Settling claims where the claimant is legally disabled: what is required to obtain the Court’s approval?

31 May 2023

In the recent decision of Royce (a pseudonym) v Australian Capital Territory [2023] ACTSC 69, the Court approved a significant settlement reached between the parties, confirming the considerations relevant to approve a settlement involving a legally disabled claimant.

In issue

  • In the recent decision of Royce (a pseudonym) v Australian Capital Territory [2023] ACTSC 69, the Court was asked by the parties to approve a monetary settlement reached between the parties in the proceedings. Pursuant to Rule 282 of the Court Procedure Rules 2009 (ACT) (‘Rules’), the Court is required to approve any settlement where the amount is payable to a person with a legal disability.

The background

The Plaintiff, by way of his Litigation Guardian, brought proceedings against the Australian Capital Territory in relation to alleged medical negligence arising from the diagnosis and treatment of pneumococcal meningitis and septicaemia when the Plaintiff presented to the Canberra Hospital in 2006. The Plaintiff alleged that as a result of the Defendant’s negligence, the Plaintiff had suffered significant developmental delays and disabilities. The Defendant admitted a breach of duty of care in relation to certain conduct but denied liability overall.

Following mediation, the parties negotiated settlement in the amount of $7,350,000 plus costs as agreed or assessed.

The Plaintiff, aged 17, was under 18 at the time the settlement was reached and therefore considered to be under a legal disability. In accordance with Rule 282 of the Court Procedure Rules (2006) (ACT), the Court was required to approve the settlement. Similar rules exist in other jurisdictions including New South Wales, Victoria and Queensland.

The decision

In deciding whether the settlement reached by the parties should be approved, the Court considered whether the settlement was in the best interests of the Plaintiff, and noted that the jurisdiction being exercised by the Court in approving settlements in these circumstances was protective in nature. The Court also noted that it must consider the degree of risk that if the proceeding went to trial, the amount awarded to the Plaintiff would be less than what had been agreed between the parties. In circumstances where the Court considers there to be a risk the claimant would receive an award less favourable than the amount agreed between the parties, the Court will be hesitant to withhold approval.

Having reviewed the expert evidence produced by the parties as well as the confidential expert opinion of senior counsel, the proposed settlement was approved by the Court. The Court considered the settlement reached to be overwhelmingly in the Plaintiff’s interests, with the agreement providing certainty and finality for the Plaintiff and his family.

Implications for you

When negotiating settlements in matters where the claimant is legally disabled, whether this is because they are under 18 years of age, are mentally incapacitated or are otherwise unable to meaningfully conduct their own affairs, it is crucial any settlements reached are in the claimant’s best interests. Any settlement required to be approved by the Court should be consistent with the expert evidence filed in the proceedings and leave the claimant no worse off than they would likely be if the claim progressed to trial.

Royce (a pseudonym) v Australian Capital Territory [2023] ACTSC 69

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