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File Number(s): 2025/00478684

JUDGMENT

1. The Plaintiff in these proceedings sues her son to obtain possession of a property at Greystanes at which he resides.

2. The parties have reached a proposed settlement of the entire claim. However, they require the Court’s approval of that settlement because the Plaintiff is under legal incapacity (as dealt with at [22]–[26] below). Before the Court is an application for that approval pursuant to s 76 of the Civil Procedure Act 2005 (NSW) (the Act).

3. The Court was assisted by concise written submissions prepared by Mr Thompson of Counsel, who appeared for the Plaintiff. Mr Thompson supplemented those submissions with a brief oral address. Mr Liedermann of Counsel, who appeared for the Defendant, adopted the Plaintiff’s position.

The dispute

4. The Plaintiff is the sole registered proprietor of the property. She lived there with the Defendant until 2016, when her care needs necessitated her moving in with her daughter, Ms Childs. The Plaintiff ultimately moved into an aged care facility in 2023, where she now lives. She is presently 90 years of age and requires substantial care.

5. The cost of the Plaintiff’s ongoing care is around $1,550 a fortnight. Because her age pension no longer covers this expense, she sought to rent out the property to derive additional income.

6. In November 2025, the Plaintiff requested that the Defendant vacate the property for this purpose. He refused. The Plaintiff then commenced these proceedings by Statement of Claim filed on 10 December 2025. Ms Childs is her tutor in the proceedings.

7. The Defendant initially did not appear. Default judgment was entered and a writ of possession was issued. However, after the Defendant elected to participate in the proceedings, that default judgment was set aside by consent on 23 April 2026 on the undertaking that the Defendant pay $30,000 to the Plaintiff’s nursing home to meet her care expenses.

8. The Defendant has served an unsealed Defence and Statement of Cross-Claim. In essence, he says that both the Plaintiff and his late father made consistent representations to him that the property was also his home and that he had a right to reside there indefinitely (and, implicitly, for free). The Defendant’s case is that he relied on those representations in providing the Plaintiff with care, support and assistance including domestic tasks, making capital improvements, and paying utilities and rates. On this basis, he claims an equitable interest in the property and seeks that the Plaintiff be restrained from obtaining possession of the property inconsistent with that interest. In the alternative, he seeks a declaration that he has a life interest or a right to reside in the property as long as he wishes.

9. The proceedings remain nascent. The pleadings have not closed, and no evidence in respect of the substantive claim has been filed.

The proposed settlement

10. The parties have prepared a Deed of Settlement and Release to dispose of the claim. The version tendered on the application is undated and unexecuted, but I was informed from the Bar table by Mr Thompson that the parties have now executed counterparts of that document.

11. It is not necessary to recite all the provisions of the proposed settlement for the purpose of this application. The following are its essential terms.

12. Clause 4.1 provides that the Plaintiff agrees to grant the Defendant a right to reside in the property for his life contingent on his paying fortnightly rent to the Plaintiff. The rent is defined as $1,820 a fortnight. However, cl 4.3(a) provides for an annual rent review by the Plaintiff, subject to any single increase being capped at 5% and the Plaintiff not increasing the rent more than three times in each five-year period.

13. Clause 4.3 sets out further mechanical provisions relating to maintenance, inspections, the payment of outgoings, and the repair of certain specified defects.

14. Clause 4.5 provides that if the rent paid by the Defendant is insufficient to cover the Plaintiff’s care costs, then he agrees to pay any such shortfall to the Defendant upon written request.

15. Clause 19.1 provides that the Deed binds and ensues for the benefit of the parties’ respective successors and permitted assigns.

16. Clauses 6.1 and 6.2 provide that, subject to compliance with the terms of the Deed, the Plaintiff and the Defendant unconditionally and irrevocably release one another from all present and future claims in these proceedings or arising from or in any way connected with the matters raised in these proceedings.

17. By cll 8.2 and 8.3, the Defendant also agrees to contribute 50% of the refundable accommodation deposit already paid by the Plaintiff to the nursing home at which she lives. He is to transfer that sum to her within 30 days of the commencement of the Deed. By cl 8.5, the Defendant is beneficially entitled to 50% of any of that deposit which is refunded. That amount will not form part of the Plaintiff’s estate.

18. By cl 4.8 the parties agree that, subject to the Court’s approval, the parties consent to orders being made in the following terms:

19. the Claim be dismissed;

20. the Cross-Claim be dismissed; and

21. the Defendant is to pay the Plaintiff’s costs of the proceedings in the fixed sum of $5,000.

22. The Deed contains, in cl 19, a boilerplate “successors and assigns” provision which, in circumstances of the Plaintiff’s advanced age and poor health, is important. So too are cll 9 and 10 (“Bar to Proceedings” and “Covenant Not to Sue”). The likelihood of the Plaintiff predeceasing the Defendant is obviously all but certain. Because the Deed provides for a legal relationship to endure for perhaps decades after the Plaintiff’s death, it is essential that the Plaintiff’s successor-in-title remains bound by the terms. This appears to have been addressed by cl 19.

23. Although the nomenclature adopted within the Deed uses the term “rent”, it seems to be a shorthand for a regular payment for occupation, despite it securing a contingent life interest. For this reason, there is no basis to treat this Deed as creating any residential tenancy.

Legal principles

21. Section 76 of the Act relevantly 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,

…

(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).

…

(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.

22. The Act relevantly defines a “person under legal incapacity” as “any person who is under a legal incapacity in relation to the conduct of legal proceedings”. As was put by Williams J in Mawson Parade Investments Pty Ltd v Heald [2024] NSWSC 1198 at [8]:

“The question is whether the defendant has capacity in relation to these specific proceedings, including whether he is capable of understanding the nature and purpose of the proceedings, making informed decisions, with the benefit of relevant legal and expert assistance, about the issues in the proceedings, understanding the possible outcomes of the proceedings, and evaluating the risks and prospects of the proceedings. The fact of tutors having been appointed is not determinative of whether the defendant is a person under legal incapacity, or whether the proceedings should have been conducted by the defendant through a tutor.”

23. In exercising its discretion under s 76(4) to approve a proposed settlement, the Court must be satisfied that the settlement is beneficial to the interests of the person under incapacity: Permanent Trustee Company Ltd v Mills (2007) 71 NSWLR 1; [2007] NSWSC 336 (Mills) at [29] (Hammerschlag J). That assessment includes considerations of litigation risk, the desirability of early finality, and the avoidance of further distress: Brown v Western NSW Local Health District [2026] NSWSC 51 at [22] (Chen J). Furthermore, the proposed settlement should be consented to by the person’s tutor, and her lawyers should give the opinion that the proposed settlement is beneficial to her interests: Mills at [29].

Is the Plaintiff a person under legal incapacity?

24. I must first be satisfied that the Plaintiff is a person under legal incapacity. I am so satisfied.

25. In evidence was a letter of Dr Jerome Ip, neurologist and geriatrician, dated 7 September 2022. That letter confirms that the Plaintiff was first diagnosed with dementia in 2020. Her principal symptom was memory impairment.

26. There was also a report of Ms Nima Shreshtha, registered nurse, dated 21 January 2025. Ms Shreshtha’s report observes that the Plaintiff has been diagnosed with dementia or cognitive impairment, is prone to confusion and bouts of wandering, requires assistance with everyday tasks, and on some days does not get out of bed.

27. As noted above, Ms Childs acts as the Plaintiff’s tutor in these proceedings. She is also the Plaintiff’s guardian under an enduring guardianship and her attorney under an enduring power of attorney.

28. I find that, because of her cognitive impairment, the Plaintiff is a person under legal incapacity and is incapable of conducting these proceedings on her own behalf.

Is the proposed settlement beneficial to the Plaintiff’s interests?

29. The Plaintiff’s goal in commencing these proceedings was to use the property to generate income for the purpose of meeting her care expenses. The proposed settlement achieves this goal.

30. In essence, the settlement secures for the Plaintiff a rent which currently exceeds her care costs. That rent is subject to periodic review and increase. In the event that the rent payable from time to time is insufficient to meet those expenses, the Defendant is liable to make up the shortfall.

31. By the terms of the Deed, the Defendant is required to meet all outgoings associated with the property and assumes certain maintenance and repair obligations. This arrangement is beneficial to the Plaintiff, and she would be unlikely to obtain such benefits if the property were leased to an independent party on commercial terms.

32. Moreover, settling the proceedings at this early stage will spare the Plaintiff what would inevitably be significant further legal costs. It will also avoid the vicissitudes of litigation, including the possibility that the Defendant will be successful on his cross-claim.

33. By her affidavit sworn on 5 August 2026, Ms Childs deposes that having given due consideration to the advice of the Plaintiff’s solicitors, she considers that the proposed settlement is in the Plaintiff’s best interests and that its terms are fair and reasonable.

34. The foregoing matters satisfy me that the proposed settlement is beneficial to the Plaintiff’s interests. Indeed, its terms provide better security for her ongoing care costs than had she been successful in obtaining the relief she initially sought. The Court will approve the settlement accordingly.

Orders

35. The Court makes the following orders:

36. The agreement for settlement of these proceedings in accordance with the Deed of Settlement and Release (located at pages 30 to 43 of Exhibit PC-2 to the affidavit of Patricia Childs sworn on 5 August 2026) is approved pursuant to s 76(4) of the Civil Procedure Act 2005 (NSW).

37. The proceedings are otherwise dismissed.

38. The Defendant is to pay the Plaintiff’s costs in the specified gross sum of $5,000.

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