Resolution
10 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.
11 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.
12 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.
13 I refer also to my reasons in Elliott v State of Victoria [2018] FCA 1029, Kemp v State of Victoria (Department of Education and Training) [2018] FCA 1327 and Tsirigotis v The Ivanhoe Grammar School [2018] FCA 2038, in all of which I have adopted the same approach.
14 I adhere to the views I expressed in Butler and Scandolera. I also adopt the observations I made in those cases about the emotional and psychological strain of litigation as an important factor in considering the risks attending the full litigation of a proceeding. Those matters are of particular significance where, as here, the applicant remains in contact with the respondent. In the present case, Mr James continues to be employed by Workpower, and the existence of this proceeding must have put the working relationship under some additional strain. Therefore, it is in Mr James' best interests to bring that potential source of tension to an end, if the settlement is otherwise appropriate.
15 I have considered the opinion of counsel. To be satisfied that a proposed settlement is in the best interests of the person under a disability, the Court need not agree nor disagree with such an opinion, although of course counsel's opinion may be of considerable assistance. In the present situation, I am satisfied counsel's opinion fairly sets out some of the benefits of the settlement, and some of the risks of the matter proceeding to trial.
16 Having considered the terms of settlement it is apparent the settlement provides some substantive benefits to Mr James, including ongoing benefits. Considered overall, I am satisfied the settlement is in Mr James' best interests.
17 The orders made reflect that part of the parties' agreement which is not to remain confidential. The Court commends the parties' responsible resolution of the proceeding.