Tongue v Council of the City of Tamworth [2004] FCA 972

FEDERAL COURT OF AUSTRALIA

Tongue v Council of the City of Tamworth [2004] FCA 972 TERENCE RODNEY TONGUE v COUNCIL OF THE CITY OF TAMWORTH NG 425 OF 1998 ALLSOP J 28 JULY 2004 SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NG 425 of 1998

BETWEEN: TERENCE RODNEY TONGUE

APPLICANT

AND: COUNCIL OF THE CITY OF TAMWORTH

RESPONDENT

JUDGE: ALLSOP J

DATE OF ORDER: 28 JULY 2004

WHERE MADE: SYDNEY

THE COURT ORDERS THAT: 1. The application under s 33V of the Federal Court of Australia Act 1976 (Cth) for approval of the settlement of these proceedings by agreement between the applicant and the respondent dated 17 July 2002 be dismissed. 2. The proceedings be expedited. 3. Within 7 days, the parties and objectors file and serve submission on costs and on any further procedural orders to be made. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NG 425 of 1998

BETWEEN: TERENCE RODNEY TONGUE

APPLICANT

AND: COUNCIL OF THE CITY OF TAMWORTH

RESPONDENT

JUDGE: ALLSOP J

DATE: 28 JULY 2004

PLACE: SYDNEY

REASONS FOR JUDGMENT 1 This is an application for approval of a settlement of these proceedings made pursuant to s 33V of the Federal Court of Australia Act 1976 (Cth) (the "FCA Act"). 2 I refer to my previous reasons for judgment in this matter: [2002] FCA 1163; [2004] FCA 33; [2004] FCA 209. These reasons should be read assuming a familiarity with those reasons. 3 I do not propose to rehearse the history of the matter in its entirety, but some repetition is important. 4 This matter came into my docket in 2001 on my appointment. It had been begun in 1998. It is a proceeding begun under Part IVA of the FCA Act. Settlement discussions had been on foot when I was informed in 2001 by the legal representatives of the parties that there was some real prospect of settlement of the case. This caused me to accede to the adjournment of the matter on a number of occasions. In mid-2002, I was told that the matter had settled. Objections to the settlement arose: see [2002] FCA 1163 at [2]–[4]. The objectors formed into a group led by a Mr Kelleher, for whom Mr Woolf acts as solicitor and Mr Robertson SC acts as counsel. On 17 September 2002, I made orders taking the matter up to late 2002 on the basis that there would be a contested approval hearing: see [2002] FCA 1163. 5 On 25 February 2003 and 25 March 2003, I made directions for evidence and submissions to be brought forward by the objectors in order that an approval hearing could commence on 23 April 2003. 6 The approval hearing commenced on 23 April 2003; I continued the hearing on the morning of 24 April 2004, after which it was necessary to adjourn the hearing to allow for the filing of further evidence: see [2004] FCA 209 at [2]. Some further difficulties arose: [2004] FCA 209 at [3]. 7 In September 2003, I was informed that the respondent viewed the settlement as "off": see [2004] FCA 209 at [4]. The applicant contested these assertions and said that the agreement was still on foot and that the proceedings were settled, subject to Court approval. Directions were made for the formulation of this issue. A pleading argument ensued which I heard on 10 December 2003 and thereafter decided on 29 January 2004. I permitted the respondent to plead that the settlement was, for various reasons, no longer effective: see [2004] FCA 33. 8 After allowing the pleading by the respondent, I ordered a separate hearing on the issue of whether the settlement remained binding: see generally [2004] FCA 209 at [4] to [10]. 9 On 23 March 2004, I delivered reasons in which I concluded the separate issues against the respondent. Orders were made on 20 April 2004 to that effect and in terms that the Court: 1. Orders that pursuant to Order 29 rule 2 of the Federal Court Rules the questions raised by paragraphs 41 to 46 of the Amended Statement of Claim, 22 to 26 of the Amended Defence to the Amended Statement of Claim (as amended pursuant to further leave granted on 29 January 2004) and the Reply to the said Amended Defence be decided separately from any other questions and before any further trial in the proceedings. 2. Declares that the agreement made on 17 July 2002 between the Applicant and the Respondent in respect of the settlement of these proceedings: (a) was not validly terminated by the respondent's letter dated 4 September 2003; (b) did, and does, not contain an implied term as set out in paragraphs 26(a), (b) and (c) of the said Amended Defence; and (c) was not frustrated by reason of the conduct of the class members or the Applicant and the class members between 17 July 2003 and 4 September 2003. 3. Declares that the Applicant has not engaged in misleading or deceptive conduct or otherwise engaged in conduct as pleaded in paragraphs 22 to 26 of the said Amended Defence entitling the Respondent to terminate or rescind the said agreement. 4. Declares that the Applicant was not in breach of said agreement and did not repudiate said agreement by reason of the conduct alleged in paragraphs 22 to 26 of the said Amended Defence. 5. Orders that the Respondent pay the Applicant's costs of the notice of motion filed in Court on 1 December 2003 and of the argument in respect thereof. 10 On that same day, I made further orders for the completion of evidence and submissions of the parties on the approval hearing. 11 I am now asked to approve the settlement made on 17 July 2002. 12 The pleaded case of the applicant is described in [2004] FCA 209 at [11] to [21]. A summary of various statements filed from 1998 to 2000 on behalf of the applicant is set out at [2004] FCA 209 at [22]. 13 The later flow of evidence is described in [2004] FCA 209 at [23] ff. 14 As can be seen from a perusal of [2004] FCA 209, the claims for damages made by the objectors are significant and far in excess of the claims originally made. I concluded in [2004] FCA 209 at [50] that the evidence now filed is beyond the particulars supplied by letter dated 30 June 1998 (see [2004] FCA 209 at [21]), but can be seen as evidence of damages asserted to be flowing from the complaints in question, and, so, in one sense, a further particularisation of the pleaded case for damages. 15 The applicant has filed further submissions urging approval. The objectors have filed further submissions urging refusal. 16 In the view that I have reached that I should not grant approval it is inappropriate to say very much as to the strength or weakness of the claim. Nevertheless, I have given careful attention to the evidence and submissions in 2003 and 2004 on the approval question. It is sufficient to say that I think that the claims as brought under contract, negligence, breach of s 17B(c) of the Water Act 1912 (NSW), s 52 of the Trade Practices Act 1974 (Cth) (the "TPA") and ss 71(1) and (2) of the TPA are, to a degree, arguable. 17 After various persons opted out, there are fifty-three claimants in total. It is not appropriate to identify the settlement sum. It is sufficient to say however that the settlement provides for the payment of a modest sum to each, reflective of the types of damage referred to in the letter of particulars dated 30 June 1998 (see [2004] FCA 209 at [21]), and reflective of the risks of litigation, but not reflective of the damages claimed by the objectors, except on a most pessimistic basis, not propounded either by the applicant or the objectors. 18 The objectors urge a much stronger and more robust case than the applicant. There is a great disparity as to quantum claimed by the objectors and what the applicant says is recoverable. 19 A significant number of the class object to the settlement. They assert damages significantly in excess of the damages structure put forward by the applicant to justify the settlement. Those interested in the settlement are riven by strongly opposing views. I am not prepared to conclude (and, in a sense the applicant does not ask me to) that the case is so hopeless that even assuming "damage" has been suffered by the objectors in the amounts identified, that the settlement should be forced on them for their own good. 20 It is clear that some would like to settle and some would like to fight. The respondent wishes to settle once and for all. My approval may only lead to further litigation. 21 The applicant began this case. He may not want to continue it. However, having begun it, he can only extricate himself from it by a settlement, if I am of the view that I should approve it. A significant proportion of the class (over half in number) opposes the settlement. 22 Conformably with what Goldberg J said in Williams v FAI (No 4) [2004] FCA 1925; 180 ALR 459 and what the United States Court of Appeal of the Third Circuit said in Re General Motors Corp Pick-Up Truck Fuel Tank Products Liability Litigation 55 F 3d 768, 785 (1993) I have taken into account (as a guide) the amount offered, the prospects of success, the claims for damages, the length of time the matter has been litigated, the involved procedural history, the views of counsel and the sharply divided views of the class. In relation to the views of counsel, I have taken into account the fact that the objectors are advised by senior counsel. 23 I have also taken into account as a consequence of the fracturing of the class the revealed attitude of the respondent to the settlement. Presumably conformably with its express and implied contractual obligations it has not sought to persuade me not to approve the settlement. However, the aspect of the litigation lost by the respondent ([2004] FCA 209) revealed a real fear in the respondent that it would see itself paying a not trivial sum of money and remain or be potentially liable to parties with a cognate grievance. This factor has not been overwhelming. If I were of the view that I should otherwise approve the settlement over the strong objection of the objectors advised as they are by senior counsel, this factor would not have prevented me approving the settlement. 24 Anxious though I am not to inflict litigation on parties who wish to take an available offer reasonable in their eyes based on how they view the case, I must give weight, and I think considerable weight, to the fact that such a large portion of the class oppose the settlement, considering it to be inadequate. 25 In all the circumstances I do not propose to approve the settlement. 26 Given the material that has been placed before me, including the advice of counsel, it is not possible for me to hear the case. I have spoken to Jacobson J and it is likely that his Honour will take over carriage of the matter and I propose to transfer the matter to his docket. Before doing so, I will give the parties seven days to decide whether there are any procedural orders that they wish me to make. One matter to which consideration should be given is what should happen to parts of the Court file given my refusal to approve the settlement. There are submissions and there is evidence, which should not be on the file held by a Judge who is to hear the case. 27 Given the history of this matter I order expedition and the parties may assume that the matter will commence in the last quarter of 2004. 28 I will hear the parties on costs. I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Allsop.