Yu Ge by her tutor Tao Ge v River Island Clothing Pty Ltd & Ors

Supreme Court of NSW|2002-02-06|Before: O'Keefe J

INTRODUCTION 1 This is an application for approval by the Court of the settlement of an action in which the plaintiff is an infant. 2 Yu Ge (the plaintiff) was injured on 18 January 1999 when she was ten years old. Her injuries were sustained in a factory operated by River Island Clothing Pty Ltd (the first defendant). In it was certain machinery which had been manufactured by Hydraulic Contracting & Supply Ltd. (the second defendant). Although the plaintiff was only a child of tender years, she was helping her mother with the work her mother was employed to undertake in the factory. 3 The injury sustained by the plaintiff consisted of the traumatic amputation of the distal half of her right hand and the top of her right thumb when a machine made by the second defendant that had moving parts, which included opposing surfaces, operated whilst her hand was between such surfaces. The amputation was complete and was rendered the more serious by the fact that the injured hand was the plaintiff's dominant hand - that is, she was right handed. 4 Fortunately for the plaintiff, the severed portion of her hand was able to be retrieved and as a result of the skill of the surgeons who treated her it was able to be reunited with the stump of the hand. This has meant that to the casual observer the plaintiff does not present as a partial amputee. However, I had the benefit of being able to see the plaintiff's hand, compare it with her other hand, have her perform a number of minor activities and motions in the witness box and respond to questions concerning the sensation in her uninjured hand compared with that in the injured and uninjured parts of her right hand. 5 The right hand of the plaintiff presents as one which has clearly been injured. The scars on the hand are apparent. Furthermore, the skin on the distal part of the plaintiff's right hand does not appear to the eye to be as robust as that on her left hand, or on the residue of her right hand. The motive power of the hand is diminished. Sensation is impaired. The plaintiff's right hand tends to be in a somewhat crooked position. The natural extension of her fingers is incomplete, and if forced gives rise to complaint of pain. Clearly, the hand is defective, dysfunctional. 6 The plaintiff also sustained damage to her right foot. This consists of a long scar which has unfortunately been the subject of keloid overgrowth. There is also impaired sensation. This is due to the fact that the saphenous nerve had to be sacrificed in order to effect the major repair operation to her right hand. The damage to her foot is associated with a ¾ inch diminution in the girth of her right calf. 7 On the evidence before the Court, she has sustained a significant impairment in physical terms. This is borne out by the medical reports tendered on behalf of the plaintiff. A claim is also made in respect of the psychological effects of the injuries. These too are dealt with in the medical reports to which I shall return later in the course of these reasons. There does not appear to be any real medical issue between the parties. Suffice it to say at this stage that senior counsel for the first and second defendants frankly conceded that the defendants' medical evidence is not really different from that of the plaintiff. He said that the doctors on both sides of the record "speak more or less with the one voice". 8 The plaintiff instituted proceedings in the District Court in respect of her injuries, her father, Tao Ge being her tutor. However, before the action came on for trial, the advisers to the plaintiff determined that the then jurisdiction of the District Court, namely $750,000, was unlikely to be adequate to permit an award of damages appropriate to the plaintiff's injuries. As a consequence, application was made to have the action transferred to the Common Law Division of the Supreme Court. The defendants opposed this, but on 6 August 2001 an order was made by the Registrar transferring the action to the Common Law Division of the Court. Subsequently, when the jurisdiction of the District Court was extended, application was made to remit it back to the District Court. That application was made on behalf of the plaintiff but was opposed by the defendants, although dates for a hearing in the District Court were at the material time proximate, namely commencing on 24 September 2001. The Registrar declined to entertain that application. 9 The application to remit the action to the District Court was then brought before a Master on 12 September 2001. He acceded to the application, and ordered that the proceedings be remitted to the District Court. An appeal to the Court was taken from that decision and a notice of motion to set aside the order of the Registrar was also brought before the Court. Studdert J allowed the appeal against the order made by the Master and dismissed the notice of motion. As a consequence, the order was made by Studdert J was: "The proceedings between the parties are to be heard in the Supreme Court and the District Court record in the matter 6136/69 is to be brought into this Court." 10 Studdert J also ordered that the action be listed in the call up list on 26 October 2001 for the fixing of a date, and a date was duly fixed. I have been informed that the trial is scheduled to commence on 11 March 2002. 11 The basis on which Studdert J determined the matter depended in the first instance on the construction of s.145 of the District Court Act 1973. Relevant to the present case that section empowers the Court to order the removal into the Supreme Court of an action pending in the District Court: "…if the Supreme Court is satisfied that the amount to be awarded to the plaintiff in the case, if successful, would be likely to exceed $750,000…" 12 His Honour proceeded on the basis that the Registrar had to be satisfied in the case that the plaintiff's damages were likely to exceed $750,000. His Honour found: "…the Registrar satisfied himself that the case was one in which damages were likely to exceed $750,000." 13 When considering the appeal from the order of the Master remitting the proceedings to the District Court, Studdert J, having expressed the opinion that it was not appropriate so to do, gave as his reason that, absent an appropriate memorandum of consent (which had been refused), the claim was one in which it was established on the transfer application that: "the claim was one in which, in the event that the plaintiff succeeded, she would be likely to recover damages in excess of $750,000". 14 Thus, the legal advisers of the plaintiff, the Registrar and Studdert J all either adopted or accepted the view that the case was one in which damages in excess of $750,000 were likely. 15 The solicitors for the respective parties reached a settlement in the matter. Under it, the first defendant agreed to pay $440,000, the second defendant $100,000. The first defendant also agreed to pay the plaintiff's costs as assessed or taxed. However, from the total of $540,000, deductions under various Commonwealth Acts and other relevant statutes, regulations, awards or agreements were to be made.

THE HEARING 16 When the application for approval first came before the Court, I had already read the papers. They included quite extensive medical reports. I expressed my concern that the proposed settlement did not appear on its face to be adequate for the injuries sustained by the plaintiff and the consequences of those injuries. The solicitor for the plaintiff was asked: "Q: …I gather that counsel have considered it (the settlement). Who are the counsel? A: For the plaintiff, it is Mr Wheelahan, Senior Counsel and Mr Cleary assisting. Q: And their advice? A: Their advice is that they would not have accepted the settlement." 17 I indicated that unless there was some reason for compromise which was not apparent on the material then before the Court, I was disinclined at that stage and on the material before the Court to approve the settlement. 18 A number of matters were, however, pressed upon me. The first was that the plaintiff's family, consisting of her mother, father and herself, were proposing to emigrate to New Zealand where the father, who had been a student at the time of his daughter's injury, hoped to take up employment. Her father is a Master of International Business and a Master of Business Administration. From my observation of him and from his educational qualifications, he is a highly intelligent man. The move to New Zealand was expressed to be for a number of reasons. One of these was that the "points" which the family had in order to obtain citizenship would give them citizenship in New Zealand earlier than they would in Australia. A second was that he hoped to enter into a partnership with a friend and engage in trading between New Zealand and China. Another reason was to put the events involving the plaintiff behind them in what he saw as a better environment in psychological terms. 19 The solicitor then appearing for the defendant said that the figure had been reached based on the fact that the plaintiff was quite a good student, did play some sport and had some capacity for using her right hand. 20 The matter was adjourned to enable the parties to put on any additional evidence they considered appropriate. No further evidence was put on by either party. 21 On the resumed hearing, the medical evidence remained as it had been on the first day of hearing. The injury sustained by the plaintiff was described by a plastic and reconstructive surgeon as "devastating". He expressed the view that the plaintiff "has a serious impairment of function in the right hand". In addition to "severe disfigurement", the loss of function of her right hand was assessed at 40%. This consists of interference with sensation and motion. Her manual dexterity is thus impaired. This will have significant effects on her economically and the surgeon has stated that her "recreational pursuits would be severely restricted". He also noted scarring and impairment of sensation on the dorsal surface of her right foot. In a follow-up report the view was expressed that the plaintiff "has a considerable disability and she will continue to have a marked disability in her right hand". One report confirms that the plaintiff will require domestic help to a substantial extent increasing over the next decade. 22 The psychological consequences of the plaintiff's injury consisted of "serious chronic post-traumatic stress disorder and major depression". The consulting psychiatrist expressed the view that "a great tragedy has happened in this young girl's life". His opinion was that the accident had "serious implications to her personal development". The risk of suicide as she approaches adolescence if she does not have appropriate treatment was referred to. A future care assessment revealed that a high cost was likely to be involved. A vocational assessment expressed the view that "Ms Ge faces a reduction in her residual work life of 40% as compared with an unimpaired person of similar age, sex and level of education," and that but for her injury there appeared to be no reason why she could not have completed her Higher School Certificate and Bachelor of Arts Degree and qualified as a fashion designer. In addition the physical and psychological impact on her social life and activities was expected to be marked. 23 The solicitor for the plaintiff reaffirmed the approach taken by him on the first day: namely, that once the litigation had been brought to an end, there was "no reason why she shouldn't make a good recovery" and that in a new environment "there is a good chance she will make good psychologically given her age and intelligence and the chance of settling down in a new country". 24 On the second day of hearing, the solicitor for the plaintiff also informed the Court that he had been informed that senior counsel for the plaintiff remained of the view that the amount of the settlement was not adequate and was in favour of the settlement not being approved. This further highlights the divergence between the solicitor for the plaintiff and the counsel engaged in the matter, one of whom is a most experienced senior counsel in the field and reinforces my initial reaction to the amount of the settlement. 25 At the resumed hearing, senior counsel appeared for the defendants. He submitted that the test to be adopted was whether the amount fell within the parameters or range of acceptable figures. He then submitted that it did because the defendants challenged the assessment of the limitations on the ability of the plaintiff to go about her daily life. This challenge was said to be based on certain unspecified material, including a statement "from a person with almost as much interest in the plaintiff's welfare, almost, as … her solicitor and her tutor." Whether this is a teacher, an adolescent friend, or some other person was not revealed by senior counsel, who indicated that he was not prepared to make available for the court the lay material said to touch upon the manual capacity and dexterity of the plaintiff. Furthermore, when later asked his attitude to the court seeing such material, the solicitor for the plaintiff objected to the Court reading the statement adverted to. I thought the stance adopted by both senior counsel for the defendants and the solicitor for the plaintiff curious, since in Ex parte Prentice: Re Hornby and Ors (1969) 90 WN (Pt 1) (NSW) 427 the Court of Appeal made it clear that where a judge has declined to approve a settlement of a matter involving an infant it is undesirable for the same judge to hear the action if there is no jury. 26 As a consequence of the stance taken by the respective legal advisers, it is not possible for the Court to assess the nature, extent or quality of any dispute as to the manual capacity and dexterity of the plaintiff other than from the evidence given before the Court and the medical reports (which clearly establish substantial impairment, both physically and psychologically) and a general statement on behalf of the defendants from the Bar table.

APPLICABLE LAW 27 By virtue of s.4 of the Damages (Infants and Persons of Unsound Mind) Act 1929 no settlement of an action on behalf of a person under the age of 18 years is valid without the sanction of the Court. No indicia for the exercise of the discretion conferred by the Act are specified in the Act itself. The Rules of Court also confer on the Court a discretion to approve or disapprove the settlement of an action involving a person under the age of 18 years (Pt 63 r 11 (1)). However, that rule does not apply to a settlement to which the Damages (Infants and Persons of Unsound Mind) Act 1929 applies (Pt 63 r 11(4)). 28 The jurisdiction conferred on the Court by the statute is protective. It is akin to the inherent parens patriae jurisdiction of the Court under the common law. Under that jurisdiction, relevantly, the Court must act so as to protect the interests of infants. Although the jurisdiction is broad, the cases indicate that it is to be exercised cautiously. (MAW v Western Sydney Area Health Service (1999) 49 NSWLR 231 at 238; Northridge v Central Area Health Service (2000) 50 NSWLR 549 at 553). 29 In Re Birchall: Wilson v Birchall (1880) 16 Ch.D 41, Jessel MR indicated that the test to be applied when considering a proposed infant settlement is that the settlement "be beneficial to the infant" (supra at 43) and said that an affidavit of this opinion should be given by counsel. In that case junior counsel had made such an affidavit, but in the absence of a like affidavit from the senior counsel retained in the matter the Court declined to approve the settlement proposed. In New South Wales the practice of counsel making an affidavit has not generally been followed but in lieu a statement from the Bar table is made by counsel. Usually an affidavit from the solicitor for the plaintiff is required and it should state the opinion expressed by counsel in the matter in relation to the settlement. 30 That the leglislative provision under which settlements in the Supreme Court are to be approved is essentially protective in nature was confirmed in McLellan v Phelps and Anor (1967) 86 WN (Pt 1) (NSW) 87 in which O'Brien J said in relation to the test to be applied in determining whether or not to approve a settlement: "… the Judge, upon whom the duty falls of considering the settlement and the orders thereby sought … must assure himself that the terms of settlement are proper in the interest of the infant …" (supra at 88) 31 The practice adopted in relation to settlements was explained by Moffitt J in the following terms: "There are some cases, of course, where the judge has to rely very greatly on the parties and the approach I often make in these cases is merely that the amount of the verdict is within proper limits. I might even feel that if I had been negotiating I might have negotiated slightly higher, but if it is within proper limits and the solicitor and counsel who have had the intimate handling of the matter have agreed to a settlement subject to the Court's approval, well then my approach is to approve the settlement. On this basis it will be appreciated that the Bench does rely substantially in that class of case on the independent approach of both the Bar and the solicitor handling the matter." ( Beavan v Pengelley (1967) 86 WN (Pt 1) (NSW) at 90 - 91). 32 The following principles apply in relation to the approval of infant settlements in actions for damages: 1. The jurisdiction of the Court under the Damages (Infants and Persons of Unsound Mind) Act 1929 is protective in character .

Before approving an infant's settlement the Court must be satisfied that the terms of settlement are proper in the interests of the plaintiff.

In some cases, where the trial has proceeded to a sufficient extent, the Court will be able to make its own assessment as to the propriety of the amount of the settlement on the material which has already emerged.

In other cases the Court will require evidence to satisfy itself as to the propriety of the amount of the settlement.

The Court will often have to rely to a significant extent on the assessment of the parties. Such assessment should be evidenced to the Court by an appropriate affidavit from the solicitor for the plaintiff which reveals to the Court the opinion of counsel, if any, retained in the matter as well as that of the solicitor for the plaintiff. Where counsel for the plaintiff propounds the settlement to the Court a statement from the Bar table by counsel as to the adequacy of the settlement in the circumstances may be sufficient.

If there has been a compromise, the basis on which the matter was compromised should be evidenced to the Court. This may involve the defendant revealing to the Court, but not necessarily to the legal advisers of the plaintiff, the nature and quality of the material which supports the need for the plaintiff to compromise.

In determining whether the amount or other terms of settlement are proper in the interests of the plaintiff the Court will not substitute its own assessment for that of the parties, provided that the amount or terms agreed is or are within parameters determined by the Court to be appropriate.

In exercising the jurisdiction the Court should act cautiously and if in doubt decline to approve the settlement.

Where a judge declines to approve a settlement in a non-jury case such judge should not, except in special circumstances, proceed to hear the action.

ANALYSIS 33 Based on the material before the Court, the earlier assessments made by others, and my own judgment, I am of opinion that the damages in the action are likely to exceed $750,000 should the plaintiff succeed and, in the light of the reports concerning future economic loss, could well, on a most favourable view, approach the million dollar mark. The amount of the settlement is well below this. The divergence between senior and junior counsel on the one hand and the solicitor for the plaintiff on the other means that the significant reliance on the advice of the legal advisors for the plaintiff referred to above cannot realistically be resorted to in the instant case. Furthermore, unless there is some matter which gives rise to the need to compromise, I do not think the amount is enough in the interests of the plaintiff. In my opinion, an amount of $650,000 would be at the bottom of the range, and a figure of, or in the order of, $750,000 would not be over-generous. In all the circumstances and subject to any need for compromise, I am of opinion that the amount is not within the range of damages appropriate to the injuries of the plaintiff, and indeed falls well short of such an amount. 34 There is no issue as to liability. Any compromise would have to be based upon the condition of the plaintiff now and in the future being much rosier than the evidence before the Court suggests is probable. The challenge to the extent of impairment of the plaintiff based on undisclosed material, including the cryptic reference to a statement by an unidentified person (see paragraph 25 above), does not persuade me as to the nature and quality of such asserted challenge, more particularly in the light of the medical evidence before the Court. 35 Senior counsel for the defendants has also argued that should the settlement not be approved, there would be delay occasioned to the plaintiff. He advanced this as a reason for approving a settlement for what I regard as a less than adequate amount. I do not see why there should be any delay. A hearing date has been fixed. That date has been known for many months. Since the case was fixed for hearing, the parties must have certified that it was ready for hearing. The terms of settlement were filed only on 18 December 2001. If refresher medicals are required, there are some five weeks available for them to be arranged and in the light of the concerns expressed by me on 10 January 2002 in relation to the settlement, that time has in truth been longer. In the circumstances, I find it difficult to accept that an insurer could not prevail upon the doctors whom it has engaged to fit the plaintiff in for a consultation. The same is likely to be true in respect of the doctors retained on behalf of the plaintiff. Refusal of the settlement should not result in the hearing date being aborted if the legal representatives for both parties take immediate and appropriate steps to ensure the updating of the matter for hearing.

CONCLUSION 36 For the foregoing reasons, I decline to approve the settlement. I order that the costs of the application be the plaintiff's costs in the action.

Last Modified: 02/07/2002 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.

CITATION : Yu Ge by her tutor Tao Ge v River Island Clothing Pty Ltd & Ors [2002] NSWSC 28 FILE NUMBER(S) : SC 12210/01 HEARING DATE(S) : 10/01/02;01/02/02 JUDGMENT DATE : 6 February 2002

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