Li v Malaysian Airline System Berhard (Administrator appointed)

On 8 March 2014 Malaysian Airlines flight number MH370 disappeared en route from Kuala Lumpur in Malaysia to Beijing in China, and was subsequently found to have crashed into the sea.

Two passengers who perished on that flight were Yuan Li (who I will call “the father”) and his wife Nai Jun Gu (who I will call “the mother”). They were Australian citizens travelling on Australian passports. I will call them, jointly, “the parents”.

The parents were survived by two children of their marriage. Tian Yun Li (also known as “Yvonne”) was born on 22 June 2009; she is presently aged 12 years. Tian Wen Li (also known as “Emma”) was born on 16 June 2012; she is presently aged 9 years. Both girls are Australian citizens.

The parents were also survived by their respective parents, the grandparents of Yvonne and Emma.

The father’s parents (“the paternal grandparents”) are Shengda Li and Xiuqin Hu. They live in Beijing. Since the death of her parents, Yvonne has resided with them.

The mother’s parents (“the maternal grandparents”) are Baogin Yu and Yindi Xi. Since the death of her parents, Emma has resided with them in Shanghai, China.

With the consent of the administrator of the defendant, two sets of proceedings were commenced on 4 March 2016.

In the proceedings numbered 2016/00069784 Yvonne and Emma (as plaintiffs) seek relief on behalf of themselves and their paternal grandparents.

In the proceedings numbered 2016/00069805 Yvonne and Emma, as plaintiffs, seek relief on behalf of themselves and their maternal grandparents.

The relief claimed in each set of proceedings is a claim for the payment of damages pursuant to the Civil Aviation (Carriers Liability) Act 1959 Cth and the 1999 Montreal Convention arising from the loss of the parents in the MH370 crash.

The two sets of proceedings have proceeded in parallel. In describing their course, it is sufficient to proceed upon the assumption that there was but one set of proceedings. For each step taken in one set of proceedings, the same step was taken in the other set of proceedings.

Before the Court today is an application made by the defendant for approval of a settlement agreement made on 15 November 2017 at a time when Yvonne and Emma (“the children”) were represented by a tutor, no longer in office.

After the settlement agreement was made the children’s tutor ceased to have contact with the lawyers retained on behalf of the children. That tutor was removed from office on 13 September 2018, and attempts made since that date to locate another person willing and able to represent the children as a tutor have not been successful.

The two sets of grandparents, in China, have been notified of both the proceedings and the defendant’s application for approval of the settlement. For reasons not fully or satisfactorily explained to the Court, they have failed to appear in the proceedings or to make any application concerning the proceedings. They have, on occasions, disclaimed any interest in the proceedings.

It was because of a need to consider the status of the settlement agreement in the absence of a tutor for the children that both sets of proceedings were transferred from the Common Law Division of the Court (where they were commenced) to the Protective List of the Equity Division.

In the course of the proceedings the children have been represented by two tutors, both of whom have abandoned any involvement in the proceedings. The first tutor was Jiazhen Yu. The second tutor was Wenqi Zhang. Both have been removed from the office of tutor. By orders of the Court, the first tutor was removed, and replaced by the second tutor, on 24 November 2016. The second tutor was removed on 13 September 2018.

So far as is presently material, the course of the two sets of proceedings, in parallel, has been as been as follows:

The amended notice of motion filed on 8 July 2020 seeks the same substantive relief as the notice of motion filed on 28 May 2020, the difference between them being orders sought in the amended motion for service of the motion on the grandparents.

On the hearing of the amended notice of motion filed 8 July 2020, I have been assisted by the senior counsel and solicitor formerly representing the children plaintiffs. They have each appeared as amicus curiae, proceeding on the basis that their formal retainer to represent the children came to an end with the removal from office of the children’s second tutor without a replacement tutor having been located. In performance of their professional obligations as lawyers, they have informed the Court (as the objective record in any event establishes) that there was on 15 November 2017 an agreement for settlement of the two sets of proceedings in accordance with instructions they obtained from the children’s then tutor, the second tutor.

In the absence of any appearance by or on behalf of the grandparents (in whose care Yvonne and Emma have long been), the defendant seeks to have the Court approve the settlement agreement made on 15 November 2017, with ancillary orders for settlement monies payable by the defendant to be paid into court on notice to the grandparents, reserving leave for funds in court to be paid out on an application, or applications, properly made.

The evidence adduced in support of the defendant’s amended notice of motion comprises, in addition to evidence of service of notice of the proceedings on the grandparents: (a) affidavits of Myles Brant affirmed 10 and 28 May 2020; (b) the affidavit of Terence Louis Goldberg sworn 13 September 2021, together with exhibit “TLG1” to that affidavit; and (c) the “Confidential Memorandum of Advice” of Paul Blacket SC dated 20 November 2017, admitted into evidence as an exhibit confidential to the children’s former lawyers and the Court.

As agreed on 15 November 2017:

Although the statements of claim filed in the proceedings formally record that damages are claimed, not only on behalf of the children, but also on behalf of their grandparents, it is plain that this Court has no jurisdiction to entertain a claim by or on behalf of the grandparents, all of whom are citizens (and always have been residents) of China. A settlement of the proceedings on the basis that damages be paid to the children, to the exclusion of their grandparents, is thus in principle reasonable.

Approval of the settlement (in essence for damages totalling $475,000 to be divided between the children) is recommended by Mr Blacket SC.

The proceedings have been stayed since the removal of the children’s second tutor from office, pending the appointment of a new tutor: Uniform Civil Procedure Rules 2005 NSW, rule 7.18(3). That has not prevented the defendant from filing its notice of motion seeking approval of the parties’ settlement, but, unless the Court otherwise orders, the absence of representation for the children is an impediment to the determination of the motion. A person under legal incapacity (such are the children by virtue of their age) may not commence or carry on proceedings except by a tutor: UCPR, rule 7.14. This requirement of the rules can be dispensed with, however, by an order under section 14 of the Civil Procedure Act 2005 NSW, and the Court can give directions under CPA section 16, with respect to any aspect of practice or procedure for which rules of court do not provide.

The Court’s jurisdiction to approve a settlement of proceedings brought by or on behalf of a person with a legal disability is both statutory (by virtue of CPA, section 76) and inherent: Permanent Trustee Company Ltd v Mills (2007) 71 NSWLR 1; Fisher v Marin [2008] NSWSC 1357. The jurisdiction is inherently protective of the person or persons under a legal disability.

A convenient statement of principles, and practice, concerning whether or not to approve a settlement on behalf of a legally incapacitated person can found in the judgment of Mortimer J in Butler v Djerriwarrh Employment & Education Services Inc [2015] FCA 296 at [10]-[16], adopted by Gleeson J in Fish v NSW Department of Education and Training [2018] FCA 434 at [18]:

Having considered whether or not the settlement is in the best interests of the children, and each of them, I have determined to approve the settlement and to make ancillary orders to the effect that:

As presently advised, provided the grandparents are given reasonable notice of the plaintiffs’ former lawyers’ claim to be entitled to be paid their costs for the principal proceedings out of the funds in court, and an opportunity thereby to object to such a payment, I anticipate that the sum of $200,000 (together with interest accrued thereon) will be ordered to be paid out to the plaintiff’s former lawyers.

At the expiry of a reasonable time after notice of the court’s orders is given to the grandparents, if no application is duly made on behalf of the children for payment out of the sum of $475,000 (together with accrued interest) on the account of the children, I anticipate that orders will be made by the Court (pursuant to CPA, section 77) for funds held in court on the account of the children to be paid to the NSW Trustee on trust for the children pending their attainment of the age of majority.

I propose to make no orders as to the costs of the defendant’s’ notice of motion or (assuming that such an order could be made) an order for the payment of interest on settlement monies referable to the date of the settlement agreement. To the extent that the defendant has been put to expense in prosecuting its motion (without any fault on its part or attributable to the children) it has had the benefit of settlement monies without any accrual of interest.

I do not propose to make any order preserving the confidentiality of the Court’s orders or these reasons for judgment. In my opinion, in the absence of any appearance by the grandparents, it is in the best interests of the children (and their grandparents) that they have the means to access information about the children’s entitlements on the public record.

Having heard from counsel for the defendant, and senior counsel formerly retained on behalf of the plaintiffs, I make notations and orders to the following effect: