Jeffriess v Perpetual Trustee Company Limited

INTRODUCTION 1 Before the Court is an interlocutory application dated 21 June 2023 seeking orders for the approval of settlement in this proceeding, in which one of the applicants, Mr Jeffries, has a litigation representative, in this case his son. Mr Anamourlis is the solicitor for the litigation representative. Mr Anamourlis has provided an affidavit sworn on 22 June 2023 exhibiting the Settlement Deed and his opinion in relation thereto. Two further affidavits of Mr Anamourlis were also filed, sworn on 17 July 2023 and 24 July 2023 respectively. They provide further opinions and evidence as to the application of the settlement funds. 2 Approval of the Settlement Deed is required pursuant to rr 9.70 and 9.71 of the Federal Court Rules 2011 (Cth). The parties consented to the application being determined on the papers pursuant to s 20A of the Federal Court of Australia Act 1976 (Cth).

THE PROCEEDING 3 The proceeding was commenced on 6 March 2020, and concerned a commercial dispute between the applicants, Mr Barry Jeffriess and Ms Dorothea Jeffriess, and the respondents, Perpetual Trustee Company Limited, Bluestone Equity Release and Harvest Home Improvements Pty Ltd. 4 The applicants entered into a reverse mortgage agreement (Agreement) with the first respondent, which they claim is a "carried over" instrument as referred to in Pt 2 Div 1A of the National Consumer Credit (Transitional and Consequential Provisions) Act 2009 (Cth). The second respondent managed the Agreement as agent for the first respondent. The applicants contend that the third respondent was appointed by the second respondent to act as its agent, however the relationship between the second and third respondent is disputed. 5 The applicants alleged that the third respondent engaged in misleading and deceptive conduct by breaching s 52 of the Trade Practices Act 1974 (Cth) (s 18 of the Australian Consumer Law), by failing to provide full pre-contractual disclosure as required by the National Credit Code. The applicants allege that they were misled into the Agreement, under the impression that it was the same as an "ASF Product" which had previously been discussed with them, when it otherwise contained unexpected "break fees" and other alleged unfavourable terms. The primary dispute between the parties was whether the applicants were adequately informed about penalties and fees, particularly "break fees" upon early repayments, and the full terms of the Agreement. 6 The applicants allege that, upon discharging the reverse mortgage, they incurred a break fee of approximately $836,214.40. 7 The applicants allege that the conduct of the third respondent caused them to suffer a financial loss. 8 The applicants also allege that the Agreement was an "unjust contract" within the meaning of s 76 of the National Credit Code. Further or in the alternative, the applicants claim that the cost/fees or early termination fees (the "break fee") is a penalty. 9 The respondents deny that the Agreement is a reverse mortgage within the meaning of the s 13A of the National Credit Code because they say there was no corresponding provision in the "old Credit Code" as defined in the Transitional Act, and therefore s 13A is not a "carried over provision" for the purposes of the Transitional Act. The respondents also deny that the required pre-contractual disclosure was not made, and assert that the applicants were aware of the implications of the Agreement. 10 The parties engaged in a private mediation and have agreed to settle the proceeding. As Mr Jeffries has a litigation representative it is therefore necessary for the Court to consider whether the settlement should be approved.

PRINCIPLES 11 Section 33V of the Act provides: 33V Settlement and discontinuance - representative proceeding (1) A representative proceeding may not be settled or discontinued without the approval of the Court. (2) If the Court gives such an approval, it may make such orders as are just with respect to the distribution of any money paid under a settlement or paid into the Court. 12 Rules 9.70 and 9.71 of the Rules 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. 13 In determining whether to approve settlement, the Court must be satisfied that the Settlement Deed is in the best interests, or beneficial to the interests, of the person in respect of whom the litigation representative is appointed: Butler v Djerriwarrh Employment & Education Services Inc [2015] FCA 296 at [10] (Mortimer J, as her Honour then was). The Court is assisted by the opinion of an independent lawyer with full knowledge of the facts and issues arising from the matter, however the Court is not bound by the opinion: Scandolera v State of Victoria [2015] FCA 1451; 331 ALR 525 at [28] (Mortimer J, as her Honour then was). 14 Whether or not settlement is in the best interests of the incapacitated party requires consideration as to the prospects of success should the matter proceed. Other considerations include the advantages and disadvantages should litigation continue, such as whether the Court may make a more favourable award than that achieved at settlement, and as to the effect upon the incapacitated party of the costs and pressures associated with the litigation: Scandolera at [29].

CONSIDERATION 15 As set out above Mr Anamourlis is the solicitor for the litigation representative. Therefore, there is a question as to whether he has provided an independent opinion for the purposes of r 9.71(2)(c) of the Rules. There is authority for the proposition that a solicitor retained to act in a proceeding might still be independent for the purposes of r 9.71(2)(c) of the Rules despite acting for one of the parties: see Bushby (by his litigation representative Webling) v State of Victoria (Department of Education and Training) (No 2) [2023] FCA 340 at [17] (McEvoy J). The alternate view was expressed in Allen v State of Victoria (Department of Education and Training) [2019] FCA 1074 at [8] (Snaden J). However the circumstances of this case are that Mr Anamourlis has only recently been briefed to represent the litigation representative. He did not act for the litigation representative throughout the matter, nor attend the mediation. I am therefore satisfied that his opinion is independent for the purposes of r 9.71(2)(c) of the Rules. 16 The settlement includes a payment to the applicants of a settlement sum in an amount substantially less than that which was sought, and provides that each party will bear their own costs arising from the application. Further, the parties agree that there should be no order as to costs. The settlement figure is acknowledged to be less than that sought by the applicants but is said by Mr Anamourlis to reflect "consideration of liability". Mr Anamourlis regarded the settlement to be fair and reasonable in all the circumstances. 17 The emotional and psychological strain is an important factor in considering the risks of proceeding to full litigation: Butler at [15]. The trial of this proceeding was likely be complex and lengthy, involving the interpretation and application of the National Credit Code and Transitional Act and the likelihood that numerous witnesses would be called. Such a trial would occasion the expenditure of a significant sum of money and comes with the risk of a substantial adverse cost order. As well, any trial would be stressful for Mr Jeffriess, and that would perhaps have been exacerbated by the resultant strain on his wife and his representative. Settlement would avoid these risks and stressors. 18 The litigation representative has been supporting the applicants financially, emotionally and physically throughout this litigation. Subject to the satisfaction of any outstanding legal fees, the settlement is intended to be put towards residential and care services for the applicants. I accept that the unpredictability of litigation means there is a risk that an amount less than the settlement sum is awarded to the applicants, or that they lose the case altogether. I also accept that continuing with litigation will increase the legal fees owed by the applicants thus may reduce any potential award by the Court.

CONCLUSION 19 Having considered Mr Anamoulis' opinion, the pleadings and the evidence, I am satisfied that settlement of this proceeding as specified in the terms set out in the Settlement Deed is in the best interests of Mr Jeffriess. I am of the view that the settlement considers Mr Jeffriess's immediate needs and accept that the settlement mitigates any stress or detriment to Mr Jeffriess. The parties will bear their own costs of and incidental to this application. An order will be made in those terms pursuant to r 9.70 of the Rules. 20 While neither party sought a confidentiality order I find it in the interests of the administration of justice that there be an order pursuant to s 37AF of the Act preserving the confidentiality of the opinion provided by Mr Anamourlis and the terms of the Settlement Deed. It is likely that confidentiality of the Settlement Deed facilitated the resolution of these proceedings, and it is unlikely that settlement would have been reached had confidentiality not been agreed to in the Settlement Deed. As acknowledged by Mortimer J (as her Honour then was) in James v WorkPower Inc [2019] FCA 1239 at [18], "The interests of justice are served not only for these parties, but so that future parties can also have confidence the Court may facilitate the resolution of these kinds of proceedings by including such orders in any approval of a settlement." 21 As has been agreed by the parties, it is appropriate to make an order pursuant to r 26.12(4) of the Rules that the applicant have leave to file a notice of discontinuance. I certify that the preceding twenty-one (21) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Meagher.