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[2007] QSC 265
Supreme Court of Queensland
2007-09-12
Lyons J
Original judgment source is linked above.
[1] LYONS J: The plaintiff is currently 55 years of age. He was previously a semi-professional soccer player who had played soccer for Iraq prior to his migration to Australia in the late 1970s. He had been employed by the first defendant as a contract cleaner at various work sites and between September 1999 and 13 June 2000 the first defendant hired out his services to the second defendant as a cleaner at the work site at the Australia Fair Shopping Centre, Southport.
[2] In the course of performing his duties on 13 June 2000 the plaintiff was required to take rubbish in a plastic moulded wheelie bin to a compactor which was situated at a loading bay within the shopping centre. He had to attach the wheelie-type bin to the compactor and then operate the compactor to lift the bin and empty its contents into the compactor. In the course of this work the bin fell from the compactor and struck the plaintiff, causing him to suffer personal injuries. He suffered a minor closed head injury, a musculo-ligamentis injury to the chest, a fracture of the right ninth and twelfth ribs, an undisplaced fracture of the right hammate, an aggravation of a degenerative disease in his cervical spine, aggravation of tendonitis in his right shoulder, aggravation of pre-existing degeneration in both knees, a soft tissue injury to the right wrist as well as an adjustment disorder with anxious and depressed moods.
[3] The plaintiff alleges that the incident was caused entirely or contributed to by the negligence and/or breach of contract of employment and/or breach of statutory duty of the defendants. As a result of the injuries the plaintiff alleges that he has suffered significant pain and discomfort and continues to do so. The plaintiff has also required treatment as well as medication and has been unable to return to any form of employment since the date of injury. The plaintiff also requires ongoing medical treatment, including the likelihood of future surgery.
[4] The plaintiff claims that the injuries to his knees represent at least a four per cent whole of body disability and he also has a six per cent whole of body permanent disability resulting from the injury to his right wrist, various other physical injuries and an adjustment disorder. The plaintiff also claims past economic loss and out of pocket expenses. The claim was initially filed on 1 June 2003 in the District Court against the second defendant only. On 2 July 2004 an amended consolidated claim was filed against the first and second defendants claiming $368,034.22 as damages, together with interest.
[5] An offer to settle was made by the first defendant but was rejected by the plaintiff on 13 December 2005. An informal settlement conference of the plaintiff's claim by way of mediation was held before Mr David Tait SC on 3 February 2006. During the course of the mediation an offer of settlement was made but it became clear to the solicitors for the plaintiff that the plaintiff was suffering from an extreme level of anxiety. To allow the plaintiff appropriate time to consider the offer they requested that the defendants leave their joint offer open for acceptance until 10 February 2006.
[6] The plaintiff returned to Melbourne and despite strong recommendations from his solicitors to reject the offer, the plaintiff rang them on 8 February 2006 and told them to accept the offer to settle. The solicitors for the plaintiff have various concerns about the plaintiff's psychological state at the time he provided instructions to settle. In order to ensure that the plaintiff's interests were properly protected, by letter dated 9 February 2006, the solicitors conveyed the plaintiff's acceptance of the defendants' offer but indicated that it was subject to confirmation from a psychiatrist that the plaintiff had capacity to provide the solicitors with instructions.
[7] Subsequent to the acceptance of the offer being communicated to the defendants it would appear that the plaintiff changed his mind about the offer. He now has no memory of the settlement offer made at the mediation.[1] The plaintiff's treating psychiatrist Dr Symons examined the plaintiff on 20 February 2006 and on 9 March 2006 gave a short report to the solicitors for the plaintiff which stated:[2]
"In my, opinion, Mr Aziz's psychiatric condition is likely to be significantly influencing his decision-making about his claim, thus preventing him from 'freely and voluntarily making decisions about his claim', thus effectively preventing him from having capacity to give instructions about his claim."
[8] Dr Symons also indicated that the plaintiff would not be able to administer any settlement monies he may receive. It was Dr Symons' opinion that it was necessary for the plaintiff to find a litigation guardian who was prepared to act on his behalf.
[9] The plaintiff's former wife, Ms Carolyn Patterson, agreed to act as the plaintiff's litigation guardian and her consent was filed on 12 April 2006. The litigation guardian gave instructions to explore further informal settlement negotiations and on 13 April 2006 an offer to settle was conveyed to the second defendant's solicitors and on 21 April 2006 to the first defendant's solicitors.
[10] Due to Dr Symons' opinion it was necessary for the plaintiff to apply to the court for leave to proceed in accordance with r 72 of the Uniform Civil Procedure Rules (the "UCPR"). This application for leave to proceed was heard before her Honour Justice Wilson on 26 June 2006 who considered that a comprehensive report should be obtained from an independent psychiatrist to determine the plaintiff's capacity. Her Honour ordered that the plaintiff be examined by Dr William Glasser, an independent psychiatrist in Melbourne, on 18 July 2006. Due to difficulties with the availability of both Dr Glasser and the plaintiff, the plaintiff's solicitors arranged for the plaintiff to be examined on 27 June 2006 by Dr Trevor Lotz, who had previously provided reports to WorkCover. Dr Lotz in his report dated 14 July 2006 considered that the plaintiff was not able to give instructions or manage any settlement funds.
[11] Dr Glasser subsequently examined the plaintiff on 30 January 2007. Dr Glasser considered that the plaintiff could make appropriate decisions if he was given instructions and advice in a calm and patient manner. He also stated that the plaintiff should be given the advice or information in a simple format and he should be provided with the opportunity to reflect on the advice or information in an unhurried fashion.
[12] The matter was re-listed and on 27 March 2007 his Honour the Chief Justice directed that the following issues be determined at a hearing:
"(a) Whether the plaintiff had capacity to prosecute these proceedings as at 9 February 2006;
(b) If the answer to (a) is in the affirmative whether the proceedings were compromised on that date;
(c) Whether it is the case that the plaintiff suffers from an impaired capacity at the present time so that any further step in the proceedings may only be taken with the leave of the court pursuant to rule 72 of the Uniform Civil Procedure Rules 1999;
(d) If such leave is necessary, whether it should be granted".
[13] The matter proceeded to trial on 1 June 2007 and written submissions were subsequently received on 22 June 2007.
[14] At the hearing issues arose in relation to the admissibility of certain paragraphs in the affidavits of Ms Patterson filed on 10 April and 1 June 2007 as well as the affidavit of Steven Herd filed on 10 April 2007.
[15] I uphold the objections to the evidence in the affidavit of Ms Patterson filed 10 April 2007 in paragraphs 5 and 9 on the basis of hearsay and the objections to paragraphs 7(e), and 17(a), (c) and (d) on the basis that those paragraphs swear the issue. I will however allow the evidence contained in paragraphs 7(g) and 7(k) which relates to Ms Patterson's evidence that the plaintiff appeared to her to be "confused" or in a "state of mental confusion" at the end of the mediation. Whilst this evidence can be characterised as non expert opinion, the High Court in Helton v Allen[3] held that non experts could give evidence in relation to whether a person was exhibiting great emotion as well as the conclusion that the emotion was simulated. In this case Ms Patterson knew the plaintiff well and her conclusion that the plaintiff appeared to her to be confused conveys in the most accurate way the version of events she was seeking to describe.
In relation to the objections to the affidavit of Ms Patterson filed on 1 June 2007 I uphold the objections to paragraph 6(g) on the basis that it gives evidence of the thoughts of another person and 6(h) on the basis that it gives a conclusion. In relation to the affidavit of Steven Herd I uphold the objections to paragraph 6 on the basis that it is opinion and paragraphs 8(a), (b), (c) on the basis of hearsay. I do consider however that the evidence in paragraphs 8(d) and (e) is relevant.
[17] Section 59 of the Public Trustee Act 1978 states that in any cause or matter in which money or damages is or are being claimed by or on behalf of a person under a legal disability either suing alone or in conjunction with other parties then no settlement or compromise shall be regarded as valid without the sanction of a court or the Public Trustee.
[18] The plaintiff gave instructions to his solicitors to settle his actions on 8 February 2006 which were then conveyed in a letter to the defendants on 9 February 2006. The question is therefore whether the plaintiff had capacity to give those instructions or whether he was a person under a legal disability at the time the agreement to settle was conveyed. Essentially the acceptance of the offer by the plaintiff gave rise to a binding agreement for a compromise of a claim unless it is struck down by s 59. It is clear that the compromise has not been sanctioned by the court, and the question is therefore whether s 59 operates to defeat the settlement which has been entered into.
[19] Section 59(1)(a) defines person under a legal disability as meaning:
(b) A person with impaired capacity for a matter within the meaning of the Guardianship and Administration Act 2000."
[20] Because the plaintiff is of full age the question is whether he is a person with impaired capacity within the definition under the Guardianship and Administration Act 2000 (the "GAA Act").
[21] Schedule 4 of the GAA Act includes the following definition of capacity for the purposes of the Act:
"Impaired capacity, for a person for a matter, means the person does not have capacity for the matter.
'Capacity' for a person for a matter means the person is capable of -
(a) understanding the nature and effect of decisions about the matter; and
(b) freely and voluntarily making decisions about the matter, and
[22] Under s 10 of the GAA Act matters are categorised into personal matters, special personal matters, special health matters and financial matters. Section 1 of Sch 2 defines financial matter as including a "legal matter relating to the adult's financial or property matters" and a legal matter is then defined to include "(d) bringing or defending a proceeding, including settling a claim whether before or after the start of the proceeding."
[23] Clearly the scheme of the Act is such that the issue of capacity is determined not on a global basis but rather on the basis of whether a person has capacity for a particular matter. In this case it is not a question of whether the plaintiff has impaired capacity for matters in general but specifically whether he has impaired capacity in relation to legal matters and particularly whether he has capacity to bring or defend a proceeding including settling a claim. This principle was clearly recognised in the decision of Gregory v Nominal Defendant & Anor[4] where it was held that:[5]
"The material presently before the court does not deal comprehensively with the plaintiff's incapacity for financial matters. He has the capacity to instruct his lawyers, to understand the compromise and to consent to it. That capacity may extend to finalising questions of costs as between him and his solicitors. If it does not, then in the circumstances of this case it is a matter for an administrator appointed under the Guardianship and Administration Act."
[24] This decision clearly indicates that the capacity for a matter is specific to the decision which needs to be made. The question in this case is whether the plaintiff had the capacity to make a decision about settling his claim as at 9 February 2006.
Did the plaintiff have capacity to prosecute these proceedings as at 9 February 2006?
[25] An adult is presumed to have capacity to make decisions on his own behalf and indeed s 1 of Sch 1 of the GAA Act explicitly states that "an adult is presumed to have capacity for a matter". In order for this presumption to be displaced the court needs to be satisfied of this on the balance of probabilities. In order to make this determination on the question of the plaintiff's capacity to make the decision to compromise his claim on 8 February 2006, it is only necessary for one element of the definition to be lacking for there to be a finding of incapacity.
[26] To come to a determination on this question of capacity it is helpful to break that issue up into four discreet issues because of the elements contained in the definition of capacity under the Act.
(b) Did the plaintiff understand the effect of the decision he was making?
(c) Did the plaintiff freely and voluntarily make a decision about the matter?
(d) Did the plaintiff communicate the decision about the matter?
[27] Significantly if the answer to any one of the questions is "no" then the test for capacity has not been fulfilled.
[28] A number of witnesses have provided significant evidence in this regard namely the plaintiff, the plaintiff's former partner Ms Carolyn Patterson, three psychiatrists Dr Mark Symons, Dr Trevor Lotz and Dr William Glasser as well as his solicitor Mr Steven Herd. In examining this evidence I have placed particular reliance on the evidence of the plaintiff's former wife, Ms Carolyn Patterson and the evidence of Drs Symons and Lotz.
[29] Ms Patterson has known the plaintiff since about 1983 and has a daughter with the plaintiff who was born in 1985. The plaintiff and Ms Patterson separated in 1999 however they continued to reside together until the plaintiff moved to Melbourne to live with his family in 2002. Despite their separation the plaintiff and Ms Patterson have a close relationship and the plaintiff resides at Ms Patterson's residence with her and their daughter on a regular basis and for extended periods. Ms Patterson not only has the advantage of having known the plaintiff for a long period of time but I also consider that the answers she gave and the manner in which she gave her evidence indicate that she was a thoughtful and objective witness.
[30] I also consider that the evidence of Dr Lotz has particular weight for a number of reasons. Firstly, Dr Lotz saw the plaintiff over a six year period and therefore has a unique perspective on the plaintiff's condition. As Dr Lotz said himself "Well it certainly gives me a longitudinal ability to evaluate him and his progress or lack of."[6] Secondly, Dr Lotz was not the plaintiff's treating psychiatrist and initially provided assessments for WorkCover.
Dr Symons also had the benefit of both examining and treating the plaintiff over a period of three years. Dr Symons gave a report on 9 March 2006 based on an appointment with the plaintiff on 20 February 2006, which was within 12 days of his instructions to his solicitors to accept the offer. Whilst the report of Dr Glasser has been of assistance I do not consider that the report carries the same weight as the reports of the other two psychiatrists given it was the result of a one hour appointment which occurred 12 months after the plaintiff gave instructions to his solicitors to accept the offer in February 2006.
Did the plaintiff understand the nature of the decision he was making in February 2006?
[32] Turning to the first of the four questions I have posed, which is whether the plaintiff actually fully understood the nature of the decision he was being asked to make. The evidence indicates that the plaintiff was a migrant and that he came to Australia as an adult. English is not his first language and he often required assistance with decision making even before the accident.
[33] The plaintiff indicated in evidence that he lives with his family, mainly his brother Karim, in Melbourne, and that he is heavily reliant on his family for assistance. His friend Colin Holton or his niece and nephew assist him with travel, appointments, his Centrelink forms and other activities. Colin assists with his banking and keeps a diary for him so he knows what he has to do and he usually gets Colin or his brother to go to the doctor with him so they can explain what the doctor says to him.[7]
When Mr Aziz gave evidence at the hearing it was clear that he did not have a good recall of the mediation. I accept that this inability to remember was genuine. Having observed Mr Aziz at the hearing I was impressed by his honesty and dignity. I consider he made genuine attempts to give his evidence as best he could but that he has a very real problem with his memory of that event. He had no recall of the barrister who conducted the mediation, nor could he recall the exact amount that was offered to him. The following interchange with his Counsel at the hearing indicates the nature of this memory:[8]
"Do you remember what happened at that meeting? - Only they ask me question like, "How are you feeling?" I said "Same thing." I don't remember really. Sorry.
And do you remember if anyone offered to settle your case? Do you remember if anyone offered to pay you money?-- Yes.
Right. How much did they offer you?-- My ex-wife she told me and I wasn't happy with it.
Do you remember what your lawyers told you that they had offered to the other side?-- Yeah, they do - they - they told me that I can - I don't know how much is.
All right?-- Only because of my wife she explained. She said to me, "What do you think?" I says, "I'm not happy with them because going to be rest of my life." I can't-----
All right. Do you remember what you did after - after that happened - after the mediation? --- No, sorry.
Right. Do you know what a litigation guardian is?-- Guardian.
Right. Can you remember whether anyone has ever tried to describe that to you before?-- Yeah, they did but I can't remember between my lawyer and my ex-wife.
Right. When your lawyer spoke to you, how did he talk to you? Was he - what -what kind of voice did he use?-- Nothing, just normal, like - like everybody does.
All right. That was at the - the conference with the other side?-- Yes, our side.
And all the other appointments you've had with him?-- Yeah."
[35] It was also clear from the evidence that Mr Aziz gave at the hearing that he actually does not remember ringing his solicitors and telling them to accept the offer:[9]
"MR DIEHM: ...... Mr Aziz, Mr Herd has given evidence that you telephoned him about five days after the meeting and instructed him - you asked him to accept the offer to pay money to you that had been made by the defendants?-- I don't-----
[36] Against this background it is necessary to consider the nature of the plaintiff's medical condition and the impact that all of these factors had on his decision making.
[37] As I have indicated I consider that Dr Lotz has had a unique perspective from which he can answer this question and I place particular reliance on his assessment in June 2006 that the plaintiff has a major depression. Dr Lotz's initial report on 1 March 2001, which was prepared for WorkCover, indicated an adjustment disorder. By 30 July 2001 however, the report to WorkCover indicated that Mr Aziz had a Major Depressive Disorder. This was subsequently confirmed in Dr Lotz's reports of 23 August 2005 and 14 July 2006. This report was based on a number of factors including the assessment conducted on 27 June 2006 and when he was questioned at the hearing about the specific basis for this opinion he indicated the following:[10]
"...when he came to see me he was scattered. He couldn't hold a reasonable, rational conversation without sort of interjecting with odd behaviours and comments. He deferred to his partner..."
"...he would suddenly sort of giggle a little bit, which I thought was inappropriate, and then he would say something which was a little bit tangential and not relevant to the exact question ..."
[38] As Dr Lotz explained at the hearing a major depression, as opposed to an adjustment disorder, means that the person has had depression or an adjustment disorder for a long time and continued:[12]
"...it's biological and there's a chemical change...it can then turn into a biological illness...which is then, by definition, major depression which then needs intervention with medication and therapy, whereas adjustment disorder often you can get away with just therapy and without medication."
[39] In terms of what impact such a condition has on a person Dr Lotz indicated that predominantly concentration and memory is impaired but that judgment and insight can also be impaired which then impacts on the ability to process information in everyday life.[13]
[40] Ms Patterson gave evidence that the plaintiff had resided with her in early 2006 at the time of the mediation. Ms Patterson stated that at that time he required assistance in relation to dealing with Centrelink, filling in forms and tax returns as well as assistance with managing appointments. She also organised his travel from Melbourne for the mediation and cared for him while he was in Brisbane.
[41] In her evidence at the hearing Ms Patterson stated it was impossible to have a conversation with the plaintiff about complex matters. She also stated that the plaintiff would never descend into detail about the claim and could not discuss the pros and cons of the offer that had been made at the mediation. In particular Ms Patterson stated she has to accompany him to meetings with his solicitors and explain to him what the solicitors had said. Ms Patterson stated that she could not discuss the claim with the plaintiff as he would become angry and volatile and he simply would not talk about the claim.
[42] In relation to the mediation on 3 February 2006 Ms Patterson stated that she was present at the mediation together with Luke Murphy and Steven Herd from the plaintiff's solicitors' firm and she observed the following:
[43] Dr Symons agrees with Dr Lotz that the plaintiff has a major depressive disorder and was of the view that this mental state was significantly affecting his decision making at the time of the mediation.
[44] Dr Glasser however, in his report dated 19 February 2007, considered that the plaintiff had an adjustment disorder but also indicated that his symptoms at that time included depressed and anxious mood as well as concentration and memory difficulties. Dr Glasser indicated that whilst the psychiatric problems were a response to the accident in 2000, he considered that there had been many distressing events in his life relating to his extended family in Iraq which were contributing factors.
[45] It is clear that even if the plaintiff's condition is an adjustment disorder rather than a major depressive condition it is an inescapable conclusion that the condition must be considered to be longstanding and that the stressors are still operating.
[46] Further, for the purpose of ascertaining if the plaintiff has impaired decision making it is essentially irrelevant what the cause of that incapacity is. For the purpose of this question it simply doesn't matter if the psychiatric problems were caused by pre-exisiting conditions or the events in 2000. The only issue is whether there is in fact impaired decision making capacity irrespective of the cause.
[47] Having considered the material however I consider that the weight of the evidence indicates that the plaintiff has a major depressive disorder which has been in existence since the accident in 2000 at least.
[48] Irrespective of whether the plaintiff has an adjustment disorder or a major depression and irrespective of whether it was due to the events in 2000 or other factors, the question which needs to be answered is "Did the plaintiff understand the nature of the decision he had to make?" At a fundamental level it is clear that the plaintiff understood that if he chose to accept the offer the litigation would end. It would also seem clear that he understood that the settlement figure represented his total payout or compensation for the accident.
[49] There is however some evidence from both Dr Lotz and Dr Symons that the plaintiff did not fully appreciate the nature of the decision. Dr Lotz considered that he understood that he would get the money as a result of the settlement but that he was not thinking any further than that. Dr Symons gave evidence that he did not think the plaintiff gave "adequate consideration"[14] to the money being offered:[15]
"Well, I don't know that he was able to even assess what was substantial and what wasn't, because of the expression 'I want health, not money' was an extreme expression implying that money wasn't important in general. So, it implied to me that he wasn't even assessing whether the settlement was - was reasonable or not."
[50] Despite these concerns I consider that the evidence indicates that the plaintiff at the time did understand at a basic level that he was making a decision that he would compromise his claim, that is, bring it to a conclusion in exchange for a monetary amount even though he can now not recall that figure. I am satisfied therefore that there is not sufficient evidence to displace the presumption that he understood the basic nature of the decision he had to make as at 9 February 2006.
[51] A far more complex issue however then arises for determination and that is the question whether the plaintiff understood the "effect" of the decision he was making? That is did he understand the full consequences and implications that would flow from that decision? He knew the litigation would end but did he fully comprehend what else flowed from that decision? Dr Symons stated "He'd understand what it meant, but I don't think he'd be able to incorporate it into a decision making process."[16] The real question here is whether he understood the full ramifications of the decision not just the immediate consequences.
Does the plaintiff understand the effect of the decision?
[52] I consider that the evidence outlined indicates that the plaintiff has had concentration, information processing and memory problems over a period of time and that these deficits were in evidence at the time of the mediation. In addition there is evidence of impaired judgement and insight in relation to his decision making. Does this mean he understands the effect of his decisions which is the crucial question?
[53] The plaintiff's solicitor Mr Steven Herd gave evidence at the hearing was that the defendant's final offer at the mediation was $200,000 and that the plaintiff did not actually give them instructions to accept the offer at the mediation but simply said he "just wanted it over with."[17]
[54] When Counsel for the plaintiff specifically asked the plaintiff at the hearing how he felt about the case and what he wants to happen with the case the following exchange occurred:[18]
"Can you tell the Court what you want to happen with this case?-- Only I need to be get well, this is very important for me.
All right?-- Very important for me. I don't care about money. I just want to be right person, just little bit so I can be - go back to teach the boys like - like all my life been young sport. I never been educate in all my life, not Arabic, not English, always been sport.
And have you spoken to Ms Patterson about what you'd like to happen to the - the claim?-- Yeah.
All right. When was that?-- This is a long time ago, about three month ago.
All right. Can you remember what you said?-- Not really.
Any at all about what you said, or where the conversation happened?-- Not really.
All right. Do you look after yourself now the way you used to look after yourself?-- No.
What's - what has changed?-- Because every day think about it. Every day I don't eat right - eat properly because of my - I can't be always with my sister-in-law, with my brothers. I feel guilty.
Why do you feel guilty?-- Just because they can't be always there looking after me, I have - I'm old enough to look after myself, but I try."
[55] I consider that this evidence raises real issues about the plaintiff's understanding of the consequences of his decision making as at the date of the hearing. The question is however what was the plaintiff's capacity as at 9 February 2006?
[56] As I have indicated Dr Symons had the advantage of having examined the plaintiff over a long period of time and importantly, saw the plaintiff around the time of the mediation. He was therefore able to give an opinion at the time the events in question were unfolding. In particular it is clear that Dr Symons was concerned that the plaintiff did not understand the long term implications of his decision about accepting the settlement figure:[19]
"I think that that would include appreciating longer term consequences, and I'd have a concern that - that he wouldn't fully understand that, or appreciate that - you know, a short term - spending money on some short term item, for example, would lead to - not considering his long term position adequately."
[57] Dr Lotz had similar concerns when he said:[20]
"He wasn't thinking further about what this payout actually meant and how it was supposed to support him for the next 20, 30 years."
[58] Ms Patterson also had concerns:[21]
"I tried to dissuade him and explain to him that it's not just such a simple matter. That there are responsibilities with regards to this case. "That it's all very well saying that you're not interested in the money, but there are monies owed to people that have to be repaid, and that you just can't walk away.""
[59] Dr Symons also had concerns about the long term implications of his decision making because of the fact he kept changing his mind:[22]
"The fact that he said he - he kept changing his plans about what he was wanting to spend money on, and, you know, and what he told me about where he'd spent some money on a car for his daughter and then regretted that."
[60] In relation to whether he could understand the consequences of decisions Ms Patterson stated that the plaintiff "sends money to friends and family"[23] in a context where he was not in a financial position to be making such gestures and Dr Symons considered that this behaviour indicated that the plaintiff was "...not being sufficiently concerned about his - his own longer term needs".[24]
In determining this issue of whether a person understands the effect of a decision it must be remembered that it is the nature and effect of the decision or the transaction after it is explained to the person. As Sir Owen Dixon CJ said in Gibbons v Wright:[25]
"...the mental capacity required by law in respect of any instrument is relative to the particular transaction which is effected by means of the instrument, and may be described as the capacity to understand the nature of that transaction when it is explained"
"The broad propositions are not in doubt. The question of difficulty in any particular case is likely to be whether the party does have the mental capacity, with the assistance of such explanation as he may be given, to understand the nature and effect of the particular transaction."
[63] I consider that an examination of the evidence in this case indicates that the plaintiff had the nature and effect of the transaction (i.e. the decision to settle) explained to him by his solicitors and his ex-wife. It is clear that the full implications of the settlement were explained to him namely that it was monetary compensation for his injuries and for his loss of income and that some sums of money would have to be repaid to various bodies and that the money would have to last him for many years into the future.
[64] I consider that even despite explanations along these lines the evidence outlined above indicates that the plaintiff did not fully understand the nature and effect of his decision to settle which was communicated to the defendants on 9 February 2006. Whilst he understood that the consequence of the decision was that the litigation would end, he did not fully appreciate that this settlement had other consequences even though they were explained to him. These consequences included the fact that significant funds would have to be repaid to bodies such as Medicare and WorkCover. Neither did he appreciate that he would be expected to live on these funds for a considerable period of time. Given his wish to essentially give the money away to a soccer team, I consider that there was clearly no appreciation by him that the settlement amounts were to compensate him for his economic loss and that this fund would be what he would need to live on in the coming years. There was no appreciation by him that the money he received would be substantially diminished once the repayments and expenses were paid and that what was left was income support for him which would have to be carefully managed.
[65] I am satisfied therefore that the plaintiff did not understand the effect of the decision he was making as at 9 February 2006. Whilst it is only necessary for one element to be missing for a finding that the plaintiff had impaired capacity for the decision it is relevant to consider the other elements in the capacity definition to understand the extent of the plaintiff's impaired decision making. In this regard the next question that needs to be answered is whether the plaintiff could freely and voluntarily make decisions?
Did the plaintiff make the decision freely and voluntarily?
[66] As previously indicated Dr Symons gave evidence both in his report and at the hearing that he considered that the plaintiff's psychiatric condition "is likely to be significantly influencing his decision making about his claim, thus preventing him from freely and voluntarily making decisions about his claim, thus effectively preventing him from having capacity to give instructions about his claim."[28] The evidence from Dr Symons was that he considered that there was reasonable doubt that the plaintiff could give instructions given his state of mind and the aspects of depression:[29]
"His depressed mood, the associated sense of guilt and not being deserving, his impatience, his agitation, his desire to settle this claim early ..."
[67] Dr Symons' opinion was that the plaintiff's extreme distress and his physical symptoms were preoccupying him and influencing his decision making and therefore the decision to settle was not a decision made freely and voluntarily.
[68] I note Dr Glasser's view that the plaintiff could give instructions if he was approached in a calm and patient manner and if he was given time to consider the information. I am satisfied however that the evidence indicates that the plaintiff had matters explained to him in a calm and patient manner by both his lawyers and his ex-wife at the mediation, and indeed subsequent to the mediation, but that the plaintiff was still anxious, agitated, and not fully comprehending the issues. Furthermore the evidence indicates that when he returned to Melbourne and had some time and distance to reflect on the issue he initially gave instructions but subsequently changed his mind. Of further concern is the fact that he does not actually recall the instructions he gave to his solicitors or the amount of the settlement figure discussed.
[69] Ms Patterson gave evidence that the plaintiff could be dissuaded from a certain course of action by her advice and that generally when she gives him instructions or directions he complies "most of the time".[30] This information reinforces these concerns about the nature of the plaintiff's decision making. Such actions are not consistent with independent decision making.
[70] In terms of how the plaintiff was generally at the time of the mediation and at the time he told the solicitors to settle, Ms Patterson has set out her concerns in some detail in paragraph 39 of these reasons. In addition she also stated that previously the plaintiff was very particular about his appearance but by the time of the mediation "...he didn't care what he wore, and he wasn't interested in eating."[31]
[71] Mr Herd, a solicitor who attended the mediation, also gave evidence in relation to his concerns about the plaintiff. In particular he indicated that he observed the plaintiff was suffering from "an extreme level of anxiety"[32] and that he had concerns about the "plaintiff's psychological state at the time he was providing instructions".[33]
[72] Of further concern is the fact that the plaintiff could not make a decision and sustain that decision over time. The fact that a person vacillates about their decisions or changes their mind easily raises concerns about their capacity to make the decision. The capacity to make a decision carries with it a requirement that the person is able to sustain that decision having arrived at that decision after some consideration.
[73] I am satisfied that due to the level of the plaintiff's psychological distress at the time of the mediation and in the period up to 9 February 2006, he could not freely and voluntarily make decisions about his claim. He could not bring an independence of thought to the decision which needed to be made or apply the level of reflection and insight that was required for this decision.
[74] Whilst Dr Symons had concerns about the plaintiff's ability to communicate given his inability to answer questions directly and the tangential way in which he spoke, I do not consider that there is sufficient evidence to establish deficits in this area of decision making.
[75] There is also evidence from the psychiatrists in relation to the plaintiff's ability to manage any settlement funds. Whilst both Dr Lotz and Dr Symons indicate they have concerns in this regard this question is not one that I have been specifically asked to address and is quite a discreet question in itself. There is not sufficient evidence therefore to make any findings in this regard. I do however note this evidence and consider that it does assist in understanding the complex nature of the plaintiff's deficits.
[76] It is clear from what has been set out above that I do not consider that the plaintiff had capacity at 8 or 9 February 2006 to compromise his claim. Furthermore I do not consider that the plaintiff has capacity now to make decisions in relation to the conduct of his litigation.
[77] The plaintiff does not therefore have capacity for legal matters as defined in the Act. The plaintiff is therefore a person under a legal disability and s 59 of the Public Trustee Act 1978 applies and the purported settlement is therefore not valid until it complies with that section.
[78] Rule 93 of the UCPR also requires that a person under a legal incapacity may start or defend a proceeding only by the person's litigation guardian. It is clear that a litigation guardian is required in this case. The plaintiff's ex-wife has agreed to assume this role and she fulfils the requirements for appointment as set out in r 94 as she is not under a legal incapacity and she has no interests in the proceedings adverse to the interests of the plaintiff. She has also filed her consent as required by r 95 of the UCPR.
[79] I also consider that in the circumstances it is appropriate that leave be given, pursuant to r 72 of the UCPR, for the litigation guardian to take a further step in the proceedings.
[80] In relation then to the questions that have been posed I answer the questions as follows:
(a) Whether the plaintiff had capacity to prosecute these proceedings as at 9 February 2006 - No.
(b) If the answer to (a) is in the affirmative whether the proceedings were compromised on that date - Not necessary to decide.
(c) Whether it is the case that the plaintiff suffers from an impaired capacity at the present time so that any further step in the proceedings may only be taken with the leave of the court pursuant to rule 72 of the Uniform Civil Procedure Rules 1999 - Yes.
(d) If such leave is necessary, whether it should be granted - Yes.
I will hear from Counsel in relation to the costs and the formulation of the Orders which are required.
Aziz
Prestige Property Services P/L and Anor
(1954) 91 CLR 423
(1940) 63 CLR 691