Meki Jnr Puletua by his Tutor Sosefina Puletua v Sydney Childrens Hospital [2024] NSWSC 64 – What is a material change in circumstances that could justify resiling from a settlement agreement?

Following settlement negotiations in a claim involving an infant plaintiff, terms of settlement were signed. In the usual course, a listing date had been allocated for the approval of the terms of settlement by the Supreme Court of NSW.
In the lead up to the infant approving Hearing, the plaintiff’s legal advisors requested that the matter be urgently heard as the plaintiff’s health had suddenly deteriorated and he was now in a critical condition. The Court agreed to hear the matter on Sunday, 14 January 2024 given that it was in the interest of both common humanity and administrative justice for the Court to have the opportunity to deal with the matter during the plaintiff’s lifetime.

Key Points 
  • The materialisation of an imminently shorter life expectancy of a plaintiff may not necessarily equate to a material change in circumstances particularly when life expectancy has been a central issue as to the quantum of a case.
  • Where a defendant attempts to resile from a settlement due to a material change in circumstances (after terms of settlement are signed), the conduct may be deemed as a lawful recission or a repudiation of contract.
  • For the plaintiff to enforce such an agreement in this situation, the plaintiff would be required to seek relief under section 73 of the Civil procedure Act 2005 (NSW).
The plaintiff was an infant aged three and suffered catastrophic injuries during a surgical procedure when he was nine months old, which was the subject of the primary proceedings. The plaintiff had been an inpatient in hospital since 1 January 2024 receiving treatment which was complicated by renal failure. Although the plaintiff’s condition had achieved a level of stability where his treating nephrology specialist was considering discharging him from hospital, the plaintiff’s condition deteriorated overnight and was in a critical condition at the time of the interlocutory proceeding. The nephrologist informed the plaintiff’s legal advisors that the plaintiff may die in the next 24 to 48 hours.
Justice Campbell heard the application. The defendant submitted that it intended to resile from the settlement agreement due to a material change of circumstances. Further, the defendant submitted that there was no valid agreement until the settlement was approved by the Court. His Honour Justice Campbell took the view that the defendant’s conduct would be classified as either a lawful recission or a repudiation, the latter of which would entitle the plaintiff to enforce the agreement.
The plaintiff’s Counsel argued that life expectancy was always a central issue as to the quantum of the claim and much evidence had been exchanged in relation to it. The fact that the plaintiff’s condition may fluctuate is not a change in circumstances, material or otherwise. The Court took a view that the uncertainty of the plaintiff’s condition and life expectancy was a continuation of the medical condition following receipt his surgical injury. This suggests that the Court acknowledged that the defendant had considered the precarious nature of the plaintiff’s life expectancy prior to settlement given submissions that expert evidence had been served in the primary proceedings.
His Honour Justice Campbell ultimately said that, “despite my own doubts about the defendant's entitlement to resile from the agreement lawfully, it seems to me that that proposition can only be appropriately tested by, given the defendant's clear statement of position, the plaintiff taking steps under s 73 of the Civil Procedure Act to enforce the agreement for compromise”.  The matter was re-listed for the parties to make submissions regarding the defendant’s entitlement to resile from the agreement.
The decision in this interlocutory proceeding suggests that the Court may not be inclined to intervene in an agreement of compromise, despite the impending death of the plaintiff which would significantly alter the quantum of the claim. This reinforces the need for defendant insurers to take a cautious approach when resolving claims involving plaintiffs whose life expectancy is complicated by their medical conditions. It suggests that any offers of settlement being made, need to take into consideration the risk that the plaintiff’s life expectancy is a fluctuating beast.   

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