The settlement of claims brought by persons under a legal disability carries an added procedural layer before damages can be paid. Section 59 of the Public Trustee Act 1978 (QLD) (‘the Act’) acts as a safeguard mechanism, requiring court or public trustee sanction any proposed settlement. This provision ensures that vulnerable claimants, including minors and those lacking capacity, are not disadvantaged by premature or inadequate settlements.

Legal Framework

Section 59 of the Act relevantly provides: –

“59 Compromise of actions by or on behalf of persons under a legal disability claiming moneys or damages valid only with sanction of court or public trustee

(1) In any cause or matter in any court in which money or damages is or are claimed by or on behalf of a person under a legal disability suing either alone or in conjunction with other parties, no settlement or compromise or acceptance of money paid into court, whether before, at or after the trial, shall, as regards the claim of such person under a legal disability, be valid without the sanction of a court or the public trustee, and no money or damages recovered or awarded in any such cause or matter in respect of the claims of any such person under a legal disability, whether by verdict, settlement, compromise, payment into court or otherwise, before or at or after the trial, shall be paid to the next friend of the plaintiff or to the plaintiff’s solicitor or to any person other than the public trustee unless the court otherwise directs.”

As is likely evident from s 59 of the Act, sanction of a proposed settlement of a claim brought by a person under a legal disability is not an optional step; put simply, there is no settlement or compromise in the absence of the Court’s sanction.

The relevant test to be applied by the Court when considering a sanction application was explored by Burns J in Nicotra v State of Queensland [2017] QSC 303, citing with approval the following excerpt from Stephenson v Geiss [1998] 1 Qd R 542: –

“In considering the matter, I must take into account that if the settlement is not sanctioned and if the matter went to trial, there are normal risks associated with the litigation. I must consider the benefit to the plaintiff of sanctioning the compromise on the one hand as compared to the risk on the other that he might obtain more on a trial. I must also consider the risk that he may not achieve as much as the compromise offered. The relevant test is well known: Fowler v. Gray. In the Supreme Court Practice U.K. 1985, para. 80/10-11/5 the following appears:

‘In considering whether to approve a settlement, the question before the court is, not what amount of damages should be or would have been awarded to the plaintiff on the trial of the action, but whether the settlement itself is a reasonable one, and is for the benefit of the infant, having regard to all of the circumstances of the case, including the risks of litigation, the desire of the parties to settle, and the disinclination of the plaintiff to go to trial. If Counsel has advised on the reasonableness or otherwise of the settlement, his opinion should be placed before the Master, who must, however, form his judgment whether to sanction the settlement or not’

Thus, the court’s task is not limited to a mere assessment of quantum, though the reasonableness of the proposed settlement remains a relevant consideration. Rather, the court must take a holistic view of the proposed compromise in light of the claimant’s circumstances and determine whether, on balance, it is in the claimant’s best interests to order that the proposed settlement be sanctioned.

Practical Considerations for Practitioners

The material that must be presented to the court upon an application brought pursuant to s 59 of the Act is detailed at Rule 98 of the Uniform Civil Procedure Rules 1999 (QLD). Further guidance can be obtained from the Supreme Court of Queensland’s Practice Direction No. 15 of 2018 (“the Practice Direction”). In summary, the following material is ordinarily required: –

a. An advice from a barrister, or alternatively an independent solicitor with appropriate experience (such as an Accredited Specialist), pertaining to the proposed settlement;

b. An affidavit of the litigation guardian of the claimant;

c. An affidavit of the claimant’s solicitor pertaining to the proposed settlement;

d. A separate affidavit of the claimant’s solicitor dealing with the estimate of standard costs and indemnity (solicitor-client) costs;

e. An affidavit of the administrator or trustee; and

f. A draft order.

The Practice Direction helpfully provides practitioners with a template order that can be utilised. Additionally, the Practice Direction also provides guidance as to the contents of each of the required affidavits.

Typically, given the usual quantum of matters that require sanction, a professional trustee will be involved, who will often prepare their own affidavit. However, the courts have recognised that in more modest settlements, a claimant’s interests may be better served by the nett settlement proceeds being administered by a family member or associate. See, in this regard, the Supreme Court of Queensland’s reasons in Keryn Mayer as litigation guardian for Ben David McKinlay v Mahoney & Anor [2011] QSC 279, wherein the claimant’s mother was appointed administrator.

In such circumstances, practitioners ought to be prepared to assist the proposed administrator in relation to preparation of their affidavit. When drafting same, regard should be had to s 16 of the Guardianship and Administration Act 2000 (QLD), which details the advice that a proposed administrator must give to the court about their appropriateness and competence prior to their appointment as administrator.

Whilst practitioners may be accustomed to the ‘three (3) clear business day’ rule in relation to applications to the court, they ought to be aware of different service requirements imposed by the Practice Direction.

The application for sanction and supporting material (save for the opinion of counsel) should be served on the Public Trustee of Queensland five (5) clear business days before the hearing of the application. Similarly, if an attorney is exercising power over the claimant, they must also be served with the application for sanction and supporting material (save for the opinion of counsel) five (5) clear business days before the hearing of the application.

Conclusion

Sanctions serve as an essential safeguard in personal injury matters involving persons under a legal disability, ensuring that settlements are fair and ultimately in the claimant’s best interests.

For practitioners, the process can be procedurally dense. Given the significance of this step, and the work required to prepare, sufficient time should be allocated to properly address the sanction process.

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