Stephen Warne on professional negligence, regulation and discipline around the world

The Australian Professional Liability Blog random header image

Costs in settlements of claims by persons under disability

July 15th, 2014 · No Comments

Associate Justice Lansdowne has released for publication an edited transcript of reasons her Honour gave in Chan v Falls Creek Alpine Resort Management Board for not approving a proposed compromise of the claim of a person under a disability. The citation for the decision is  [2014] VSC 314.  ‘Disability’ in this sense is a term of art and extends to the disability of being a minor.

The plaintiff, through his litigation guardian, had proposed a compromise in terms which were expressed as an amount for the claim and an amount for his costs.  Her Honour pointed to Sztockman v Taylor [1979] VR 572 which suggests that such compromises are to be discouraged lest the plaintiff’s solicitors be attracted to an offer which is comparatively favourable in relation to costs but comparatively unfavourable in relation to the claim.  That raises a conflict between interest and duty which is inherent in any compromise structured this way, but which is comparatively impermissible because of the disability of the plaintiff and the important role played by the parties’ lawyers in assisting the Court to evaluate the reasonableness of the compromise, a judicial function which is not a feature of compromises of claims by people not under a disability.  Another reason for the discouragement of such compromises is that the judge approving the compromise is ill-equipped to assess the reasonableness of the proposed compromise in relation to costs.

Following the non-approval of the compromise, the deal was renegotiated such that the settlement sum was expressed on an all-in basis as the total of the separate sums originally proposed by way of compromise of the claim and of costs.  That sum was to be paid to the Senior Master and the plaintiff’s solicitors were to apply to the Senior Master for costs.  The renegotiated proposed compromise was approved by the Court.

See also:

Tags: conflicts · duty and interest · Ethics · Party party costs