the circumstances, including the stage of life the plaintiff is at, his medical condition, his relationship with the litigation guardian, her additional evidence provided to the Court this afternoon about the use to which the money will be put and the planned accommodation for her husband in the future, I am persuaded that the appointment of the litigation guardian to manage the settlement is also in the interests of the plaintiff. Accordingly, it is appropriate to make an order under s 25(1) of the Public Trustee and Guardian Act 1985 (ACT) for the funds to be paid out of court to a trustee other than the Public Trustee and Guardian.
Orders
The Court orders that:
(1)Pursuant to r 282 of the Court Procedures Rules 2006 (ACT) (‘the Rules’), the compromise of this claim for the sum of $300,000 plus costs as agreed or assessed on behalf of the plaintiff is approved by this Honourable Court;
(2)The defendant is authorised to deduct from that sum and pay:
(a)the amount specified on a valid Notice of Past Benefits or Notice of Charge or 10% of the Settlement Amount by advance payment to Medicare Australia in accordance with section 33B of the Health and Other Services (Compensation) Act 1995 (Cth);
(b)to Centrelink, the sum the subject of any recovery notice issued pursuant to the Social Security Act 1991 (Cth).
(3)Pursuant to r 1617 of the Rules the sum of $300,000 be paid into Court by the defendant, less any amounts paid in accordance with Order 2 above;
(4)The sum paid into Court pursuant to Order 3 above, is then to be paid out forthwith by the Court as follows:
(a)Pursuant to r 1618(2)(a)(i)(B) of the Rules, the sum of $300,000 less any amounts paid in accordance with Order 2 above, be paid out to the litigation guardian Marjorie Dianne Sullivan for the maintenance and benefit of the plaintiff;
(5)The defendant is to pay the plaintiff's costs of the proceedings as agreed or assessed.
(6)The confidential advice of Messrs Campbell SC and Ronald is to be placed in a sealed envelope and marked ‘confidential, not to be opened without the approval of a Judge’.
(7)Leave is granted to Marjorie Sullivan to give evidence by AVL from South Mackay, Queensland.
The Court notes that:
(1)The terms of the compromise are reflected in a confidential deed (read by the court) that the parties will execute within three (3) days of court approval of the compromise.
(2)The plaintiff will file a notice of discontinuance with seven (7) days of the payment of the settlement sum by the defendant into court.
| I certify that the preceding twenty-nine [29] numbered paragraphs are a true copy of the Reasons for Judgment of her Honour Justice McWilliam. Associate: Date: 28 June 2023 |
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