FEDERAL COURT OF AUSTRALIA

Gray v State of Victoria (Department of Education and Early Childhood Development) [2017] FCA 353

ORDERS

THE COURT ORDERS THAT:

1.    The affidavits of Joseph Ridley sworn on 6 September 2016 and 18 October 2016 and filed herein, together with their annexures, are to be treated as confidential and placed in an envelope marked “Confidential – not to be opened without the permission of a Judge of this Court.”

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

REASONS FOR JUDGMENT

MURPHY J:

1    In this application, Sharlene Gray, the mother and litigation representative of the applicant, Jason Gray, sought Court approval of the settlement of a proceeding brought against the State of Victoria, through the Victorian Department of Education and Training (the Department). Mr Gray suffers from a number of disabilities within the Disability Discrimination Act 1992 (Cth) (the DDA) and the proceeding alleged that the Department discriminated against him in accessing educational services at various state schools.

2    On 1 December 2016 I made orders approving the settlement, reserving for later determination the question as to whether a confidentiality order should be made over the terms of settlement. I continue to have a level of disquiet in relation to the Department’s submissions on that question, but I have decided to make the confidentiality order sought. I now provide my reasons for approving the settlement and for making the confidentiality order.

The substantive proceeding

3    Mr Gray alleged that he suffers from autism spectrum disorder, attention deficit hyperactivity disorder, oppositional defiant disorder, severe pragmatic language impairment and impairment of his memory, processing, reasoning and fine motor skills. The Department accepted that Mr Gray has those disabilities and that it was aware of them during the period between June 2008 and May 2014, when Mr Gray was a student at various state schools.

4    Mr Gray alleged that during that period employees of the Department directly and indirectly discriminated against him by, amongst other things:

(a)    locking him in a “timeout” room from which he could not leave;

(b)    physically restraining him;

(c)    assaulting him by striking him in the throat; and

(d)    refusing to enrol him because of his disabilities.

He alleged that the Department failed to properly manage the behaviour which arose out of his disabilities, whether by conducting a functional behaviour assessment, having a positive behaviour plan, or through its own engagement policy or student support group guidelines. He said that the Department failed to make “reasonable adjustments” for his condition as required under the DDA, and that he suffered trauma and ongoing anxiety as a result of the breaches of the DDA.

5    In broad terms, the Department denied the allegations. Amongst other things, it said that placing Mr Gray in a timeout room was an appropriate strategy for dealing with his behaviour. It challenged the characterisation of the incidents of physical restraint and assault by saying, amongst other things, that the incidents did not occur or were not as severe as Mr Gray alleged and that the steps taken were reasonable responses to Mr Gray’s behaviour. It said that the school that refused his enrolment in fact offered appropriate transitional strategies for him to commence on one day a week and to increase incrementally. It claimed that the schools used a range of behavioural strategies to deal with Mr Gray’s challenging behaviour which were based on his individual circumstances and needs, in accordance with written and unwritten plans. It argued that Mr Gray did not identify any steps or adjustments that it ought to have made to comply with the Disability Standards for Education 2005 and denied that it breached the DDA.

The materials in support of the application

6    The parties agreed to a settlement of the proceeding at a confidential mediation. The settlement is recorded in a Settlement Deed dated 16 August 2016 (the Settlement Deed) made between Mr Gray (by Mrs Gray as his litigation representative), and the State of Victoria through the Department.

7    Rule 9.70 of the Federal Court Rules 2011 (Cth) (the Rules) requires that a litigation representative must make an interlocutory application to the Court for approval of any settlement reached on behalf of a person under a legal incapacity, and that the settlement does not become binding unless approved. Rule 9.71 requires that the application must be accompanied by an affidavit stating the material facts on which the application relies, the agreement that is sought to be approved, and an opinion of an independent lawyer that the agreement is in the best interests of the person under a legal incapacity.

8    There is authority that an “independent lawyer” within the meaning of the rule may be a lawyer who has acted for a party in the matter, but who offers an opinion on the merits of settlement as an independent officer of the Court and not in furtherance of his or her duty to any party to the proceeding: see Wade v State of Victoria (No 2) [2012] FCA 1080 at [9] (Bromberg J), followed in Modra v State of Victoria [2013] FCA 1041 (Modra) at [9] (Tracey J); Hickey v Public Advocate (Victoria) [2012] FCA 1203 at [10]-[11] (Gray J); Koenders v State of Victoria [2016] FCA 842 at [3] (Davies J).

9    The litigation representative filed affidavits of Joseph Ridley, a solicitor with the legal firm Arnold Thomas & Becker which acted for Mr Gray, sworn on 6 September 2016 and 18 October 2016. The affidavits included the following annexures:

(a)    the Settlement Deed dated 16 August 2016;

(b)    the confidential opinion of Mr David Hancock of counsel, dated 30 August 2016;

(c)    the confidential opinion of Mr Jonathan Brett QC dated 17 October 2016.

10    When the application was filed the only opinion provided was that of Mr Hancock, who was Mr Gray’s counsel throughout the proceeding. In the particular circumstances of the case, including that the settlement amount is substantial and contained an unusual term, I determined that it was appropriate to obtain an opinion from a lawyer who had not acted in the proceeding. I directed Mrs Gray to obtain such an opinion, which she did so from Mr Brett QC.

Consideration

Whether the settlement is in the best interests of Mr Gray

11    I am well satisfied that the settlement is in the best interests of Mr Gray.

12    There are, of course, advantages to settlement. The trial of the proceeding would have been lengthy and complex and it would have involved a significant number of lay and expert witnesses and the expenditure of significant legal resources. If the proceeding ran to trial Mrs Gray would be exposed to the risk of a significant adverse costs order, and any such trial would be unavoidably stressful for Mr Gray and his mother. Settlement avoids the risk of a less advantageous outcome, of incurring significant legal costs, of being required to meet an adverse costs order, and it avoids the stress of a trial.

13    Because of the requirement for confidentiality I cannot set out my view as to the merits of the settlement by reference to its elements. It must suffice to note that the opinions of Mr Hancock and Mr Brett QC are detailed, properly deal with each aspect of the proceeding, express a view as to the prospects of success of the different parts of Mr Gray’s claims and take account of his personal circumstances and the importance of a particular term of the settlement to him. Both counsel conclude that the settlement amount and the other settlement terms are in Mr Gray’s best interests.

14    It is appropriate to give the two opinions significant weight in my decision to approve the settlement (Modra at [12]) but it is the Court’s responsibility to determine whether the settlement is beneficial to Mr Gray: Scandolera v State of Victoria [2015] FCA 1451 (Scandolera) at [27] (Mortimer J). In making this assessment, the Court is concerned only with the benefit of the settlement to Mr Gray: Gillespie v Alperstein [1964] VR 749 (Gillard J).

15    The determination of whether the settlement is in Mr Gray’s best interests requires the Court to consider his prospects of success if the proceeding were to continue (Scandolera at [29]), which, on some if his claims, look reasonable. In my view the settlement amount is reasonable in light of the potential judgment in respect to those parts of his claim on which he has a reasonable prospect of success. It is also appropriate to consider the emotional and psychological strain that litigation would place on Mr Gray and his family (Scandolera at [32]). It is apparent that the proceeding has caused Mr Gray and his mother significant stress and the settlement will help them move beyond that stress without the exacerbating influence of a protracted hearing.

16    Having regard to the opinions of both Mr Hancock and Mr Brett QC, my consideration of the pleadings, and my review of the evidence filed in the proceeding, I am satisfied that the settlement amount and other settlement terms are reasonable and in Mr Gray’s best interests.

The confidentiality orders sought

17    In the Settlement Deed the parties bound themselves to keep confidential the terms of settlement and the terms of any previous offer to settle the proceeding, and to take all necessary steps to obtain Court approval of the settlement on a confidential basis. They specifically agreed to protect the confidentiality of the Settlement Deed and mutually recognised that seeking the protection of confidentiality has assisted the parties in reaching the agreement embodied in the Settlement Deed.

18    The litigation representative and the respondent jointly sought orders that Mr Ridley’s affidavits and their annexures be treated as confidential. There is, however, an important public interest in open justice and before a confidentiality order may be made the Court must be satisfied that there are proper grounds for doing so.

19    Section 37AE of the Federal Court of Australia Act 1976 (Cth) (the Act) provides:

In deciding whether to make a suppression order or non-publication order, the Court must take into account that a primary objective of the administration of justice is to safeguard the public interest in open justice.

20    Section 37AG provides:

Grounds for making an order

(1)    The Court may make a suppression order or non-publication order on one or more of the following grounds:

(a)    the order is necessary to prevent prejudice to the proper administration of justice;

(b)    the order is necessary to prevent prejudice to the interests of the Commonwealth or a State or Territory in relation to national or international security;

(c)    the order is necessary to protect the safety of any person;

(d)    the order is necessary to avoid causing undue distress or embarrassment to a party to or witness in a criminal proceeding involving an offence of a sexual nature (including an act of indecency).

(2)    A suppression order or non-publication order must specify the ground or grounds on which the order is made.

21    The application for a confidentiality order is based in the contention that it is necessary to prevent prejudice to the proper administration of justice, under s 37AG(1)(a). The use of the word “necessary” in s 37AG(1)(a) indicates a reasonably strict test: Hogan v Australian Crime Commission (2010) 240 CLR 651; [2010] HCA 21 at [30] (French CJ, Gummow, Hayne, Heydon and Kiefel JJ) in relation to a predecessor provision; Rinehart v Welker [2011] NSWCA 403 (Rinehart) at [27] (Bathurst CJ and McColl JA) and at [105]-[106] (Young JA).

22    The concept of the administration of justice is multi-faceted: Rinehart at [39]. It incorporates:

(a)    the public interest in the preservation of the confidentiality of the mediation process and the process of negotiation of the settlement of litigation: Sharjade Pty Ltd v RAAF (Landings) Ex-Servicemen Charitable Fund Pty Ltd [2008] NSWSC 1347 at [34] (Bergin J); Cannon v Griffiths & Ors (No 2) [2015] NSWSC 1329 (Cannon) at [14] (Beech-Jones J);

(b)    the public interest in keeping people to their freely-entered bargain: Baltic Shipping Co v Dillon [1991] NSWCA 19; 22 NSWLR 1 at 9 (Gleeson CJ);

(c)    the public interest in the settlement of proceedings prior to trial: Oldham v Capgemini Australia Pty Ltd (No 2) [2016] FCA 1101 at [24] (Mortimer J); Reynolds v JP Morgan Administrative Services Australia Limited (No 2) (2011) 193 FCR 507; [2011] FCA 489 at [30] (Rares J).

23    It became clear in the hearing that Mr Hancock, counsel for Mr Gray, had no concern that publication of the terms of settlement would somehow prejudice the proper administration of justice. He sought to make submissions in that regard but was reminded by Ms Bennett, counsel for the Department, that doing so may constitute a breach of the applicant’s contractual obligation to seek to protect the confidentiality of the Settlement Deed during the hearing and determination of the settlement approval application. In the finish the Department put on detailed submissions on the question of confidentiality but no written submissions were filed on Mr Gray’s behalf. In order that the Court might have the benefit of argument by a contradictor my chambers requested the Human Rights Commission to consider intervening in the application pursuant to s 67(1)(l) of the DDA. The Commission declined to do so.

24    Taking account of the public interest in open justice, in the hearing I expressed a doubt that revealing the terms of settlement of a claim brought by a student alleging that the Department did not make reasonable adjustments under the DDA, could cause any prejudice to the proper administration of justice.

25    Counsel for the Department conceded that, when settling DDA cases, the Department has a practice of requiring a confidentiality agreement. At the Court’s request the Department produced a table which showed that there have been 21 judgments of the Court approving settlements of disability discrimination cases and in all but one of those cases (settled in 2008) the terms of settlement required confidentiality.

26    The Department submitted that DDA cases, similar to the present case, that are brought against it are largely unmeritorious, that the allegations in the proceedings are cut and pasted from earlier pleadings, and that the Department only chooses to settle the proceedings because they are expensive to conduct, because the compensation paid is less than the costs of conducting the case, and because the Department would usually be unable to recover its costs if successful. Counsel referred to statements by the Court which emphasised that litigants ought not to be wrongly led to believe that redress is available under the DDA for what they perceive to be deficiencies in the manner in which educational services are being provided by the educational provider: Kiefel v State of Victoria [2013] FCA 1398 at [6] (Tracey J); Abela v State of Victoria [2013] FCA 832 at [103] (Tracey J).

27    In my view the Department’s reliance on those statements was misplaced. Some cases will lack merit but it beggars belief that every discrimination case brought against the Department is unmeritorious. For example, having read the pleadings and the evidence in Mr Gray’s case, and having regard to the settlement reached, I do not accept that it is without merit. It is inappropriate to speculate as to the Department’s motivation, but I do not accept the contention that its policy is wholly based in a concern to ensure that unmeritorious cases are not brought against it. Where parents have well-founded concerns that their child has suffered disability discrimination in accessing or using state educational services I can see no public interest in keeping them in the dark as to the practical availability of compensation under the DDA.

28    Having said this, for the following reasons I have decided to make the confidentiality orders sought.

29    First, the present case is not a good vehicle for resolving any issue in relation to the Department’s policy of requiring confidentiality. Although it is clear enough that counsel for Mr Gray did not consider that refusing the confidentiality orders would prejudice the proper administration of justice, I have not had the benefit of submissions to that effect. The only detailed submissions I have received are those of the Department. They strenuously contend that refusal of a confidentiality order is contrary to the interests of justice. In my view the Human Rights Commission should not have declined to intervene.

30    Counsels’ opinions did not go to this issue. In my view, if there is any suggestion that the proposed confidentiality regime is not freely-agreed the independent lawyer should deal with that question. An agreement by the litigation representative to protect confidentiality in the terms of settlement could not inhibit the independent lawyer from informing the Court of his or her opinion on whether confidentiality was in the best interests of the applicant. Any such opinion is provided as an officer of the Court rather than as the applicant’s or litigation representative’s lawyer.

31    Second, I accept the Department’s contention that it is a party to a number of DDA proceedings, and that such matters are often complex and can involve long and expensive trials. I accept that, in addition to the perceived merits of any such claim, a multitude of factors may influence its decision to settle the case and may affect the quantum of the settlement sum, including the costs (both financial and in terms of the impact on witnesses) of conducting a lengthy trial, the fact that the costs may far exceed any damages payable if the claim proceeds and that there may be no realistic prospect of recovering costs if the claim fails. The Department has a legitimate interest in reducing the number of cases brought against it.

32    Third, the Department strenuously contends that if it is not able to obtain confidentiality orders covering the settlement terms in cases such as the present, it will have a serious chilling effect on its preparedness to settle such cases. It says that the removal of confidentiality over the settlement amount is likely to lead to a shift in the Department’s analysis that it is appropriate to settle DDA cases prior to trial, with the result that:

(a)    there will be fewer settlements prior to trial; and

(b)    a higher number of expensive, complex trials will occur in which the parties are required to attend and give evidence.

If that is the case it would prejudice the proper administration of justice. There are no submissions to the contrary.

33    Fourth, I accept that in the present case the confidentiality of the terms of the settlement was a matter of key importance to the settlement. The parties agreed to keep the terms of the Settlement Deed confidential, individuals associated with the proceeding gave an undertaking to preserve confidentiality in respect of the terms of settlement, and the parties expressly agreed that the confidentiality of the terms of settlement assisted the parties in reaching the agreement the subject of the Deed.

34    There is a public interest in keeping parties to their freely-entered bargains, but the fact that the parties have entered into a contractual obligation to maintain confidentiality in an agreement cannot be determinative of whether a confidentiality order is appropriate. In my view, where confidentiality is critical to achieving resolution of a case, it is open to see the refusal of a freely agreed confidentiality regime as giving rise to some prejudice to the proper administration of justice. In Cannon at [17] Beech-Jones J said, in respect of an analogous provision:

In my view it is quite clear from reading the materials that a critical aspect of the successful resolution of the proceedings was the agreement of the parties to keep the terms of settlement confidential as far as possible. It is not necessary or appropriate to speculate as to why that is so. In my view the public interest in respecting that settlement would tend to be undermined by removing an assumption on which the settlement was arrived at, namely the confidentiality of its terms.

I have some doubts that it is appropriate to describe the present confidentiality regime as freely agreed, but I have no evidence or submissions in that regard.

35    I previously made orders approving the settlement. For the reasons set out above I have now made orders for confidentiality of the affidavits and annexures filed in support of settlement approval, which includes the Settlement Deed.

Associate:

Dated:    4 April 2017