I have recently had a couple of cases raising this issue, which arises from time to time, of when does a settlement actual become final + binding (so neither party can withdraw). I will cover the issues in 2 separate blog posts.
The first case involved a relatively modest settlement of a plastic surgery related case, arising from botched breast reduction surgery. My client agreed to a relatively modest settlement offer made by the surgeon’s insurer, only to then have misgivings when the settlement documents were provided to her to sign (about 10 days later). In my view the settlement was close to the amount she would be likely to be paid if her claim proceeded to trial and for this reason I had recommended it.
The client advised me she literally could not bring herself to sign the paperwork to give effect to the settlement, because she felt the doctor was getting away with it + had not been made properly accountable for what he had done.
Unfortunately this is a common and recently, ever more frequent conclusion by clients, when their claim primarily involves compensation for non-financial loss: pain, suffering and disfigurement, loss of enjoyment etc. The modesty of our court’s awards of compensation and the loss of the first $18,000.00 of compensation for such part of the claim, due to the Civil Liability Act, now frequently leaving clients unhappy and feeling poorly heard and their suffering under valued. In my view, there is nothing unreasonable with these sentiments. The Civil Liability Act deductible, in particular, is grossly unfair, mean spirited and utterly unjustifiable.
As I advised her, in my view, though there is no absolute certainty, in hers, like most cases, a binding settlement was reached at the time oral agreement to settle the claim occurred + is not delayed or conditional upon signature to the settlement documents. As such, she could not back out of the settlement: though if she tried, it may be the insurer would permit this + her claim could proceed.
The issue is one of intention: Is there intent that the agreement will be binding or does it need the documentation as well? In cases in which the documentation is pro forma + contains nothing unexpected, generally the answer I think is ‘yes’ immediately. There is nothing unique about medical claims. The same applies in other types of personal injury cases (though exceptions apply in relation to claims subject to the court’s approval: Workers Compensation redemptions + claims for children or other persons under a disability + quite often in commercial cases, there will be important detail in the written contract to be negotiated, so no final settlement will arise before such document’s terms are agreed and signed). It is an application of the principles discussed in Masters v Cameron (1954) 91 CLR 253.
As I advised my client, even if there is uncertainty, from a practical perspective, if she wished to seek to withdraw from the settlement, it was unlikely I would be able to continue to represent her. This is because, if the surgeon’s insurer sought to rely on the settlement in answer to the claim, I would be a likely witness in relation to such settlement and so could not continue to act for her.
Lesson to learn: make sure you have made up your mind before instructing your lawyer to accept an offer (or to put an offer that may be accepted + so lead to a binding settlement agreement)