This matter came before me in the Duty List on 27 July 2018. It was explained that it was an application for approval of a settlement of civil proceedings, pursuant to s 76 of the Civil Procedure Act 2005 (NSW), necessitated by the fact that Mr James Irwin McIntyre (the plaintiff) is a legally incapable person.
On that occasion, having received some documents, I indicated to the parties my initial thought that, if the matter proceeded to finality there and then, on the evidence proposed to be placed before me I would not be prepared to approve the settlement. A fruitful discussion occurred between counsel for the plaintiff and me about possible further evidence, and the matter was stood over by consent, part heard before me, for hearing on 16 November 2018.
On the latter occasion, the evidence and submissions were expanded markedly. They included a detailed confidential advice prepared by senior counsel, expert in this particular area of law, which was of great assistance to my comprehension.
For the following reasons, I am content to approve the settlement at which the parties arrived, some time ago now.
[2]
Background
The background of the matter may be shortly stated; I shall take care, of course, not to reveal anything derived solely from the confidential advice.
The plaintiff suffered a motorcycle accident in 1981. That has led to a degree of permanent cognitive impairment occasioned by traumatic brain injury. Over the years, it has manifested itself in deficits with regard to processing complex information, decision-making, and managing his financial affairs. Although he has functioned and functions at a reasonably high level, as I have said, he has required the assistance of a tutor in these proceedings.
The plaintiff was married in the past, but that came to an end in 2014. After that, he developed a romantic relationship with Ms Sonia Satori, who is the third defendant in these proceedings. In the course of that relationship, he made a number of payments to her that added up to quite a significant sum. Those payments were ultimately credited to Salvador Klein Proprietary Limited, the first defendant, which is an entity managed by Mr Salvador Klein, the second defendant, and who is the son of Ms Satori.
To state things succinctly, the romantic relationship between the plaintiff and Ms Satori came to an end in 2015. The monies were not repaid. Eventually, the plaintiff commenced proceedings in this Court by way of an originating process filed in 12 April 2017. To state his claim very broadly, it was that all of the defendants had behaved unconscionably towards him due to his state of health and emotional dependence on the third defendant (there were a number of variations on that legal doctrine, but the claim can be conveniently summarised in that way).
I was told from the Bar table (without objection or dispute on the part of counsel for the plaintiff) by the solicitor for the defendants that the matter had been the subject of a successful mediation. Without delving into detail unnecessarily, that mediation has resulted in the plaintiff being prepared to accept a much smaller sum in settlement than he originally claimed.
To conclude this very brief précis, the advice of senior counsel, as is customary, provides a detailed analysis of all of the forensic "pluses and minuses" that attend further prosecution of the claim.
The final significant factual matter is that it is clear that the plaintiff himself is suffering significant anxiety as a result of the litigation; wishes to put it behind him; and is content with the settlement. So is his tutor, and the family of the plaintiff more generally.
[3]
Submissions
The following were the most significant submissions made by counsel for the plaintiff in support of the approval.
First, whilst accepting that, by definition, the wishes of a plaintiff, represented in proceedings by a tutor and with regard to which approval is necessary, cannot be determinative, emphasis was placed on the evidence to the effect that the plaintiff strongly wishes to bring the claim to an end now.
Secondly, the proceedings have been settled at an early stage, in a constructive effort to save costs. The result of that is that evidentiary statements of both parties have not yet been exchanged. An inevitable side-effect of that is that the lawyers advising the plaintiff must be circumspect about assessing the prospects of success. The result of all of that is that a cautious approach to settlement on their part is appropriate.
Thirdly, questions of unconscionability and the like are not just highly dependent upon the details of the evidence as it is given at the hearing, including under the probing light of cross-examination. They are also matters for evaluative judgment, about which different judges sitting as the tribunal of fact may legitimately differ. That, it was submitted, is another factor that calls for caution.
Fourthly, it is already clear from the pleadings that there will be a very sharp dispute about the circumstances in which the payments were made by the plaintiff, and the whole human relationship that were their context. Yet again, that calls for significant caution.
Fifthly, it is true that the settlement sum is a marked reduction from the claim originally made. But on the evidence placed before me, there can be no guarantee that, if the approval is not granted, the defendants would make a higher counter-offer. Nor could I come to the view that there is any guarantee that, if the matter were fully litigated, the plaintiff would "do better".
Sixthly, to develop that submission further, these proceedings cannot be equated with, for example, a professional negligence claim in which liability is admitted, and the only question during an application for approval is whether the proposed settlement sum with regard to damages is appropriate. Quite the contrary: a real concern for the plaintiff and his legal advisors is that, if fully litigated, his claim may fail completely.
Seventhly, it is true that the proposal (as I understand it, arising from the mediation) is that payments be made by the defendants to the plaintiff in tranches. But it was submitted that I can be confident that steps have been put in place to ensure that the proceedings will not be discontinued on behalf of the plaintiff unless and until the entire agreed settlement sum has been forthcoming from the defendants.
Eighthly and finally, the primary position of counsel for the plaintiff at the end of the application remained that, in all the circumstances, I would be content with the arrangements proposed with regard to financial management. The primary proposal is that the plaintiff would take responsibility for the management of his own money, but he would be closely assisted by family members and professional financial advisors.
If I were concerned about that question, however, counsel for the plaintiff made it clear that the whole approval should by no means founder; she provided alternative orders that she submitted would, if I were concerned, put my mind at ease, whereby a judge of the Protective List of the Equity Division of this Court would be asked to make orders placing the management of the settlement funds in the hands of a responsible and expert money manager.
As one would expect from the nature of the proceedings, the representative for the defendants simply submitted that the approval should be granted, and neither contradicted nor supplemented any of the above submissions of counsel for the plaintiff.
[4]
Determination
As I have written, when the matter first came before me I felt the need to understand it far more deeply. That was not just a matter of being appraised of the detail of the evidence that would underpin the claim of unconscionability. It was also a matter of understanding the disjunction between the amount originally claimed, and the ultimate proposed settlement sum.
Having said that, the expanded material placed before me on the latter date has put my concerns at rest.
In particular, I respectfully consider that the detailed advice of senior counsel is obviously expert, and appropriately measured, reflective, and cautious.
I also accept that the submissions of counsel for the plaintiff that I have summarised above are soundly based.
In particular, I accept that the pendency of this litigation is troubling for the plaintiff and his family; that none of them wish to "gamble" as against the possibility of complete failure of the claim, including a very significant adverse costs order; that the lawyers acting on behalf of the plaintiff are suitably qualified and experienced to advise him with regard to settlement; and that there is nothing to suggest that the tutor is motivated by anything than love and concern for his brother.
In King v Chrisis [2018] NSWSC 377, Hallen J provides, with respect, a very useful summary of the applicable principles when considering s 76 of the Civil Procedure Act, at [19]-[22]. In a nutshell, when granting an approval for an incapable person, the Court must be of the view that the settlement is beneficial to the interests of that person under the incapacity. That evaluative judgment is fact-specific and determined on its own merits; namely, whether the settlement ought to be approved, making sure to protect the person under legal incapacity. Furthermore, the Court must also consider the possibility of the incapable person receiving a more advantageous sum of damages after litigation, alongside consideration of the disadvantageous aspects of continuing the litigation for the plaintiff.
In addition, the summary of O'Keefe J at [32] in Yu Ge by her tutor Tao Ge v River Island Clothing Pty Ltd & Ors [2002] NSWSC 28 has been seen as something of a touchstone regarding the key considerations for such a settlement approval. That decision has been cited with approval more recently, in Fisher by her tutor Fisher v Marin [2008] NSWSC 1357, at [37], and in Fairhurst (bht NSW Trustee and Guardian) v Fairhurst [2012] NSWSC 388, at [30].
In short, applying those principles to this matter, I am content to approve this settlement on the basis that it is in the best interests of the plaintiff.
Having said that, in light of the fact that the whole of the litigation is founded upon the basal proposition that the plaintiff was recently incapable of managing his money wisely, I am firmly of the opinion that, despite the good intentions of his family and others in terms of overseeing his management of his own money, I approve the settlement only on the basis of my acceptance of the undertaking of counsel for the plaintiff that an application will be made for funds management to a judge of the Protective List of the Equity Division of this Court.
Finally, in order to protect the privacy of this cognitively impaired gentleman who will be coming into a significant sum of money, I do not propose to have the exact sum published on New South Wales Caselaw.
[5]
Orders
For the foregoing reasons, I make the following orders:
1. Pursuant to s 76 of the Civil Procedure Act 2005 (NSW), the settlement of these proceedings are approved in the terms set forth in the Deed of Settlement and Release in the form annexed to the affidavit of John McIntyre affirmed 25 July 2018 (the Deed), subject to the following orders.
2. Pursuant to s 77(3) of the Civil Procedure Act 2005 (NSW), the Court directs that money payable to the Plaintiff, in accordance with the Deed, be paid into this Court pending further orders of the Protective List of the Equity Division of this Court.
3. The proceedings are adjourned for mention to 3 July 2020 to allow for performance of the terms of the Deed.
4. The Plaintiff is granted liberty to file a Notice of Discontinuance (in the form at Annexure A of the Deed), at the Registry of this Court, prior to 3 July 2020.
5. Liberty is granted to both parties to restore the matter to the list on 7 days' notice.
[6]
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 07 December 2018
Parties
Applicant/Plaintiff:
James Irwin McIntyre by his tutor John Alan McIntyre
Respondent/Defendant:
Salvador Klein Pty Limited as trustee for Sonia Ursus Satori Investment Trust