Solicitors:
Plaintiffs: Not presently represented
Defendant: Clyde & Co, Solicitors
Amicus curiae: TL Goldberg of Turner Freeman Solicitors (formerly solicitor for the plaintiffs)
File Number(s): 2016/00069784
2016/00069805
[2]
Judgment
On 8 March 2014 Malaysian Airlines flight number MH370 disappeared en route from Kuala Lumpur in Malaysia to Beijing in China, and was subsequently found to have crashed into the sea.
Two passengers who perished on that flight were Yuan Li (who I will call "the father") and his wife Nai Jun Gu (who I will call "the mother"). They were Australian citizens travelling on Australian passports. I will call them, jointly, "the parents".
The parents were survived by two children of their marriage. Tian Yun Li (also known as "Yvonne") was born on 22 June 2009; she is presently aged 12 years. Tian Wen Li (also known as "Emma") was born on 16 June 2012; she is presently aged 9 years. Both girls are Australian citizens.
The parents were also survived by their respective parents, the grandparents of Yvonne and Emma.
The father's parents ("the paternal grandparents") are Shengda Li and Xiuqin Hu. They live in Beijing. Since the death of her parents, Yvonne has resided with them.
The mother's parents ("the maternal grandparents") are Baogin Yu and Yindi Xi. Since the death of her parents, Emma has resided with them in Shanghai, China.
With the consent of the administrator of the defendant, two sets of proceedings were commenced on 4 March 2016.
In the proceedings numbered 2016/00069784 Yvonne and Emma (as plaintiffs) seek relief on behalf of themselves and their paternal grandparents.
In the proceedings numbered 2016/00069805 Yvonne and Emma, as plaintiffs, seek relief on behalf of themselves and their maternal grandparents.
The relief claimed in each set of proceedings is a claim for the payment of damages pursuant to the Civil Aviation (Carriers Liability) Act 1959 Cth and the 1999 Montreal Convention arising from the loss of the parents in the MH370 crash.
The two sets of proceedings have proceeded in parallel. In describing their course, it is sufficient to proceed upon the assumption that there was but one set of proceedings. For each step taken in one set of proceedings, the same step was taken in the other set of proceedings.
Before the Court today is an application made by the defendant for approval of a settlement agreement made on 15 November 2017 at a time when Yvonne and Emma ("the children") were represented by a tutor, no longer in office.
After the settlement agreement was made the children's tutor ceased to have contact with the lawyers retained on behalf of the children. That tutor was removed from office on 13 September 2018, and attempts made since that date to locate another person willing and able to represent the children as a tutor have not been successful.
The two sets of grandparents, in China, have been notified of both the proceedings and the defendant's application for approval of the settlement. For reasons not fully or satisfactorily explained to the Court, they have failed to appear in the proceedings or to make any application concerning the proceedings. They have, on occasions, disclaimed any interest in the proceedings.
It was because of a need to consider the status of the settlement agreement in the absence of a tutor for the children that both sets of proceedings were transferred from the Common Law Division of the Court (where they were commenced) to the Protective List of the Equity Division.
In the course of the proceedings the children have been represented by two tutors, both of whom have abandoned any involvement in the proceedings. The first tutor was Jiazhen Yu. The second tutor was Wenqi Zhang. Both have been removed from the office of tutor. By orders of the Court, the first tutor was removed, and replaced by the second tutor, on 24 November 2016. The second tutor was removed on 13 September 2018.
So far as is presently material, the course of the two sets of proceedings, in parallel, has been as been as follows:
1. a statement of claim, naming the children (by their tutor) as plaintiffs, was filed on 4 March 2016;
2. in lieu of a defence, the defendant on 21 November 2016 filed a notice of motion seeking, inter alia, "an order that the proceedings be dismissed as the plaintiffs have not established that they have jurisdiction pursuant to Article 33 of the 1999 Montreal Convention to bring a claim in the Supreme Court of New South Wales";
3. following the appointment of the children's second tutor on 24 November 2016, an amended statement of claim reflecting that fact was filed on 28 November 2016;
4. on 15 November 2017 the parties, with their respective lawyers, participated in an informal settlement conference as a result of which (with the approval of the children's tutor) an agreement for settlement of the proceedings was reached, subject to the Court's approval; and
5. on 28 May 2020 the defendant filed a notice of motion (amended on 8 July 2020) seeking, inter alia, an order pursuant to section 73 of the Civil Procedure Act 2005 NSW giving effect to the settlement agreement.
The amended notice of motion filed on 8 July 2020 seeks the same substantive relief as the notice of motion filed on 28 May 2020, the difference between them being orders sought in the amended motion for service of the motion on the grandparents.
On the hearing of the amended notice of motion filed 8 July 2020, I have been assisted by the senior counsel and solicitor formerly representing the children plaintiffs. They have each appeared as amicus curiae, proceeding on the basis that their formal retainer to represent the children came to an end with the removal from office of the children's second tutor without a replacement tutor having been located. In performance of their professional obligations as lawyers, they have informed the Court (as the objective record in any event establishes) that there was on 15 November 2017 an agreement for settlement of the two sets of proceedings in accordance with instructions they obtained from the children's then tutor, the second tutor.
In the absence of any appearance by or on behalf of the grandparents (in whose care Yvonne and Emma have long been), the defendant seeks to have the Court approve the settlement agreement made on 15 November 2017, with ancillary orders for settlement monies payable by the defendant to be paid into court on notice to the grandparents, reserving leave for funds in court to be paid out on an application, or applications, properly made.
The evidence adduced in support of the defendant's amended notice of motion comprises, in addition to evidence of service of notice of the proceedings on the grandparents: (a) affidavits of Myles Brant affirmed 10 and 28 May 2020; (b) the affidavit of Terence Louis Goldberg sworn 13 September 2021, together with exhibit "TLG1" to that affidavit; and (c) the "Confidential Memorandum of Advice" of Paul Blacket SC dated 20 November 2017, admitted into evidence as an exhibit confidential to the children's former lawyers and the Court.
As agreed on 15 November 2017:
1. in each case, damages of $237,500 are to be paid to the plaintiff children as tenants in common in equal shares, plus costs agreed at $100,000;
2. in total, the defendant thus agrees to pay damages of $475,000, together with $200,000 costs; and
3. the defendant's agreement to make these payments is conditioned on their being accepted (as the plaintiffs have accepted) that they are in full and final settlement of any entitlement the plaintiffs might otherwise have had against the defendant.
Although the statements of claim filed in the proceedings formally record that damages are claimed, not only on behalf of the children, but also on behalf of their grandparents, it is plain that this Court has no jurisdiction to entertain a claim by or on behalf of the grandparents, all of whom are citizens (and always have been residents) of China. A settlement of the proceedings on the basis that damages be paid to the children, to the exclusion of their grandparents, is thus in principle reasonable.
Approval of the settlement (in essence for damages totalling $475,000 to be divided between the children) is recommended by Mr Blacket SC.
The proceedings have been stayed since the removal of the children's second tutor from office, pending the appointment of a new tutor: Uniform Civil Procedure Rules 2005 NSW, rule 7.18(3). That has not prevented the defendant from filing its notice of motion seeking approval of the parties' settlement, but, unless the Court otherwise orders, the absence of representation for the children is an impediment to the determination of the motion. A person under legal incapacity (such are the children by virtue of their age) may not commence or carry on proceedings except by a tutor: UCPR, rule 7.14. This requirement of the rules can be dispensed with, however, by an order under section 14 of the Civil Procedure Act 2005 NSW, and the Court can give directions under CPA section 16, with respect to any aspect of practice or procedure for which rules of court do not provide.
The Court's jurisdiction to approve a settlement of proceedings brought by or on behalf of a person with a legal disability is both statutory (by virtue of CPA, section 76) and inherent: Permanent Trustee Company Ltd v Mills (2007) 71 NSWLR 1; Fisher v Marin [2008] NSWSC 1357. The jurisdiction is inherently protective of the person or persons under a legal disability.
A convenient statement of principles, and practice, concerning whether or not to approve a settlement on behalf of a legally incapacitated person can found in the judgment of Mortimer J in Butler v Djerriwarrh Employment & Education Services Inc [2015] FCA 296 at [10]-[16], adopted by Gleeson J in Fish v NSW Department of Education and Training [2018] FCA 434 at [18]:
"[10] In determining whether or not to approve the settlement, for the purpose of rendering it binding on the applicant, the Court must be satisfied the settlement is in her best interests, or beneficial to her interests. That is not a requirement of the Rules themselves but stems from the nature of the jurisdiction exercised by the Court where a party is under a disability and unable to conduct a proceeding.
[11] It is the Court's responsibility to determine, for itself, whether the settlement is beneficial to the interests of the person under a disability: see Somerset v Ley [1964] 1 WLR 640 sub nom Re Ley's Trusts [1964] 2 All ER 326; Permanent Trustee v Mills [2007] NSWSC 336; (2007) 71 NSWLR 1 at [29] per Hammerschlag J; Fisher v Marin [2008] NSWSC 1357 at [29] per Rothman J; Button v CSL Ltd [2014] FCA 601 at [31] per Barker J.
[12] The Court is assisted in that determination by the provision of an opinion by an independent lawyer. It is likely … that the lawyer can be briefed fully on the facts and relevant evidence, and will have access to more material than the Court. The evidence and instructions considered by the independent lawyer can then be placed before the Court in, at least, the written opinion of that lawyer.
[13] The Court is not bound by the independent opinion, and indeed there have been situations where the Court has not approved a settlement despite the advice of an independent lawyer: see for example Rothman J's decision in Fisher disapproving settlement (under equivalent NSW legislation), albeit in circumstances where the plaintiff's litigation guardian had changed her mind and sought that the settlement not be approved.
[14] On an examination of the pleadings, and the other evidence before it, including the independent opinion, the determination of whether the proposed settlement is in the best interests of, or beneficial to the interests of, a person under a disability requires the Court to weigh, at least as an important consideration, the prospects of the applicant if the proceeding were continue: see Fisher at [35]-[37].
[15] What the Court is being asked to do is to approve a settlement so that it binds the party under the disability and brings the litigation to an end. Therefore, a primary consideration is, it seems to me, the advantages and disadvantages of the litigation continuing: not only in terms of whether the applicant might secure a more advantageous award from the Court at trial, but also issues such as the prospects of an appeal, the time it will take for the proceeding to reach a first instance judgment, and the pressures imposed on the applicant if the litigation were to continue. These pressures include the continuation of the applicant's current circumstances without the financial or material benefits flowing from the settlement as proposed, the emotional and psychological effects which attend the conduct of litigation and the strain of waiting to give, and then giving evidence (if that were to occur), or having evidence given about oneself. Anyone with experience of litigation knows these pressures are real, even if they cannot be quantified in financial or material terms.
[16] The jurisdiction to approve a settlement for a person under a disability is inherently protective, and I take that to mean protective not only of the financial interests of the person under a disability, but also protective of her interests in being as well and as healthy as she can, of living as comfortably as she can, with a good quality of life."
Having considered whether or not the settlement is in the best interests of the children, and each of them, I have determined to approve the settlement and to make ancillary orders to the effect that:
1. the defendant pay into court, within 28 days of today, to abide the further orders of the Court, the sum of $675,000 (inclusive of costs); and
2. before any order is made for the payment of those monies out of court, notice of the terms upon which the settlement has been approved be given to the grandparents.
As presently advised, provided the grandparents are given reasonable notice of the plaintiffs' former lawyers' claim to be entitled to be paid their costs for the principal proceedings out of the funds in court, and an opportunity thereby to object to such a payment, I anticipate that the sum of $200,000 (together with interest accrued thereon) will be ordered to be paid out to the plaintiff's former lawyers.
At the expiry of a reasonable time after notice of the court's orders is given to the grandparents, if no application is duly made on behalf of the children for payment out of the sum of $475,000 (together with accrued interest) on the account of the children, I anticipate that orders will be made by the Court (pursuant to CPA, section 77) for funds held in court on the account of the children to be paid to the NSW Trustee on trust for the children pending their attainment of the age of majority.
I propose to make no orders as to the costs of the defendant's' notice of motion or (assuming that such an order could be made) an order for the payment of interest on settlement monies referable to the date of the settlement agreement. To the extent that the defendant has been put to expense in prosecuting its motion (without any fault on its part or attributable to the children) it has had the benefit of settlement monies without any accrual of interest.
I do not propose to make any order preserving the confidentiality of the Court's orders or these reasons for judgment. In my opinion, in the absence of any appearance by the grandparents, it is in the best interests of the children (and their grandparents) that they have the means to access information about the children's entitlements on the public record.
Having heard from counsel for the defendant, and senior counsel formerly retained on behalf of the plaintiffs, I make notations and orders to the following effect:
1. ORDER that the defendant be granted such, if any, leave necessary for the hearing and determination of its amended notice of motion filed on 8 July 2020 despite the absence of any representation on behalf of the plaintiffs.
2. ORDER that any requirement for further service of the defendant's motion on the grandparents of the plaintiffs (ostensibly their guardians) be dispensed with.
3. ORDER that the barrister and solicitor formerly retained in these proceedings on behalf of the plaintiffs (Mr PE Blacket SC and Mr TL Goldberg respectively) be granted leave to appear, to assist the Court, on the hearing of the defendant's motion.
4. ORDER that the amended notice of motion filed on 8 July 2021 by the defendant in each of the proceedings respectively numbered 2016/00069784 and 2016/00069805 be heard together with evidence in the one set of proceedings to be evidence in the other so far as may be material.
5. NOTE that the grandparents of the plaintiffs in the two sets of proceedings have been given notice of the proceedings.
6. NOTE in that regard:
1. the affidavit of Myles Bryant affirmed 30 June 2020;
2. the affidavit of Alana Davison affirmed 24 September 2021; and
3. the correspondence comprising Exhibits D1 to D4, inclusive.
1. NOTE the following evidence adduced by the defendant in support of its notice of motion:
1. the affidavit of Myles Bryant affirmed 10 May 2020;
2. the affidavit of Myles Bryant affirmed 28 May 2020; and
3. the affidavit of Terence Goldberg sworn 13 September 2021.
1. NOTE the confidential Memorandum of Advice dated 20 November 2017 (MFI C6) prepared by Paul Blacket SC, then senior counsel retained by the plaintiffs.
2. ORDER, subject to further order, that the confidential exhibit to the affidavit of Terence Louis Goldberg sworn 13 September 2021 and the confidential memorandum of advice marked for identification as MFI C6 remain confidential to the plaintiffs and their former lawyers.
3. DECLARE that, subject to the approval of the Court, the two sets of proceedings respectively numbered 2016/00069784 and 2016/00069875 were settled by an agreement ("the settlement agreement") made between the plaintiffs (then represented by a tutor) and the defendant on 15 November 2017 on the following terms:
1. in each case, damages of $237,500 are to be paid to the plaintiffs as tenants in common in equal shares, plus costs agreed at $100,000;
2. in total, the defendant thus agrees to pay damages of $475,000, together with $200,000 costs; and
3. the defendant's agreement to make these payments is conditioned on their being accepted (as the plaintiffs have accepted) that they are in full and final settlement of any entitlement the plaintiffs might otherwise have had against the defendant.
1. ORDER that the settlement agreement be approved by the Court.
2. ORDER that the total sum of $675,000 payable by the defendant pursuant to the settlement agreement be paid into court by the defendant to abide the further orders of the Court.
3. ORDER that no interest be payable by the defendant on that sum if paid into court no later than 22 October 2021.
4. ORDER that, if that sum of $675,000 is not paid into court within that time, interest accrue on the sum of $675,000 or any lesser amount that may remain to be paid into court, at the rates prescribed for the purpose of section 101 of the Civil Procedure Act 2005 NSW, calculated from and incuding 23 October 2021 until paid into court.
5. NOTE that no orders are made as to the costs of the defendant's motion to the intent that each party to the motion, and the former lawyers for the plaintiffs, each pay or bear their own costs.
6. RESERVE, to the lawyers formerly retained on behalf of the plaintiff, liberty to apply to the Court for the sum of $200,000 (plus interest accrued on that sum when held in court) to be paid out to them for "costs" within the meaning of the settlement agreement.
7. RESERVE to the grandparents, or any other person who claims to exercise the rights and obligations of a guardian vis-à-vis the plaintiffs or either of them, to apply to the court for the sum of $475,000 (plus interest accrued on that sum when held in court) to be paid out to them, or as they may direct, on behalf of the plaintiffs.
8. RESERVE for further consideration whether funds held in court on the account of the plaintiffs be paid out to the NSW Trustee to be held by the NSW Trustee on trust for the plaintiffs, according to their entitlements as between themselves, until they respectively attain the age of majority (18 years).
9. ORDER that the solicitor formerly on the record for the plaintiffs (Mr Goldberg), on notice to the solicitors for the defendant, serve a copy of these orders (together with the reasons for judgment published in support of them as [2021] NSWSC 1213) on the grandparents of the plaintiffs no later than 28 September 2021.
10. ORDER that that order may be complied with by an email addressed to [XXXX].
11. ORDER, that should they seek to be heard in these proceedings on any of the questions reserved by the Court, or generally, the grandparents of the plaintiffs no later than 26 October 2021 give written notice of that fact (via an email or emails) addressed to:
1. Mr TL Goldberg at tlg@turnerfreeman.com.au; and
2. the staff of Lindsay J at daniel.yazdani@courts.nsw.gov.au.
1. ORDER that the proceedings be listed before Lindsay J at 9:00am on 2 November 2021 for consideration of the questions reserved by these orders, or directions, as the nature of the case might require.
2. ORDER, subject to further order, that the defendant be excused from attendance before the Court on that occasion.
3. RESERVE to all interested persons liberty to apply generally.
4. ORDER that these orders be entered forthwith.
[3]
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: 24 September 2021