FEDERAL COURT OF AUSTRALIA

Freeman v State of Victoria [2018] FCA 797

ORDERS

THE COURT ORDERS THAT:

1.    Subject to paragraph 2, pursuant to r 9.70 of the Federal Court Rules 2011, the settlement of this proceeding set out in the Settlement Deed marked as annexure “JR1” to the affidavit of Joseph Thomas Ridley affirmed on 18 May 2018 (the Settlement Deed) be approved.

2.    If the Senior Master of the Supreme Court makes an order under r 79.10(2) of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) that the settlement monies set out in the Settlement Deed be held in court for the benefit of the applicant:

(a)    The respondent shall pay the settlement monies to the Senior Master for the benefit of the applicant; and

(b)    The applicant has leave to file a notice of discontinuance of this proceeding with no order as to costs. For the avoidance of doubt, this constitutes an order otherwise for the purposes of r 26.12(7).

3.    If the Senior Master of the Supreme Court does not make the order described in paragraph 2 by 24 July 2018, the matter be listed for case management on a date to be fixed.

4.    The requirement in r 9.71(2)(c) that the interlocutory application be accompanied by an opinion of a lawyer who is “independent” be dispensed with.

5.    Pursuant to s 37AG of the Federal Court of Australia Act 1976 (Cth), on the ground that it is necessary to prevent prejudice to the proper administration of justice, annexures “JR1” and “JR2” to the affidavit of Joseph Thomas Ridley affirmed on 18 May 2018 are to be treated as confidential and are not to be accessed without the permission of a Judge of the Court.

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

REASONS FOR JUDGMENT

MOSHINSKY J:

1    The applicant’s litigation representative has applied for approval of a settlement of this proceeding. The Court’s approval is required by r 9.70 of the Federal Court Rules 2011. This provides that, 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    The application is supported by the following documents:

(a)    an affidavit of Joseph Ridley, a solicitor employed by the applicant’s solicitors, dated 18 May 2018, stating the material facts upon which the litigation representative relies, and stating that in his (Mr Ridley’s) opinion, the settlement is in the best interests of the applicant;

(b)    a settlement deed between the parties (the Settlement Deed) (being an annexure to Mr Ridley’s affidavit); and

(c)    an opinion of Mr David Hancock of counsel dated 17 May 2018 (also annexed to Mr Ridley’s affidavit).

3    Mr Hancock was briefed to act on behalf of the applicant in the proceeding, together with Mr Michael Heaton QC. Mr Hancock expresses the view that the agreement contained in the Settlement Deed is in the best interests of the applicant.

Applicable principles

4    Rule 9.70 provides as follows:

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.

5    Rule 9.71 provides:

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.

6    It is the Court’s responsibility to determine, for itself, whether the settlement is beneficial to the interests of the person under the disability: Scandolera v Victoria (Department of Education and Early Childhood Development) (2015) 331 ALR 525 (Scandolera) at [27] per Mortimer J. The Court should be concerned “only with the benefit of the disabled person”: Gillespie v Alperstein [1964] VR 749; Modra v State of Victoria (Department of Human Services Victoria) [2013] FCA 1041 (Modra) at [12] per Tracey J.

7    In forming the necessary judgment, significant weight will be given to the opinions of the applicant’s legal advisers: Modra at [12]. The Court is assisted in its determination by the “provision of an opinion by an independent lawyer who has been briefed fully on the facts and relevant evidence, and may have access to more material than the Court”: Scandolera at [28].

8    The Court is not, however, bound to accept those opinions, and must determine for itself whether the settlement is beneficial to the interests of the party: Scandolera at [26]-[28]; Koenders v State of Victoria (Department of Education and Training) [2016] FCA 842 (Koenders) at [4] per Davies J.

9    In Modra, Tracey J referred at [12] to the comments of Megarry J in Re Barbour’s Settlement; National Westminster Bank Ltd v Barbour [1974] 1 All ER 1188 at 1191, where an application was made on behalf of a minor. Megarry J stated as follows:

[T]here is the important matter of the minors’ benefit. When the court is asked to give its approval on behalf of minors to a compromise of a dispute, the court has long been accustomed to rely heavily on those advising the minors for assistance in deciding whether the compromise is for the benefit of the minors. Counsel, solicitors, and guardians ad litem or next friends have opportunities which the court lacks for prolonged and detailed consideration of the proposals and possible variations of them in relation to the attitudes of the other parties and the apparent strength and weakness of their respective claims. When the matter comes before the court, the terms of settlement are in final form and the time for consideration is of necessity less ample. The court accordingly must rely to a considerable extent on the views of those whose opportunities of weighing the matter have been so much greater. Expressing a view on whether the terms of a proposed compromise are in the interests of a minor is a matter of great responsibility for all concerned.

10    The Court is required to weigh, at least as an important consideration, the prospects of the applicant if the proceeding were to continue. In Scandolera, Mortimer J stated as follows at [29]:

Since the approval of a settlement will bind the party under the disability and bring the litigation to an end, the Court should consider the advantages and disadvantages of the litigation continuing not only in terms of whether the applicants might secure a more advantageous award from the Court at trial, but also issues such as the prospects of an appeal and the costs and pressures imposed on [the applicants] if the litigation were to continue to what is estimated to be a five-week trial.

11    Another important factor in the Court’s determination is the emotional and psychological strain of the litigation on the applicant and his or her family, and the finality and certainty of a settlement (Scandolera at [32]).

12    An important factor in considering whether the settlement is in the best interests of the applicant is how the settlement sum is to be properly preserved for his or her benefit. Unless this can be achieved, then the Court may have doubt about whether the settlement proposal overall is beneficial to his or her interests: Scandolera at [33]. To avoid the possibility of dissipation of the settlement sum, it may be appropriate for the sum to be held securely in trust and applied towards the educational, developmental or health interests of the applicant: Scandolera at [34].

Application of principles in the present case

13    The opinion of Mr Hancock contains a clear and helpful discussion about the likely prospects of success of the claim, together with other factors said to be relevant including a comparison of awards of compensation in other cases, and the likely quantum of damages if the matter proceeded to trial and the claims were established. The opinion also covers issues such as the stage the proceeding has reached, the risks of litigation, the possible exposure of the applicant’s litigation representative to an adverse costs order, and the fact that the settlement sum will not be reduced by legal fees taken out by the applicant’s solicitors or counsel.

14    The opinion of Mr Hancock deals with the issue of the emotional and psychological strain of the litigation on the applicant and her family.

15    The Settlement Deed provides for the payment of the settlement sum to the Supreme Court of Victoria Senior Master’s Fund. I note that in Scandolera at [42], Mortimer J considered orders designed to enable the settlement sum to be paid to that fund to be “the most appropriate orders” in the circumstances of that case.

16    On the basis of the matters referred to above, and in particular the opinion of Mr Hancock, I am satisfied that the settlement is in the best interests of the applicant and it is appropriate to approve the settlement.

17    I note that there has been discussion in some cases as to whether a lawyer acting for the applicant is “independent” for the purposes of r 9.71(2)(c) (see Koenders at [3] per Davies J and the cases cited therein). In the circumstances of this case, I consider it appropriate to receive and rely upon an opinion of a lawyer who has acted for the applicant. It would be productive of unnecessary expense, and such expense may well be disproportionate to the circumstances of the proceeding, to require another lawyer to be engaged to prepare an opinion. Accordingly, I will make an order that the requirement in r 9.71(2)(c) that the interlocutory application be accompanied by an opinion of a lawyer who is “independent” be dispensed with.

18    For the reasons set out above, I will make an order approving the settlement and ancillary orders as proposed by the applicant’s litigation representative.

Associate:

Dated:    30 May 2018