Background
Cody Smith, acting by his tutor Felicity Punch, brought a claim for pure mental harm allegedly caused by the defendants’ negligent treatment of Ms Punch, his mother. The first defendant was Ms Punch’s general practitioner and the second defendant operated a dental clinic where she underwent dental surgery in June 2020.
Ms Punch, who had known cardiac vulnerabilities, later developed a streptococcal infection and suffered a subarachnoid and intraparenchymal haemorrhage associated with mitral valve endocarditis and a mycotic cerebral aneurysm. She underwent urgent cranial surgery, later rehabilitation, cranioplasty and mitral valve replacement. The plaintiff alleged nervous shock from exposure to his mother’s condition. His claim was settled subject to approval under s 76 of the Civil Procedure Act 2005 (NSW).
The Court’s Holding
Elkaim AJ approved the settlement. The Court emphasised that its role in an infant-settlement application is protective, with the central question being whether the settlement benefits the child.
The Court accepted that the plaintiff’s claim was closely dependent on Ms Punch’s unresolved negligence proceedings. Liability and causation in her case were substantially contested, including whether her condition would have occurred irrespective of the defendants’ alleged negligence. Those risks supported approval. The Court also accepted a relatively minor deduction from the plaintiff’s settlement sum to meet the shortfall in agreed legal costs.
However, the Court declined to direct that the plaintiff’s net settlement funds be paid to his mother for management until he turned 18. Having regard to her serious condition, Adelaide residence and continuing litigation, the Court held that payment to the NSW Trustee and Guardian for investment on the plaintiff’s behalf was the safer and better course.
Key Takeaways
- Approval under s 76 requires the Court to assess whether the settlement is beneficial to the infant plaintiff.
- A child’s psychiatric-injury claim may warrant settlement where it depends on separate, contested litigation by the injured parent.
- The Court may reject a proposed parental management arrangement and instead require the NSW Trustee and Guardian to hold and invest the child’s net funds.
Why It Matters
The decision illustrates the Supreme Court’s independent protective role in infant settlements. Approval of the compromise did not mean the Court accepted the pleaded negligence claim; it reflected the litigation risks, particularly the disputed causation issues in the mother’s proceedings.
It also shows that the destination and management of a child’s settlement proceeds remain a separate welfare question. Even where a parent supports the settlement, the Court may prefer trustee administration where the parent’s circumstances make that arrangement more protective of the child’s interests.