In law, if a claim is made on behalf of a minor, then such a claim is normally made through a litigation friend which would often be a parent or carer. Obviously a minor cannot bring a claim themselves and therefore a litigation friend acts for them in their best interests. Obviously you would expect parents to act in their child’s best interests but if, for whatever reason, this was not the case then a professional person could be appointed as the litigation friend.
When a case is brought on behalf of a minor, when it comes to settlement, normally the settlement is made subject to approval by the Court. This is because the Court has to make sure that the settlement figure is reasonable and fair in respect of the Claimant’s (the child’s) injuries. This is known as Infant Approval Hearing.
You can agree a settlement “subject to Court approval”. The Court will then be presented with all the details and the medical evidence. The Court will then decide if the offer can be accepted in settlement of the child’s claim. The money is the child’s and it is often kept or saved until the child’s 18th birthday, upon which date the funds are released. The money is stored in the Court Funds Office.
Insurers will often make offers to settle a child’s claim under the “parental indemnity” principle. The parental indemnity principle is basically agreeing settlement without it being approved by the Court. As a firm of Solicitors we could never recommend accepting an offer of settlement under the parental indemnity principle, and doing this leaves the parent open to a claim in negligence themselves.
If the child reaches the age of 18 years and decides that their parent or carer has under settled their claim, then the child can bring a claim in negligence against the litigation friend (parent or carer) who settled the claim under parental indemnity. If a case is settled via Court approval then the award is approved by the Court and the litigation friend is not susceptible to a negligence claim. Obviously you may think that your child will not sue you for negligence, but the parental indemnity principle is a bad choice, in our opinion, for a reason. When settling a child’s claim, we would always recommend going through the correct process which involves Court Approval.
The purpose of the infant approval hearing is to protect children. The judge checks that the compensation is sufficient and makes arrangements for the money to be invested for the child until he or she reaches 18 years old. The idea of parental indemnity is for insurers to get around this rule; they are not doing it to be nice but to save costs of the hearing and, more than likely, in the hope that there offer of settlement is lower than would be accepted at Court. If an award is too low then a Court would reject it and therefore going through the route of Court Approval you know that the award is reasonable in the case.
With parental indemnity, there is always a risk of under settlement. If the case is under settled you could be liable for action in negligence. Our advice is to go through the correct procedure and the correct procedure is Court Approval.
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