On 17 December 2020 Bellew J refused to accept a settlement agreed at mediation that had been recorded in Heads of Agreement signed by the parties.
Factual Background
Briefly, the plaintiff commenced proceedings on 29 May 2014 seeking damages, predominantly for psychological damage, after swallowing a “foreign object” contained in a McDonalds thick shake. The plaintiff was under a disability and therefore any settlement agreement needed to be approved by the Court.
Up until 12 June 2015 the plaintiff had been represented by Firths the Compensation Lawyers but since then he had been represented by his non-legally trained tutor.
The Court referred the matter to mediation which took place on 30 November 2020. At the mediation Heads of Agreement were executed reflecting what the defendant considered to be the settlement of the proceedings. Following the Heads of Agreement the tutor submitted an affidavit to the Court in which she claimed to have been misled about the total cost that Firths would deduct from the settlement sum. The Court noted that in part the confusion appeared to be the difference between the party/party costs and solicitor/client costs and as such stated there was no criticism of the tutor. In response, the defendant submitted there was nothing in the evidence to support the conclusion that the tutor had any relevant misunderstanding.
The Court disagreed and stated there was a clear issue about the tutor’s understanding of the terms of the purported settlement and therefore there existed an equally clear question about whether the matter had in fact settled.
To resolve the matter requires a hearing during which deponents of affidavits would be cross examined, evidence analysed and a determination made. The Court then noted that even if the settlement was not disputed, the Court may not have been able to assess the justice of the settlement as it considered that the evidence available was insufficient.
The Court considered that the issues were complicated and that proceedings for declaratory relief should not, so far as possible, be conducted by a litigant in person. The Court was at pains not to give legal advice but did explain the nature of the pro-bono scheme in Rule 7.36 of the UCPR 2005 (NSW).
As it would have been impossible to properly consider the legality of the settlement prior tp the scheduled hearing on 22 February 2021 that date was vacated.
The plaintiff was then referred to the Registrar for a referral to a barrister or solicitor on the pro-bono panel system and the Court ordered that the defendant was to bring any application for declaratory relief by 1 February 2021.
Takeaways
Litigants in person generally add a layer of complexity and uncertainty to formal proceedings.
When that litigant in person is also under a disability and represented by a non-legally qualified tutor, there is an amplified need to take particular care and ensure that the terms of settlement are abundantly clear.
Following the settlement, it is then equally important to take care that the Court is in possession of sufficient evidence to make approval as easy as possible.
Parties who to attend mediation should also know precisely what costs have been incurred up to that point. Where those costs are to be paid from the settlement sum, it is important that the receiving party understands exactly how much will be left once the legal costs and expenses have been deducted.
If possible, capture the settlement as a deed rather than HOA because once delivered it is difficult to withdraw the agreement. A deed may not have prevented the court from withholding approval but it is still as a matter of practice a good idea and anyone trained by TC will always take a draft deed to a mediation/ISC together with an authority to amend the deed signed by the client.
