Persons under legal incapacity
Section 3 of the CPA defines a person under a legal incapacity as:
any person who is under a legal incapacity in relation to the conduct of legal proceedings (other than an incapacity arising under section 4 of the Felons (Civil Proceedings) Act 1981 and, in particular, includes:
a child under the age of 18 years, and
an involuntary patient or forensic patient within the meaning of the Mental Health Act 2007, and
a person under guardianship within the meaning of the Guardianship Act 1987, and
a protected person within the meaning of the NSW Trustee and Guardian Act 2009, and
an incommunicate person, being a person who has such a physical or mental disability that he or she is unable to receive communications, or express his or her will, with respect to his or her property or affairs.
Rule 7.13 of the UCPR provides that for the purpose of the relevant division of the Rules, such a person includes a person who is incapable of managing his or her affairs.
For a discussion of the definition of a person under a legal incapacity and how a challenge to a claimed state of such incapacity should be made, see Doulaveras v Daher (2009) 253 ALR 627 at –.
For an application under s 4 of the Felons (Civil Proceedings) Act, see Potier v Director-General, Department of Justice and Attorney General  NSWCA 105 and Potier v Arnott  NSWCA 5, where the prisoner failed to establish before the Court of Appeal that there was prima facie grounds for the proceedings. Such grounds must be arguable and not hopeless: Application of Malcolm Huntley Potier  NSWCA 222 at .
[2-4610] Commencing proceedings
A person under a legal incapacity may not commence or carry on proceedings, including defending proceedings, except by his or her tutor: r 7.14(1).
The court may, pursuant to CPA s 14, dispense with compliance with r 7.14(2): Mao v AMP Superannuation Ltd  NSWCA 252 at . As to the exercise of this power, see Mao v AMP Superannuation Ltd  NSWCA 72 at –, .
A tutor may not commence or carry on proceedings, including defending proceedings, except by a solicitor unless the court orders otherwise: r 7.14(2). As to such orders, see Wang v State of New South Wales  NSWSC 909.
One purpose of the appointment of a tutor is to provide a person answerable to the defendant for the costs of the litigation: NSW Insurance Ministerial Corp v Abualfoul (1999) 162 ALR 417 at .
Another purpose is to provide a person regarded as an officer of the court to act for the benefit of the infant in the litigation: Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 113.
It is not necessary for a person under legal incapacity to have a tutor in order to be a group member in representative proceedings, however, such a person may only take a step in representative proceedings, or conduct part of the proceedings, by the member’s tutor: s 160 of the CPA.
[2-4620] Defending proceedings
Following service of proceedings upon a person under a legal incapacity, the plaintiff may take no further steps in the proceedings until a tutor has entered an appearance on behalf of the defendant: r 7.17(1).
If no such appearance is entered the plaintiff may apply to the court under r 7.18 for an appointment of a tutor for the defendant, or for the removal of such a tutor: see Note to r 7.17(1).
A proviso to r 7.17 in respect of Local Court proceedings permits a plaintiff, where the reason for the legal incapacity of the defendant is minority only, to serve on the defendant a notice requiring a tutor of the defendant to enter an appearance in the proceedings. Unless an appearance is filed within 28 days after such service, the plaintiff may continue the proceedings as if the defendant were not a person under a legal incapacity unless the court otherwise orders: r 7.17(2).
A person may become a tutor without the need for any formal instrument of appointment or any order of the court: r 7.15(1). However, a tutor can only be changed by an order of a court: r 7.15(5).
Any person, but not a corporation, may be a tutor unless the person is:
a person under a legal incapacity: r 7.15(2)(a);
a judicial officer, a registrar or any other person involved in the administration of a court: r 7.15(2)(b);
a person who has an interest in the proceedings adverse to the interests of the person under legal incapacity: r 7.15(2)(c).
Particular provision is made in respect of an estate managed under the NSW Trustee and Guardian Act 2009: r 7.15(3) and (4). See Bobolas v Waverley Council (2012) 187 LGERA 63.
The tutor may do anything that the rules allow or require a party, being under legal incapacity, to do in relation to the conduct of any proceedings: r 7.15(6).
A tutor may not commence or carry on proceedings unless there has been filed the tutor’s consent to act as tutor (r 7.16(a) — Form 24) and a certificate signed by the tutor’s solicitor in the proceedings, to the effect that the tutor does not have any interest in the proceedings adverse to the interest of the person under legal incapacity: r 7.16(b).
The court may appoint a tutor or remove a tutor and appoint another: r 7.18(1). For examples, see South v Northern Sydney Area Health Service  NSWSC 479 and Wang v State of New South Wales  NSWSC 909. The court may appoint a tutor for a person under legal incapacity who is not a party and join that person as a party: r 7.18(2). If the court removes a party’s tutor, it may stay the proceedings until the appointment of a new tutor: r 7.18(3).
Unless the court otherwise orders, notices of motion under r 7.18 are to be served on the person under a legal incapacity and, if it proposes removal of a person’s tutor, upon the tutor: r 7.18(4).
In proceedings on a motion to appoint a tutor the evidence must include evidence of legal incapacity, the consent of the tutor and absence of any adverse interest: r 7.18(5).
An application for appointment under r 7.18 may be made by the court on its own motion or by any person including the proposed tutor: r 7.18(6).
[2-4640] Proceedings commenced or continued by a person under legal incapacity without a tutor
Such proceedings are an irregularity which may be conveniently cured by the court appointing a tutor under r 7.18(1). The Supreme Court can also make such an appointment in the exercise of its parens patriae jurisdiction: Bobolas v Waverley Council (2012) 187 LGERA 63.
If there is no relative or suitable friend willing to so act and not having a conflicting interest, an independent solicitor is a suitable choice as a tutor: Deputy Commissioner of Taxation v P (1987) 11 NSWLR 200 at 204.
It would be inappropriate to dispense with the requirement of evidence of consent and absence of conflicting interest. However, it may be appropriate to dispense with the requirement that the solicitor tutor act by another solicitor: Deputy Commissioner of Taxation v P, above, at 206.
[2-4650] No appearance by tutor for a defendant under legal incapacity
In default of such an appearance, the plaintiff is unable to proceed until a tutor has been appointed and an appearance filed: r 7.17(1). This rule does not apply in respect of certain Local Court matters: r 7.17(2).
The plaintiff may apply to the court under r 7.18 for the appointment of a tutor of the defendant or for the removal of a tutor and the appointment of another: r 7.17(1) Note.
An independent solicitor would be a suitable nominee, however, the tutor must consent to being so appointed and may well require that the plaintiff indemnify him or her as to costs.
For discussions of possible approaches, see Deputy Commissioner of Taxation v P, above; Iskanda v Mahbur  NSWSC 1056 and Sperling v Sperling  NSWSC 286.
[2-4660] The end of legal incapacity
Should legal incapacity end during the course of the proceedings, typically, although not solely, by the plaintiff coming of age, the tutor is not entitled to take further steps in the proceedings: Brown v Weatherhead (1844) 4 Hare .
Upon the end of legal incapacity, the plaintiff’s solicitor should ascertain whether the plaintiff elects to continue. If the plaintiff does elect to continue, the solicitor should file a notice to that effect and serve the other parties. The proceedings should be entitled accordingly. For example, “AB late an infant but now of full age, Plaintiff”: Feeney v Pieper  QWN 23; Carberry (formerly an infant but now of full age) v Davies  2 All ER 817.
[2-4670] Costs — legally incapacitated person’s legal representation
A tutor is liable for the costs of the legally incapacitated person’s own legal representation and is entitled to be indemnified by the legally incapacitated person for any costs reasonably and properly incurred in litigation: Thatcher v Scott  87 WN (Pt 1) (NSW) 461 at 463; Chapman v Freeman  VR 259; Murray v Kirkpatrick (1940) 57 WN (NSW) 162 at 163.
[2-4680] Costs — tutor for plaintiff (formerly “next friend”)
The tutor for a plaintiff is liable to pay the costs of a successful defendant. That defendant may enforce a costs order directly against a tutor where the plaintiff is legally incapacitated: Poy v Darcey (1898) 15 WN (NSW) 161; Radford v Cavanagh  15 WN (NSW) 226; NSW Insurance Ministerial Corp v Abualfoul (1999) 162 ALR 417.
The tutor’s liability for further costs ceases at the time the incapacity ceases unless the tutor actively participates in the proceedings after that date: Abualfoul, above, at .
If the incapacitated person elects to continue the proceedings, he or she becomes liable for all the costs. There is no apportionment based on the change from being legally incapacitated to having full capacity: Bligh v Tredgett (1851) 5 De G & Sm ; Abualfoul at .
Similarly a replacement tutor is liable for the whole costs of the proceedings and not just those after appointment: Bligh v Tredgett, above at .
The tutor is ordinarily entitled to recover the costs from the legally incapacitated person’s estate if he or she acted bona fide: Abualfoul at .
[2-4690] Costs — tutor for the defendant (formerly “guardian ad litem”)
The tutor for a defendant is not, except in the case of misconduct, personally liable to pay the costs of an action which he or she has defended unsuccessfully: Morgan v Morgan (1865) 12 LT 199.
A tutor can only compromise proceedings if the compromise is for the benefit of the person under legal incapacity: Rhodes v Swithenbank (1889) 22 QBD 577. The court cannot force a compromise upon a person under legal incapacity against the opinion of a tutor or his or her advisers: Birchall, In re; Wilson v Birchall (1880) 16 Ch D 41.
With some limited exceptions, see CPA s 74(2), compromises or settlements by persons under legal incapacity require the approval of the court.
Compromise of claims enforceable by proceedings in the court made on behalf of or against a person under legal incapacity may be approved by the court before proceedings are commenced: s 75(2). If not approved the agreement is not binding on the person under legal incapacity: s 75(3). If approved, the agreement is binding on the person under legal incapacity and his or her agents: s 75(4). Applications for such approval should be made by summons: r 6.4(1)(e).
In proceedings commenced by, on behalf of, or against a person under legal incapacity, a person who, during the course of the proceedings, becomes a person under legal incapacity or a person who the court finds to be incapable of managing his or her own affairs, there cannot be a compromise of the proceedings or an acceptance of money paid into court without the approval of the court: s 76(3). However approval is not required where the person under legal incapacity has attained the age of 18 years on the day the agreement for the compromise or settlement is made unless that person is otherwise under legal incapacity or found by the court to be incapable of managing his or her own affairs: s 76(3A).
The court may approve or disapprove an agreement for compromise: s 76(4). If not approved, the agreement does not bind the person by whom or on whose behalf it was made: s 76(5). If approved, it binds that person and his or her agent: s 76(6).
The court finding referred to above can only be made on the basis of evidence given in the proceedings and has effect only for the proceedings. As to findings of incapacity to manage affairs, see Murphy v Doman (2003) 58 NSWLR 51 at 58.
Principles dealing with the process of approval are collected in Yu Ge v River Island Clothing Pty Ltd  Aust Torts Report ¶81-638. These principles do not depend upon the Damages (Infants and Persons of Unsound Mind) Act 1929 which has been repealed: CPA s 6. Consideration should be given to any deductions or payments required by statute or the terms of settlement.
In general, agreements for compromise on behalf of persons under legal incapacity should not be on an inclusive of costs basis to avoid a possible conflict between the interests of those persons and their solicitors: Practice Note — Settlement of Claims for Damages for Infants  1 NSWR 276; McLennan v Phelps (1967) 86 WN Pt 1 (NSW) 86. Consideration should be given to any additional costs the plaintiff may be liable for.
[2-4710] NSW Trustee and Guardian Act 2009
Subject to the last paragraph below, once a settlement involving a plaintiff under legal incapacity (other than solely as a minor) has been approved by the court, an application should be made for a declaration under s 41 of the NSW Trustee and Guardian Act 2009 that the plaintiff is incapable of managing his or her affairs and an order that the estate of the plaintiff be subject to management under that Act.
Such an application does not affect the requirement of s 77(2) of the CPA that the monies recovered should be paid into court. It is, however, inappropriate for an order under s 77(3), as to payment to such person as the court may direct rather than into court, to be made before the application is determined other than to provide for non-discretionary payments required by statute or the terms of settlement. For greater caution the order approving the compromise may order that the balance after such deductions be paid into court. See Sample orders — “Approval of settlement”, at [2-4740].
The application is made by summons in the Supreme Court in accordance with the procedure provided by Pt 57 of the UCPR: Ritchie’s [57.3.5] ff and Thomson Reuters [57.3] ff.
The plaintiff must be made a defendant and must be served: UCPR r 57.3. Usually the application will be dealt with within 28 days including the time for service.
Usually, it will be ordered that the estate of the plaintiff be managed by the NSW Trustee and Guardian, a named Trustee company or another person or persons. The cost of that management will often be recoverable as damages, and is a factor to be taken into account in consideration of the adequacy of the proposed settlement: The Nominal Defendant v Gardikiotis (1996) 186 CLR 49. Where the manager appointed is not the NSW Trustee and Guardian, the cost of management includes the cost of supervision of that manager by the NSW Trustee and Guardian.
An application will be unnecessary where the estate of the plaintiff is already under relevant management: NSW Trustee and Guardian Act 2009 ss 44, 45 and 52; Guardianship Act 1987, s 25E. An application can be made under the Guardianship Act 1987, however, the procedure is more cumbersome and time consuming.
[2-4720] Directions to tutor
On application by a tutor the Supreme Court may give directions with respect to the tutor’s conduct of proceedings in any court: s 80.
[2-4730] Money recovered
Money recovered in proceedings on behalf of a person under legal incapacity is to be paid into court: s 77(2). However, the court may order that the whole or part of such money be paid instead to such persons as the court may direct including the NSW Trustee and Guardian or manager of a protected person’s estate: s 77(3). Money paid into court is to be paid out to such person as the court may direct including the NSW Trustee and Guardian or manager: s 77(4).
It has been argued that the effect of s 77(3) and (4) is to restrict payments made under those subsections to the NSW Trustee and Guardian where the person on whose behalf the money was recovered is a minor and to the manager of the protected person’s estate where that person is a protected person. The better view would appear to be that upon their true construction the subsections do not impose such a limitation.
Whilst it is arguable that the terms of s 77 permit the court to order payment to a voluntary service provider in respect of some or all of amounts awarded under the Griffiths v Kerkemeyer (1977) 139 CLR 161 principles, the better course would appear to be to leave such a payment to the NSW Trustee and Guardian or other person appointed (but see below). A judge may usefully make a recommendation if so minded.
It is to be remembered that the moneys are the plaintiff’s funds, there is no obligation to pay and the plaintiff is incapable of making the decision.
The NSW Trustee and Guardian has power to make such a payment under s 59 of the NSW Trustee and Guardian Act 2009: Protective Commissioner v D (2004) 60 NSWLR 513. It remains doubtful if the NSW Trustee and Guardian has power to authorise other managers to make such payments. However, the Supreme Court, in its protective role, has inherent power to authorise them after a management order is made. The NSW Trustee and Guardian customarily makes such payments in appropriate cases.
For an example of an order for payment other than to the NSW Trustee and Guardian or manager, see Lim v Nominal Defendant (unrep, 27/6/97, NSWSC) and also see Walker v Public Trustee  NSWSC 1133.
[2-4740] Sample orders
CPA ss 3, 6, 74–77, 80, 160
Felons (Civil Proceedings) Act 1981 s 4
Guardianship Act 1987, s 25E
Mental Health Act 2007
NSW Trustee and Guardian Act 2009 ss 41, 44, 45, 52 and 59
UCPR Form 24, rr 6.4, 7.13, 7.14, 7.15, 7.16, 7.17, 7.18, Pt 57, r 57.3