Nau v Kemp & Associates

The case of *Nau v Kemp & Associates* was heard in the Court of Appeal of New South Wales, with McColl and Campbell JJA and Sackville AJA presiding. The dispute concerned the application of section 5(1)(b) of the *Law Reform (Miscellaneous Provisions) Act 1946* (NSW) in circumstances where a plaintiff had settled with one tortfeasor and subsequently sought to recover further damages from another. The central issue was whether the settlement amount, agreed between the plaintiff and the first tortfeasor, constituted "damages awarded" for the purposes of section 5(1)(b), which prevents a plaintiff from recovering more than the total damages assessed.

The court was required to determine the meaning of "damages awarded" within section 5(1)(b) of the *Law Reform (Miscellaneous Provisions) Act 1946*. Specifically, it had to consider whether this phrase encompassed judgments that gave effect to a settlement between parties, or if it was limited to damages assessed by a court following a trial. The court also had to consider the purpose and effect of section 5(1)(b) in preventing double recovery, and whether the potential for under-compensation of the plaintiff was relevant to its operation.

The Court of Appeal held that "damages awarded" in section 5(1)(b) refers only to damages that have been assessed by a court. It reasoned that the purpose of the section is to prevent a plaintiff from recovering more than the total amount of damage assessed by the court, and that a settlement amount, not having been assessed by a court, does not fall within this definition. The court found that the District Court had erred in its interpretation of the section by treating the settlement amount as "damages awarded". Consequently, the appeal was allowed, the orders of the District Court were set aside, and the respondents' notices of motion were dismissed with costs.