Background
Ryan Tolley, acting through his tutor Joanne Caldwell, alleged that he was sexually and psychologically abused by a foster carer while attending respite placement at age 15 or 16. The State of New South Wales had removed him from his mother’s care and later transferred responsibility for his day-to-day casework to Barnardos Australia. The carer was subsequently convicted of indecency offences concerning Tolley and another person.
Tolley alleged that the State and Barnardos breached duties of care owed to him, causing significant damage. Both defendants made some admissions but denied the principal negligence allegations and his entitlement to damages. The parties reached a settlement following mediation and sought approval under s 76 of the Civil Procedure Act 2005 (NSW) because Tolley, although an adult, was under a legal incapacity due to mental health conditions including autism spectrum disorder, attention deficit hyperactivity disorder, and a borderline to mild intellectual disability.
The Court’s Holding
Elkaim AJ approved the settlement and made orders in accordance with the parties’ consent orders. The Court explained that its role was protective: it had to determine whether the settlement was beneficial to Tolley.
Confidential counsel’s advice did not recommend compromising the case because of liability issues. It instead identified economic loss as a significant issue in assessing damages and supported a degree of compromise that had been incorporated into the settlement sum. Given Tolley’s mental health conditions and their possible effect on his economic capacity, the Court found that compromise appropriate.
Key Takeaways
- A settlement involving a person under legal incapacity requires the Court’s approval under s 76 of the Civil Procedure Act 2005 (NSW).
- The Court’s approval function is protective and turns on whether the proposed settlement benefits the person under legal incapacity.
- The approved compromise reflected uncertainty concerning economic loss and the possible effect of the plaintiff’s mental health conditions on his economic capacity, not a suggested weakness in liability.
Why It Matters
The decision illustrates how the Supreme Court scrutinizes settlements made for plaintiffs under legal incapacity. Even where counsel does not recommend compromising liability, uncertainty in assessing a substantial component of damages—here, economic loss—may provide a sound basis for compromise if the overall settlement benefits the plaintiff.