Royce (a pseudonym) v Australian Capital Territory
[2023] ACTSC 69
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | Royce (a pseudonym) v Australian Capital Territory |
Citation: | [2023] ACTSC 69 |
Hearing Date: | 31 March 2023 |
DecisionDate: | 31 March 2023 |
Before: | McWilliam AsJ |
Decision: | See [23]. |
Catchwords: | NEGLIGENCE – medical negligence – where plaintiff is a minor – settlement of proceedings – court approval required for settlement involving a minor – whether private trustee should be appointed |
Legislation Cited: | Court Procedures Rules (2006) (ACT), r 282 Social Security Act 1991 (Cth) |
Cases Cited: | Duffell v Duffell [2015] ACTSC 123 |
Parties: | Alex Royce (a pseudonym) by his Litigation Guardian ( Plaintiff) Australian Capital Territory (Defendant) |
Representation: | Counsel D Campbell SC; I Bradfield; B Jullienne ( Plaintiff) M Fordham SC ( Defendant) |
| Solicitors Blumers Personal Injury Lawyers (Plaintiffs) ACT Government Solicitors (Defendant) | |
File Number: | SC 399 of 2008 |
McWilliam AsJ:
The parties to the present litigation have been involved in a claim of medical negligence against the Canberra Hospital. The harrowing events giving rise to the litigation occurred in 2006. The child the subject of the litigation contracted pneumococcal meningitis and septicaemia when he was 3 months old, which changed his life course. The claim concerns the diagnosis and treatment of the illness following the child’s presentation to the hospital in 2006. A breach of duty of care was admitted in respect of certain conduct pleaded but liability overall was denied. The assessment of the child’s development and disabilities was deferred until the child’s late teens.
The parties have now had the opportunity to see how the plaintiff has developed and, following the exchange of numerous medical expert reports, a compromise has been reached between the plaintiff and defendant, in the amount of $7,350,000 plus costs as agreed or assessed.
Because the plaintiff is still an infant (he is now 17), an application in proceeding dated 31 January 2023 has been brought 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 an infant, the Court is exercising the inherent parens patriae jurisdiction; that is, the protective 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.
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, Allsop P (as his Honour then was) referred to the discussion in Fairhurst at [2] 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 infant. 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 (the infant) is at risk that if the proceeding went to trial, the result would be less favourable than what has been offered in the settlement. The Court will hesitate to withhold its approval of a settlement which provides certainty where such a risk exists (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 a number of affidavits which exhibited the comprehensive medical and other expert evidence that had been obtained. They were part of the documents assembled for the mediation that resulted in the current settlement for which approval is sought.
The application was also supported by the confidential detailed opinion of Messrs Campbell SC, Bradfield and Jullienne. As would be anticipated in a settlement of this size and complexity, the advice was comprehensive, dealing with various issues arising on liability and quantum, summarising the medical evidence, and also addressing the considerations relevant to the management of any settlement sum, discussed further below. I have relied heavily on that opinion in assessing whether the terms agreed are within appropriate parameters.
Finally, the Court had before it the affidavit of the litigation guardian demonstrating an understanding of the settlement proposed and her assent to it, and an affidavit of the solicitor on the record, Mr Philip Schubert. It should be noted that the solicitor is also a senior and experienced litigation solicitor. He shares the views expressed in the opinion of counsel.
The plaintiff and his parents have been dealing with the consequences of the events in 2006 for 17 years. They will continue to do so for the rest of the plaintiff’s life and the quantum of the settlement reflects that reality. This litigation was initially commenced in 2008 and absent the compromise, the hearing would have taken multiple weeks. The plaintiff and his parents have had this litigation in their lives since that time. The proposed settlement provides certainty and finality and in doing so, relieves one of the burdens faced by the plaintiff and his family. I am satisfied that the settlement of the case for the amount proposed is overwhelmingly 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:
(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 Australian Executor Trustees Ltd (AET), 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].
There is no concern about either the structural and financial security of the trustee proposed or the skills, investment strategies and experience of the likely appointees. The proposed trust deed was in evidence. It sets out the investment strategy and the trustee company proposed is one that will be subject to appropriate safeguards contained in legislation to protect the contents of the fund. The draft deed also sets out the anticipated management expenses. They appear to reflect market rates and the funding model is the same as that utilised in many of the matters in which the Court has appointed that firm as trustee.
In any event, the settlement amount is inclusive of funds management and therefore a matter of the plaintiff’s choice. The plaintiff and his parents have already met with a representative of AET and based on that meeting, it is their particular request for the appointment of AET. When the management of the fund is potentially for a long period of time (depending on the ultimate level of cognitive impairment), ensuring there is a satisfactory working relationship between the plaintiff, his parents and the trustee is a matter of some significance.
All of those matters make it abundantly clear that the appointment of AET to manage the sizeable settlement is also in the interests of the plaintiff. I will so order.
Conclusion
The Orders of the Court are as follows:
1)The compromise of this matter in the sum of $7,350,000.00 plus costs as agreed or assessed is approved.
2)By consent, judgment is entered for the plaintiff against the defendant in the sum of $7,350,000.00 inclusive of funds management expenses (“the judgment sum”).
3)The defendant is to pay the plaintiff’s costs as agreed or assessed.
4)Prior to the payment of the judgment sum into Court, the defendant is authorised to deduct from that sum and pay:
a) The sum the subject of a notice of charge issued by Medicare Australia pursuant to the Health and Other Services (Compensation) Act 1995 (Cth);
b) The sum the subject of any recovery notice issued by the National Disability Insurance Agency pursuant to the National Disability Insurance Scheme Act 2013 (Cth); and
c) The sum the subject of any recovery notice issued by Centrelink pursuant to the Social Security Act 1991 (Cth).
5)The defendant is to pay the judgment sum less any amounts paid in accordance with Order 4 above and the notes below into Court, pursuant to s 25 of the Public Trustee and Guardian Act 1985 (ACT).
6)The sum paid into Court is then to be paid out forthwith by the Court to the Australian Executor Trustees Ltd (“AET”), as trustee, to be held pursuant to the [plaintiff’s] Compensation Trust established under the deed which is annexure C to the affidavit of Mr Tim Grant-Allen affirmed 29 March 2023 (“the Trust Fund”).
7)The confidential advice of Messrs D Campbell SC, I Bradfield and B Jullienne dated 29 March 2023 is to be placed in an envelope, sealed and the envelope marked “not to be accessed without an order of a Judge or Associate Judge”.
The Court NOTES:
a)The agreement between the parties that AET may, if it is in the plaintiff’s interests to do so, transfer the whole or any part of the Trust Fund to a superannuation fund (being a complying superannuation fund for the Income Tax Assessment Act 1997 (Cth)) of which the plaintiff is or becomes a member and shall thereafter manage the plaintiff’s rights as a member of the fund for his benefit.
b)The agreement of the parties that no interest is payable on the judgment sum if the defendant pays that amount not later than 28 days after the latest of the following:
i)The day the defendant receives a sealed copy of these orders;
ii)The day the defendant receives a Medicare notice of settlement or judgment;
iii)The day the defendant receives any clearance notice from Centrelink; or
iv)The day the defendant receives a recovery notice from the National Disability Insurance Agency.
| I certify that the preceding twenty-four [24] numbered paragraphs are a true copy of the Reasons for Judgment of her Honour Associate Justice McWilliam. Associate: Date: 3 April 2023 |
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