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  • Unreported Judgment

HJO v BWO

 

[2018] QSC 78

SUPREME COURT OF QUEENSLAND

CITATION:

HJO v BWO & Anor [2018] QSC 78

PARTIES:

HJO by his litigation guardian AO

(Applicant)

v

BWO

(First Respondent)

and

AN INSURER

(Second Respondent)

FILE NO/S:

117 of 2018

DIVISION:

Trial

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court at Cairns

DELIVERED ON:

18 April 2018

DELIVERED AT:

Cairns

HEARING DATES:

16 March 2018 and 13 April 2018

JUDGE:

Henry J

ORDERS:

  1. The second respondent will pay the applicant’s costs of the originating application to be agreed or, failing agreement, to be assessed on the standard basis in accordance with the Supreme Court scale.
  2. This proceeding having occurred in closed court:
  1. these reasons are not to be published other than in their anonymised form; and
  2. a copy of these reasons is to be placed by the Registrar in the sealed envelope referred to in order 11(b) of this court of 13 April 2018.

CATCHWORDS:

PROCEDURE – SUPREME COURT PROCEDURE – QUEENSLAND – PROCEDURE UNDER RULES OF COURT – JUDGMENTS AND ORDERS – OTHER MATTERS – ORDER SANCTIONING SETTLEMENT – where the applicant’s claim for damages for personal injuries was settled– where the applicant lacks capacity and seeks sanction of the settlement – where settlement was sanctioned – where the settlement related to but did not resolve the appointment of an administrator and the reasonable fees and charges of the administrator

PROCEDURE – COSTS – GENERAL RULE – where the applicant did not serve the respondent insurer with materials upon which it relied, occasioning an adjournment – whether the applicant was precluded from serving the materials by r 98 Uniform Civil Procedure Rules

Guardianship and Administration Act 2000

Public Trustee Act 1978

Uniform Civil Procedure Rules 1999 (Qld) r 98

COUNSEL:

M D Glen for the applicant

J A Greggery QC for the second respondent

SOLICITORS:

Maurice Blackburn Solicitors for the applicant

Moray & Agnew Lawyers for the second respondent

  1. On 13 April 2018 the court sanctioned a settlement of the applicant’s personal injuries claim for damages and appointed an administrator to receive and manage the settlement balance.
  2. It is now necessary to decide the appropriate order as to the costs of the originating application in which those orders were sought. 
  3. The decision as to costs turns upon whether the applicant was precluded by r 98 Uniform Civil Procedure Rules 1999 (Qld) (“UCPR”) from serving the second respondent insurer with the materials upon which it relied in support of the order appointing the administrator.

Background

  1. The applicant’s personal injuries damages claim was settled following a compulsory conference on 18 December 2017.  The terms of settlement relevantly included:

“Following a compulsory conference conducted on 18 December 2018 (sic: 2017), the claimant and the insurer have agreed to settle this claim on the following terms:

  1. The claimant and insurer acknowledge and agree that these terms of settlement are subject to and conditional upon sanction of the court.
  1. The insurer will pay, the sum of nine hundred thousand dollars ($900,000.00) (‘the settlement sum’) in full settlement of the claimant’s claim for damages and interest.
  1. In addition to the settlement sum and only if the court appoints an administrator the insurer will pay as damages the amount of reasonable administration fees and charges payable on any fund remitted to the administrator for administration on behalf of the claimant in a sum to be agreed or otherwise as may be assessed by the court.
  1. The insurer will pay the claimant’s standard costs and outlays of and incidental to the claim, including the costs of the application for sanction, to be agreed or failing agreement to be assessed according to the Uniform Civil Procedure Rules 1999. …”  (emphasis added)
  1. Paragraph 3 of the terms of the settlement was, by reason of paragraph 1, “subject to and conditional upon sanction of the court”.  In paragraph 3 the words “if the court appoints an administrator the insurer will pay as damages the amount of reasonable administration fees and charges payable” appear to have left room for dispute as to whether an administrator should be appointed and what would constitute a “reasonable” amount of administration fees and charges.  In the context of the terms of settlement, the reference in paragraph 3 to “the court” is obviously a reference to the court referred to in paragraph 1, that is, the court called upon to sanction the terms of settlement.
  2. In an originating application before this court the applicant’s litigation guardian sought two substantive orders:

“1. Pursuant to s 59(2) of the Public Trustee Act 1978 the Court sanction the settlement of the Applicant’s claim for damages.

  1. Pursuant to s 12 of the Guardianship and Administration Act 2000, [a corporate administrator] (“the Administrator”) be appointed administrator for the Applicant to receive and manage the balance of the settlement sum after deduction of statutory refunds.”[1]
  1. The application first came before me on 16 March 2018 (“the first hearing”).   The applicant’s counsel’s written submissions were provided and the applicant’s written material read.  On considering that material I intimated I would likely sanction the settlement but did not then do so because of an issue which had arisen in connection with the appointment of an administrator.
  2. The draft order proffered at the first hearing included orders that:

“1. Pursuant to 59(2) of the Public Trustee Act 1978 the settlement of the Applicant’s claim for damages for personal injuries against the Respondents on the following terms be sanctioned:  …

  1. the Second Respondent pay the reasonable administration fees and charges for the management of the Applicant’s damages to be agreed, or failing agreement to be assessed by the Court (“the fund management fees”) which together with the primary damages constitutes the compromise sum (“the compromise sum”) …
  1. Pursuant to s 12 of the Guardianship and Administration Act 2000, [a corporate administrator] (“the Administrator”) be appointed administrator for the Applicant to receive and manage the balance of the compromise sum after the deduction of amounts identified at paragraph 6(a) of this order.”[2]
  1. Paragraph 1(b) was obviously intended to leave the reasonableness of the fees and charges of the administrator as an open issue for the future.  This was, unsurprisingly, unsatisfactory to the second respondent because:
    1. the reasonableness of the fees and charges likely to be charged by the proposed administrator bore upon the suitability for appointment of the administrator in the first place; and
    2. once the court had appointed an administrator the court would be reluctant to be later drawn into adjudicating upon the reasonableness or otherwise of that administrator’s fees and charges.
  2. Of course the proposed draft orders were just that.  There was ample material before the court, filed by the applicant, to allow me to then hear argument about and decide the suitability for appointment of an administrator, including by reference to whether its proposed fees and charges were reasonable.  It may well have been that in the course of such an argument the applicant or respondent may have proffered varied draft orders.  However, such an argument could not proceed because the applicant’s filed material relevant to the issue, as with all of its supporting material, had not been served upon the second respondent.  The second respondent rightly wanted to consider the material before electing whether to concede or argue the issue.
  3. I accordingly adjourned the party’s application to 13 April 2018, ordering inter alia that the applicant was to serve the respondent with any affidavit material upon which it intended to rely in respect of the argument pertaining to the appointment of the administrator and the reasonableness of its fees and charges.
  4. When the hearing resumed before me on 13 April 2018 (“the second hearing”) the parties had, save as to the issue of costs, reached agreement as to the terms of a new draft order.  That draft relevantly provided:

“1. Pursuant to s 59(2) of the Public Trustee Act 1978 the settlement of the Applicant’s claim for damages for personal injuries against the Respondents on the following terms be sanctioned:- …

  1. the second respondent pay to the Applicant administration fees and charges for the management of the Applicant’s damages agreed in the sum of four hundred and forty five thousand dollars ($445,000.00) (“the fund management fees”) which together with the primary damages constitutes the compromise sum (“the compromise sum”) …
  1. Pursuant to s 12 of the Guardianship Administration Act 2000, [a corporate administrator] (“the Administrator”) be appointed administrator for the Applicant to receive and manage the balance of the compromised sum after the deduction of amounts identified in paragraph 6(a) of this order.”[3]
  1. It is clear the parties had settled their dispute by agreeing upon a fixed amount to be paid for the administrator’s fees and charges.  They remained in dispute about the costs of the application.

The argument as to costs

  1. In the course of argument as to costs at the second hearing each party highlighted a number of matters which are ultimately not determinative.  The applicant, for example, highlighted that the respondent had, even before the first hearing, been agitating in correspondence for the appointment of the Public Trustee which would have charged materially less fees than the applicant’s preferred administrator.  The second respondent had since changed its position, agreeing to a fixed amount for fees and charges materially in excess of that which would have been charged by the Public Trustee.  On the other hand the second respondent argued that since the first hearing it had been provided with a host of additional information relevant to the suitability of the proposed administrator for appointment and to the reasonableness of its fees.  While there was no evidence of it, this was said by implication to be causally connected with the settlement of the dispute.  The exhibited correspondence exchanged between the parties leading up to the first hearing suggests the parties were poles apart on the reasonableness or otherwise of the fees and charges of the applicant’s proposed administrator.  It is impossible to gauge whether or not a dispute would have occurred at the first hearing if the second respondent had earlier been provided with the relevant affidavit material from the applicant. 
  2. In any event the issue is not whether if time could be rewound and the materials had been disclosed earlier, the parties would have settled the disputed issue by or at the first hearing.  That is because if the materials had been disclosed before the first hearing then the court would have proceeded to decide the issue.  Put differently, there would then have been a determination of the orders to be made regardless of whether they were the product of agreement or argument.
  3. The court was precluded from deciding the case because the applicant’s affidavit material had not been served upon the respondent.  For the same reason, the respondent was precluded from considering the material relied upon by the applicant and preparing argument by reference to it, as well as deciding whether it should concede the issue or file affidavit material going to the issue. 
  4. This explains the determinative significance of whether or not the applicant should have served its affidavit material upon the second respondent by the time of the first hearing.  The applicant submits it was prevented from doing so by the court’s own rules.  The second respondent submits to the contrary.  If the applicant is correct, then it was always going to be necessary for the court to give directions as to the serving of affidavit material and always going to be necessary to adjourn to a second hearing.  Thus, the fact that there were two hearing days rather than one was unavoidable, a necessary incident of the litigation and the applicant should have his costs.  If the second respondent is correct, then the second respondent should be compensated for its costs thrown away in consequence of the first hearing having to be adjourned.
  5. The present dispute is readily resolved by determining the merit of those submissions.  That determination will make it unnecessary to consider the more thorny question, not the focus of argument, of whether the second respondent is bound to pay the applicant’s costs of the application for sanction by reason of paragraph 4 of the terms of settlement, regardless of the event or outcome of a dispute as to the matters left undecided in paragraph 3.

Discussion

  1. The applicant contends he was specifically precluded from serving the materials going to the disputed issue upon the second respondent in advance of the first hearing by reason of r 98(3) Uniform Civil Procedure Rules 1999 (Qld).  Rule 98 provides:

98.  Settlements and compromises

  1. A settlement or compromise of a proceeding in which a party is a person under a legal incapacity is ineffective unless it is approved by the court or the Public Trustee acting under the Public Trustee Act 1978, s 59.
  2. To enable the court to consider whether a settlement or compromise should be approved, the litigation guardian for the party must produce to the court –
  1. an affidavit made by the party’s solicitor stating why the settlement or compromise is in the party’s best interests; and
  1. a statement by the litigation guardian that instructions had been given for the settlement or compromise of the proceeding; and
  1. any other material the court may require.
  1. The documents mentioned in sub-rule (2) are not to be served on another party unless the court orders otherwise.”  (emphasis added)
  1. The second respondent contends the operation of r 98 is confined to the documents bearing upon the sanction of the settlement sum, as distinct from documents going to the issue of the appointment of an administrator and the reasonableness of the administrator’s fees.
  2. As earlier highlighted, the latter issue was clearly left live by paragraph 3 of the terms of settlement.  However, it will also be recalled that paragraph 1 of the terms of settlement provided that “these terms of settlement are subject to and conditional upon sanction of the court”.  The words of paragraph 1 were not confined to a specified or limited number of the multiple paragraphs of the terms of settlement.  Its reference to “these terms of settlement” was clearly to the entire terms of settlement, not just the terms expressly relating to the settled damages figure of $900,000.  The entire terms of settlement were subject to and conditional upon the sanction of the court.  The issue of the suitability of an administrator for appointment and the reasonableness of its fees and charges was inextricably bound up in the sanction because of the terms of settlement.
  3. It is implicit in r 98(2) that the documents, which the litigation guardian had to produce to the court, were the documents which would be necessary, as r 98(2) provides, “To enable the court to consider whether a settlement or compromise should be approved”.  In the case at hand, for the court to consider whether the settlement should be approved, it would require material relevant to paragraph 3 of the terms of settlement, that is, material relevant to the appointment of a suitable administrator and the reasonableness of the proposed appointee’s administration fees and charges.  That material clearly came within the description in r 98(2)(c), “any other material the court may require”.
  4. It is self-evident that the drafters of r 98 were focused upon the court’s parens patriae role in respect of a person under a legal incapacity and, as demonstrated by r 98(3), motivated to preserve the privacy of that person in the process.  It is inevitable that some materials produced to the court pursuant to r 98(2) will be more private than others.  Given the variability of the terms and circumstances of settlements, it is hardly surprising that r 98(3) leaves the issue of disclosure by service for the court’s determination.
  5. The source of the problem in the case at hand is not r 98.  It is the terms of settlement.  Those terms left work to be done before and or at the sanction hearing.  Absent earlier agreement upon the appointment of an administrator and the reasonableness of the administrator’s fees and charges, r 98 loomed as an inevitable stumbling block to the resolution of those matters at the first return date of the application. 
  6. The first return date of the application in this matter was one and the same as the date set for hearing in the originating application.  The terms of settlement meant that, failing agreement on the issue of an appointment of an administrator and the reasonableness of the administrator’s fees and charges, there would have to be a second hearing date.
  7. It was of course within the capacity of the parties in advance of the first hearing date to have agreed on draft consent orders with a view to the listed first hearing date being varied to a first return date and treated merely as an occasion for the giving of directions about the service of material and listing a substantive hearing of the sanction for a future date. They did not do so.

Conclusion

  1. Because of the interplay of the terms of settlement and r 98 it was, barring some further agreement by the parties, inevitable that the hearing of the sanction proceeding occurred over two dates.  It follows the applicant should have his costs of the application for the sanction, notwithstanding that it involved two hearing dates.
  2. In addition to ordering the applicant’s costs it will be necessary to make orders preserving the confidentiality of these reasons, the application having been heard and determined in closed court.

Orders

  1. My orders are:
  1. The second respondent will pay the applicant’s costs of the originating application to be agreed or, failing agreement, to be assessed on the standard basis in accordance with the Supreme Court scale.
  2. This proceeding having occurred in closed court:
  1. these reasons are not to be published other than in their anonymised form; and
  1. a copy of these reasons is to be placed by the Registrar in the sealed envelope referred to in order 11(b) of this court of 13 April 2018.

Footnotes

[1]The corporate administrator was named but is anonymised here.

[2]The corporate administrator was named but is anonymised here.

[3]The corporate administrator was named but is anonymised here.  It is the same administrator as named in the application and the earlier draft order.

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Editorial Notes

  • Published Case Name:

    HJO v BWO & Anor

  • Shortened Case Name:

    HJO v BWO

  • MNC:

    [2018] QSC 78

  • Court:

    QSC

  • Judge(s):

    Henry J

  • Date:

    18 Apr 2018

Litigation History

Event Citation or File Date Notes
Primary Judgment [2018] QSC 78 18 Apr 2018 Order for costs in relation to a sanction application that occurred over two days: Henry J.

Appeal Status

No Status