State of NSW v Karibian [2005] NSWSC 1357

New South Wales Supreme Court

CITATION : State of NSW v Karibian [2005] NSWSC 1357

HEARING DATE(S) : 15 & 16 December 2005

JUDGMENT DATE : 16 December 2005

JURISDICTION : Equity

JUDGMENT OF : Campbell J

DECISION : Contract entered. Standard terms not incorporated. Specific performance ordered.

CATCHWORDS : CONTRACTS – contract for settlement of litigation – whether contract entered – whether Crown's standard terms for settlement of District Court personal injuries litigation incorporated – whether appropriate to order specific performance of agreement – no questions of principle

Mental Health Act 1990 LEGISLATION CITED : Police Legislation Amendment (Civil Liability) Act 2003

State of New South Wales - Plaintiff PARTIES : Guy Karibian - Defendant

FILE NUMBER(S) : SC 2391/05

R Lancaster; M McFadden - Plaintiff COUNSEL : G Karibian, in person - Defendant

Crown Solicitor's Office - Plaintiff SOLICITORS : G Karibian, in person - Defendant

LOWER COURT JURISDICTION :

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION EQUITY LIST

CAMPBELL J

FRIDAY 16 DECEMBER 2005

2391/05 STATE OF NEW SOUTH WALES v GUY KARIBIAN JUDGMENT – (Ex Tempore) 1 HIS HONOUR: This is an application for specific performance of an alleged contract to settle litigation. There are three central issues in the case: First, whether there was a contract to settle the litigation at all; second, if there was, what were its terms; third, if there was, is it the sort of contract that should be specifically performed. 2 The litigation in question is litigation which Mr Guy Karibian brought in the District Court by a statement of claim filed on 7 May 2002. The defendants in that litigation, at least at the outset, were three in number. There were two police officers and, as well, there was the State of New South Wales. 3 The allegations in the statement of claim concerned events which Mr Karibian alleged took place on 20 May 1999. The thrust of his statement of claim is that, on that day, he was, in effect, tricked by the two police officers who were named as defendants into accompanying them to the Cumberland Hospital and that, once he was there, those police officers made various untrue representations to the hospital authorities and presented the hospital authorities with a request for his detention under section 24 of the Mental Health Act 1990, upon which the hospital authorities acted. He says he was detained for of the order of 168 hours. On his case, that detention was wrongful in itself, and also caused him significant consequential damage. The police officers were alleged to have committed various torts, and the State was alleged to have a vicarious liability for their actions. 4 Before the action was launched, Mr Karibian had received an advice from Mr Martin SC, suggesting that, if liability was established, very significant damages would be recoverable. 5 On 23 April 2003 Carroll & O'Dea, Solicitors, wrote to Mr Karibian setting out the terms on which they were prepared to act for him, and he accepted those terms fairly soon afterwards. Their retainer was one which involved acting for him in the action for damages against the two police officers and the State of New South Wales. 6 The Police Legislation Amendment (Civil Liability) Act 2003 came into operation on 1 January 2004. It declared a police officer to be an employee of the Crown, and imposed various restrictions on the way in which an allegation that a person who was a police officer at the time of carrying out conduct which was complained about could be sued in tort in connection with that conduct. Section 9B of the Act prohibited the making of a police tort claim against the police officer concerned, but permitted the bringing of that claim directly against the Crown. It was only if the Crown denied vicarious liability that the police officers could be joined under section 9B(3) of the Act. Because of section 9G, it extended to torts allegedly committed by police officers before the commencement of the provisions I have just described. 7 The Police Department gave instructions to the Crown Solicitor's Office, once this legislation was in operation, to review all files on foot where allegations of tort were made against police officers, and to try to get the agreement of the plaintiffs in those cases to the removal of the police officers from the proceedings. 8 In this particular case, on 8 March 2004, the State accepted vicarious liability for the two police officers who were sued, and on 12 March 2004 Coorey DCJ made an order dismissing the statement of claim against the first and second defendants. On 22 March 2004 an amended statement of claim was filed by Mr Karibian's solicitors, which named the State as the only defendant, and asserted its vicarious liability for the actions of the two police officers. 9 The case was set down for hearing in the District Court commencing on Monday, 20 September 2004. 10 Before the case began, namely on 6 August 2005, Mr Karibian's solicitors obtained a joint advice from Mr Taylor SC and Mr Dominic Williams, barrister, on the likely outcome of the litigation and the quantum range. 11 At the District Court proceedings, Mr Karibian was represented by Mr Des Kennedy SC and Mr Dominic Williams. Ms Rossana Tagliapietra of Carroll & O'Dea was the solicitor who acted as instructing solicitor. 12 The Crown was represented in the case by Mr Menzies QC and Ms Webster. Mr Brett Davies of the Crown Solicitor's Office acted as the instructing solicitor during the trial. The trial was held before Murray ADCJ. 13 I have heard evidence in this case from Mr Menzies, from Ms Tagliapietra, from Mr Davies, and from Mr Karibian. The first three of these witnesses were called by the Crown. 14 Mr Menzies' recollection of all of the detail of the settlement discussions is not complete, but I accept his evidence about the structure of the events which happened. That evidence is consistent with evidence given by Mr Davies and Ms Tagliapietra. 15 At around 5.30pm on 22 September, Mr Menzies phoned Mr Kennedy, and told him that he was instructed to make an offer of settlement in the amount of $75,000, plus costs. The substance of the conversation was no more extensive than that. As commonly happens when counsel are negotiating settlement of a matter, the proposals which they put one to the other outline the commercial bare bones of a settlement. 16 Mr Menzies enquired whether Mr Kennedy would get some instructions and call him back, to which Mr Kennedy agreed. 17 Evidently, Mr Kennedy passed on the substance of the conversation he had had to Mr Williams, because Mr Williams rang Ms Tagliapietra that afternoon and reported on the offer having been made. 18 On the morning of 23 September 2004 the Court did not resume at the appointed time. One or other of the barristers sent a message to the Judge asking for time, and that request was granted. 19 Ms Tagliapietra gives evidence, which I accept, that, after the matter was stood down, Mr Kennedy returned to a conference room, of which, it seems, Mr Karibian's team had the use, and told Mr Karibian of the offer of $75,000, plus costs. This offer was one which Mr Karibian did not regard as in the slightest attractive. He had a view that his case was worth far, far more than that, and told Mr Kennedy so. 20 Ms Tagliapietra explains what happened next: "18. Upon Mr Karibian saying that, Mr Kennedy, Mr Williams and myself, in turn or together, explained to Mr Karibian that his expectations were high and reminded him that the $75,000 was within the range of damages as set out in Mr Taylor's advice. I then took the 6 August advice of Mr Taylor from my file and re-examined it and showed it to Mr Karibian. I recall saying words to the effect that '$75,000 comes within the range of damages you might expect to recover in the proceedings as detailed in that advice'. 19. When acting for a plaintiff, my normal practice is to advise the client as to the range of damages that might reasonably be recovered on his or her claim, that is, based on all the evidence, what the client can reasonably expect to be awarded should he or she succeed in establishing liability. I follow this practice with every client. I am confident that I advised Mr Karibian, on more than one occasion, and both prior to and during the hearing of the District Court proceedings, of the value of his claim, based on the advice of Mr Taylor dated 6 August 2004. 20. I recall during these discussions, the following conversation, or words to that effect, occurred: Mr Kennedy SC: That doesn't mean that [the $75,000] is the final offer. That's just the start. We can go back with a higher offer. Mr Karibian: Okay. How much will we go back with? Mr Kennedy SC: $150,000 plus costs. Mr Karibian: Okay, I am happy with that, that's fine. Ms Tagliapietra: You will not get $150,000 but that offer is a way of negotiating a suitable settlement figure. If you can get $100,000 plus costs, would you be happy with that? Mr Karibian: Yes. Ms Tagliapietra: Okay. We'll go back with an offer of $150,000 plus costs." 21 An offer of $150,000 plus costs was conveyed by Mr Kennedy to Mr Menzies, and Mr Menzies in turn passed the offer on to Mr Davies. 22 The lines of communication between the two legal camps during that day ran so that communication took place from Senior Counsel to Senior Counsel. Mr Menzies at no time was privy to what took place between Mr Karibian and his legal advisers. 23 It is unnecessary to recount each move in the negotiations. At one stage, the State was willing to make an offer of $100,000, which Mr Menzies conveyed to Mr Kennedy, and Mr Kennedy in turn passed on. When that offer was passed on to Mr Karibian, Ms Tagliapietra formed the view that he would be satisfied with a settlement for $100,000, plus costs. She wrote out the text of a document entitled "Authority to Settle", which, at the time she wrote it out, had the following text: "I, Guy Karibian, authorise you to settle my claim against the State of New South Wales in the sum of $100,000 plus costs. I have read the joint Advice of Dominic Williams and Peter Taylor SC, and understand the difficulties in my case regarding liability [, and damages]. I understand that Peter Taylor SC is of the opinion that having regard to those difficulties my case is worth between $10,000 and $80,000 plus costs. I understand that my solicitors will allow me the total amount of $100,000 and that they and my current barristers Des Kennedy SC and Dominic Williams will take whatever is allowed on assessment. I understand that I will receive reimbursement of any disbursements that I have paid myself that may be allowed on assessment. I understand that there are no medical expenses to be paid and no money to be refunded to Medicare. I understand that there may be an amount owing to Centrelink as I have been in receipt of benefits on and off since the tort occurred. I estimate that I have received approximately $10,000 since the tort in Newstart benefits and that this or any other amount which may be more, would be deducted from my settlement monies and that my solicitors are not responsible for any refund that may be due. Knowing all of this I instruct you to settle my claim for the sum of $100,000.00 plus costs. I understand that my solicitors will not seek to recover any unrecovered costs and disbursements from me."