Elderfield (by her litigation guardian Visentin) v Transport Accident Commission (TAC)
[2010] VSC 116
•12 April 2010
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
MAJOR TORTS LIST
No 9145 of 2008
| JESSICA JUNE ELDERFIELD (by her Litigation Guardian DEBORAH VISENTIN) | Plaintiff |
| and | |
| TRANSPORT ACCIDENT COMMISSION | Defendant |
---
JUDGE: | ROBSON J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 8 April 2010 | |
DATE OF JUDGMENT: | 12 April 2010 | |
CASE MAY BE CITED AS: | Elderfield v TAC | |
MEDIUM NEUTRAL CITATION: | [2010] VSC 116 | |
---
ACCIDENT COMPENSATION – traffic accident - claim in negligence for damages under Transport Accident Act 1986 on behalf of a disabled plaintiff - application for approval of compromise under r 15.08 of the Supreme Court (General Civil Procedure) Rules 2005 – relevant test to apply on application for approval – compromise approved
---
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr T J Casey QC with Mr D J N Purcell | Ryan Legal |
| For the Defendant | Mr C J Blanden SC with Mr P J Gates | Solicitor to the Transport Accident Commission |
Cases cited
Elliott v Diener (1978) 21 ACTR 21
Fisher v Martin [2008 NWSC 1357
Gillespie v Alperstein [1964] VR 749
HIS HONOUR:
The plaintiff (“Ms Elderfield”), by her litigation guardian, has brought proceedings against the defendant (“TAC”) under the Transport Accident Act 1986 (”the Act“) seeking damages for pecuniary loss and for pain and suffering arising out of serious injuries she sustained in a motor car accident.
Subject to the approval of the Court, the parties have agreed to settle Ms Elderfield’s claim as follows:
(i)The defendant agrees to pay to the plaintiff $750,000;
(ii)In addition the plaintiff may retain the sum of $245,360 paid as an impairment lump sum pursuant to s 47 the Act and the sum of $50,375.21 paid by way of loss of earning capacity payments pursuant to s 49 of the Act;
(iii)The payment is to be made within 21 days of the date of service of a copy of the Order approving the compromise upon the defendant’s solicitors;
(iv)The defendant agrees to pay the plaintiff’s costs of the proceeding including any reserved costs and costs of transcript and the cost of the application for approval of the compromise on a party and party basis.
(v)If the compromise is approved, within 21 days of the date of service of a copy of the order, the TAC is to pay the settlement sum to the Office of the Senior Master for the benefit of Ms Elderfield.
The parties seek the Court’s approval of the compromise. For the Following reasons, I approve the compromise.
THE ACCIDENT
I take the following details of Ms Elderfield and the accident from the opinion provided by counsel for the plaintiff.
The plaintiff is currently 27 years of age having been born on 12 November 1982. She received catastrophic injuries in a transport accident which occurred on Saturday 21 October 2006 on the Colac/Ballarat Road at Napoleons, a small township 131 kilometres west of Melbourne. At the time of the collision the plaintiff was travelling as a front seat passenger in a silver Ford Fairlane motor car driven by her fiancé Christopher Davies. The driver was fatally injured in the collision and the plaintiff received a serious brain injury and some fractures to the vertebrae at the top of her cervical spine.
THE CLAIM
Currently the maximum threshold for pain and suffering damages is $450,460 and for pecuniary loss damages is $1,013,560.
In this instance the pecuniary loss is limited to impairment of earning capacity and expenses of managing the funds held in court on her behalf. The claim for pecuniary loss is calculated as follows:
At the time of the accident Ms Elderfield was employed by the Sebastopol Bowling Club as the gaming supervisor. She was in receipt of a gross annual wage of $37,947 for a 38 hour week. This is $729.75 gross per week, $586.75 net per week. With some overtime her average net weekly wage was $598.65 and her superannuation entitlement was $65.65 per week. Her income package was, therefore, $664.30. The claim for past loss of wages and superannuation entitlement is $67,758.
The claim for impairment of earning capacity was based upon her loss of $664.30 per week multiplied by 764.6 (to age 60) which came to $507,925 or 797.7 (to age 65) which came to $529,912. Reduce the sums by 15% for vicissitudes and the range comes to $431,736 - $450,425.
There is also a claim for operational expenses incurred for management of the funds by the Office of the Senior Master calculated at $5,400 per $100,000 invested in the funds. On a settlement sum of $750,000 the operational expenses are calculated at $40,500.
The range of the claims for pecuniary loss amount to $539,994 - $558,683.
If one adds the maximum award for pain and suffering damages of $450,460 to this range it becomes $990,454 - $1,009,143.
APPROVAL OF THE COMPROMISE
Ms Elderfield is a person under disability. Under r 15.08 of the Supreme Court (General Civil Procedure) Rules 2005 the compromise will not be valid without the approval of the Court. The rules provide that application for approval is to be made by summons save that the Court may dispense with that requirement where the application for approval is made at the trial of the proceeding, as it has been in this case. I dispense with the requirement that the application be made on summons.
On the application, evidence is to be given of the date of the compromise, payment or acceptance and the date of the person under disability, and the dates shall be stated in any order approving the compromise.[1]
[1]r 15.08 (4)
In this instance, the litigation guardian Deborah Visentin gave evidence of the date of birth of Ms Elderfield, her daughter, and that she had attended the mediation held between the parties and had been advised by her legal advisers that in their opinion the compromise was in the best interests of Ms Elderfield. I have been informed that the matter was compromised on 7 April 2010.
PRINCIPLES RELEVANT TO APPROVAL OF COMPROMISE
In carrying out its function of sanctioning the compromise the Court is called upon to consider whether the settlement is for the benefit of Ms Elderfield: Gillespie v Alperstein.[2] The learned authors of Civil Procedure – Victoria state that:
The major consideration is the degree to which the person under disability is at risk if the proceeding went to trial the result would be less favourable than what is offered in settlement. The court will hesitate to withhold its approval where that risk is not insignificant.[3]
[2][1964] VR 749 at 751 per Gillard J
[3][I 15.08.5]
In Fisher v Martin[4] Rothman J of the Supreme Court of New South Wales examined the general principles applicable to the Court’s approval of a settlement. He confirmed the protective nature and overriding principle of the court’s jurisdiction. He said:[5]
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.
[4][2008] NSWSC 1357
[5]Ibid [29]
In the case before Rothman J he was asked to approve a compromise of a claim of an infant by her tutor, her mother, in a medical negligence claim. Subsequently, the tutor opposed the compromise being approved. The compromise would have led to the infant loosing considerable government benefits. Rothman J declined to approve the compromise. Rothman J said that:[6]
The determination of liability or damages, in these proceedings, is a determination for the ancillary purpose of determining whether it is in the best interests of the plaintiff for the compromise to be approved. Further, the view I take of liability and damages must be weighed against the possibility (and/or probability) that another judicial officer would take a different view of the evidence and a different view of the outcome. The test, it seems, must be whether it would be in the interests of the plaintiff to reject the Offer and continue the action in the hope of receiving a larger amount: see Karvelas (by her next friend) v Chikirow (1976) 26 FLR; (1976) 11 ACTR 22 (per Blackburn J, as he then was).
[6]Ibid [35]
Rothman J cited with approval what Blackburn CJ of the ACT Supreme Court said in respect of an application to approve a compromise in Elliott v Diener:[7]
…I am obliged to repeat what I said in Karvelas v Chikirow )1976) 11 ACTR 22. The solicitor says in his affidavit that he has considered what would be for the benefit of the infant; but that is not enough. The test of benefit to the infant is not whether the sum is adequate and reasonable. The matter is not to be decided by the plaintiff's own solicitor as if he were a judge awarding damages after a contested hearing. The question which counsel or solicitor for the plaintiff has to decide, when considering a compromise of an infant's claim, is whether the prospect of getting a greater sum by rejecting the present offer is good enough to outweigh, significantly, the risk of not getting any more. There may be various factors in such a decision, sometimes present and sometimes not; for example, the importance of termination of proceedings may be great for some plaintiffs and insignificant for others. The question of costs, also, will usually be significant. The decision is peculiarly one for experienced counsel and solicitors. The opinion of the next friend will seldom be of any importance; never, indeed, unless he is carefully advised as to the real question to be decided, and in particular that his own interest are totally irrelevant.
[7](1978) 21 ACTR 21 at 22
I accept that for the purposes of this case the test is whether it would be in the interests of the plaintiff to reject the compromise and continue the action in the hope of receiving a larger amount. In my view that question is relevantly answered by deciding whether or not, in my opinion, the certainty of obtaining the compromise sum is significantly outweighed by the uncertain prospect of obtaining more by rejecting the compromise after taking into account the risk of obtaining less.
APPLICATION OF PRINCIPLES
In this case, counsel for the plaintiff, Mr T J Casey QC and Mr D J N Purcell, have provided an opinion in support of the application to the court that the compromise of the plaintiff’s claim be approved. The opinion thoroughly and carefully canvasses the facts surrounding the accident, the plaintiff’s medical condition and prognosis, her pecuniary losses and all other relevant matters.
Counsel opine that the real issue on liability would be about the two special defences: volenti non fit injuria and contributory negligence.
I accept the contentions of counsel for the plaintiff that this defence of volenti was highly unlikely to have succeeded. The defence of contributory negligence was another matter. It is unnecessary for me to repeat the points raised in the opinion. It is sufficient for me to find that the plaintiff faced a real risk that a jury might wish to reduce the damages by reason of contributory negligence.
I accept that part of the opinion dealing with the claims and the conclusions that counsel have reached, as follows:
[46] In this common law proceeding the plaintiff claims damages under two broad heads of damage permitted by s. 93 of the Act. That section contains a number of inhibitions, thresholds and caps. It limits the heads of damage for which damages may be awarded at common law to pain and suffering damages and pecuniary loss damages.
[47] At the present time the threshold for both pain and suffering damages and pecuniary loss damages is $45,030 and the maximum lump sum for which the Court can enter judgment for pecuniary loss damages is $1,013,560 and for pain and suffering damages is $450,460.
[48] We consider it likely that a reasonable jury would award damages for pain and suffering at the maximum amount permitted - $450,460.
[49] The claim for pecuniary loss encompasses past loss of wages and superannuation entitlements, impairment of future earning capacity and superannuation entitlements and the operational expenses incurred for management of the plaintiff’s damages by the Office of the senior master of the Supreme Court. Although the plaintiff has been totally unfit for any employment from the date of the accident her past loss commences at a time 18 months after the accident,[8] namely on 21 April 2008. Where an award of damages is to include compensation, assessed as a lump sum in respect of damages for future loss which is referable to impairment of earning capacity and a liability to incur expenditure in the future, the present value of the future loss must be assessed by using a discount rate of 6%.[9]
… [Counsel here canvass the same matters concerning pecuniary damages as set out in paragraph 6 – 12 above.]
[51] It is plain that Jessica is quite unable to manage her financial affairs and that will be a lifelong incapacity. The damages that she is awarded will have to be invested and managed for her. Her mother has been appointed her guardian and administrator. It is her wish to have the damages paid to the Supreme Court for management on behalf of Jessica during her life. Operational expenses are charged for this service, so that is an annual cost which must be borne by Jessica for the provision of these services. A claim is made for this expenditure. Using published life tables for female life expectancy it is predicted that Jessica would have another 61 years of life should she live out her normal life expectancy. Actuaries have been employed to assess the operational expenses incurred by the management of Jessica’s fund. The calculations demonstrate that the operational fees in Jessica’s presumed life come, in round terms, to $54,000 per $1m invested in the managed funds or $5,400 per $100,000 invested in the funds. Since the sum of $750,000 is to be paid into Court the present day value of the expenditure to be incurred is 7.5 x $5,400 or a lump sum of $40,500.
[52} The range of the claims for pecuniary loss amount to $539,994 - $558,683 depending upon what age it might be expected that Jessica would have retired from employment.
[53] If one adds the maximum award for pain and suffering damages of $450,460 to this range, the total claim under both heads of damage is estimated to be $990,454 - $1,009,143.
[54] The Act requires that the damages award is to be reduced by the amount of compensation paid in respect of the injury under sections 49, 50 and 51[10] and in respect of the injury under sections 47 and 54[11]. In this case the total amount of compensation already paid to the plaintiff under sections 47 and 49 amount to $295,735.21. Applying a reduction of this amount to the estimated range of damages would reduce the amount for which judgment could be entered to $694,718.79 to $713,407.79.
[55] Accordingly, in our opinion, the settlement of $750,000 plus retention of the compensation paid is a fair and reasonable settlement. We consider that it is in the best interests of the plaintiff to accept the settlement.
[8] S. 93 (10) (a) of the Act
[9]S. 93 (13) of the Act
[10]S. 93 (11) (a) (i)
[11]S. 93 (11) (b) (i)
In counsel’s opinion, the sum obtained under the compromise does not involve any deduction for the risk of the plaintiff being found contributory negligent.
CONCLUSION
Applying the relevant test to the facts of this case; in my opinion, the certainty of obtaining the compromise sum is not significantly outweighed by the small prospect of obtaining more by rejecting the compromise after taking into account the material risk of obtaining less.
Accordingly, in my opinion, the compromise is in the interests of the plaintiff.
The compromise is approved. I direct that the opinion of counsel be placed on the file.
The order of the Court will be as follows.
OTHER MATTERS:
1. The name and date of birth of the person under a disability on whose behalf the proceeding is brought is Jessica June Elderfield, born on 12 November 1982.
2. By a compromise entered into on 7 April 2010, the Defendant proposes to pay and the Plaintiff desires to accept the further amount of $750,000.00 for the benefit of the Plaintiff in addition to the amount of $245,360 paid to the Plaintiff pursuant to section 47 of the Transport Accident Act 1986 [“the Act”] and the amount of $50,375.21 paid to the Plaintiff pursuant to section 49 of the Act, a total settlement sum of One million and forty five thousand seven hundred and thirty five dollars and 21 cents ($1,045,735.21) plus party/party costs and disbursements including any reserved costs, costs of transcript and costs of this application in full settlement of the Plaintiff's claim in the proceeding.
3. The Court read the following material:
The Opinion of Mr Casey QC and Mr Purcell of counsel dated 9 April 2010;
The Affidavit of the Plaintiff’s Solicitor, Shane Anthony Ryan sworn 8 April 2010;
4. The Court:
(a) heard the viva voce evidence of the Litigation Guardian, Deborah Joanne Visentin;
(b) heard the submission of Senior Counsel for the Plaintiff in support of the proposed compromise.
5. The Defendant consents to the proposed compromise.
THE COURT ORDERS THAT:
1. There be special leave for the application to be made to a Judge of this Court.
2. The compromise be approved.
3. The Defendant, within 21 days after service of a copy of this Order on the Defendant’s Solicitors, pay the sum of $750,000 to the Senior Master of the Supreme Court for the benefit of the Plaintiff.
4. The party/party costs of the Plaintiff, including reserved costs, costs of transcript and the costs of this application be taxed in default of agreement and paid by the Defendant.
5. Subject to any further order, the Senior Master invest $750,000 for the benefit of the Plaintiff.
6. The Plaintiff’s Solicitors be granted leave to apply to the Senior Master (funds in Court) for payment of Solicitor/client costs.
7. Upon payment of the sum referred to in paragraph 3 and the costs referred to in paragraph 4, the proceeding be forever stayed.
8. Each party have liberty to apply.
9. The exhibits to the Affidavit of the Plaintiff’s Solicitor and a transcript of this application be transmitted to the Solicitor to the Senior Master.
10. Pursuant to Rule 60.04 of the Rules of the Court, the order be drawn up by the Solicitors for the Plaintiff and signed by the Judge.
0
0