FEDERAL COURT OF AUSTRALIA

Fish v NSW Department of Education and Training [2018] FCA 434

ORDERS

THE COURT ORDERS THAT:

1.    The applicant’s solicitor file electronically:

(a)    the affidavit of Claire Pirie affirmed 9 March 2018; and

(b)    the submissions dated 9 March 2018 marked “Confidential further submissions on behalf of the applicants”,

within seven days of the date of this order.

2.    Pursuant to s 37AF of the Federal Court of Australia Act 1976 (Cth), on the ground that the order is necessary to prevent prejudice to the proper administration of justice, the following documents and information be ordered to be confidential within the meaning of r 2.32(1)(b) of the Federal Court Rules 2011 and not be published or disclosed except in accordance with an order of a judge of the Court until further order:

(a)    paragraph 15(iii) of the affidavit of Claire Pirie affirmed 22 January 2018;

(b)    the dollar figure in para 17 of that affidavit;

(c)    the annexures to that affidavit; and

(d)    paragraph 17 of the 9 March 2018 submissions.

3.    Within seven days of the date of these orders, the applicant file the following documents:

(a)    a redacted version of the affidavit of Claire Pirie affirmed 22 January 2018, redacting the documents and information referred to in order 2(a) to (c) above;

(b)    a redacted version of the 9 March 2018 submissions, redacting paragraph 17.

4.    The settlement on the terms set out in the minute of consent orders dated 14 December 2017, which is annexure “CP1” to the affidavit of Claire Pirie affirmed 22 January 2018, be approved.

5.    Within 28 days of the date of this order, the respondent pay into Court an amount calculated in accordance with the minute of consent orders dated 14 December 2017.

6.    On the respondent’s compliance with order 5, the proceedings be dismissed.

7.    Liberty to the applicants to apply on seven days’ notice for further orders pursuant to r 2.42 of the Federal Court Rules 2011.

8.    The costs in relation to the application for approval of the settlement of this proceeding and NSD 1253 of 2017 be costs in the cause.

9.    Each party bear its, his or her own costs in relation to the application for payment of the settlement sum to Kathleen Fish to be held on trust for the benefit of Rory Fish.

10.    Otherwise, the respondent pay the applicant’s costs and disbursements of this proceeding as agreed or taxed.

11.    All previous orders of the Court in relation to costs are vacated.

12.    No interest is payable in respect of the settlement sum if it is paid within 28 days from the date of these orders or within 28 days after receipt by the solicitor on record for the respondent of:

(a)    an authority to receive;

(b)    a copy of the approved orders duly entered; and

(c)    appropriate clearances and notifications as set out in these orders in respect of amounts owing by the applicant to Medicare Australia, Centrelink, public health organisation/s and the National Disability Insurance Scheme,

whichever is the later.

13.    No interest is payable by the respondent in respect of any payment made to:

(a)    Medicare Australia in complying with the applicant’s obligations under the Health and Other Services (Compensation) Care Charges Act 1995 (Cth);

(b)    Centrelink in complying with the applicant’s obligations pursuant to the Social Security Act 1991 (Cth) or any other legislation;

(c)    the National Disability Insurance Scheme pursuant to the provisions of the National Disability Insurance Scheme Act 2013 (Cth); and/or

(d)    any others.

THE COURT NOTES THAT:

14.    The respondent has agreed to pay the applicant the settlement sum, less any payments made pursuant to the matters noted in 15, 16 and 17 below, into Court to be held on trust for the benefit of the applicant until the applicant attains the age of 18 years, or unless otherwise ordered by the Court.

15.    The applicant (by his litigation representative) acknowledges that the settlement is subject to the provisions of the following Acts and the applicant may be obligated to pay from the settlement sum an amount pursuant to the provisions of the:

(a)    Health and Other Services (Compensation) Act 1995 (Cth);

(b)    Health and Other Services (Compensation) Care Charges Act 1995 (Cth);

(c)    Social Security Act 1991 (Cth); and/or

(d)    National Disability Insurance Scheme Act 2013 (Cth).

16.    The applicant (by his litigation representative) consents to the respondent notifying:

(a)    Medicare Australia of the settlement of the applicant’s claim and ascertaining whether the applicant has an obligation to repay an amount pursuant to the provisions of the:

(i)    Health and Other Services (Compensation) 1995 (Cth); and/or

(ii)    Health and Other Services (Compensation) Care Charges Act 1995 (Cth).

(b)    Centrelink of the settlement of the applicant’s claim and ascertaining whether the applicant has an obligation to repay an amount pursuant to the provisions of the Social Security Act 1991 (Cth); and

(c)    the National Disability Insurance Scheme of the settlement of the applicant’s claim and ascertaining whether the applicant has an obligation to repay an amount pursuant to the provisions of the National Disability Insurance Scheme Act 2013 (Cth).

17.    The applicant (by his litigation representative) consents to and authorises the respondent to pay from the settlement sum any amount notified to them pursuant to the notifications given in 16 above.

18.    The parties have agreed that the applicant and the applicant’s litigation representative will not disclose the settlement sum, except as required by law.

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

ORDERS

BY CONSENT AND WITHOUT ADMISSION OF LIABILITY, THE COURT ORDERS THAT:

1.    The proceedings be dismissed.

2.    The respondent pay the costs and disbursements of the first applicant and the second applicant as agreed or taxed.

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

REASONS FOR JUDGMENT

GLEESON J:

1    The parties to these proceedings have reached an agreement to settle both proceedings after a mediation conducted by a Registrar of the Court. By r 9.70 of the Federal Court Rules 2011, the agreement requires the Court’s approval as the first applicant (“Ms Fish”) is a litigation representative.

2    In addition to seeking approval of the settlement, Ms Fish seeks an order that she be paid the settlement sum payable under the agreement to be held on trust for the benefit of Rory Fish until he attains the age of 18 year, or unless otherwise ordered by the Court.

3    The relief is sought with the knowledge of the State, although the supporting evidence was not served on the State in order to protect the confidentiality of its contents.

Background

4    Rory (the applicant in NSD2177/2016 and the second applicant in NSD1253/2017) is 10 years old. Ms Fish (the first applicant in NSD1253/2017) is his mother. Ms Fish was appointed as her son’s litigation representative by an order of the Court made on 28 February 2017.

5    In the proceedings, the applicants claim relief under the Australian Human Rights Commission Act 1986 (Cth), the Disability Discrimination Act 1992 (Cth) (“Disability Discrimination Act”) and the Racial Discrimination Act 1975 (Cth). In short, the applicants allege:

(a)    discrimination by the state of New South Wales on the basis of disability against Rory (a child with disabilities) in the provision of education to him, as well as an instance of battery and an instance of racial discrimination or offensive behaviour because of race; and

(b)    victimisation of Rory and Ms Fish by the State as a consequence of the assertion of Rory’s rights pursuant to the Disability Discrimination Act.

Evidence

Settlement approval

6    The evidence in support of the settlement approval comprises two affidavits of the applicants’ solicitor, Claire Pirie, affirmed 22 January 2018 and 9 March 2018. Ms Pirie’s first affidavit annexes signed minutes of consent orders in each proceeding, evidencing in part the agreement of the parties, and an opinion of counsel that the agreement is in the best interests of Rory.

7    Ms Pirie stated that, in addition to the agreed orders, the settlement involves the provision by the State of a statement of regret addressed to Rory. Ms Pirie expressed the view that the settlement reached in both proceedings is in the best interests of Rory.

Payment of settlement proceeds

8    The State has agreed to pay the settlement sum into Court to be held on trust for Rory’s benefit until he attains the age of 18 years, or unless otherwise ordered by the Court.

9    As noted above, if the Court approves the settlement, Ms Fish requests that the Court make orders that she be paid the settlement sum payable under the agreement to be held on trust for the benefit of Rory until he attains the age of 18 years, or unless otherwise ordered by the Court.

10    Ms Pirie’s first affidavit annexes a statement by Ms Fish of her intentions for dealing with the settlement sum in the event that it is paid to her to be held on trust for Rory.

11    Ms Fish has sought a confidentiality order in respect of the statement, on the basis that it is information that most people would consider confidential and of an intimate nature. Ms Pirie submitted, and I accept, that, Ms Fish’s statement demonstrates that:

(1)    Ms Fish intends to hold the settlement sum in an account which is clearly marked as a trust account, and has made investigations into appropriate accounts for this purpose;

(2)    Ms Fish does not intend to apply the settlement sum for any purpose other than for Rory’s benefit;

(3)    Ms Fish intends to apply the settlement sum for such treatment as Rory might require, including to remedy the consequences of the State’s conduct which was the subject of the proceedings, and/or to support his education, health and development; and

(4)    on the assumption that the settlement sum will not be disbursed for such requirements before Rory attains the age of 18 years, to give him control of the money at that time.

12    Ms Pirie gave evidence of the fees for management and investment of the settlement sum by the NSW Trustee and Guardian. Having regard to the NSW Trustee and Guardian’s published fee structure, and assuming that the settlement sum is preserved in full until Rory attains the age of 18 years, the total fees could be in the order of $3,000. I accept that, in context, this is a significant sum.

13    In her first affidavit, Ms Pirie submitted that, where Ms Fish is available to manage the settlement sum of Rory’s behalf, the deduction represented by management and investment fees is an unnecessary cost which Rory should not be required to bear.

14    Ms Pirie stated that if the settlement sum is managed by the NSW Trustee and Guardian, it will be necessary for Ms Fish to make an application each time Rory has an expense for which it is appropriate to draw on the settlement sum. In her second affidavit, Ms Pirie provided additional evidence concerning the process for obtaining access to funds held by the NSW Trustee and Guardian. Based on that evidence, a written application is required to access funds for the relevant beneficiary. The applications are assessed on a case by case basis, apparently by or with the assistance of a case manager assigned to the particular matter. There is no document setting out the criteria for advancing funds but, where a minor is involved, the trustee will consider whether funds are for education purposes, medical treatment or other services or goods that support the wellbeing of the minor.

15    I accept that the process of applying the settlement monies to Rory’s benefit would be more cumbersome and time-consuming if the settlement sum is held by the NSW Trustee and Guardian instead of Ms Fish.

16    In her affidavit, Ms Pirie also submitted that, having regard to the nature of the proceedings, the proposed payment of the settlement proceeds to Ms Fish to hold on trust assists in the restoration of Rory’s human dignity and therefore meets the purpose of the proceedings and their settlement more closely than requiring the settlement sum to be managed in some other way.

Approval of settlement

Legal framework

17    Rules 9.69, 9.70 and 9.71 provide:

9.69    Payment into Court

A litigation representative must not:

…

(b)    other than on condition that the settlement is subject to the Court’s approval – agree to the compromise or settlement of any matter in dispute in the proceeding.

Note: The Court may dispense with compliance with this rule—see rule 1.34.

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.

18    In Butler v Djerriwarrh Employment & Education Services Inc [2015] FCA 296, Mortimer J set out the following principles concerning whether or not to approve a settlement:

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 … 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.

Consideration

19    I have considered the amended originating application and the concise statement in NSD2177/2016 and the originating application in NSD1253/2017.

20    The opinion that the settlement reached by the parties is in Rory’s best interests is given by experienced counsel, and is shared by Ms Pirie. In my view, counsel’s opinion is based on a thoughtful and realistic analysis of the risks involved in litigating the applicants’ claims in a trial, with particular attention given to the factual disputes between the parties. Counsel’s opinion identifies the substantial benefits of the agreement including the settlement sum and the value of the statement of regret, the latter which, I accept, is unlikely to be received if the matter proceeds to trial.

21    On all of the material available to me, I am satisfied that the agreed settlement is in the best interests of Rory. In reaching this conclusion, I take into account the significant benefits to both Rory and Ms Fish of ending the likely emotional strain from the proceedings and enabling them to move on with their lives.

22    I am aware that the mediation of the proceedings involved considerable commitment from all parties and I congratulate them on achieving a negotiated outcome that is in Rory’s best interests.

Payment of settlement sum

23    As noted earlier, the State has agreed to pay the settlement sum into Court to be held on trust for Rory’s benefit until he attains the age of 18 years, or unless otherwise ordered by the Court.

24    Rule 2.42 provides:

2.42    Dealing with money paid into Court

…

(2)    A party may apply to the Court for an order:

(a)    that money paid, or to be paid, into Court be paid, credited or applied in a manner other than by payment into the Litigants’ Fund; and …

25    Ms Fish proposes that the settlement sum be held on trust by her for Rory’s benefit.

26    I accept that the costs of management and investment of the settlement sum by the NSW Trustee and Guardian are high, and that it would be preferable to avoid the depletion of the settlement sum by these costs.

27    I also accept that Ms Fish’s proposal is appropriate to the extent that, as Rory’s mother, she is an appropriate choice of trustee. Further, I accept that it may be appropriate for the settlement sum to be available to be used for Rory’s benefit before he reaches the age of 18 years given he is likely to have significant needs that his family may not always be in a financial position to meet.

28    There are cases where a course somewhat similar to the one proposed by Ms Fish has been taken. In Cho v State of New South Wales [2015] NSWSC 882 (“Cho”), the Supreme Court ordered the payment of $10,000 to a minor to be paid by her parent into a trust account on account of the minor pending their attaining the age of 18 years. The Court was satisfied that the child’s father could be relied upon to keep the money for her benefit when she turned 18. In Hu by his tutor Zhao v Wong [2014] NSWSC 641 (“Hu”), monies in court were ordered to be paid to the minor’s mother as trustee for the purposes only of making a nominated investment.

29    However, Ms Fish’s proposed orders are significantly different from those made in Cho or Hu because she proposes that the settlement proceeds may be applied for Rory’s benefit before he reaches the age of 18 years. I accept that it may well be appropriate for some or all of the settlement proceeds to be used for that purpose, however, I have not been pointed to any case in which a court has paid funds to a sole individual trustee with the broad discretion that the proposed orders entail. Historically, a court would not allow funds in court to be paid to a sole trustee unless all beneficiaries are sui juris and consent: see, for example, In Re Parsons; Barnsdale and Smallman v Parsons [1940] Ch 973 at 983. Section 66G of the Conveyancing Act 1919 (NSW) is also an illustration of this policy, providing for the appointment of two or more individuals as trustees of property for sale of property held in co-ownership.

30    I would therefore be prepared to make an order for the payment out of money paid into Court in accordance with the parties’ settlement agreement to the defendant to be held on trust by Ms Fish and another suitable individual until Rory reaches the age of 18 years, on terms that the moneys held in trust may be applied for Rory’s benefit during the term of the trust. Such an individual should not be related to Rory’s family, and should preferably be a person with experience as a trustee. I will grant liberty to the applicants to apply for further orders pursuant to r 2.42 of the Federal Court Rules 2011.

Confidentiality

31    I am satisfied that an order pursuant to s 37AF of the Federal Court of Australia Act 1976 (Cth) is necessary to prevent prejudice to the proper administration of justice by preserving the confidentiality of counsel’s opinion and the terms of settlement: cf. Bulense Holdings Pty Ltd v Arup Pty Ltd [2015] FCA 726 at [37]. For this purpose, this order must extend to the dollar figure in para 17 of Ms Pirie’s affidavit of 22 January 2018, which tends to reveal the amount of the settlement sum, in addition to annexures “CP1”, “CP2” and “CP3” to that affidavit.

32    Ms Fish also sought a confidentiality order with respect both to her statement of intentions concerning the management of the settlement sum for Rory’s benefit and the body of Ms Pirie’s affidavit of 22 January 2018. I accept that the statement of intentions itself, being annexure “CP4” to Ms Pirie’s affidavit of 22 January 2018 (summarised at para 17 of the 9 March 2018 submissions), contains private information about Rory and that it is necessary to prevent prejudice to the proper administration of justice that such private information be protected by a confidentiality order. However, I am not satisfied that the body of Ms Pirie’s first affidavit, including those parts of the affidavit referring to Ms Fish’s statement of intentions, should be ordered to be confidential other than to the extent that it contains private information concerning Rory. Only para 15(iii) of the affidavit meets that description.

Conclusion

33    I will make orders in accordance with these reasons.

Associate:

Dated:    5 April 2018