Brannaghan v Thiess Pty Ltd and Degremont Pty Ltd trading as Thiess Degremont Joint Venture

IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 242 of 2012

AND: THIESS PTY LTD (ACN 010 221 486) AND DEGREMONT PTY LTD (ACN 051 950 068) TRADING AS THIESS DEGREMONT JOINT VENTURE

AUSTRALIAN SECURITY AND INVESTIGATIONS (TAS) PTY LTD (ACN 040 959 701)

JUDGE: NORTH J DATE: 17 JULY 2013 PLACE: MELBOURNE

REASONS FOR JUDGMENT 1 Before the Court is an application under s 33V of the Federal Court of Australia Act 1976 (Cth) (the Act) for the approval of a proposed settlement of this proceeding between the applicant and the first respondent. The terms of the settlement are contained in a written agreement between the applicant and the first respondent. 2 Section 33V of the Act provides: (1) A representative proceeding may not be settled or discontinued without the approval of the Court. 3 The applicant also seeks leave to file an amended application reflecting the discontinuance of the proceeding against the first respondent. The applicant accepted that if the settlement with the first respondent was approved, the proceeding between the applicant and the second, third and fourth respondents would continue. 4 The applicant and the first respondent also seek an order that the agreement and the affidavit in support of the application for approval, affirmed by the solicitor for the applicant, Mr Clayton, on 11 July 2013, remain confidential. 5 The proceeding concerns the alleged wrongful collection, use and disclosure by the respondents of confidential information relating to the applicant and group members. The applicant and group members are employees or potential employees of the first respondent. 6 The agreement provides that the first respondent will institute a regime to manage and protect the confidential information in question from being wrongfully disseminated or disclosed. In this sense, by the agreement the applicant and the group members achieve in substance the result which they sought from the proceeding against the first respondent. 7 Two matters of concern were raised by the Court in relation to the application for approval of the agreement. 8 The first matter of concern relates to costs. It is agreed between the applicant and the first respondent that there be no order as to costs. The question raised was whether it was reasonable for the Court to approve an agreement that each party to the agreement bear their own costs. Of concern was that there might be costs consequences which flow to the applicant from the outcome of the ongoing litigation between the applicant and the second, third and fourth respondents for which the first respondent might, but for the agreement, reasonably be called on to contribute. 9 The reasoning behind the agreement that each party bear their own costs was not explained in the affidavits in support of the application for approval. 10 Mr Crennan, who appeared as counsel on behalf of the first respondent, explained that in coming to the agreement, each party was legally advised and likely made an assessment of the risks of a litigated outcome of the proceeding against the value of the terms of the agreement. Mr Crennan submitted that whilst the applicant was giving up any entitlement he may have to costs, on the other hand, the applicant is also avoiding any risk of any costs being ordered against him in favour of the first respondent. Whilst certain causes of action originally instituted in relation to the first respondent would not be pursued under the agreement, the agreement also contains terms which go beyond what a Court might order in a litigated outcome. Mr Crennan's oral submissions that the agreement in relation to costs is a reasonable approach should be accepted. 11 The second matter of concern was whether it was a reasonable for the applicant to settle with the first respondent when the proceeding would continue against the second, third and fourth respondents. The allegations of wrongful acquisition and misuse of information centrally point to liability on the part of the second, third and fourth respondents, albeit as agents or otherwise of the first respondent. Again, the question was whether there might be consequences which flow to the applicant from the outcome of the litigation between the applicant and the second, third and fourth respondents for which the first respondent might be liable, but enforcing that liability would be foreclosed by the agreement. 12 Mr Crennan submitted that the Court must assess the reasonableness of the agreement and that exercise does not require every potential future possibility which might bear on the value of the agreement to be considered. Mr Crennan contended that the concern with the potential consequences of the litigation between the applicant and the second, third and fourth respondents was not within the realm of reasonably predictable circumstances. Hence, they should not be determinative in the assessment of the reasonableness of the agreement between the applicant and the first respondent. This submission should be accepted. 13 Consequently, the agreement should be approved. The applicant will have leave to file an amended application reflecting the discontinuance of the proceeding against the first respondent. 14 The final matter relates to whether the agreement and the affidavit in support of the approval application affirmed by Mr Clayton on 11 July 2013 should be kept confidential. 15 The effect of a confidentiality order means that the circumstances and terms of the settlement remain closed to the public. There is a public value in the outcome of the proceeding and circumstances of the Court's approval being available for public scrutiny. At the same time there is a public benefit, as well as a benefit to the parties, in the encouragement of the resolution of litigation by agreement. 16 Where certain issues are regularly litigated it is particularly important to make settlement outcomes publicly available. Parties to later litigation need to refer back to outcomes in other cases in order to assess the likely outcome in comparable litigation. An example is to be found in the increasing number of disability discrimination claims brought by students against schools in this Court. In those cases, the settlements usually include a confidentiality clause. Hence the range of outcomes is not available to litigants involved in similar cases later. In due course, the desirability of this practice might need to be examined by the Court. That would involve determining how the value of open justice is to be balanced against the need to encourage litigants to reach negotiated settlements of litigation. 17 Those considerations do not arise in an acute form in this case. The causes of action and the circumstances of this proceeding are unusual. The disadvantage referred to above which arises from keeping the terms of the settlement confidential do not arise. The orders of the Court will be on the public record. To some degree the outcome of the case will thus be public. 18 The Court will make orders that ensure that the agreement between the applicant and the first respondent and the affidavit of Mr Clayton affirmed on 11 July 2013 will be kept confidential. 19 The parties are to file a minute of proposed orders to reflect these reasons. I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice North.