Kuzma v Nepean Blue Mountains Local Health District

[2022] NSWSC 419

Supreme Court

New South Wales

Medium Neutral Citation:

Kuzma v Nepean Blue Mountains Local Health District [2022] NSWSC 419

Hearing dates:

5 and 8 April 2022

Date of orders:

08 April 2022

Decision date:

08 April 2022

Jurisdiction:

Common Law

Before:

Harrison J

Decision:

(1)  Note that this matter has settled subject to approval, in accordance with the terms of a consent judgment dated 25 February 2022 and signed by the legal representatives of the parties.

(2) Approve the settlement pursuant to s 76(4) of the Civil Procedure Act 2005.

(3)  Make orders in accordance with paragraphs 1 to 9 inclusive of that consent judgment.

(4) Order in accordance with s 77(2) of the Civil Procedure Act 2005 that after 28 days the judgment sum referred to in paragraph 1 of the consent judgment, less any authorised deductions for which the consent judgment specifically or by necessary implication provides, be paid into Court for payment out thereafter to the NSW Trustee & Guardian or as the Court may upon application made by any person pursuant to s 77(3) of the Act otherwise direct.

(5)  Grant liberty to the parties to apply by arrangement with my Associate.

Catchwords:

INFANT SETTLEMENT – approval of settlement – negligence – medical negligence – whether settlement in best interests of plaintiff

TRUSTEES – conflict of interest – whether solicitor able to assume office of trustee for settled funds of plaintiff when anticipating payment of legal fees from corpus

Legislation Cited:

Civil Procedure Act 2005 (NSW) ss 76(4), 77

Category:

Principal judgment

Parties:

Seth Kuzma by his tutor Laura Howard (Plaintiff)
Nepean Blue Mountains Local Health District (Defendant)

Representation:

Counsel:
P D’Arcy-King (Plaintiff)

Solicitors:
McHardy Law (Plaintiff)
McCabe Curwood (Defendant)

File Number(s):

2019/00112977

Publication restriction:

Nil

Judgment

1. HIS HONOUR: Seth Kuzma was born in April 2016. He will turn 18 years of age in 2034. He sues the Nepean Blue Mountains Local Health District claiming damages for injuries he sustained when umbilical and venous catheters were inserted to treat his hypoglycaemia following delay in his delivery. He maintains that he should have been delivered one day earlier which would have obviated the need for catheterisation and would have avoided the risk of the right iliac and common artery occlusions that resulted. Because of the compromised blood supply to his right leg, Seth has been left with severe and continuing disabilities.

2. The parties have now resolved this dispute and seek approval of the settlement that has been achieved.

3. Had the matter proceeded to a hearing, Seth would have contended that a significant perinatal hypoxic insult substantially contributed to his hypoglycaemia. The defendant contends that Seth suffered from islet cell hyperplasia and/or placental insufficiency, rather than an hypoxic insult, which led to his hypoglycaemic state. It was common ground that there is an inherent risk of lower limb arterial occlusion associated with umbilical arterial catheterisation and that it is only warranted in severe hypoglycaemic situations where normal treatment regimes fail to correct the condition.

4. There is no dispute that Seth should have been delivered one day earlier. There is consensus that lower limb arterial thrombosis is a recognised complication of umbilical arterial catheters notwithstanding the use of heparinised saline infusions. However, while this reduced the risk of arterial thrombosis and thromboembolism, it did not eliminate the likelihood of unilateral lower limb ischaemia, secondary to thrombosis.

5. The following causation issues would have required resolution:

1. Did Seth have islet cell hyperplasia?

2. Did he sustain an hypoxic insult?

3. Did he suffer from placental insufficiency?

4. Would Seth have required umbilical catheterisation if delivered one day earlier?

6. The parties engaged competing specialist medical opinions with respect to these issues. These have been helpfully reviewed in a confidential advice on settlement provided by Mr D’Arcy-King of counsel who appears for Seth. I have had regard to that opinion, as well as the reports provided on this application. Mr D’Arcy-King has concluded that the settlement represents an appropriate compromise having regard to the nature and extent of Seth’s injuries and the contest joined on the issue of the defendant’s liability.

7. In my opinion, the proposed settlement is in the best interests of the infant plaintiff and I propose to approve it. In doing so, I specifically refrain in these remarks from dealing with Seth’s current condition or his likely prognosis and development. Apart from the details to which I have already referred, exposition of these matters in more detail is arguably, if not certainly, inimical to Seth’s privacy, and that of his family.

8. However, the following practical issue, unrelated to the medical controversies in the case, has arisen and requires resolution. As is usual, the settlement sum excludes legal costs on a party and party basis. These costs have been agreed. As is also common, but by no means universal in infant settlements, there is said to be a component of solicitor and client costs over and above the costs that the defendant has agreed to pay. It is common in such cases for the tutor, or the tutor’s solicitor, to specify the additional solicitor and client costs in anticipation that favourable consideration might in due course be given by any trustee appointed to manage the settlement sum to reimbursing the tutor who is responsible for their payment. Despite often being asked to order that this be done, I take the view that it is not a matter for the Court but is one that falls squarely within the discretion of the trustee.

9. In the present case, the evidence makes it clear that, if the settlement monies were to be settled upon the NSW Trustee and Guardian, the amount available for distribution to Seth when he turns 18 would be less than the settled sum by something in the order of nearly $60,000, by reason of fees and so-called management costs, even allowing for income earned on the fund over that time. Seth’s mother, his tutor for the purposes of these proceedings, has expressed some understandable concern about this and asks that the settlement monies be dealt with in some other way. Obviously, investment in an interest bearing deposit or some equivalent account would, at current interest rates, earn little by way of income, but would incur little, if anything at all, by way of costs or charges and would clearly require nothing that could be described as fund management with associated costs.

10. In the normal course of events, a plaintiff’s solicitor would be the obvious first choice as a prospective trustee. As will by now be apparent, however, Seth’s solicitor in this case has what seems clearly to be an irreconcilable conflict of interest that would preclude his appointment as such: it would not be possible properly to discharge the office of trustee for the settled fund and simultaneously to purport to exercise a discretion as trustee authorising payment of outstanding solicitor and client costs to himself from the same fund. No one contends to the contrary. Nor for cognate reasons would Seth’s mother and tutor, as a person liable for the costs, be able to exercise the onerous duties of Seth’s trustee in the circumstances.

11. The appointment of Seth’s father as his trustee would not appear, as a purely hypothetical matter, to be attended with the same difficulties. I hasten to observe that no application pursuant to s 77(3) of the Civil Procedure Act 2005 has either been made or foreshadowed. It seems to me that the parties should be afforded some opportunity to consider adopting that course as a suitable solution.

12. In the circumstances, I will make the following orders:

1. I note that this matter has settled subject to approval, in accordance with the terms of a consent judgment dated 25 February 2022 and signed by the legal representatives of the parties.

2. I approve the settlement pursuant to s 76(4) of the Civil Procedure Act 2005.

3. I make orders in accordance with paragraphs 1 to 9 inclusive of that consent judgment which for identification will initial, date with today’s date and place with the papers.

4. I order in accordance with s 77(2) of the Civil Procedure Act 2005 that after 28 days the judgment sum referred to in paragraph 1 of the consent judgment, less any authorised deductions for which the consent judgment specifically or by necessary implication provides, be paid into Court for payment out thereafter to the NSW Trustee & Guardian or as the Court may upon application made by any person pursuant to s 77(3) of the Act otherwise direct.

5. I grant liberty to the parties to apply by arrangement with my Associate.

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Decision last updated: 08 April 2022