3. How can a minor or a mentally incapacitated person settle?
To settle a claim involving a minor (a person under 18 years of age) or a mentally incapacitated person, the parties must strictly follow the legal framework set out under Order 80 of the Rules of the High Court (Cap. 4A) or the Rules of the District Court (Cap. 336H).
The court must approve any settlement on behalf of a minor or mentally incapacitated person (Order 80, rule 10).
As to the sanctioned offer or payment, they may be accepted only with the leave of the court. The money in court also may not be paid out except pursuant to a court order (Order 22, rule 19(1)).
If settlement is reached before proceedings are issued, and the parties wish to obtain the court’s approval to the settlement, they may obtain the approval by proceedings under originating summons (Order 80, rule 11).
If an action is already in progress, the application for approval is made by summons in the action.
The parties must demonstrate to the court that the settlement is fair and for the benefit of the person under disability. Normally, the court would require the opinion from the counsel appearing on behalf of the person under disability on the adequacy of the settlement before approving the settlement.
As to the money recovered on behalf of the person under disability in accordance with the settlement, it should be dealt with pursuant to the directions given by the court. The court may give directions as to the investment and use of the settlement monies.
The directions given by the court may include any general or special directions that the court thinks fit to give, in particular, directions as to how the money is to be applied or dealt with. Usually, costs would be awarded to the person under disability on a common fund basis. This is intended to ensure the settlement sum is not diluted by unrecovered legal costs, and solicitors are often expected to waive any further costs beyond those allowed on a common fund taxation.
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