Bettison v Clemments [2018] QDC 113

1 DISTRICT COURT OF QUEENSLAND CITATION: Bettison & Anor v Clemments & Anor [2018] QDC 113 PARTIES: MELCORA MODIGO BETTISON (first plaintiff) MIKAELA CAROL BETTISON by her litigation guardian MELCORA MODIGO BETTISON (second plaintiff) AND GEORGE STANLEY CLEMMENTS (first defendant) ALLIANZ AUSTRALIA INSURANCE LTD (second defendant) FILE NO/S: 106/17 DIVISION: Civil PROCEEDING: Claim/originating application ORIGINATING COURT: District Court of Cairns DELIVERED ON: 8 June 2018 (delivered ex tempore) DELIVERED AT: Cairns HEARING DATE: 8 June 2018 JUDGE: Fantin DCJ ORDER: 1. The compromise of this proceeding on the following terms be sanctioned pursuant to s 59(1) of the Public Trustee Act 1978: (a) That the second defendant pay the second plaintiff damages in the sum of $100,000.00 together with $34,315.85 for management fees totalling $134,315.85 (“the compromise sum”); (b) That the second defendant pay the second plaintiff her costs of and incidental to this proceeding, including the costs of this application, to be assessed on the standard basis, excluding the costs thrown away by the appearance on 27 April 2018 (“the standard costs”). 2. The Public Trustee of Queensland (“the trustee”) be appointed to receive, hold and manage the balance of the compromise sum after the deduction of the amounts identified in sub-paragraph 6.1 of this order on trust for the second plaintiff until she -- 1 of 7 -- 2 attains 18 years. 3. The trustee be empowered to invest the balance of the compromise sum and any accretions in such investments as trustees are empowered to invest under the Trusts Act 1973. 4. The trustee apply such monies for the maintenance benefit and support of the second plaintiff. 5. Within seven (7) days of this order the second plaintiff’s solicitors – 5.1 serve a copy of this order on the trustee; 5.2 request the statutory clearances and serve copies of the requests on the second applicant’s solicitors. 6. Within twenty-one (21) days of this order or of the second defendant’s receipt of the last of any statutory clearances or charges in relation to the compromise sum (whichever is the later to occur), the second defendant pay the compromise sum as follows – 6.1 to any statutory body having a charge over the compromise sum, the amount necessary to satisfy the charge; 6.2 to the trustee, the balance. whose receipt shall in each case be a sufficient discharge all the second defendant. 7. No interest shall be payable by the second defendant on the compromise sum if the compromise sum is paid in accordance with this order within 21 days of the last of the statutory clearances being received by the second defendant following this order, and in any event in which interest becomes payable, such interest shall accrue only from the date of receipt of the last of the statutory clearances as aforesaid. 8. The second defendant pay the standard costs to the trustee within twenty-one (21) days of their assessment or prior agreement between the second defendant and the trustee as to their amount. 9. The trustee pay the standard costs to the second plaintiff’s solicitors from the monies received under paragraph 8 of this order within twenty-one (21) days of their assessment or prior agreement between the second plaintiff’s solicitors and the trustee as to the amount. -- 2 of 7 -- 3 10. The Registrar of the Court place the opinion of counsel read on this application in a sealed envelope marked “Not to be opened without an order of the Court”. 11. The sealed envelope described in Order 10 must not be opened without an order of the court. 12. Each of the parties, the trustee and the second plaintiff’s solicitors have liberty to apply in respect of these orders. CATCHWORDS: JUDGMENT AND ORDERS – ORDER SANCTIONING COMPROMISE – WHERE THE APPLICANT WAS A PERSON UNDER A LEGAL DISABILITY (BEING A MINOR) – WHERE THE APPLICANT’S MOTHER WAS LITIGATION GUARDIAN FOR THE APPLICANT – WHERE THE APPLICANT’S CLAIM FOR DAMAGES WAS SETTLED, SUBJECT TO SANCTION – where the applicant filed an application for sanction of the compromise pursuant to s 59 of the Public Trustee Act 1978 (Qld) – whether the compromise of the applicant’s claim is reasonable and for the benefit of the applicant. LEGISLATION: Civil Liability Act 2003 (Qld) s 59A Public Trustee Act 1978 (Qld) ss 59, 67 Uniform Civil Procedure Rules 1999 (Qld) rr 93, 98 CASES: Nicotra v State of Queensland [2017] QSC 303 COUNSEL: C J Eylander for the second plaintiff W Elliott for the second defendant SOLICITORS: Murray & Lyons Solicitors for the Second Plaintiff Moray & Agnew Lawyers for Second Defendant -- 3 of 7 -- 4 HER HONOUR: The second plaintiff is a four year old girl whose father died in a motor vehicle accident on 11 July 2014 on the Captain Cook Highway at Wangetti Beach, North Cairns. The first plaintiff is the mother of the second plaintiff and her litigation guardian. She is also the widow of the deceased. 5 This is an application for the sanction of the compromise of a claim by the second plaintiff for damages pursuant to section 59(1) of the Public Trustee Act 1978 (Qld). The second plaintiff’s claim is for lost services that would have been provided by her father who died in the motor vehicle accident pursuant to section 59A of the Civil Liability Act 2003, together with loss of financial support as an adult undertaking 10 tertiary education. There is no claim for any personal injury to the second plaintiff and therefore no medical reports or opinions on quantum. The application was heard in the applications jurisdiction before me today. The compromise was in terms requiring the second defendant to pay to the second 15 plaintiff damages in the sum of $100,000 together with management fees of $34,315.85 (“the compromise sum”) together with the second plaintiff’s costs of the proceeding to be assessed on the standard basis. The compromise contained in the draft order also contains the following 20 components. The Public Trustee of Queensland is appointed to receive, hold and manage the balance of the compromise sum, after deduction of certain amounts on trust for the second plaintiff, until she reaches 18 years of age. The draft order contains the standard terms attached to Supreme Court of Queensland Practice Direction number 9 of 2007 (as amended) save for a few modifications. The 25 modifications include a provision that no interest will be payable by the second defendant on the compromise sum if the compromise sum is paid in accordance with the order within 21 days of the last of certain statutory clearances being received by the second defendant. In any event in which interest becomes payable, it will only accrue from the date of receipt of the last of the said statutory clearances. 30 The draft order also provides for the second defendant to pay standard costs to the trustee within 21 days of their assessment or prior agreement and for the trustee to then pay the standard costs to the second plaintiff’s solicitors. It also contains the usual orders with respect to placing the opinion of counsel read on the application in 35 a sealed envelope marked, “Not to be opened without an order of the court,” and an order that that sealed envelope, in fact, not be opened without an order of the court. It is necessary to set out a brief history of the matter. On 5 November 2014 the first plaintiff and litigation guardian instructed her solicitors to give notice of claim and 40 commence proceedings seeking damages for herself and the second plaintiff. On 9 February 2015 the second defendant admitted liability. Between October 2015 and December 2016 the parties participated in “without prejudice” settlement discussions. On 5 June 2017 the parties participated in a compulsory conference. On 25 June 2017 proceedings were commenced. The second plaintiff claimed 45 damages of the order of approximate $270,000 against the defendants (see paragraphs 9 (g) and (h) of the Statement of Claim). The parties participated in further “without prejudice” negotiations. As a result of those negotiations the second plaintiff’s claim was settled, subject to sanction, on 50 certain terms. -- 4 of 7 -- 5 Because the second plaintiff is a child, she is a person under a legal disability (see section 59(1A) of the Public Trustee Act), the consequence of that is that she may start or defend the proceeding only by her litigation guardian: rule 93(1), Uniform Civil Procedure Rules 1999 (Qld). In addition by rule 98 UCPR, compromise of a proceeding to which such a person is a party will be ineffective unless it is approved 5 by the court or the Public Trustee acting under section 59 of the Public Trustee Act. The effect of section 59 is that where there is a proceeding on foot on which damages are claimed on behalf of such a person, no compromise can be valid without the sanction of the court or the Public Trustee: section 59(1). A litigation guardian who is not a solicitor may only act by a solicitor: UCPR rule 93(3). 10 The application to sanction the compromise was filed on 12 March 2018 on behalf of the first plaintiff as litigation guardian for the second plaintiff. The application sought orders including an order sanctioning the compromise, pursuant to section 59(1) of the Public Trustee Act and such further orders as the court considers 15 appropriate. Rule 98(2) UCPR is facilitative. It has certain mandatory preconditions to the exercise of the court’s jurisdiction. They are that the litigation guardian produce to the court an affidavit made by the applicant’s solicitor stating why the settlement or 20 compromise is in the applicant’s best interests, a statement by the litigation guardian that instructions have been given for the settlement or order of the proceeding, and any other material the court requires in order to consider whether the settlement or compromise should be approved. 25 Practice Direction 9 of 2007 (as amended) further prescribes what should be provided to the court on an application for sanction including, ordinarily, an opinion of counsel in relation to the compromise as well as a draft order. Pro forma drafts are annexed to the Practice Direction. 30 In addition to the above requirements, in order for the court to determine whether a compromise is reasonable and for the benefit of a person under a legal disability, evidence should be placed before it as to the amount likely to compromise the applicant’s estate after the various external calls on the compromise sum (including statutory charges, management fees, costs and payments out for past expenses and 35 care if applicable) have been paid: see Nicotra v State of Queensland [2017] QSC 303 at [50] and [69] per Burns J. A reliable estimate of any indemnity and standard costs should also be advanced. It is only in that way that the estimated differential between the indemnity and standard costs, being a sum that will be paid out of the applicant’s estate by the Public Trustee, may be ascertained. 40 The affidavit of the solicitor should, after considering all relevant aspects of the case and Counsel’s advice, be able to state that with respect to liability and quantum he or she believes the compromise to be beneficial for the person under a disability. 45 Counsel’s opinion should be to similar effect. Facts and circumstances as to liability, if any, should be clearly stated and if relevant there should be up to date medical and other relevant opinions as to quantum: Nicotra at [21]. It is often difficult for the solicitor in their affidavit to state precisely how much the 50 applicant will receive “in the hand” if the compromise is sanctioned because that will -- 5 of 7 -- 6 depend on a number of variables including the amount of statutory refunds and the amount recovered from the respondent by way of standard costs. In Nicotra Justice Burns discussed the relevant principles on an application for the sanction of a compromise pursuant to section 59 of the Public Trustee Act, which are 5 applicable here. The central question will always be whether in all the circumstances of the case the compromise is reasonable and for the benefit of the person under a legal disability. The object of the sanction application is to protect those who cannot look after 10 themselves and a proper appreciation of that object informs how the discretion conferred on the Court by section 59 is to be exercised. The discretion exercised by the Court under the section is by no means a “rubber stamp” exercise and it should not be treated as such by practitioners coming before the Court seeking to have the court’s jurisdiction enlivened. 15 The matters to be considered by the Court in those circumstances will include the following. The Court must take into account that if the settlement is not sanctioned, then if the matter went to trial there are normal risks associated with litigation. The Court must consider the benefit to the plaintiff of sanctioning the compromise, on the 20 one hand, as compared to the risk on the other that he or she might achieve more on trial. It must also consider the risk that he or she may not achieve as much as the compromise offered. There is a high duty imposed on the legal practitioner to give a person under a 25 disability and his or her next friend advice which is impartial and which must not, in any way, conflict with any personal interest. Expressing a view on whether the terms of the proposed compromise are in the interests of a minor is a matter of great responsibility for all concerned. The solicitor must see that all relevant matters are put before counsel, the right questions are asked, and that the guardian ad litem or 30 next friend of the minor fully understands and weighs counsel’s advice when it is given. Counsel also has to discharge an important and responsible function in helping those unable to help themselves understand the advice given, and carefully weigh the 35 advantages and disadvantages of the proposed compromise to a minor. The undoubted benefit for the claimant in the finality that acceptance of the compromise will bring, as opposed to the uncertainty of proceeding to trial is also a relevant consideration, as is the significant saving in legal costs and outlays that sanctioning of a compromise will achieve. 40 These are just some of the considerations that may be relevant to the Court’s assessment of the reasonableness of the compromise and the extent to which it benefits the applicant. 45 In Nicotra His Honour said that in cases where there is evidence before the Court of a significant differential between the estimates of indemnity and standard costs, that may be an issue so significant that the reasonableness of the compromise is affected. The Court is entitled to take into account the possibility that what is left to the applicant may be impermissibly eroded by legal fees that have not been reasonably 50 -- 6 of 7 -- 7 incurred or which are not of a reasonable amount in making its assessment about the reasonableness of the compromise. In order for the Court to determine whether the compromise is reasonable and for the benefit of the applicant, it must consider what amount is likely to be left in the 5 applicant’s estate after payment of statutory charges and outgoings, the management fees and the difference between the applicant’s indemnity costs and standard costs applicable. When this application first came before me on 27 April 2018, the material did not 10 comply with the requirements of the Practice Direction or contain all the necessary evidence referred to above. The application was adjourned to enable further material to be filed by the applicant. Further material has since been filed and there is now evidence before the Court 15 satisfying all of the relevant requirements. I am satisfied that the second plaintiff has complied with the Practice Direction. The Public Trustee of Queensland has been given a copy of the application for sanction and supporting material and has provided a fee estimate. It does not appear at the hearing unless requested to do so by the Court. The second defendant consents to the terms of the order. 20 The litigation guardian and first plaintiff, has given informed consent to the compromise. The solicitor for the second plaintiff has formed the opinion that the compromise is in the best interests of the second plaintiff. There are no external charges on the compromise sum such as statutory charges, legal costs and past 25 expenses. The management fees for the Public Trustee are to be paid by the second defendant. The legal fees and outlays payable by the second plaintiff to her solicitor in this matter including the costs of this application, save for one exception I will mention, are those assessed or agreed on the standard basis by the second defendant. 30 The second plaintiff’s solicitor deposes that he has now agreed to settle standard basis costs with the second defendant with the result that there will be no shortfall payable by the second plaintiff with respect to costs. That means the entire amount of damages ought to be placed with the Public Trustee for the benefit of the second plaintiff, and that there will be no differential between indemnity and standard costs. 35 There will be no indemnity costs payable out of the compromise sum. The only relevant exception with respect to costs order is this. The second defendant will pay the second plaintiff her costs of and incidental to the proceeding to be assessed on the standard basis, excluding the costs thrown away by the appearance 40 on 27 April 2018. Taking into account all of those matters, I am satisfied after a consideration of the factors referred to earlier that the compromise is reasonable and for the benefit of the second plaintiff and that it should be sanctioned pursuant to section 59 of the Public 45 Trustee Act. I make orders in terms of the amended draft initialled by me and placed with the papers. 50 ______________________ -- 7 of 7 --