Kobi Davis bht Natalie Simon v Mid North Coast Area Health Service & Anor

[2007] NSWSC 1044

CITATION:	Kobi Davis bht Natalie Simon v Mid North Coast Area Health Service & Anor [2007] NSWSC 1044
HEARING DATE(S):	13 September 2007
JUDGMENT DATE :	19 September 2007
JUDGMENT OF:	Harrison J
DECISION:	See paragraph 19
CATCHWORDS:	CIVIL PROCEDURE - Civil Procedure Act 2005, s 76 - settlement of proceedings commenced by or on behalf of a person under legal incapacity - plaintiff's application for approval of compromise on liability - application opposed - CIVIL PROCEDURE - Civil Procedure Act 2005, s 56 - overriding purpose to facilitate the just, quick and cheap resolution of real issues in the proceedings
LEGISLATION CITED:	Civil Procedure Act 2005 - ss 56 and 76 Supreme Court Rules 1970 - Pt 63 r 11
CASES CITED:	Drake v Bodycott [1982] 2 NSWLR 496
PARTIES:	Kobi Davis by his tutor Natalie Simon (plaintiff) Mid North Coast Area Health Service (first defendant) Dr Raymond Hodgson (second defendant)
FILE NUMBER(S):	SC 20278 of 2001
COUNSEL:	D E Graham (plaintiff) L King SC with J Sandford (second defendant)
SOLICITORS:	Carroll & O'Dea (plaintiff) TressCox Lawyers (second defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION
PROFESSIONAL NEGLIGENCE LIST

HARRISON J

19 September 2007

20278 of 2001 KOBI DAVIS BY HIS TUTOR NATALIE SIMON v MID NORTH COAST AREA HEALTH SERVICE & DR RAYMOND HODGSON

JUDGMENT

1 HARRISON J: This matter has been assigned to me for case management. It came before me on 13 September 2007 on the application of the plaintiff seeking approval of a compromise on the issue of liability, and judgment on that issue if approval is given. In the nature of what amounts to a preliminary point, the defendants oppose the making of the application at this time. This judgment deals only with the preliminary point.

Background

2 The plaintiff was born on 23 November 1998 and so is nearly nine years of age. He sues the defendants for damages for negligence in respect of injuries suffered by him at the time of his birth. These injuries include cerebral palsy, toxic ischaemic encephalopathy, epilepsy and associated disabilities. The plaintiff alleges that the defendants were negligent in the manner in which he was delivered including allegations that they failed to proceed to a caesarean section in a timely way and failed adequately to resuscitate him when that ultimately occurred.

3 The defendants deny liability. The matter has been listed for hearing later this year limited to the question of liability.

4 I am now informed that agreement has been reached between the plaintiff and the defendants disposing of this issue. Although I have not been provided with the details of the compromise, I have been informed that it consists in an agreement that the plaintiff will be limited to the recovery of a particular proportion of any damages that he may ultimately be awarded by this court on a contested hearing on that issue. By way of example, assuming that the plaintiff were in due course to be awarded $5m, and that the agreement that has been reached between the parties were that he should receive only 60 per cent of such damages as may be assessed without reference to a discount for problems the plaintiff may face in establishing liability, judgment for the plaintiff would (subject to approval) be entered for $3m. The discount that the parties have agreed should apply to those damages reflects a compromise of the parties’ competing contentions concerning the strength of the plaintiff's case on liability.

5 The plaintiff seeks for the following orders: -

1 Judgment for the plaintiff against the defendants for the proportion of damages agreed between the parties, the quantum of such damages to be agreed or assessed.

2 Order the defendants to pay the plaintiff's costs of the proceedings.

3 Hearing scheduled to commence on 5 November 2007 be vacated.

4 Costs of and incidental to the vacation of the hearing be reserved.

6 The defendants presently oppose the making of order 1. They do not oppose order 3. Orders 2 and 4 ought necessarily to abide the outcome of the approval application. There is no dispute that the agreement, of which approval by this Court will ultimately be required, has been concluded.

Consideration

7 The plaintiff’s case is quite simple. It is based upon a desire for certainty. It is underpinned by a concern not to incur further costs in the preparation of the plaintiff's case on damages unless and until the plaintiff and his legal advisers can be satisfied that a verdict in his favour in some amount has been assured. That concern arises in the following way.

8 Presumably the plaintiff’s damages will in due course either be assessed by a judge or agreed between the parties. Because of his injuries and disabilities, the plaintiff is likely at all relevant times to remain a person under legal incapacity. To that extent, the compromise of any portion of his claim will require approval by the court. Accordingly, even if damages are assessed by a judge following a hearing, the proposed compromise on liability will still remain to be considered for approval by a judge of this Court at that time, if not approved beforehand. In the event that the currently proposed compromise on liability is not approved in the near future, there can be no certainty that the defendants would be prepared to replace it with a further similar agreement if the current proposal did not ultimately find favour with the court once damages had been ascertained. If that were to occur, so the plaintiff argues, the effort and associated expense that would be incurred in preparing and running a trial on damages might be wasted. Presumably the plaintiff would also argue that such a consequence would be particularly onerous having regard to the representative capacity in which the plaintiff’s tutor brings these proceedings and to her personal liability for any costs orders which may be made in favour of the defendants.

9 In further support of these arguments the plaintiff prays in aid the terms of s 76 of the Civil Procedure Act 2005. That section is in the following terms: -

76 Settlement of proceedings commenced by or on behalf of person under legal incapacity

(1) This section applies to proceedings commenced by or on behalf of any of the following persons:


(a) a person under legal incapacity,

(b) a person who, during the course of the proceedings, becomes a person under legal incapacity,

(c) a person whom the court finds, during the course of the proceedings, to be incapable of managing his or her own affairs.


(2) The court may make a finding referred to in subsection (1)(c) only on the basis of evidence given in the proceedings in which it is made, and such a finding has effect for the purpose only of those proceedings.

(3) Except with the approval of the court, there may not be:

(a) any compromise or settlement of any proceedings to which this section applies, or

(b) any acceptance of money paid into court in any such proceedings,


as regards the claim of a person referred to in subsection (1).

(4) If an agreement for the compromise or settlement of any matter in dispute in any such proceedings is made by or on behalf of a person referred to in subsection (1), the court may approve or disapprove the agreement.

(5) An agreement disapproved by the court does not bind the person by whom or on whose behalf it was made.

(6) An agreement approved by the court binds the person by whom or on whose behalf it was made as if he or she were of full capacity and (if it was made by some other person on his or her behalf) as if that other person had made the agreement as his or her agent.

10 There was no dispute before me as to the meaning or effect of this section. All parties agree that a compromise of the plaintiff's claim on liability would, sooner or later, require the approval of the court. The plaintiff argues that the effect of subss (3) and (4) mandates an approval now, or as soon as possible after the agreement has been reached. The defendants argue that no part of s 76 has that effect but that approval is only required before the compromise on liability has been incorporated as part of a judgment that can be enforced and that, relevantly, that will not occur until damages are agreed or assessed.

11 The defendants concede that there is a discretionary power to approve the compromise in the way sought by the plaintiff. However, they argue that there is no present requirement to approve the compromise on liability as a "compromise or settlement of any matter in dispute in any . . . proceedings" pursuant to s 76(4).

12 Even though s 76(3) does not in terms refer to a compromise or settlement of part of the proceedings (compare in this respect the words "any proceedings to which this section applies" in subs 3(a) and the words "[t]his section applies to proceedings commenced by or on behalf of the following persons" in subs (1)), the words of subs (4) are not so limited. If this were not otherwise obvious, it clearly emerges from a comparison between s 76(4) of the Act and Part 63 rule 11 of the Supreme CourtRules, 1970. Rule 11(1) was in the following terms: -

(1) Where proceedings have been commenced, and afterwards an agreement is made by the tutor in the proceedings of a disable person for the compromise or settlement of any matter in dispute in the proceedings , the Court may approve or disapprove the agreement. (Emphasis added)

13 In Drake v Bodycott [1982] 2 NSWLR 496 at 500C, Master Allen, as he then was, referring to rule 11, said that "[t]he agreement does not have to be finally dispositive of the proceedings. In that respect the provision made by Pt 63, r 11 is essentially different from that made by the Damages (Infants and Persons of Unsound Mind) Act, s 4". There is no relevant difference between the words “any matter in dispute in the proceedings” and the words “any matter in dispute in any such proceedings” in subs (4).

14 According to the defendants, whilst there exists a present power to approve the compromise, there is no requirement to do so. The present case is to be distinguished from Drake where Master Allen indicated that the provisions of the rules could be used where it was important to bind the party to the particular compromise. That case involved the approval of a proposal to make limited payments to the plaintiff in respect of a discrete head of damage. In the defendants’ submission, the plaintiff's application should in this case be refused as a matter of discretion.

15 The defendants also argue that on no account should any step be taken in the proceedings that may compromise the ability of a judge before whom the plaintiff’s case on damages might come, to assess those damages independently and objectively and without the possibility that knowledge of the compromise might theoretically influence his or her decision. In crude terms, this argument is informed by the notion that any judge assessing damages for a severely injured infant should not be exposed to the temptation to inflate damages in order to take account of the agreed discount for problems with liability.

Determination

16 It is convenient to deal with the last point. It is customary in this Court that the approval of a compromise in the case of a person under a legal incapacity is not listed before a judge who is either part heard in the matter or about to embark upon the hearing. The reasons for this are obvious and require no elaboration. In my opinion the present case is not relevantly different to that commonly occurring situation. As the defendants’ (alternative) submissions make clear, "if the Court embarks upon a consideration of the appropriateness of the resolution of the issue of liability, that should be done in such a way as to preserve the confidentiality of the outcome of the Court's deliberation one way or another".

17 The plaintiff’s principal argument is that the compromise on liability, if approved, creates certainty. It effectively forecloses upon the unlikely but nevertheless theoretically possible occurrence that the defendants might not be prepared in the future to enter into a similar, if somewhat modified, compromise on the question of liability if the Court were not prepared to approve the present agreement. The need for certainty becomes more important in the present case because of the likelihood that the plaintiff may not be in a position to enjoy the fruits of the agreement for some time and, significantly, in all likelihood not before the plaintiff's tutor has been further exposed to the prospect of increasing costs that she may be ordered to pay. The defendants have not offered to replace the existing agreement with another, or others, in some cascading fashion so as, in effect, to guarantee that approval will finally be obtained. There are significant reasons why the defendants would not wish to do so, and equally significant reasons why they could not be required to do so.

18 In my opinion, the matter is most obviously resolved by reference to the terms of s 56 of the Civil Procedure Act 2005. It can confidently be assumed that the agreement that the parties have reached was intended, subject only to the approval of the Court, finally to dispose of the issue of liability. It seems to me that it is inimical to the just, quick and cheap disposition of the proceedings to postpone resolution of the question of whether or not the proposed compromise is appropriate and should be approved for longer than may be dictated by any particular practical considerations affecting the parties. Appropriate directions about confidentiality can be made to accommodate the only substantial concerns raised by the defendants.

Conclusion

19 In my opinion, the plaintiff’s application to submit the agreement for the compromise or settlement of the issue of liability for the approval of the Court should proceed. The terms of s 76 do not make this course mandatory. However, for the reasons I have given, I consider that it is a course that is desirable. In forming my views on this matter I have given consideration to all the written and oral submissions of the parties.

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