On 2 June 2016, Mr Bernard King ("the plaintiff") commenced proceedings against the Liverpool City Council ("the Council") pursuant to Pt 10 of the Civil Procedure Act 2005.
By Notice of Motion filed 28 June 2018, the plaintiff sought the Court's approval, pursuant to s 173 of the Civil Procedure Act, for the settlement of the proceedings.
At all relevant times, the plaintiff resided in Rickard Road, Chipping Norton. The group members were property owners of houses, or else residents in houses, that were located along Rickard Road, and also Newbridge Road, at Chipping Norton.
The Council is the local government authority with responsibility for that area.
According to the most recent pleading, the plaintiff claimed that he and the group members had suffered economic loss, and also considerable anxiety and distress, arising from the Council's conduct in building 12 earth mounds in various locations along Rickard Road in October 2014. The mounds were built using fill material from a stockpile maintained by the Council at one of its depots.
The Council removed the mounds in June 2015. At that time, the Council informed the residents of the Chipping Norton area by letter that it was remediating the area including by removing the mounds, which comprised soil used from a source "… that is now known to contain small fragments of asbestos contaminating material".
The Council, by its defence in the proceedings, denied that it had been negligent in sourcing the material used in constructing the mounds and also denied that the mounds constituted an actionable nuisance.
In February 2015, the Council received a report from an external contractor which identified that, in one of the three samples taken from the mound nearest to the plaintiff's house, trace elements of amosite asbestos had been found. Testing of the other two samples taken from that mound, and many other samples taken from the other 11 mounds, did not establish any asbestos contamination.
In July 2015, the plaintiff's property was tested by independent experts. A chrysotile asbestos fibre was identified on the verandah of the plaintiff's property. No other asbestos contamination was found. At the time same time, testing undertaken on some of the other properties owned by the group members, being those nearest to the mounds, did not identify any asbestos contamination on those properties.
Experts retained by the Council had identified a possible source for the chrysotile asbestos fibre found on the verandah of the plaintiff's property, namely friable asbestos fibres released from a weathered corrugated asbestos roof on a large building next to the plaintiff's property.
The Council's expert expressed the opinion that nothing from the mound created by the Council near the plaintiff's property caused any asbestos contamination of the plaintiff's property.
There were competing valuation reports exchanged between the parties that engaged with the question of whether in fact there had been any loss of market value of any of the properties.
In the course of the interlocutory procedures in the proceedings, the Court ordered the plaintiff to provide security for the Council's costs by depositing the sum of $100,000 into a bank account and undertaking not to sell, encumber or otherwise dispose of his property, or any interest in his property without first giving 14 days' notice in writing to the solicitors for the Council: King v Liverpool City Council [2017] NSWSC 1148.
At an early stage in the interlocutory management of the proceedings, a final hearing date of 6 March 2018 was fixed. In the course of a case management hearing on 31 January 2018, it became obvious that the matter was not ready on the part of the plaintiff to proceed to a hearing. That was because the plaintiff had failed to comply with a series of orders made by the Court to serve any expert reports dealing with the issues that were intended to be heard at the hearing listed in March 2018.
For the reasons which were expressed in an ex tempore judgment, King v Liverpool City Council (No.2) [2018] NSWSC 29, the hearing date in March was vacated, and the proceedings were fixed for hearing on 30 July 2018, for a period of 10 days. Further case management orders were made.
On 7 June 2018, the parties attended a mediation with the Honourable Ian Callinan AC QC. There the parties signed Heads of Agreement intending to resolve the proceedings subject to this Court's approval.
On 15 June 2018, the Court ordered that a Notice of the proposed settlement be given to each group member. The Notice outlined the nature of the proceedings and the central elements of the proposed settlement. It informed group members that the Court's approval would be sought at a hearing on 6 July 2018, and that any group member who wished to make submissions to the Court as to why the settlement ought not be approved ought undertake certain steps, including appearing before the Court on 6 July 2018. No group member sought to appear to oppose the approval of the settlement on that day.
Both the plaintiff and the Council supported approval being given by the Court, and lawyers for both parties put evidence and submissions before the Court in support of their positions.
Since the material filed by the lawyers for each party included confidential exhibits consisting of legal advice which party had received, not all of the material upon which the Court's approval is based is able to be recited in this judgment.
[2]
The Proposed Settlement
The parties seek the approval of the settlement and that the Court make orders, which would, in effect, dismiss the whole of the proceedings, including entering judgment in favour of the Council on the plaintiff's claim.
In addition to these orders, the Court has been asked to vacate all orders for security for costs, and all prior costs orders which the Court has made in the course of the interlocutory stage of the proceedings.
Finally, the Court has been asked to order that the Council, consequent upon the plaintiff providing a release in terms negotiated between the parties, is to pay the plaintiff the sum of $200,000 by way of costs and disbursements.
What is obvious from these orders is that neither the plaintiff nor any group member would receive any compensation in respect of the cause of action that has been pleaded.
The plaintiff's solicitor also asserted in an affidavit that neither he nor the plaintiff's counsel would receive any fees for their acting for the plaintiff and group members.
[3]
Relevant Principles
Hoeben CJ at CL summarised the relevant principles governing an application for the approval by this Court of a settlement of representative proceedings in Johnston v Endeavour Energy [2016] NSWSC 1132. At [22] his Honour said:
"22. The principles that govern an application for approval of a settlement of a group proceeding are well established:
(i) The central question for the Court is whether the proposed settlement is fair and reasonable in the interests of the group members as a whole (Rowe v AusNet Electricity Services Pty Ltd and Ors [2015] VSC 232 at [49] - [51]; Matthews v SPI Electricity and SPI Electricity Pty Ltd v Utility Services Corporation Ltd (Ruling No 16) [2013] VSC 74 (Matthews) at [34]; Wheelahan & Anor v City of Casey & Ors [2011] VSC 215 (Wheelahan) at [57] (Emerton J) citing ACCC v Chats House Investments Pty Ltd & Ors [1996] 71 FCR 250; FCA 1119 at 258 (Branson J) (Chats House).
(ii) There will rarely be one single or obvious way in which a settlement should be framed, either between group members and the defendants (inter partes aspects) or in relation to sharing the compensation among group members (inter se aspects) - reasonableness is a range and the question is whether the proposed settlement is within that range (Darwalla Milling Co Pty Ltd v F Hoffman-La Roche & Ors Ltd (No 2) [2006] FCA 1388; 236 ALR 322 at 336 [40] (Jessup J) (Darwalla).
(iii) It is not the task of the Court to "second-guess" or go behind the tactical or other decisions made by the plaintiff's legal representatives, but rather to satisfy itself that the decisions are within the range of reasonable decisions according to the known circumstances and the reasonably perceived risks of the litigation (Matthews, Darwalla, see also Pharm-a-Care Laboratories Pty Ltd v Commonwealth of Australia (No 6) [2011] FCA 277 at [22] (Flick J) (Pharma); Modtech Engineering Pty Ltd v GPT Management Holdings Ltd [2013] FCA 626 at [12] (Modtech) (Gordon J).
(iv) In assessing the fairness and reasonableness of a proposed settlement the court relies heavily upon the candid, frank and confidential opinions provided to it by the plaintiff's legal representatives requiring them to disclose the factors which were material to the decision to accept the settlement (Thomas v Powercor Australia Limited [2011] VSC 614 at [18] (Beach J) (Powercor); Wheelahan at [75]; Rod Investments (Vic) Pty Ltd v Abeyratne & Ors [2010] VSC 457 at [11] and [18] (Almond J) (Abeyratne); Lopez v Star World Enterprises Pty [1999] ATPR 41 - 678 at 42 - 670; [1999] FCA 104 (Finkelstein J) (Lopez).
(v) The factors adopted in Williams v FAI Home Security Pty Ltd (No 4) [2000] 180 ALR 459; [2000] FCA 1925 (Williams) indicate some of the considerations typically relevant to an assessment of an application for approval. As Goldberg J pointed out in Williams, this is a useful but not exhaustive guide. Those considerations are:
(a) The complexity and duration of the litigation.
(b) The reaction of the class to the settlement.
(c) The stage of the proceedings.
(d) The risks of establishing liability.
(e) The risks of establishing damages.
(f) The risks of maintaining a class action.
(g) The ability of the defendants to withstand a greater judgment.
(h) The range of reasonableness of the settlement in light of the best recovery; and
(i) The range of reasonableness of the settlement in light of all of the attendant risks of litigation.
(vi) The factors in Williams are largely directed to the reasonableness of a compromise inter partes. They are, however, also relevant to a consideration of the agreements reached with the insurance intervenors. The procedure should likewise be fair and reasonable "inter se".
(vii) An important consideration is whether group members were given timely notice of the critical elements so that they had an opportunity to take steps to protect their own position if they wished. Once appropriate notice is given, the absence of objections or other response action from group members is a relevant consideration in support of the settlement and all its elements (Dorajay Pty Ltd v Aristocrat Leisure Ltd [2009] FCA 19 (Stone J) (Aristocrat); Abeyratne at [22]; Horsham at [15], [25).
(viii) Where a group member objects to the settlement, an important question is whether the objector is prepared to assume the role and risks of being lead plaintiff. It is easy for group members who face no adverse costs risk to want a plaintiff to fight to the very end. The weight to be given to objections will diminish where the objector is unwilling or unable to take on all of the economic and other burdens which the plaintiff otherwise bears (Wong v Silkfield [2000] FCA 1421 at [24] - [30] (Spender J))."
Having regard to the terms of this particular proposed settlement, not all of these criteria will be relevant. Certainly, it will be relevant to take into account and give significant weight to the confidential opinion provided to the Court by the plaintiff's senior counsel.
Principally relevant to this settlement, however, is the nature of the proceedings, the stage which had been reached and the risks confronting the plaintiff and group members in establishing liability, and any sum for damages.
I also take into account that no group member has appeared to oppose the Court's approval.
It is not unimportant also to note that, according to the evidence before the Court, the sum being paid by the Council to the plaintiff will exceed the disbursements which have been incurred by the plaintiff's solicitor.
[4]
Discernment
Senior counsel for the plaintiff provided submissions in support of the proposed settlement. Unlike the contents of his confidential opinion, these submissions were not restricted. In those submissions, dated 5 July 2018, he expressed the following view on the prospects of the plaintiff's case:
"… the Plaintiff's chance of winning the litigation were not good and it was our opinion that it would not be possible to establish that any of the other Group Members suffered any loss even if the Plaintiff could prove some loss. For those reasons, it was the prudent course to settle the proceedings and receive money to pay out disbursements.
In my submission, since no Group Member made any financial contribution to the proceedings and since no Group Member has expressed any opposition to the settlement, the Court should give favourable consideration to approving the settlement."
From all of the material which has been put before me, I am satisfied that this view of the plaintiff's prospects was plainly correct.
In my opinion, it is most unlikely that the plaintiff or any of the group members would succeed in proving that the conduct of the Council was negligent, or that its conduct constituted an actionable nuisance.
In the first place, I am satisfied that a court would be likely to find that the Council had taken all reasonable steps to ensure that the fill that was used to construct the mounds was free of asbestos and other contaminants. Secondly, I am not satisfied, with the exception of one mound (being that nearest the plaintiff's house) that the mounds created by the Council had any asbestos contamination in them. Thirdly, whilst one of the three samples taken from the mound nearest the plaintiff's house was tested as having a small number of asbestos fibres, the testing of the plaintiff's house, and other group members' houses, did not demonstrate that asbestos fibres of that type to be found in any of the houses. Indeed, in all of the group members' houses that were examined, except for a single fibre on the plaintiff's verandah, no asbestos fibres were found.
Finally, it is doubtful, in light of the nature of the construction of the houses, their age and the location in which they presently are that, on the present state of the evidence, there would be any significant economic detriment to the market value of the houses by reason of the Council's conduct in placing the earth mounds in their positions.
Additionally, a further matter supports the conclusion that the proposed settlement should be approved. A hearing of the proceedings would likely have taken some weeks and significant costs would be incurred. The Council has incurred a significant amount of legal costs and disbursements which the plaintiff would be liable to pay in the event that he was unsuccessful.
The proposed settlement is therefore significantly in the plaintiff's interest because it relieves him of the burden of paying the Council's legal costs in the event that the action was unsuccessful.
As well, particularly in circumstances where I am satisfied that, on the probabilities, there is a significant likelihood that the plaintiff would fail, the receipt by the plaintiff of the sum of $200,000 to be paid towards disbursements is a significant benefit to him.
In all of the circumstances, I am satisfied that the proposed settlement should be approved.
[5]
Orders
For the above reasons, I make the following orders:
1. Vacate the hearing date fixed for 30 July 2018.
2. Approve the proposed settlement pursuant to s 173 of the Civil Procedure Act 2005.
3. Order that all costs orders made against the plaintiff are vacated.
4. Order that the order for security for costs is vacated.
5. Order that the monies paid into a controlled account by the plaintiff as security for costs, together with interest, are to be paid to the plaintiff.
6. Order that the plaintiff be released from his undertaking given to the Court on 24 August 2017.
7. Order the defendant to pay the plaintiff's solicitor the sum of $200,000 within 28 days.
8. The Court notes the agreement of the parties that this money is to be disbursed by the plaintiff's solicitor in payment of disbursements incurred in the litigation other than legal costs. Further note that no part of this sum is to be paid to the plaintiff nor any of the group members.
9. Judgment for the defendant on the plaintiff's claim.
10. Otherwise dismiss the proceedings.
11. Order each party to pay his and its own legal costs of the proceedings.
[6]
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 13 July 2018