When a compromise has been reached, approval of the Court must be sought promptly. Rule 15.08 provides that the summons must be issued within 30 days of the date of the compromise.

The summons will be supported by an affidavit of the plaintiff’s solicitor, and an affidavit of the litigation guardian or administrator.  Evidence of the consent of the defendant must be given.

The exhibits to the affidavits will include the written advice of Counsel. In a common law matter, this advice will consider the assessment of the damages and any issues as to liability, with a view to determining if a better outcome could be obtained at trial.

Repayment to Centrelink

Section 1184 of the Social Security Act 1991 requires that any amount which is owing, as a result of the compromise, must be repaid before any funds are paid to or for a successful plaintiff. Therefore a Compensation Recovery Notice must be obtained before the approval of the compromise, as this will determine the net amount to be paid into Court or otherwise for the plaintiff.

Repayment to Medicare Australia (in non-TAC cases)

Section 24 of the Health and Other Services (Compensation) Act 1995 operates in a similar way in relation to the repayment of certain benefits to Medicare Australia. A Notice of Past Benefits must be obtained prior to the approval of the compromise. This repayment must be made before any funds are paid to or for the plaintiff. The repayment will be reduced in line with any overall reduction in the damages awarded due to the plaintiff’s contributory negligence. As such, the percentage of any such reduction must be clearly expressed in both the affidavits and the order.

Cost of Fund Management

A plaintiff has the right to seek damages from the defendant representing the cost of managing any funds awarded, where the plaintiff’s inability to manage the award is caused by the negligence of the defendant. See Willet v Futcher [2005] HCA 47.

The amount which can be claimed under this head of damages, pursuant to the above case, is an amount assessed as allowing for remuneration and expenditures properly charged or incurred by the administrator of the fund during the intended life of the fund.

The sum which can be claimed may be very significant where a large award of damages is to be made, and as such this issue should be addressed in the application for approval of compromise.

Investment and Management of the Funds

In all cases where an award is made for a plaintiff who is incapable of managing their financial affairs, the award is to be paid, in the first instance, to the Senior Master.

Pursuant to s. 66(3) of the Guardianship and Administration Act 1986, the funds may then be retained by the Senior Master, or paid out to an administrator.

Usually the order will provide that, subject to any further order, the Senior Master invest the award for the plaintiff (see Form 15A). If the funds are to be invested and managed other than by the Senior Master, this will need to be clearly expressed in the order. Such an order will have consequences regarding the cost of funds management.

Costs

The usual order in Form 15A provides for the (party/party) costs of the proceeding, including the compromise application, be paid by the defendant.

The solicitors for the plaintiff are then free to seek a further payment for solicitor/client costs from the funds held by the Senior Master. There is no need to refer to solicitor/client costs in the order, and usually an itemized bill of costs is not necessary.

It is not appropriate for solicitor/client costs to be specified or fixed in the order approving the compromise. The issue of the plaintiff’s costs should be considered separately from the approval of the compromise. Sztockman v Taylor [1979] VR 572.

Order

The order approving compromise should conform to Form 15A or 15B, with any necessary modification. The date of birth of the plaintiff or minor must be included in the order, and also the date of the compromise.