New South Wales Supreme Court CITATION : Saul v Lin [2007] NSWSC 782 This decision has been amended. Please see the end of the judgment for a list of the amendments. HEARING DATE(S) : 4 & 5 July 2007 JUDGMENT DATE : 5 July 2007 JURISDICTION : Equity JUDGMENT OF : Hamilton J DECISION : Costs orders set aside. CATCHWORDS : MENTAL HEALTH [18] – Ch 10 Legal proceedings by and against mentally ill and other protected persons – Compromise – Power of Court to approve settlement - Proceedings against incapable person – Apparent lacuna in Civil Procedure Act 2005 s 76 – Inherent power of Supreme Court - PROCEDURE [483] – Judgments and orders – Amending, varying and setting aside – Final orders made after hearing both sides – General rule – Exception for order not determining claim for relief or dismissing proceedings even when order entered – Uniform Civil Procedure Rules 2005 r 36.16(3). Civil Procedure Act 2005 ss 75 & 76 LEGISLATION CITED : Damages (Infants and Persons of Unsound Mind) Act 1929 Supreme Court Rules 1970 Part 63 r 11 Uniform Civil Procedure Rules 2005 r 36.16(3) CASES CITED : Permanent Trustee v Mills [2007] NSWSC 336 1758/05 Jennifer Suzie Saul (P) Tsung Cheng Lin by his tutor the Protective Commissioner (D1 & XC) Wakalla Holdings Pty Ltd (D2) Michael Peter Saul (D3) Melteal Pty Ltd (XD) P16/03 Jennifer Suzie Saul (P) PARTIES : Tsung Cheng Lin (D1 & XC) Wakalla Holdings Pty Ltd (D2) Michael Peter Saul (D3) Hong Lin Xu (D4) Melteal Pty Limited (XD) 2294/04 Jennifer Suzie Saul (P1) Hannah Saul and Alexander Saul by their tutor Michael Peter Saul (P2) Tsung Cheng Lin (D) FILE NUMBER(S) : SC 1758/05; P16/03; 2294/04 COUNSEL : J A D Needham SC (Ps & XD) P Blackburn-Hart SC (D & XC) SOLICITORS : Teece Hodgson & Ward (Ps & XD) Craddock Murray Neumann (D & XC) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION Hamilton J Thursday, 5 July 2007 1758/05 JENNIFER SUZIE SAUL v TSUNG CHENG LIN & ORS 16/03 JENNIFER SUZIE SAUL v TSUNG CHENG LIN & ORS 2294/04 JENNIFER SUZIE SAUL & ORS v TSUNG CHENG LIN JUDGMENT 1 HIS HONOUR: What is in contest before me in these matters is the cross claim filed in 1758/05 between Tsung Cheng Lin by his tutor the Protective Commissioner as cross claimant and Melteal Pty Ltd as cross defendant. This cross claim has been in the course of settlement for some day and a half since that matter was called on for hearing yesterday morning. It is understandable that the process of settlement has taken some time in view of the careful and detailed provisions that are now contained in the short minutes that are laid before me. Short minutes are also laid before me in the two other matters referred to above, because it is part of the settlement that orders for costs in those proceedings be set aside. 2 It has been put to me that, in addition to the orders contained in the short minutes, I should make an order approving the settlement because of the involvement in the proceedings of a person under legal incapacity. The settlement of such proceedings has traditionally required the approval of the Court. It was made plain that previously, whether proceedings were by or against a disable person, as they were then referred to, their compromise required approval under Part 63 r 11 of the Supreme Court Rules 1970 ("the SCR"), now repealed. 3 It would seem that that provision of the SCR, together with the statutory requirements of the Damages (Infants and Persons of Unsound Mind) Act 1929 have been replaced by the provisions of s 76 of the Civil Procedure Act 2005 ("the CPA"). 4 The similar section relating to the settlement of claims before action brought is s 75 of the CPA, which is stated to apply to any claim made by or on behalf of or against a person under legal incapacity. Unfortunately, s 76(1) provides, in terms, that the section applies only to proceedings commenced by or on behalf of any person under legal incapacity and, therefore, does not, in terms, apply to proceedings brought against such a person. 5 This deficit was recently referred to by Hammerschlag J in Permanent Trustee v Mills [2007] NSWSC 336. His Honour, in that case, decided that despite this lacuna, the CPA was not intended to interfere with the Court's long established supervisory jurisdiction over settlements in cases such as the present and proceeded to approve in the inherent jurisdiction of the Court a settlement which his Honour deemed to be beneficial. 6 It may be that it is not necessary to follow the course that his Honour took in this case, because the only claim that is extant and is being settled in these proceedings is a claim brought on behalf of the incapable person as cross claimant on the cross claim in the proceedings. In my view, s 76 does in fact apply, because the cross claim that is being settled ought be regarded as being proceedings commenced on behalf of a person under legal incapacity within the meaning of the section. 7 If I am wrong about that, the order of approval that I make should be taken to be made in the exercise of the inherent jurisdiction of the Court referred to by Hammerschlag J. 8 I draw to the attention of the appropriate authorities the lacuna that appears to exist, so that this apparent deficiency may be attended to. 9 I have already referred to the careful and detailed provisions of the settlement which has been reached. I have looked at the details of those arrangements and I have no doubt that the settlement is a settlement beneficial to the person under legal incapacity and I have no hesitation in approving that settlement. 10 The only other aspect of the settlement that requires some comment is that the Court is asked to set aside costs orders made in two other sets of proceedings some years ago. Those orders were made before the inception of the provisions under the present regime where, under rule 36.11, orders are deemed to be entered upon being recorded in the Court's computerised court record system, which is at present the Courtnet system, which has been in use in this Court for some years. 11 For reasons that will be apparent, there is no need for me to investigate what did happen in respect of these costs orders. They probably were recorded in the Courtnet system, but at a time when recording in that system did not constitute entry, which had to be effected in other ways under the system prevailing prior to the enactment of the Uniform Civil Procedure Rules 2005 ("the UCPR"). 12 However, the provision of the UCPR under which I am asked to set aside the costs is r 36.16(3). Some doubt was raised at one stage as to whether r 36.16(3) should be read as adjectival to or dependent upon the establishment of the conditions for the operation of either r 36.16(1) or r 36.16(2). However, in April of this year, there were inserted at the beginning of r 36.16(3), the words "In addition to its power under subrules (1) and (2)". This makes it quite plain that r 36.16(3) operates to confer a separate substantive power upon the Court. That power is available whether or not the order has been entered. The limitation upon it is that it may not be used in relation to an order so far as that order determines any claim for relief, or determines any question arising on any claim for relief, or dismisses proceedings in whole or in part. 13 The orders I am asked to set aside are orders for costs and, in my view, those orders do not fall within the classes of order that are excepted from the power conferred upon the Court by r 36.16(3). 14 I, therefore, propose to make orders setting aside those costs orders as requested by the parties. 15 The same effect could, of course, be achieved, if there were any difficulty in setting the costs orders aside, by agreement between the parties that the costs orders should not be enforced. However, it is a cleaner solution to set the orders aside. For the reasons I have set out above, I see no difficulty in making the orders requested of me by the parties. 16 In 1758/05, I approve the compromise of the proceedings embodied in the short minutes. There will be orders in accordance with the short minutes initialled by me and placed with the papers. 17 In each of 16/03 Protective List and 2294/04, there will be orders in accordance with short minutes initialled by me and placed with the papers. ********** 19/07/2007 - Clerical error - Paragraph(s) Citation 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.