Resolution
16 Rules 9.70 and 9.71 of the Federal Court Rules 2011 (Cth) provide:
9.70 Compromise or settlement of matter in proceeding
(1) If a litigation representative agrees to the compromise or settlement of any matter in dispute in a proceeding, the litigation representative must apply to the Court for approval of the agreement.
(2) If the Court approves the agreement, the agreement is binding on the person by or for whom it was made as if:
(a) the person were not under a legal incapacity; and
(b) the litigation representative had made the agreement as the person's agent.
(3) The Court may, as a condition of approval, require that any money or other property payable for the benefit of a person under a legal incapacity be dealt with by way of a settlement, or in any other way that the Court considers appropriate.
Note: The Court may give approval subject to conditions - see rule 1.33.
(4) If the Court does not approve the agreement, the agreement is not binding on the person under a legal incapacity.
9.71 Application by litigation representative for approval of agreement
(1) An application by a litigation representative for approval of an agreement must be made by filing an interlocutory application.
(2) The interlocutory application must be accompanied by the following:
(a) an affidavit stating the material facts on which the application relies;
(b) the agreement that is sought to be approved;
(c) an opinion of an independent lawyer that the agreement is in the best interests of the person under a legal incapacity.
17 As I noted in my reasons for approving the settlement in Butler v Djerriwarrh Employment & Education Services Inc [2015] FCA 296 (at [10]), in determining whether or not to approve a settlement, for the purpose of rendering it binding on an applicant under a legal incapacity, the Court must be satisfied the settlement is in the applicant's best interests, or beneficial to the applicant's interests. That is not a requirement of the Rules themselves but stems from the nature of the jurisdiction exercised by the Court where a party is under a disability and unable to conduct or conclude a proceeding himself or herself.
18 In Scandolera v State of Victoria [2015] FCA 1451; 331 ALR 525 at [27]-[29] I said, referring to both the applicable principles and their application to that proceeding:
It is the Court's responsibility to determine, for itself, whether the settlement is beneficial to the interests of the person under a disability: see Somerset v Ley [1964] 1 WLR 640 sub nom Re Ley's Trusts [1964] 2 All ER 326; Permanent Trustee v Mills [2007] NSWSC 336; 71 NSWLR 1 at [29] per Hammerschlag J; Fisher v Marin [2008] NSWSC 1357 at [29] per Rothman J; Button v CSL Ltd [2014] FCA 601 at [31] per Barker J.
The Court is assisted in that determination by the provision of an opinion by an independent lawyer who has been briefed fully on the facts and relevant evidence, and may have access to more material than the Court. However the Court is not bound by the independent opinion, and indeed there have been situations where the Court has not approved a settlement despite the advice of an independent lawyer: see for example Rothman J's decision in Fisher disapproving settlement (under equivalent NSW legislation). The circumstances of that case were somewhat particular, because the plaintiff's litigation guardian had changed her mind and sought that the settlement not be approved. Rothman J ultimately agreed the settlement should not be approved.
The determination whether the proposed settlement is in the best interests of, or beneficial to the interests of, a person under a disability requires the Court to weigh, at least as an important consideration, the prospects of the applicants if the proceeding were continue[d]: see Fisher at [35]-[37]. Since the approval of a settlement will bind the party under the disability and bring the litigation to an end, the Court should consider the advantages and disadvantages of the litigation continuing not only in terms of whether the applicants might secure a more advantageous award from the Court at trial, but also issues such as the prospects of an appeal and the costs and pressures imposed on Matthew and Harley if the litigation were to continue to what is estimated to be a five-week trial.
19 I adhere to the view I expressed in Butler and Scandolera that the emotional and psychological strain of litigation is an important factor in considering the risks attending the full litigation of a proceeding. As I observed in Tsirigotis v The Ivanhoe Girls Grammar School [2017] FCA 1064, that is the case even when the applicant is quite a young child. In the present proceeding, not only is Jennifer old enough to experience such strain herself, but she would be likely to be exposed to the strain experienced by her father and step-mother in prosecuting a matter like this through to trial.
20 The settlement includes payment of a settlement sum to the applicant by the respondent. It also provides that the respondent will pay the applicant's legal costs reasonably incurred in the proceeding, but does not fix a figure for costs. While no explicit provision has been made for this in the Settlement Deed, Ms Pirie's evidence is that the applicant's solicitors will not charge the applicant legal fees over and above what they can recover from the respondent on a party-party basis.
21 There are aspects of the settlement agreement which are said to be important to Jennifer, her father and step-mother, and which were unlikely to have been obtained through trial. Having seen the agreement, I accept that is the case. This is a factor I have taken into account in approving the settlement.
22 Having considered the allegations as put, the opinion of counsel, and the terms of the Settlement Deed, I am satisfied that settlement of this proceeding on the terms set out in the Deed is in Jennifer's best interests.
23 The Settlement Deed provides that the settlement sum is to be paid into the Supreme Court of Victoria, to be held as funds in Court for Jennifer's benefit. In Scandolera at [35] to [43], I considered the power of this Court to make orders that the settlement sum be paid into the Supreme Court of Victoria to be administered by the Senior Master, and the appropriateness of such an arrangement in ensuring that the settlement sum is preserved in trust and applied towards the ongoing needs of the individual under a legal incapacity. I am satisfied the parties have made appropriate provision in the Settlement Deed for this to occur, so that in the present proceeding it is not necessary for this Court to make orders of the kind this Court made in Scandolera.
24 I am also satisfied it is appropriate to make limited orders pursuant to s 37AG of the Federal Court of Australia Act 1976 (Cth), preserving the confidentiality of the opinion given by counsel, and the terms of settlement. I am satisfied that the protection afforded by the prospect of a confidentiality regime under s 37AG as to the final terms of settlement, including but not limited to any payment made, has encouraged and facilitated the resolution of the proceeding. I consider it unlikely that such a settlement would have occurred without the prospect of such protection. The interests of the administration of justice are served by the making of limited orders to preserve the confidentiality of the terms, and of counsel's opinion. The interests of justice are served not only for these parties, but so that future parties can also have confidence the Court may be prepared to facilitate the resolution of these kinds of proceedings by including such orders in any approval of a settlement. The resources of the parties and the Court have been conserved, and finality has been brought to a dispute which would have been intensive and time consuming for all concerned. Instead, the parties and potential witnesses on both sides, including the teachers involved, and Jennifer and her family, can move on. It is to be hoped that the future will be positive for Jennifer.
25 I am not persuaded there is anything about the interlocutory application itself, or the body of the supporting affidavit, which justifies orders under s 37AG. The manner in which an application for final orders is made, and the affidavit evidence to support it (aside from the terms of settlement themselves and counsel's opinion) do not have the necessary quality of confidence about them. There are no wider interests served by making orders under s 37AG in respect of these documents, and indeed the interests of justice are better served by these documents being publicly available so that the basis for the Court's final orders has some public form.
26 Finally, as I noted at the start of these reasons, Jennifer turned 18 years of age just prior to the Settlement Deed being signed on her behalf. Although the application for the initial orders for a litigation representative was made on the stated basis of Jennifer's age, it is apparent from the nature of her claim that despite turning 18, it is appropriate for this proceeding, and for its settlement, to have been conducted on Jennifer's behalf by her father as her litigation representative. No party suggested otherwise. I am satisfied that it remains appropriate for the Court to approve the settlement, despite Jennifer having turned 18, and for the Court to do so in terms which will see the settlement sum held for her benefit, rather than being paid directly to her. Again no party suggested otherwise. Whether or not the Supreme Court of Victoria requires any further evidence concerning Jennifer's continuing capacity to make decisions for herself, will be a matter for that Court.
I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Mortimer.