Solicitors:
Slater and Gordon Lawyers (Plaintiff)
Moray and Agnew Lawyers (Defendant)
File Number(s): 2017/154018
[2]
JUDGMENT
This is an application for approval of a proposed settlement of a claim for damages commenced on behalf of Abbass Farhat, who is aged 12, by his mother, Karema Farhat, as his tutor, against Daniel Foyle. The application is made pursuant to s 76 of the Civil Procedure Act 2005 (NSW) (the Act), which provides that, in proceedings commenced on behalf of a person under legal incapacity, if an agreement for a compromise or settlement is made, that person is not bound by it unless it is approved by the Court.
The plaintiff is aged 12. On 21 May 2014, when he was 3 years old, he was severely injured in a motor vehicle collision. Proceedings were commenced on behalf of the plaintiff in this Court on 22 May 2017. In an amended statement of claim filed on 1 March 2021, the plaintiff alleged that he was struck by a vehicle being driven by the defendant on the road outside his residence. The plaintiff suffered a severe traumatic brain injury with a resultant right hemiplegia, an atlantoaxial ligamentous injury, a fractured right tibia and fibula, liver lacerations and pulmonary contusions.
It has been conceded by the plaintiff that the defendant was blameless, within the meaning of s 7A of the Motor Accidents Compensation Act 1999 (NSW), which became common ground pursuant to an amended defence filed on 26 May 2022. A police report that was generated on 17 July 2014 recorded that the plaintiff ran down a driveway and onto the road directly in front of the defendant's vehicle, which he was driving well below the applicable speed limit.
The compulsory third party (CTP) insurer of the defendant, GIO, has offered to settle the claim in an amount which has been disclosed to the Court, plus costs in an agreed sum. The plaintiff's tutor has provided instructions to her legal representatives to accept that offer.
Section 76 of the Act provides as follows:
"76 Settlement of proceedings commenced by or on behalf of, or against, person under legal incapacity
(1) This section applies to proceedings commenced by or on behalf of, or against, 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 a claim made by or on behalf of, or against, a person referred to in subsection (1).
(3A) However, the approval of the court is not required in relation to any agreement for the compromise or settlement of any matter in dispute in proceedings commenced by, or on behalf of, or against, a person under legal incapacity if, on the day the agreement for the compromise or settlement is made, that person has attained the age of 18 years and is not otherwise a person referred to in subsection (1). Accordingly, subsections (4)-(6) do not apply in relation to any such agreement.
(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."
Section 77 specifies how money recovered on behalf of a person under legal incapacity is to be dealt with:
"77 Payment of money recovered on behalf of person under legal incapacity
(1) This section applies to money recovered in any proceedings 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 has found, under section 76 (1) (c), to be incapable of managing his or her own affairs,
pursuant to a compromise, settlement, judgment or order in any proceedings.
(2) All money recovered on behalf of a person referred to in subsection (1) is to be paid into court.
(3) Despite subsection (2), the court may order that the whole or any part of such money not be paid into court but be paid instead to such person as the court may direct, including -
(a) if the person is a minor, to the NSW Trustee and Guardian, or
(b) if the person is a protected person, to the manager of the protected person's estate.
(4) Money paid into court under subsection (2) is to be paid to such person as the court may direct, including -
(a) if the person is a minor, to the NSW Trustee and Guardian, or
(b) if the person is a protected person, to the manager of the protected person's estate."
An affidavit read on the motion sworn by the plaintiff's solicitor, Tom Mithieux, annexed medical reports to the effect that the plaintiff has permanent injuries for which he has received rehabilitative treatment, including occupational therapy, in order to live with his resultant disabilities. Dr Hannah McGuinness, a rehabilitation medicine paediatrician attached to the Westmead Children's Hospital, noted in a report dated 2 December 2020 that the plaintiff has a borderline intellectual disability, a language delay and mild right (predominantly lower limb) hemiplegia as a result of the accident. The plaintiff receives multiple medical and therapeutic interventions to assist him to maximise his capacity to continue to learn and participate socially in the school environment.
I note that the plaintiff has a pre-existing hearing disability; shortly after his birth it was determined that he had significant hearing loss, for which he was fitted with hearing aids when he was three months old.
The application for approval seeks orders pursuant to a consent judgment in favour of the plaintiff in the sum referred to above, and costs in an agreed sum. The sum, less deductions as set out in the consent judgment, would be paid into Court, pending further order and after the appointment of the plaintiff's trustee.
I have read a confidential advice as to the merits of the proposed settlement prepared by senior counsel for the plaintiff, Mr Stone SC. In an affidavit sworn on 3 July 2023, the plaintiff's mother explained that she had received advice from Mr Stone which she accepted, and that she desired the Court to approve the proposed settlement. She stated that she understands that, if approved, the proposed settlement will constitute full and final settlement of the plaintiff's claims, meaning that no further claims can be made. She understood that there would be a separate application to the Court to have a trustee appointed, which she anticipated would be for a private trustee and financial manager, rather than the New South Wales Trustee and Guardian.
The Court's function in a hearing pursuant to s 76 of the Act is protective in nature. In Permanent Trustee Co Ltd v Mills (2007) 71 NSWLR 1; [2007] NSWSC 336, Hammerschlag J, referring to the legislative scheme in the Compensation to Relatives Act 1987 (NSW), observed, in an oft-quoted passage at [29]:
"The principle is that for the Court to grant approval for a compromise to be entered into by the disable[d] 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 disable[d] person: Somerset v Ley [1964] 1 WLR 640 ..."
Taking into account the confidential advice by Mr Stone SC and the content of the affidavit of his instructing solicitor and the plaintiff's mother, I am satisfied that the settlement is in the best interests of the plaintiff. Accordingly, I approve the settlement in the terms set out in the paragraphs numbered (1)-(7) in the consent judgment, a copy of which I shall initial and place with the Court file.
[3]
Orders
I make the following orders by consent:
1. Pursuant to ss 75-77 of the Civil Procedure Act 2005 (NSW), approve the settlement set out in the consent judgment.
2. Judgment for the plaintiff for the sum in paragraph 2 of the consent judgment.
3. The defendant to pay the plaintiff's party/party costs as agreed in paragraph 2 of the consent judgment directly to the plaintiff's solicitor.
4. Note paragraphs 3 - 7 of the consent judgment.
5. Pursuant to paragraph 5 of the consent judgment, the net sum remaining after identified deductions, be paid into Court.
[4]
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Decision last updated: 26 July 2023