FEDERAL COURT OF AUSTRALIA

Butler v Djerriwarrh Employment & Education Services Inc [2015] FCA 296

THE COURT ORDERS THAT:

1.    The settlement of this proceeding set out in the Deed of Release dated 18 February 2015 marked as Annexure DV-1 to the affidavit of Daniel Victory dated 26 March 2015 be approved.

2.    Annexure DV-1 to the affidavit of Daniel Victory dated 26 March 2015 be treated as confidential to the parties and retained in an envelope on the Court file. The envelope is to be endorsed with the words “Confidential to the parties in this proceeding. Not to be opened without leave of a Judge of this Court”.

3.    Annexure DV-2 to the affidavit of Daniel Victory dated 26 March 2015 be treated as confidential to the applicant and retained in an envelope on the Court file. The envelope is to be endorsed with the words “Confidential to the applicant. Contents not to be shown or produced to the respondent, its employees or agents, or its legal representatives. Not to be opened without leave of a Judge of this Court”.

4.    The proceeding be listed for further directions on Friday 17 April 2015 at 9.30am.

5.    There be no order as to costs.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

1    Ms Crystal Butler was previously employed as a sessional teacher and training and placement officer. In circumstances which need not be detailed, she became seriously unwell with a series of psychiatric illnesses, as well as arthritis. These conditions meant that she could no longer perform her work as a teacher and trainer and she ceased performing her duties in early May 2008. She has not worked since, and there is no suggestion in any of the material before me that she will be able to return to work in the near future, although the medium- to long-term prognosis may be more hopeful than that.

2    Ms Butler was employed by the respondent between approximately 21 July 2006 and May 2008. In this proceeding, issued on 31 January 2014, Ms Butler claimed that while she was employed, the respondent failed to contribute 9% of her salary into the HESTA Superannuation Fund, in the manner and at the times it was obliged to do under either the employment agreement between the applicant and the respondent, or under the award which governed her employment.

3    That failure, she alleged, deprived her of the opportunity, when she fell ill, to make a claim under the life insurance policies held by HESTA for the benefit of its members. She alleges she would have qualified for benefits under those policies, either benefits by way of a lump sum payment for total and permanent disablement, or total disablement. The periods over which Ms Butler would have been entitled to those benefits were variously alleged in the pleadings.

4    A mediation was held in October 2014, and the matter did not settle. An application was made in November 2014 for Ms Christine Butler, the applicant’s mother, to be appointed her litigation representative. The material supporting this application was sufficient to justify the making of an order under r 9.63 of the Federal Court Rules 2011 (Cth). On and from 21 November 2014 Ms Christine Butler has had the conduct of this proceeding on behalf of her daughter. The matter was subject to orders preparing it for trial, with a trial listed to occur in September 2015. In January 2015, the parties approached the Court, stating that the matter was likely to settle and asking for the trial date and trial preparation orders to be vacated. Those orders were made on 27 January 2015.

5    A deed of release was signed by the parties on 18 February 2015. Some time then elapsed while the applicant obtained the opinion of an independent lawyer, for the purposes of r 9.71(2)(c) of the Rules.

6    By an interlocutory application made on 26 March 2015, Ms Christine Butler applied for orders that the settlement contained in the 18 February 2015 deed be approved by the Court. The application was supported by an affidavit of Mr Daniel Victory, the solicitor for the applicant. Annexed to that affidavit were the deed of release and an independent legal opinion. The independent legal opinion supported the approval of the settlement contained in the deed of release. Orders were also sought to preserve the confidentiality of both the deed of release and the independent legal opinion.

7    Initially, the interlocutory application sought an order dismissing the proceeding. At the hearing of the application, counsel for the applicant submitted that order was no longer sought, and instead what was proposed was that a notice of discontinuance would be filed after certain steps contemplated by the deed had been taken.

8    On 30 March 2015 orders were made approving the settlement. The parties were informed that reasons for the approval would be delivered shortly thereafter.

9    Rule 9.70 of the Rules provides:

(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.

10    In determining whether or not to approve the settlement, for the purpose of rendering it binding on the applicant, the Court must be satisfied the settlement is in her best interests, or beneficial to her 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 a proceeding.

11    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; (2007) 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.

12    The Court is assisted in that determination by the provision of an opinion by an independent lawyer. It is likely (as was indeed the case in the present proceeding) that the lawyer can be briefed fully on the facts and relevant evidence, and will have access to more material than the Court. The evidence and instructions considered by the independent lawyer can then be placed before the Court in, at least, the written opinion of that lawyer.

13    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), albeit in circumstances where the plaintiff’s litigation guardian had changed her mind and sought that the settlement not be approved.

14    On an examination of the pleadings, and the other evidence before it, including the independent opinion, the determination of 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 applicant if the proceeding were continue: see Fisher at [35]-[37].

15    What the Court is being asked to do is to approve a settlement so that it binds the party under the disability and brings the litigation to an end. Therefore, a primary consideration is, it seems to me, the advantages and disadvantages of the litigation continuing: not only in terms of whether the applicant might secure a more advantageous award from the Court at trial, but also issues such as the prospects of an appeal, the time it will take for the proceeding to reach a first instance judgment, and the pressures imposed on the applicant if the litigation were to continue. These pressures include the continuation of the applicant’s current circumstances without the financial or material benefits flowing from the settlement as proposed, the emotional and psychological effects which attend the conduct of litigation and the strain of waiting to give, and then giving evidence (if that were to occur), or having evidence given about oneself. Anyone with experience of litigation knows these pressures are real, even if they cannot be quantified in financial or material terms.

16    The jurisdiction to approve a settlement for a person under a disability is inherently protective, and I take that to mean protective not only of the financial interests of the person under a disability, but also protective of her interests in being as well and as healthy as she can, of living as comfortably as she can, with a good quality of life. These latter considerations should be afforded weight in the present case, where the applicant is a young adult woman, whose conditions may improve in the long term. Further, given the nature of her disabilities (including anxiety disorders), continued litigation is likely to affect her quality of life. Her circumstances are in this sense in contrast to those facing Rothman J in Fisher, or Barker J in Button, where respectively the plaintiff and applicant involved were children with very severe disabilities who were likely never to be able to live independently, including in the sense of their own personal care. Ms Butler is in the kind of situation where her health and wellbeing are more likely to be advanced in a meaningful way by bringing some finality to her claim against the respondent, if the settlement is within a reasonably appropriate range.

17    The independent opinion by counsel in this proceeding is detailed and thorough. Given the orders sought by the applicant in relation to maintaining the confidentiality of that opinion, I do not propose to set out the contents of the opinion in my reasons. I consider the opinion is soundly based in law both in terms of liability and damages, and adopts a view of what the applicant would need to establish in this case which is accurate. I consider the opinion fairly and appropriately assesses the risks and strengths of the applicant’s case. It may be fair to characterize the opinion as cautious, but that is not necessarily inappropriate in these circumstances.

18    The evidence discloses that the applicant herself supports the settlement. The evidence is that her mother, as her litigation representative, also does. I do not consider the deed of release itself contains any terms and conditions which give rise to concern. The terms and conditions of the deed are of the kind one would expect in a settlement of this nature, and there is no evidence to suggest they have not been complied with to date. I am satisfied there is nothing in the terms and conditions of the deed which should preclude the Court giving approval in order to make the deed effective, and binding on the applicant.

19    To the contrary, especially given the applicant’s age and the not fanciful prospect that she may recover from her present conditions at least to some extent, in my opinion it is most beneficial to her interests for the litigation to be brought to an end, provided that the settlement represents a reasonable compromise and is not wholly disconnected from, or different to, the outcome if the matter were litigated. Consideration should also be given to the risks attending a full litigation of her claim, including the risk she may not succeed and that even if she does there may be an appeal. As I have observed above, the delay and emotional and psychological strain are important factors.

20    Taking all those matters into account, and giving weight to the independent legal opinion, I am comfortably satisfied the settlement contained in the deed of release should be approved because a settlement on these terms, at this time, is beneficial to the applicant’s interests, and indeed, in her best interests.

Associate:

Dated:    31 March 2015