FEDERAL COURT OF AUSTRALIA Duval-Comrie v Commonwealth of Australia [2016] FCA 1523 File number(s): VID 1367 of 2013 Judge(s): NORTH J Date of judgment: 16 December 2016 Catchwords: PRACTICE AND PROCEDURE – representative proceedings – approval of settlement by court – whether proposed settlement is fair and in the interests of the group as a whole – whether differential outcomes for group members is unfair Legislation: Business Services Wage Assessment Tool Payment Scheme Act 2015 ss 6(2), 6(4), 8(3)(b), 9, 10, 35(3), 36, 37, 98 Disability Discrimination Act 1992 (Cth) ss 6, 15, 122 Federal Court of Australia Act 1976 (Cth) s 33V, 33ZB, 33J, 33ZF Federal Court Rules 2011 r 9.70 Human Rights Commission Act 1986 (Cth) s 46PH(1)(i) Cases cited: Australian Competition and Consumer Commission v Chats House Investments (1996) 71 FCR 250 Commonwealth of Australia and Anor v Prior; Commonwealth of Australia and Anor v Nojin and Anor [2013] HCA Trans 101 Nojin v Commonwealth of Australia [2012] FCAFC 192 Date of hearing: 12 December 2016 Registry: Victoria Division: General Division National Practice Area: Administrative and Constitutional Law and Human Rights Category: Catchwords Number of paragraphs: 75 Counsel for the Applicant: Dr K Hanscombe QC with Ms K Bowshell Solicitor for the Applicant: Maurice Blackburn Counsel for the Respondent: Mr P Hanks QC with Mr D Star SC and Mr T Goodwin Solicitor for the Respondent: Australian Government Solicitor ORDERS VID 1367 of 2013 BETWEEN: TYSON DUVAL-COMRIE (BY HIS LITIGATION REPRESENTATIVE CLAUDINE DUVAL) Applicant AND: COMMONWEALTH OF AUSTRALIA Respondent JUDGE: NORTH J DATE OF ORDER: 16 DECEMBER 2016 THE COURT ORDERS THAT: Confidentiality 1. Pursuant to s 37AF of the Federal Court of Australia Act 1976 (Cth) (the Act), and on the ground that the order is necessary to prevent prejudice to the proper administration of justice, the opinion of Counsel for the applicant which is Confidential Annexure KMT-4 to the Affidavit of Kelly Maree Thomas made 25 November 2016 remain confidential, and be placed on the Court file in a sealed envelope marked "Not to be opened except by Direction of a Judge of the Court". Settlement approval 2. Pursuant to ss 33V and 33ZF of the Act and r 9.70 of the Federal Court Rules 2011, the Court approves the settlement of this proceeding upon the terms set out in the Deed of Settlement exhibited as Annexure PCB-3 to the affidavit of Paul Christopher Barker made 11 April 2016 (the Deed). 3. Pursuant to s 33ZF of the Act or otherwise, the Court authorises the applicant nunc pro tunc on behalf of the group members as defined in paragraphs 2 and 2A of the Second Further Amended Statement of Claim filed 21 December 2015 (Defined Group Members) to enter into and to give effect to the Deed and the transactions thereby contemplated for and on behalf of the Defined Group Members. 4. Pursuant to s 33ZB of the Act, the Court declares that the persons affected and bound by the settlement of the proceedings are: (a) the applicant; (b) the respondent; and (c) the Defined Group Members, other than those who have opted out of the proceeding pursuant to s 33J of the Act. Settlement and opt out process 5. The date in Order 3 of the Orders made on 28 October 2016 be extended nunc pro tunc to 4 November 2016. 6. The date in Order 9 of the Orders made on 28 October 2016 be extended nunc pro tunc to 10 November 2016. Costs 7. The respondent will pay the applicant's costs of the proceeding in accordance with cl 2.4 of the Deed. 8. All costs orders made to date in the proceedings (including orders reserving costs) are vacated. Dismissal of proceedings 9. These proceedings be dismissed with 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 NORTH J: introduction 1 Before the Court is an interlocutory application filed on 14 April 2016, by Tyson Duval-Comrie, the applicant, for approval of the settlement of the proceeding. 2 The approval of the Court is required by s 33V of the Federal Court of Australia Act 1976 (Cth) because the proceeding is a representative proceeding. the proceeding 3 The applicant and the members of the group on whose behalf he sues are intellectually disabled workers who were, or had been, employed as at 22 October 2013, in an Australian Disability Enterprise (ADE) and whose wages had been or were proposed to be fixed using the Business Services Wage Assessment Tool (BSWAT). 4 An ADE is an enterprise providing business services in which the majority of employees are disabled. Tasks undertaken by those employees include gardening, packing and confidential document destruction. During the relevant period, BSWAT was the single most common wage assessment tool used in ADEs. It was used in that period by over 100 ADEs. The number of people who fall within the group is 9,735. 5 It is alleged that it was a condition or requirement of the employment of the applicant and group members that in order to obtain a wage increase they had to undergo a wage assessment by the use of BSWAT. 6 It is alleged that the imposition of the condition or requirement that wages be fixed using BSWAT amounted to indirect disability discrimination within the meaning of s 6 of the Disability Discrimination Act 1992 (Cth) (DDA) both as it stood before, and on and from 5 August 2009, when the terms of the section were amended. That indirect discrimination, so it was alleged, occurred in the course of the group members' employment, in contravention of s 15 of the DDA. 7 BSWAT fixed the amount of a wage by an assessment of competency and of productivity. Each of those elements governed fifty per cent of the amount of the wage to be paid. It is the use of the competency element which is alleged to have been discriminatory. 8 The assessment of competency was made by reference to eight elements each of which determined the availability of 6.25 per cent of the wage to be paid. 9 Four of the competency assessment elements concerned industry competencies defined in the Australian Training Quality Framework. It is alleged that some of these competencies were irrelevant to the work actually undertaken by group members, and in some cases there was no defined competency for the work undertaken. In either case, the worker's competence was rated at nil for that element and hence the 6.25 per cent wage assessment was unavailable. It is alleged that as a result of their intellectual disability, the applicant and the group members were more likely to undertake restricted duties in their employment than workers with non-intellectual disabilities, which in turn meant that there were less likely to be four industry competencies against which the applicant and the group members could be assessed. 10 It is also alleged that the other four competency assessment elements, designated by BSWAT as core competencies, were determined by interview using abstract language. If the answer given by the worker was unacceptable that worker scored zero for that element and a 6.25 per cent wage component was unavailable to that worker. It is alleged that as a result of their intellectual disability, the applicant and the group members were less likely to be able to demonstrate competency by interview using abstract language than workers with non-intellectual disabilities. 11 The respondent, the Commonwealth of Australia, approved BSWAT as a wage fixing tool. It offered to fund ADEs for assessments using BSWAT. In accordance with the offer the Commonwealth funded CRS Australia to conduct assessments of the applicant's and group members' wages using BSWAT. It is alleged that the Commonwealth thereby caused, induced, and aided the ADEs to act unlawfully and that it is liable for the indirect disability discrimination by operation of s 122 of the DDA. 12 There were several other claims made by the applicant and the group members in the proceeding. It is not necessary to detail those claims for present purposes. 13 In the proceeding the applicant and the group members seek a declaration that the Commonwealth had unlawfully discriminated against them, injunctions to prevent further discrimination, and compensation for loss and damage, including interest. The loss and damage was said to arise from the fact that the applicant and group members were paid lower wages than they would have been paid if there had not been unlawful discrimination. 14 It is now necessary to refer to several events which occurred before these proceedings were instituted. Nojin v commonwealth of australia 15 On 21 December 2012, the Full Court delivered judgment in Nojin v Commonwealth of Australia [2012] FCAFC 192 (Nojin). By majority (Buchanan and Katzmann JJ) the Court held that the use of BSWAT to assess the wages of two intellectually disabled workers in an ADE amounted to unlawful discrimination within the meaning of s 15 of the DDA. The High Court refused special leave to appeal from that judgment: Commonwealth of Australia and Anor v Prior; Commonwealth of Australia and Anor v Nojin and Anor [2013] HCA Trans 101. complaint before the ahrc 16 On 26 July 2013, following judgment in Nojin, another employee of an ADE, Alysia Maloney, filed a complaint of unlawful discrimination in the Australian Human Rights Commission. The complaint was amended so as to constitute it as a representative complaint. The applicant was a member of the group represented in that complaint. 17 On 22 October 2013, the complaint was terminated under s 46PH(1)(i) of the Australian Human Rights Commission Act 1986 (Cth) (HR Act), on the basis that the Commission was satisfied that there was no reasonable prospect of conciliation. proceeding before the federal court 18 On 23 December 2013, the applicant filed the present proceeding. He has standing to sue as a member of the represented class in the Australian Human Rights Commission complaint. He commenced this proceeding through his litigation guardian, his mother, Claudine Duval. the BSWAT payment scheme act 19 On 5 June 2014, shortly after the commencement of the proceeding, the government introduced the Business Services Wage Assessment Tool Payment Scheme Bill 2014. The bill was not passed by the Senate. However, it was subsequently passed and received the royal assent on 30 June 2015. 20 In its original form the Business Services Wage Assessment Tool Payment Scheme Act 2015 (Cth) (the BSWAT Scheme Act) provided, in general terms, for intellectually disabled people whose wages had been assessed using BSWAT to apply for a payment of 50 per cent of the difference between the wages they were paid and the wages they would have been paid had the discriminatory elements not been used in the assessment (the scheme). 21 The BSWAT Scheme Act in its original form had two significant features which have not changed. First, payments under the scheme are effectively tax-free payments. That is because the Income Tax Assessment Act 1936 (Cth) was amended by the Business Services Wage Assessment Tool Payment Scheme (Consequential Amendments) Act 2015 (Cth) (BSWAT Consequential Amendments Act) so that payments under the scheme became eligible for the lump sum in arrears tax rebate, which alleviates the problem of a lump sum amount being subject to more tax in the year of receipt than would have been payable if the lump sum had been taxed in each of the years in which it accrued. Further, s 8(3)(b) of the BSWAT Scheme Act provides that if income tax is nevertheless payable on a payment under the scheme, then an additional amount will be paid to account for the expected tax. Second, the BSWAT Consequential Amendments Act amended the Social Security Act 1991 (Cth) (SSA) so that payments under the scheme are not income for the purpose of social security entitlements and will not affect any pension which the applicant receives. That provision is especially important as over 94 per cent of the group members receive income support under the SSA, mainly in the form of Disability Support Pensions. the deed of settlement 22 Against this background of legislative action taken to mitigate the effects of the use of BSWAT for intellectually disabled people a mediation was held in order to attempt to resolve the proceeding. All members of the group fall within the definition of persons able to make a claim under the legislative scheme. The mediation was successful. On 19 November 2015, the parties signed Heads of Agreement. The parties then executed a Deed of Settlement dated 9 February 2016. 23 The terms of the Deed relevant to the present application provided that the Commonwealth would use its best endeavours to pass amending legislation to increase the amount of payment under the scheme from 50 to 70 per cent of the difference between the wages paid and the wages which would have been paid if the discriminatory elements of the BSWAT had not been used, and also to extend by 12 months the period within which claimants could apply under the scheme. In return, the applicant, for himself and on behalf of group members, would release the Commonwealth from any claim associated with the use of the BSWAT to assess wages. 24 The terms of the Deed also provided that the Commonwealth would pay the applicant's costs of this proceeding, up to and including approval of the settlement, on a party and party basis. 25 Further, the terms of the Deed provided that the Commonwealth would take steps to promote and facilitate registration in, and application to, the scheme by both group members and any other eligible persons, namely, by: corresponding with persons potentially eligible for the scheme; facilitating the display of posters advertising the scheme in ADEs; preparing easy English information about the scheme for dissemination to eligible persons and their families, carers, and nominees, ADEs, legal advisors and financial counsellors; holding information sessions at ADEs and other public venues, where assistance was provided to those attending to register and apply to the scheme; and running a scheme telephone hotline. 26 In accordance with the terms of the Deed the Commonwealth introduced the agreed amendments to parliament. On 18 March 2016, the amending legislation received the royal assent. The scheme 27 Some features of the scheme should be referred to. 28 The scheme applies to a person with an intellectual impairment employed as a supported worker at an ADE on at least one day from 1 January 2004 until 31 January 2015 whose wage was assessed using BSWAT (s 6(2)). The scheme therefore incorporates a larger class of persons than the present proceeding. There was evidence that BSWAT had been used as a wage assessment tool for disabled workers since about 2005. It was stipulated as an approved method of wage fixing by inclusion in the Federal award related directly to work done by disabled people in the Business Services sector, the Australian Liquor, Hospitality and Miscellaneous Workers Union Supported Employment (Business Enterprises) Award 2001. On 5 June 2015, the Award was amended so that BSWAT was no longer an approved wage assessment tool under the Award. The Award was also amended to include transitional arrangements for BSWAT to be used until 29 February 2016. However, there is evidence before the Court that the Commonwealth suspended BSWAT assessments on 24 December 2012, and that no assessments have been conducted since that time. The period to which the scheme applies therefore covers the whole period over which BSWAT was actually used. 29 In order to apply for payment under the scheme a person must register or apply by 1 May 2017. If a person registers by that date, that person has until 30 November 2017 to apply for a payment. 30 The BSWAT Scheme Act provides for rules to prescribe the method of calculation of the amount of payment (s 8). Chapter 3 of the BSWAT Payment Scheme Rules 2015 (the Rules) provides the method for calculating the amount of the payment. The Secretary of the Department must determine the amount of the payment and must offer that amount to the applicant (s 17 and s 19). The claimant may seek an internal and external review of the determination (Chapter 5 and 6 of the Rules). An external review must be conducted by a former judge or a legal practitioner of at least 10 years standing. 31 There are conditions relating to the acceptance of offers of payment under the scheme. The acceptance must be lodged before 1 January 2019. It must be accompanied by a legal advice certificate and a financial counselling certificate (s 35(3), s 36 and s 37). The Rules provide for the Commonwealth to fund the provision of the legal and financial advice (Ch 9, Pt 3 of the Rules). A person who has settled for an amount of money or is entitled to an order for the payment of an amount of money relating to the use of BSWAT is not eligible under the scheme (s 6(4)). 32 If an offer is accepted then by force of the Act the claimant ceases to be a group member in any representative proceeding concerning the use of BSWAT (s 9), and the claimant releases the Commonwealth and the ADE from liability arising from the use of BSWAT (s 10). Applying the provisions of the scheme does not constitute an admission of liability by the Commonwealth (s 98). material filed in support of the application 33 Affidavits in support of the application have been filed by the following deponents, namely, Paul Christopher Barker, Dejan Lukic, James Alexander Kemp, and Kelly Marie Thomas. 34 Mr Barker is a lawyer employed by the Australian Government Solicitor which represents the Commonwealth. He has the conduct of this proceeding on behalf of the Commonwealth. He has sworn affidavits on 11 April 2016, 9 June 2016, 22 July 2016, and 9 December 2016. 35 Mr Lukic is a lawyer employed by the Australian Government Solicitor assisting Mr Barker. He affirmed an affidavit on 22 July 2016. 36 Mr Kemp is the Acting Branch Manager of the Supported Employment Policy, Access and Engagement Branch of the Department of Social Services. From May 2013 until February 2016, he was the Director of the Payment Scheme and Supported Employment Policy Section which was responsible for the design of the BSWAT payment scheme and for the implementation of the computer system changes necessary to implement the scheme. Mr Kemp has affirmed four affidavits in support of this application, namely, on 22 July 2016, 17 October 2016, 9 November 2016 and 9 December 2016 (the Kemp Affidavits 1, 2, 3 and 4 respectively). 37 Ms Thomas is a lawyer employed by Maurice Blackburn Lawyers which represent the applicant and group members. She affirmed an affidavit in support of this application on 25 November 2016. Annexed to the Thomas Affidavit is a confidential opinion of counsel which advises that, in their view, the proposed settlement is fair and in the interest of the group members. 38 The applicant and the Commonwealth have also filed written submissions in support of this application. comparison between the amount recoverable in the proceeding and the amount recoverable under the scheme 39 The Court will approve a settlement in a representative proceeding if the terms of the settlement are fair and in the interest of the members of the group as a whole: ACCC v Chats House Investments (1996) 71 FCR 250 at 258. 40 Kemp Affidavits 1, 2 and 3 explain in detail the development of the BSWAT calculator designed to work out the entitlements of claimants in the scheme. 41 The Commonwealth engaged Ernst and Young to model the outcome of a hypothetical 100 per cent success for group members in the proceeding against a 70 per cent payment under the scheme. Ernst and Young were to use the BSWAT calculator for this modelling. Over a period of time improvements were made to the BSWAT calculator as various problems and anomalies were identified. Consequently, Ernst and Young were asked by the Commonwealth to repeat the modelling using the improved BSWAT calculator system. 42 On 17 October 2016, Ernst and Young provided a further report containing the second modelling exercise. The report indicated that, on average, the group members would retain only 47 per cent of their 100 per cent compensation payment due to income tax and income support implications. More specifically, the report also indicated that 10 per cent of group members would receive no payment from a successful claim in the proceeding. It also showed that 26 per cent of the group members would receive between 70 and 100 per cent of the compensation claimed. Finally, it demonstrated that 64 per cent of the group members would receive less than the 70 per cent provided by the scheme. 43 Thus, the 64 per cent of the group members are better off under the scheme than if they succeeded in the proceeding. 44 As to the 10 per cent of the group who were shown in the modelling to receive nothing, Mr Kemp explained that they fell into four categories. 45 Two per cent of the group had BSWAT assessments where the assessed wage exceeded the productivity scored wage. A further 1.6 per cent of the group had a higher actual wage than their productivity scored wage. Both of these categories experienced no loss as a result of their wage assessment using BSWAT and they could not recover compensation in the proceeding. 46 In respect of 3.1 per cent of the group, they were shown as having little or no earnings data, and a further 3.3 per cent of the group were shown as having little or no relevant earnings. In these cases the BSWAT calculator will flag the issue and the Department will undertake further investigation. It is expected that the investigation would disclose a similar profile amongst those groups as amongst the group as a whole. 47 The group which will be worse off under the scheme than on a total success in the proceeding are the 26 per cent of the group. 48 Eleven per cent of the group would recover between 70 per cent and 100 per cent of the claim in a successful case. Fifteen per cent of the group would recover 100 per cent of the claim in a successful case and hence suffer a discount of 30 per cent by taking the 70 per cent available under the scheme. However, these 15 per cent have substantially lower claims in dollar terms than those in the 64% cohort. The average of each of those claims is $1,400. differential treatment of group members 49 As explained later in these reasons for judgment a discount of up to 30 per cent of the amount of each claim would represent a reasonable reduction for the risks of the litigation, particularly the risk that the Commonwealth might succeed in its defences in whole or in part. It follows that the 64 per cent of group members who recover more under the scheme than on a successful claim in the proceeding experience a windfall result. 50 Twenty-six per cent of the group members would receive less under the scheme than they would if the proceeding succeeded and the Court granted them the full amount claimed. However, the amount of the discount which they would experience reflects a reasonable allocation of the risks of litigation. 51 This differential outcome is not ideal because there is greater fairness in equality of outcomes between group members. However, the claims of the 26 per cent, in dollar terms, are substantially lower than those in the 64 per cent cohort. Yet the costs of bringing the proceedings on behalf of the smaller claims, including overcoming the defences raised by the Commonwealth, are not substantially lower than the costs for bringing the proceedings on behalf of the larger claims. There is therefore some justification for a proportionately higher discount being applied to claims where the costs for running the case are proportionately higher. the proposed defences of the commonwealth 52 A relevant consideration in determining whether a settlement is fair and in the interests of the applicant and the group members is an assessment of the risks of establishing liability and loss or damage. 53 The Commonwealth has set out in written submissions and elaborated orally three defences on liability and three defences on loss and damage which it intends to pursue and contends constitute very real and significant risks that the applicant and the group members will not be able to establish liability and / or loss and damage. 54 First, the Commonwealth intends to lead expert evidence from Professor Roger Stancliffe to demonstrate that the applicant and group members with a mild intellectual disability would be able to understand and answer the abstract language of the competency questions posed in the use of BSWAT. The applicant and group members with a moderate intellectual disability would generally experience difficulty answering those questions but assessors were able to use techniques which would have greatly assisted those people. The Commonwealth intends to call Sara Nutting, formerly National Operations Manager of CRS Australia, the body responsible for undertaking BSWAT assessments, to say that assessors used those techniques. The Commonwealth contended that group members with mild or moderate intellectual disability may not be able to establish that they could not comply with the requirement imposed by the competency testing element of BSWAT. 55 Second, the Commonwealth intends to argue that if the ADEs were required to use a productivity only assessment the wages of the applicant and group members would have increased to such an extent that most of the ADEs would not have been financially viable. As a result they would have closed or employed only low support needs workers thereby excluding many of the group members from employment. 56 In support of this argument the Commonwealth referred to a sample of eight ADEs which demonstrated that the wage rates using a productivity only assessment would have risen by 22 to 206 per cent. Significantly, the wages paid by Endeavour Foundation would have risen by 47 per cent. That ADE employs up to 2,125 workers, that is to say, over 20 per cent of the group members who number 9,735. Endeavour Foundation would have become unviable and would have likely closed as would have six of the remaining seven ADEs in the sample. The results of the sample were supported by a survey conducted by KPMG of the effect of wage increases on 85 ADEs. 57 The submission of the Commonwealth outlined the various ways in which the financial viability of the ADEs is relevant to defences to liability. The operation of the defences is complicated by the amendment to the DDA effective from 5 August 2009. It is sufficient for present purposes to observe that the effect on the viability of the ADEs would be a complete answer to all the claims of discrimination on and from 5 August 2009 if that effect amounted to an unjustifiable hardship on each ADE. In relation to the period before 5 August 2009, the applicant and group members bore the onus of establishing that the imposition of the condition or requirement involving the use of BSWAT was not reasonable. If use of BSWAT ensured the financial viability of an ADE the applicant and group members would find it difficult to establish that the requirement to use BSWAT was not reasonable. The applicant and group members would then be unable to establish unlawful discrimination. 58 Further, the Commonwealth submitted that the evidence to be called on the financial viability of ADEs would make out the special measures exception for the period before 5 August 2009 (s 45 of the DDA pre 5 August 2009). The use of BSWAT by ADEs, so it was submitted, was reasonably intended to provide the applicant and group members access to meet their special needs in relation to employment opportunity. 59 Third, the Commonwealth will rely on evidence from Endeavour Foundation that the BSWAT measured in a real not abstract way the capacity of their intellectually disabled workers to perform their work and that the competency assessment was directly relevant to the work undertaken by those employees. If this evidence is accepted in relation to all or some of the group members they will have difficulty showing that the use of BSWAT was not reasonable in respect of the period prior to 5 August 2009 or resisting the defence of the Commonwealth that the requirement to use BSWAT was reasonable in respect of the period on and from 5 August 2009 in respect of all or some of those particular people. 60 In relation to loss and damage, the first argument to be relied upon by the Commonwealth is that if the use of BSWAT rendered the ADE which employed the applicant and group members unviable then those parties incurred no loss or damage. The ADEs would have closed and the applicant and group members, or very many of them, would have lost their jobs and not been offered employment. 61 The second loss and damage argument relies on evidence collected to date from the eight ADEs surveyed by the Commonwealth. The applicant and the group members claimed loss and damage on the basis of the difference between the BSWAT assessed wage and a wage assessed using a productivity only tool. However, of the ADEs surveyed by the Commonwealth, if they had not used BSWAT, two would have used the Green Acres Tool, five would have used the Skillsmaster Tool, and one would have used the FWS Wage Assessment Tool. Each of those tools was available under the award. Had those tools been used the wages of the applicant and group members would have increased, but not to the level of wages assessed under a productivity only tool. Consequently, the amount which the applicant and many of the group members could recover would be significantly less than the claims made. 62 The third and final loss and damage defence argues that the Commonwealth should not be held liable to pay compensation for loss and damage suffered after 28 April 2014 because the Commonwealth and the ADEs were granted exemptions by the Australian Human Rights Commission from the relevant provisions of the DDA for the use of BSWAT. 63 Whilst Nojin stands for the proposition that use of BSWAT amounts to discrimination in certain circumstances, the defences raised in this case focus on individual or sub-group features which were not in issue in that case. Hence, if those defences are successful Nojin will have limited application. 64 The Commonwealth has taken considerable trouble to outline the scope of the defences which it intends to pursue both in comprehensive written submissions and the voluminous affidavits of Mr Barker, Mr Lukic and Mr Kemp. Those affidavits have disclosed some of the evidence on which the Commonwealth would rely in a contested hearing. The material discloses a credible basis for a number of those defences applicable either to all or to a large number of the group members. The defences pose a risk to the applicant and the group members which justify a discount of up to 30 per cent from the result of a successful claim. 65 There are some further benefits in the proposed settlement when compared with a litigated outcome. costs 66 The Commonwealth will bear the costs of the proceeding so that claims under the scheme will not be reduced by any sum for the legal costs incurred to date. The applicant's legal representatives' costs agreements expressly provide that no shortfall will be recovered from the applicant, nor is there any proposal to recover any shortfall from the group members. The result is that no group member will pay costs as a result of the settlement. administration of payments 67 Further, the applicant and the group members will not be responsible for the administration of the calculation and payment of the claims. The Commonwealth will administer the system of payment. That relieves the applicant and the group members from bearing the costs of administering the payment scheme. As the group comprises over 9,700 members the costs of administering the system of distribution would be considerable. 68 The operation of the scheme is subject to accountability to Parliament being a result of legislative enactment. Further, the integrity of its operation is subject to oversight by the Australian National Audit Office. These are each valuable protections for the claimants under the scheme. interest and indexation 69 It is likely that the Court would order interest to be paid on any compensation awards made in contested litigation to account for the delay between when the sums were due and when they are paid. The BSWAT Act, however, provides for annual indexation of the claim amounts (s 8A). Whilst the rate of indexation is probably lower than the rate of interest which would be awarded, there is some provision to take account of the passage of time from when the payment was due. consequences of the continuance of the proceeding 70 It is necessary to consider the consequences if the proceeding is to continue. The interlocutory steps are at an early stage. Only limited discovery has been made and no directions have been given about the preparation for or conduct of the trial including, for instance, the exchange of expert reports. The trial is likely to be highly complex because the defences of the Commonwealth will require the examination of the circumstances of some individual group members or some sub-groups of the group members. Apart from the cost of preparing and conducting complex litigation of this nature, it is likely that the outcomes would be delayed long past the date when payments under the scheme would otherwise be available. The applicant and the group members would likely experience the attendant stress and uncertainty of the outstanding litigation over a long period. degree of acceptance among group members 71 The Department of Social Services has verified the identity of 14,590 persons who have been assessed under BSWAT. Those persons include all of the 9,735 identified group members. On 16 June 2016, 11,918 BSWAT-assessed persons were sent notices advising them of the proposed settlement of the proceeding. In view of the disabilities of the BSWAT-assessed persons, the settlement notice was prepared in Easy English style, which combines text and images to convey information simply and directly. They were invited to return a notice to the Court if they objected to the settlement. 913 BSWAT-assessed persons were excluded from that mailout because they had previously opted out of the proceeding. The Department subsequently discovered an error in the initial mailout which meant that 1,759 BSWAT-assessed persons had not been sent notice of the settlement. On 4 November 2016, 7,143 BSWAT-assessed persons were sent the settlement and objection notices. That further mailout included all of the 1,759 persons affected by the identified error. Thus, allowing for the inherent difficulties in verifying the details of workers employed at over 100 ADEs, it appears that all of the 14,590 BSWAT-assessed persons have been sent a notice of the settlement. 72 In addition, on 9 November 2016, information about the settlement was featured in a special edition of the Department's Disability E-News publication, and on 10 November 2016, a poster with information about the settlement was sent to all operating ADEs to be displayed prominently. 73 Forty-two objection notices have been returned to the Court. Only a very small number of those notices objected to the settlement and stated a reason or reasons. Of that small number, some of the notices objected because the person was concerned about losing their employment, or because the person said that they did not have an intellectual disability. The very small objection rate is an indication of the generally favourable nature of the settlement. Excluded group members 74 Special arrangements have been made for two group members, Andrew Smith and Alysia Maloney, who have settled claims related to the use of BSWAT, thereby becoming ineligible for the scheme (s 4 and s 6(4) of the BSWAT Scheme Act). The effect of the special arrangements is that Smith and Maloney are to receive the same amount by settlement as they would have received under the scheme. That is achieved through separate Deeds of Settlement regarding each of Smith and Maloney, which provide for the payment of an extra sum of money to account for the expected income tax liability incurred by the receipt of the settlement payment, and a determination by the Secretary of the Department of Social Services that the settlement payments will be an exempt lump sum for the purposes of income tests under the SSA. conclusion 75 It follows that from these reasons for judgment that the terms of settlement set out in the Deed of Settlement are fair and in the interests of the applicant and the group members as a whole. Consequently, the settlement is approved. I certify that the preceding seventy-five (75) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice North. Associate: Dated: 16 December 2016