Court approval of settlements

Court approval of settlements

Where the plaintiff is a person who by reason of injury, disease, senility etc or otherwise is incapable of managing her or his affairs, the person must have a litigation guardian appointed under r 15.03 and any compromise of the claim must be approved by the Court r 15.08.  Approval is not automatic and the solicitor or barrister appearing on the approval application should be prepared to place all the relevant material before the court and answer the judge’s enquiries as to the form and quantum of the settlement.

Application may be made at the trial rather than as a separate application: r 15.08(3) and the judge may dispense with the application.

The procedure for obtaining approval is as follows:

1.  In general, applications for approval under r. 15.08 will be made to the associate judge or Practice Court, without notice to any other party.
2. The litigation guardian may list a matter for approval by contacting the associate to the judge or associate judge.
3. The litigation guardian must file his or her affidavit and an affidavit of the solicitor for the person under the disability not later than 30 days after the compromise, payment or acceptance. The affidavit must not be served: 15.08(2.1).
4. Unless there are exceptional circumstances, the plaintiff and the litigation guardian and the solicitor will be required to attend at the hearing of the application.
5. The affidavit evidence may, where relevant, include the following matters:
   1. Whether the settlement reflects a compromise of liability and if so, copies of any relevant documents;
   2. Up to date medical reports dealing with all relevant medical issues;
   3. A statement by the litigation guardian as to the plaintiff’s current disabilities, if any;
   4. Details of the past out-of-pocket expenses both paid and unpaid;
   5. Details of any other deductions to be made from the settlement e.g. Centrelink;
   6. A statement by the litigation guardian to the effect that the amount allowed for past out-of-pocket expenses in the settlement includes all accounts, both paid and unpaid, of which the litigation guardian is aware having made all relevant enquiries;
   7. An acknowledgement by the litigation guardian that the settlement is final.
   8. Rule 15.08 also requires evidence  as to:
   1. the date of the compromise, payment or acceptance, and
   2. the date of birth of the person under disability
   Evidence must be given as to the date of the compromise, payment or acceptance and the date of birth of the person under a disability.

If an application for approval of a compromise on behalf of a person under a disability is either refused or not ready to proceed, the action will be returned for management.  If the action has already been allocated an arbitration or trial date, that arbitration or trial will, unless the court otherwise orders, proceed.

The test for approval of the compromise appears to be:
‘[T]he question is whether the prospect of getting a greater sum by rejecting the offer is good enough to outweigh significantly the risk of not getting any more.’: Elliott v Diener (1978) 21 ACTR 21.