New South Wales Supreme Court CITATION : Latham v North Sydney Municipal Council & Anor [2004] NSWSC 93 HEARING DATE(S) : 20/02/2004 JUDGMENT DATE : 26 February 2004 JURISDICTION: Common Law Division JUDGMENT OF : Hidden J at 1 DECISION : Entry of judgment in accordance with settlement reached between the plaintiff and first defendant deferred until second defendant's cross-claim determined. CATCHWORDS : Action for damages for personal injury - two defendants - cross-claims by each defendant against the other - settlement between plaintiff and first defendant, giving judgment to first defendant - whether entry of judgment should be deferred until second defendant's cross-claim determined. LEGISLATION CITED : Damages (Infants and Persons of Unsound Mind) Act, 1929 Law Reform (Miscellaneous Provisions) Act, 1946 Aleknavicius v Pharmacia & Upjohn & Ors (Studdert J, unreported, 19.10.2000) CASES CITED : Cockatoo Dockyard Pty Ltd v Commonwealth of Australia [2001] NSWCA 468 James Hardie & Coy Pty Limited v Seltsam Pty Ltd (1998) 196 CLR 53 Yu Ge by her tutor Tao Ge v River Island Clothing Pty Ltd [2002] NSWSC 28 Anna Christine Latham by her tutor Chloris Ann Latham - Plaintiff PARTIES : North Sydney Municipal Council - First Defendant NSW Insurance Ministerial Corporation (Formerly GIO of NSW) - Second Defendant FILE NUMBER(S) : SC 10511/90 B Walker SC/G Graham - Plaintiff COUNSEL : P Garling SC/S Glascott - 1st Defendant M Neil QC/R Tonner - 2nd Defendant T D Kelly & Co - Plaintiff SOLICITORS : Phillips Fox - 1st Defendant Helen Chrysostomidis & Co Inc - 2nd Defendant IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION HIDDEN J Thursday, 26 February, 2004 010511/90 – Anna Christine Latham by her tutor Chloris Ann Latham v North Sydney Municipal Council and NSW Insurance Ministerial Corporation (formerly GIO of NSW) JUDGMENT 1 HIS HONOUR: Almost eighteen years ago, Mrs Chloris Latham was driving her car in a suburban street in Sydney when it collided with a car driven by a neighbour of hers. She was pregnant at the time. She was not seriously injured, but she sustained significant bruising to her abdomen from her seatbelt. 2 The third party insurer in respect of the other vehicle was the New South Wales Insurance Ministerial Corporation, then known as the Government Insurance Office ("GIO"). The Local Council having responsibility for the area where the accident occurred was the North Sydney Municipal Council ("the Council"). 3 Some months later Mrs Latham gave birth to a baby girl, Anna. In due course, it became apparent that the child had suffered brain damage and was severely disabled. Anna is now seventeen years old. Through her mother as tutor, she brought the present proceedings against the GIO and the Council, alleging that her brain damage had been sustained in utero as a result of the accident. She sued the GIO upon the basis that the other vehicle was on its wrong side of the road at the time of the collision, and the Council on the basis that it had failed to trim certain roadside foliage which, it is said, obscured a view of the roadway where the accident occurred. 4 At the outset of the hearing before me, the question whether either defendant was in breach of its duty of care to the plaintiff was in issue. In addition, there was, and remains, a major issue whether the plaintiff's condition is attributable to the accident. Apart from denying any liability to the plaintiff, each defendant cross-claimed against the other, seeking contribution or indemnity under s5 of the Law Reform (Miscellaneous Provisions) Act, 1946. 5 The hearing has now proceeded for three weeks, but is not expected to conclude for several more weeks. However, in the course of the second week the plaintiff and the Council agreed to settle the proceedings between them upon the basis that there would be verdict and judgment for the Council, with the Council to pay a certain proportion of the plaintiff's costs thus far incurred. Pursuant to s4 of the Damages (Infants and Persons of Unsound Mind) Act, 1929, Bell J approved of that settlement. 6 The question which I must determine is whether judgment should now be entered for the Council in accordance with that settlement, or whether I should defer the entry of judgment until the conclusion of the evidence and submissions in the proceedings. It is common ground that the entry of judgment for the Council forthwith would put paid to the GIO's cross-claim against it, because the Council could not then be an entity which "is, or would if sued have been, liable in respect of" the damage sustained by the plaintiff, within the meaning of s5(1)(c) of the Law Reform (Miscellaneous Provisions) Act, 1946: James Hardie & Coy Pty Limited v Seltsam Pty Limited (1998) 196 CLR 53. Notwithstanding that consequence, the Council and the plaintiff submitted that I should not defer the entry of judgment. The GIO, of course, submitted that I should. 7 Mr Garling SC, for the Council, argued that the settlement itself was sufficient to prevent the GIO pursuing its cross-claim, because the plaintiff's election not to proceed against the Council removed it from the category of parties under s5(1)(c) against whom contribution or indemnity might be sought. However, what emerges from the reasoning of the majority in James Hardie v Seltsam is that it is the entry of judgment which would bring the cross-claim to an end because, albeit by consent, that judgment would amount to a final determination of the question of the Council's liability to the plaintiff: see the judgment of Gaudron and Gummow JJ at paras 16, 35, 39-40, and of Callinan J at paras 124-7. It is for that reason that it is open to the GIO to apply for the deferral of the entry of judgment until the merit of its cross-claim has been determined: Gaudron and Gummow JJ at paras 16-20, 41, Callinan J at para 133. This was the approach which guided the later decisions of Studdert J in Aleknavicius v Pharmacia & Upjohn & Ors (unreported, NSWSC,19 October, 2000) and of the Court of Appeal in Cockatoo Dockyard Pty Ltd v Commonwealth of Australia [2001] NSWCA 468. 8 Mr Garling also sought to distinguish the present case upon the basis that the settlement required the approval of a judge under the Damages (Infants and Persons of Unsound Mind) Act. He pointed out that the agreement had been reached after mature consideration, and was perceived by Bell J to be in the interests of the plaintiff and an appropriate adjustment of her rights against those of the Council. He relied upon the undoubted importance of the sanction of such a settlement required by the relevant legislation, referring to the observations of O'Keefe J in Yu Ge by her tutor Tao Ge v River Island Clothing Pty Ltd & Ors [2002] NSWSC 28, at paras 27-32. He argued that curial approval of the settlement amounted effectively to a determination in the Council's favour, such as to deprive the GIO of the jurisdictional basis for its cross-claim . 9 Neither James Hardie v Seltsam nor any of the other cases to which I have been referred involved a settlement in favour of a defendant which required approval. However, I am unable to accept Mr Garling's argument. No doubt, an assessment of the prospect of success of a claim is a relevant matter in the process of deciding whether a settlement should be approved, but that decision may well be influenced by other factors and in no sense does the approval amount to a determination of the merits of the claim. In my view, it is only the entry of judgment which could extinguish the GIO's right to pursue its cross-claim against the Council. Accordingly, whether that judgment should be entered forthwith or deferred is a matter about which I must exercise a discretion, considering the competing interests of the parties and doing the best I can to achieve justice. 10 Without abandoning his jurisdictional argument, Mr Garling acknowledged that, on the available evidence, the GIO's cross-claim is arguable. Nevertheless, he relied upon the undoubted public interest in bringing litigation to finality, together with the possibility of a finding on the cross-claim inconsistent with the verdict to which the Council is entitled, and the desirability of encouraging the settlement of claims as early as possible. He pointed out that deferral of the entry of judgment would require the Council to continue to participate in the proceedings, not only in relation to the cross-claim itself but also because that cross-claim leaves it with a continuing interest in defeating the plaintiff's claim. Obviously, this would increase costs, and he observed that no order for costs which I might make in the Council's favour would cover all of the expense incurred or compensate the Council for the effort and inconvenience involved in resisting the claims against it. 11 The stance of Mr Walker SC, for the plaintiff, was to support the entry of judgment forthwith in conformity with the agreement which his client had reached with the Council. He added that, in the event of a costs order being made against the plaintiff, she herself might be prejudiced by the extension of the hearing time necessarily involved in the Council's continued participation. It was also put that, if I were to defer the entry of judgment, it should be upon a condition that, whatever the outcome of the proceedings, the plaintiff should not bear any costs of the Council after the date of approval of the settlement. 12 All these are legitimate considerations but, in my view, they do not override the prejudice suffered by the GIO in being unable to pursue a cross-claim, conceded to be arguable, because of an agreement to which it is not a party. This is a serious case and, if the plaintiff succeeds against the GIO, the award of damages is likely to be very high. As Mr Neil QC, counsel for the GIO, observed, there is no prospect of his client being unable to meet any order for costs which might be made against it. Some evidence about the roadside foliage has already been given, and I do not understand that the pursuit of the cross-claim would involve much more of the Court's time. The major issue in the case is the causation of the plaintiff's condition, and that is an issue about which the defendants have a common interest. It is the GIO which has marshalled the expert evidence on that question, and it is to be presented by senior and junior counsel and a solicitor who are very experienced in cases of this kind. The breadth of my discretion in fashioning orders for costs can go a long way towards alleviating any disadvantage suffered by the Council or the plaintiff. 13 It is unnecessary to analyse the decided cases to which I have been referred dealing with the discretion which I am called upon to exercise. It is sufficient to say that all of them are very different from the present case. 14 Accordingly, I propose to defer the entry of judgment in accordance with the settlement between the plaintiff and the Council until the GIO's cross-claim has been determined. I will not impose the condition suggested by counsel for the plaintiff, as I think it preferable to consider the question of costs globally at the end of the proceedings. ********** Last Modified: 04/14/2004 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.