New South Wales Supreme Court CITATION : Farr v State of Queensland [2009] NSWSC 906 HEARING DATE(S) : 20 August 2009 JUDGMENT DATE : 20 August 2009 JUDGMENT OF : Price J at 1 EX TEMPORE JUDGMENT DATE : 20 August 2009 DECISION : I declare that the plaintiff is not under a legal incapacity for the purposes of UCPR rule 7.14 and in particular for the purposes of: (a) settling the proceedings with the second and third defendants, and (b) carrying on the proceedings against the first defendant. CATCHWORDS : Common law - Practice and Procedure - declarations - whether plaintiff under a legal incapacity for carrying on and settling proceedings - whether plaintiff incapable of managing own affairs. Civil Procedure Act 2005 s 3, s 76(4) LEGISLATION CITED : Mental Health Act 1958 s 18 NSW Trustee and Guardian Act 2009 s 41 CATEGORY : Procedural and other rulings Masterman-Lister v Brutton & Co Ltd [2003] 3 All ER 162 CASES CITED : P v R [2003] NSWSC 819 PY v RJS [1982] 2 NSWLR 700 PARTIES : Samantha Farr State of Queensland & 2 Others FILE NUMBER(S) : SC 20231/05 DJ Higgs SC and A Cheshire (Plaintiff) COUNSEL : B Bradley (1st Defendant) M Windsor SC (2nd and 3rd Defendants) IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION PRICE J 20 August 2009 20231/05 Samantha Farr v State of Queensland & 2 Ors JUDGMENT 1 HIS HONOUR: On 13 July 2005 the plaintiff commenced proceedings against the State of Queensland, the first defendant; the South Eastern Sydney and Illawarra Area Health Service, the second defendant; and the Sydney South West Area Health Service, the third defendant, claiming damages arising from her management and treatment at various hospitals in Queensland and in New South Wales between 1 February 1999 to 19 July 2006. 2 The gravamen of the plaintiff's claim is that defendants negligently made and maintained a diagnosis of myasthenia gravis and failed to treat her psychiatric symptoms such that she has developed a severe and chronic conversion disorder. 3 Following mediation on 25 May 2009, an offer of settlement was made by the second and third defendants in the terms of the consent judgment which is annexure B to the affidavit of Maria Feletti sworn 28 July 2009. 4 The plaintiff, in her affidavit sworn 28 July 2009, states that she has been advised by her counsel, David Higgs SC and Anthony Cheshire, that the settlement was within a reasonable range considering the risks associated with litigation and the potential quantum of damages she might recover if successful at trial. She has instructed her solicitor to accept the offer and understands that the proceedings against the first defendant remain on foot with the risk and potential costs associated with the continuing litigation. 5 Before the proposed settlement can proceed, various matters have arisen for consideration which include the subject of the present amended notice of motion which has been brought on behalf of the plaintiff. The orders sought are as follows: 1. A declaration that the plaintiff is not under a legal incapacity for the purposes of UCPR rule 7.14 and, in particular, for the purposes of: (a) Settling the proceedings with the second and third defendants (b) Carrying on the proceedings against the first defendant. 2. In the alternative to order 1, orders that: (a) Andrew Farr be appointed as the plaintiff's tutor; (b) The settlement between the plaintiff on the one hand and second and third defendants on the other be approved pursuant to s 76(4) of the Civil Procedure Act 2005. 3. A declaration that the plaintiff is incapable of managing her own affairs within the meaning of s 41 of the New South Wales Trustee and Guardian Act 2009 (the Act), and consequential orders thereunder. 6 The application for the orders has been properly sought on the advice of the plaintiff's counsel. The plaintiff considers she is capable of giving proper instructions for the running of the proceedings, including for the settling of the case against the second and third defendants. She is also of the view she is capable of managing her own affairs such that she should have control of the estate and in particular the settlement monies that she might receive. Notwithstanding these views, she understands counsels' advice and sees sense in the orders sought in the motion. 7 The principal reason the application has been made is that Dr Jonathan Phillips, a consultant psychiatrist, in a report dated 31 March 2009, expressed the opinion that the plaintiff has capacity to provide instructions on her legal claim but that as a result of her injuries and extensive hospitalisation during her teenage years is unable to manage a significant sum of money because she is "poorly equipped to make serious financial decisions regarding investment or for the use of money to ensure her future care in the longer term". He expresses two matters of concern which are: "Ms Farr's level of experience and skill in the management of monies particularly with regard to investment or the future; and additionally the risk of undue influence by another person or persons. In relation to the latter, the plaintiff is not at all worldly and would be at considerable risk of being influenced improperly by others, and potentially exploited." 8 Other than the question of the ability to make serious financial decisions regarding investment, what is said by Dr Phillips raises the question as to whether the plaintiff can properly make use of the proposed settlement monies towards appropriate future treatment. It is said that, contrary to the opinion of the psychiatrist, the plaintiff does not accept that her injuries are of a psychiatric, rather than of a physical, origin and that she has a belle indifference to her condition. The suggestion is she is poorly placed to apply any of the settlement monies towards appropriate treatment. 9 Dr Phillips is of the opinion that the plaintiff developed and continues to suffer from a very significant conversion disorder and has become entrenched in a long-term sick role that confines her to a reclining wheelchair. Dr Brown, a consultant forensic psychiatrist, agrees with the diagnosis of conversion disorder. 10 The plaintiff, however, says in her affidavit that while she may have some psychiatric issues her disabilities are largely, if not wholly, due to physical causes which the doctors are currently unable to identify. She believes that the doctors, including Drs Phillips and Brown, are wrong although she accepts that she may be wrong. 11 The first question for consideration is whether the plaintiff is not under a legal incapacity for the purposes of UCPR rule 7.14 and, in particular, for the purposes of settling the proceedings with the second and third defendants and carrying on the proceedings against the first defendant. 12 UCPR rule 7.14(1) provides: " A person under legal incapacity may not commence or carry on proceedings except by his or her tutor." 13 UCPR rule 7.13 provides: "In this Division person under legal incapacity includes a person who is incapable of managing his or her affairs." 14 A person under legal incapacity is defined under s 3 of the Civil Procedure Act to mean "any person who is under a legal incapacity in relation to the conduct of legal proceedings." 15 For the resolution of this question I refer to the test applied by Chadwick LJ in Masterman-Lister v Brutton & Co [2003] 3 All ER 162 where his Honour said at [75]: "…the test to be applied, as it seems to me, is whether the party to legal proceedings is capable of understanding, with the assistance of such proper explanation from legal advisers and experts in other disciplines as the case may require, the issues on which his consent or decision is likely to be necessary in the course of those proceedings. If he has capacity to understand that which he needs to understand in order to pursue or defend a claim, I can see no reason why the law - whether substantive or procedural - should require the interposition of a next friend or guardian ad litem." 16 I am satisfied the plaintiff has the capacity to understand what is necessary to pursue her claim against the first defendant, to understand the precise details of the proposed settlement offer, the consequences of its acceptance or rejection, the advice proffered by counsel and has the ability to make decisions and give instructions based upon that advice for the following reasons: a. The plaintiff is 25 years old. She is currently studying psychology as an undergraduate at Macquarie University. She obtained her Higher School Certificate last year with a UAI of 85.90 which qualified her for entry to her present university course. b. The proceedings were commenced on her instructions against the defendants without a tutor. c. The plaintiff has participated over the years in lengthy discussions and conferences with her solicitors and barristers. She attended the mediation during which she was interactive with her legal team, contributed to the discussions as well as giving clear instructions to them. d. It is the view of Ms Feletti, her solicitor, that the plaintiff understood the issues as well as the questions of capacity in the proceedings and for the purposes of the New South Wales Trustee and Guardian Act. Ms Feletti expressed the opinion that the plaintiff always appeared to understand what she had discussed with her and had given clear instructions as to the conduct of the proceedings where required to do so. The plaintiff has provided Ms Feletti with both written and verbal instructions to accept the offer and for the present application to be made. e. Both the plaintiff's senior and junior counsel in their advice annexed to Ms Feletti's affidavit considered that the plaintiff does have capacity to give instructions as to the conduct of the case generally. Mr Higgs confirmed that opinion in oral submissions this morning. f. Andrew Farr, the plaintiff's father, in his affidavit sworn 31 July 2009 is of the opinion that his daughter is capable of giving proper instructions for the running of these proceedings, including for settling the claim as against the second and third defendants. He was present when the settlement offer was explained to her and makes reference in the affidavit to the plaintiff's understanding of the terms of the settlement offer. g. The plaintiff in her affidavit sets out in some detail her understanding of the settlement offer and the deductions that are to be made if the settlement proceeds. h. Dr Brown in a report dated 20 May 2009 states that the plaintiff does not have any mental incapacity arising from her ongoing conversion disorder which would interfere with her capacity to make financial decisions. 17 Dr Brown opines: "I would not concur with Dr Phillips' opinion that the plaintiff does not have sufficient skills to manage money, including making more serious financial decisions. Although Ms Farr may not have had experience in dealing with such matters to date she did not impress as being more naive or unworldly than any other young woman her age who has not yet had to make major financial decisions. Although she would be best advised to seek financial advice from reputable sources, Ms Farr does not have any mental incapacity arising from her ongoing conversion disorder which would interfere with her capacity to make financial decisions. I am not aware of any history to indicate that she has been exploited by others to date and would consider, similar to Dr Phillips' comments, that Ms Farr is a sensible young woman. In my opinion she would therefore be able to make reasonable judgements about who to trust regarding financial issues." 18 Dr Brown does not support Dr Phillips's recommendation that Ms Farr receive assistance from the Protective Commissioner. Although I have intruded upon the matters which are to be considered in the application under s 41 of the Act. Dr Brown's views are of relevance as settlement of the proceedings is both an important legal and financial decision. 19 For the foregoing reasons I propose to make the declaration sought in order 1. 20 A declaration is also sought that the plaintiff is incapable of managing her own affairs within the meaning of s 41 of the Act. Section 41(1) of the Act is in the following terms: "If the Supreme Court is satisfied that a person is incapable of managing his or her affairs, the court may: (a) declare that the person is incapable of managing his or her affairs and order that the estate of the person be subject to management under this Act, and (b) by order appoint a suitable person as manager of the estate of the person or commit the management of the estate of the person to the New South Wales Trustee." 21 The words, "incapable of managing his or her own affairs" as they appeared in s 18 of the Mental Health Act 1958 were considered by Powell J in PY v RJS [1982] 2 NSWLR 700. His Honour said at [7]: "It is my view that a person is not shown to be incapable of managing his or her own affairs unless, at the least, it appears: (a) that he or she appears incapable of dealing, in a reasonably competent fashion, with the ordinary routine affairs of man; and (b) that, by reason of that lack of competence there is shown to be a real risk that either: (i) that he or she may be disadvantaged in the conduct of such affairs; or (ii) that such moneys or property which he or she may possess may be dissipated or lost…; it is not sufficient, in my view, merely to demonstrate that the person lacks the high level of ability needed to deal with complicated transactions or that he or she does not deal with even simple or routine transactions in the most efficient manner. " See also P v R [2003] NSWSC 819. 22 Dr Phillips's concerns as to the plaintiff's capacity to make financial decisions arises from the plaintiff's long periods of hospitalisation and illness from the time she was 12 years old. In particular, when she was 16 and had commenced year 11, she spent some 8 months in hospital of which 50 to 75 per cent of the time was spent in bed or in a wheelchair. After she developed a cold in the following year, she was admitted to Katoomba Hospital and was then subsequently transferred to Liverpool Hospital where she remained as a patient for the next 5 years. 23 Dr Phillips considers that having missed out on the critical formative years when lessons are learnt how to manage one's affairs, the plaintiff is poorly equipped to make serious financial decisions regarding investment or for the use of money to ensure her longer term care needs. Dr Phillips is of the opinion that the plaintiff is not at all worldly and is at considerable risk of exploitation. He does not suggest that the plaintiff lacks the skills to manage her day-to-day affairs and handle relatively small amounts of money. Dr Phillips considers that the plaintiff is a sensible young woman. As I have recounted, Dr Brown disagrees with the views expressed by Dr Phillips. 24 Throughout her many years of illness, the plaintiff has had the support of her parents with whom she lives. Mr Farr, who is a registered nurse, does not agree that his daughter is incapable of managing her own affairs such that she could not manage the funds from the proposed settlement. All of the evidence indicates that the plaintiff is an intelligent and sensible young woman. She did not impress Dr Brown as being any more naive or unworldly than any other young woman of 25 years. 25 It seems to me for a declaration to be made for this reason under s 41(1) of the Act something more must be demonstrated than a lack of experience in making major financial decisions. The evidence establishes that the plaintiff is capable of dealing in a reasonably competent fashion with the ordinary routine of daily life. Furthermore, I propose to accept Dr Brown's opinion that the plaintiff is capable of making major financial decisions including seeking appropriate financial advice and making reasonable judgments about who to trust regarding financial issues. 26 I am not satisfied that it has been shown by reason of a lack of competence that there is a real risk that she may be disadvantaged in the conduct of her financial affairs or that the settlement monies may be dissipated or lost. 27 The most difficult issue in the application is the question of further treatment. Dr Phillips opines that the plaintiff has exhibited belle indifference, an affect he has not witnessed in many years. He states in his report dated 9 August 2007: "This is an affect characterised by a bland optimistic and inappropriate indifference in the context of considerable disability. It is an affect which is strongly linked with a lack of insight into the seriousness of her situation. It is an affect which almost always will be noted in association with conversion disorder." 28 In a report dated 31 March 2009 he considers that the central question relates to the plaintiff's ability to come to understand what happened to her, to accept that slow rehabilitation may prove possible (but without her having to lose face) and to agree to the complex reconditioning process which will be essential if she is to make progress. He notes that the plaintiff is making excellent educational progress, has a circle of friends and enjoys socialising but remains in a reclining wheelchair, with this making most tasks of daily living extremely difficult. Dr Phillips recommends that the plaintiff undertake comprehensive psychological treatment and a highly intensive program of physical conditioning/retraining in tandem. 29 Notwithstanding the good educational and social progress the plaintiff has made, Dr Phillips notes that belle indifference essentially remains a feature of her presentation. 30 During her oral testimony the plaintiff confirmed that, whilst she believed that her disabilities were largely due to physical causes, she was prepared to accept that she made may be wrong. She said that she was open to undergoing the treatment recommended by Dr Phillips. 31 The plaintiff has secured a place at Hull University where, as I understand it, she intends to complete her psychology degree. The course is to commence on 19 October 2009 and she will be moving with her parents to the United Kingdom for that purpose. 32 Mr Farr testified that he did not dispute the diagnosis of conversion disorder, but questioned the degree of the disorder because of the improvement in his daughter's physical condition. His mind is not closed to the treatment recommended by Dr Phillips but he wishes to obtain a second opinion as to the extent of the treatment. He intends to seek the advice of psychiatrists and psychologists. 33 Dr Brown does not concur with the extent of the psychotherapy recommended by Dr Phillips. She opines in her report dated 20 May 2009 that: " Ms Farr has impressed, from the previously clinical assessment of her, as being unlikely to make benefit from a very high level of psychological input. She might benefit from attending a course of cognitive behavioural type treatment which is focused on supporting the rehabilitation efforts, for up to 20 sessions." 34 In her report dated 12 December 2007, Dr Brown observed at page 26: "Although some Conversion Disorder patients do not seem to be able to make use of psychological insights, Ms Farr is an intelligent young woman and gentle exploration of underlying psychological issues and encouragement of increasing mobility might be usefully provided her in up to 20 sessions of individual counselling. Some individuals begin to make better use of treatment over a more extended period of time and a lengthier number of sessions allows a more gentle and non-confrontational approach to be undertaken." 35 As there is disagreement as to future treatment by the psychiatrists, it is not surprising that Mr Farr wishes to seek further professional advice and the plaintiff has indicated some resistance to the regime proposed by Dr Phillips. 36 It is submitted that the plaintiff's lack of insight goes to the heart of her consideration of further treatment and the imposition of a suitable person as manager would be of assistance by providing objective advice as to treatment. I am not persuaded that that would be the case. It seems to me that the imposition of a third person would be likely to add complexity to the plaintiff's life to little advantage. The plaintiff is more likely to accept the advice of the psychologists and psychiatrists whom she attends with the assistance of her parents. She is, as has been stated on a number of occasions, an intelligent and sensible young woman. 37 Whilst she may lack some insight, it has not been demonstrated that she lacks the competence to make reasonable decisions as to her future medical treatment. Her future needs are best served, in my opinion, by her own independence with the loving support of her family. I do not propose to make the third order sought. 38 I declare that the plaintiff is not under a legal incapacity for the purposes of UCPR rule 7.14 and in particular for the purposes of: (a) settling the proceedings with the second and third defendants, and (b) carrying on the proceedings against the first defendant. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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