Federal Court of Australia Budini v Sunnyfield (No 3) [2021] FCA 1540 File number(s): SAD 266 of 2018 Judgment of: PERRY J Date of judgment: 10 December 2021 Catchwords: PRACTICE AND PROCEDURE – application by litigation representative for approval of settlement – where applicant under legal incapacity due to disability – consideration of relevant factors for approval of settlement – settlement approved Legislation: Australian Consumer Law (contained in Sch 2 to the Competition and Consumer Act 2020 (Cth)) Disability Discrimination Act 1992 (Cth) Federal Court of Australia Act 1976 (Cth) s 37AG Federal Court Rules 2011 (Cth) rr 9.70, 9.71 Trustee and Guardian Act 2009 (NSW) Cases cited: Butler v Djerriwarrh Employment & Education Services Inc [2015] FCA 296 Elliott v Victoria (Department of Education & Training) [2018] FCA 1029 Fish v NSW Department of Education and Training [2018] FCA 434 James v WorkPower Inc [2019] FCA 1239 Modra v Victoria (Department of Human Services Victoria & Department of Education and Early Childhood Development) [2013] FCA 1041 Mununggurr v Channel Seven Sydney Pty Ltd [2019] FCA 2188 Re Barbour's Settlement; National Westminster Bank Ltd v Barbour [1974] 1 All ER 1188 Scandolera (by his next friend Robinson) v Victoria (Department of Education and Early Childhood Development) [2015] FCA 1451; (2015) 331 ALR 525 Division: General Division Registry: South Australia National Practice Area: Administrative and Constitutional Law and Human Rights Number of paragraphs: 20 Date of last submission/s: 9 July 2021 Date of hearing: Determined on the papers Solicitor for the Applicants: Harmers Workplace Lawyers Solicitor for the Respondents: Clayton Utz ORDERS SAD 266 of 2018 BETWEEN: ENRICA BUDINI First Applicant MICHAEL BUDINI Second Applicant AND: SUNNYFIELD ACN 000 415 127 First Respondent MARK CLAYTON Second Respondent order made by: Perry J DATE OF ORDER: 10 December 2021 THE COURT ORDERS THAT: 1. Pursuant to r 9.70 of the Federal Court Rules 2011 (Cth), the agreement to settle this proceeding, as set out in the deed of release and settlement marked Annexure JVW-15 to the affidavit of Jacob Victor William White, affirmed 9 July 2021 (White Affidavit), be approved. 2. Pursuant to s 37AG(1)(a) of the Federal Court of Australia Act 1976 (Cth), to prevent any prejudice to the proper administration of justice, Annexures JVW-15, JVW-16 and JVW-19 and Exhibit JVW-17 to the White Affidavit be treated as confidential to the parties in this proceeding and until further order: (a) be marked as confidential to the parties on the Court's Electronic Court File; and (b) not be available for public inspection, disclosed in open court or disclosed in the open part of any court transcript. 3. There be no order as to costs, such that each party bears their own costs. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT PERRY J: 1. INTRODUCTION 1 This is an application for approval of a settlement reached between the parties pursuant to rule 9.70 of the Federal Court Rules 2011 (Cth) (FCR). 2 The first applicant, Ms Enrica Grace Budini, is 62 years of age and has a permanent intellectual disability, significant developmental delay, and certain physical disabilities associated with Down Syndrome. As Ms Budini is a person under a disability, she is conducting these proceedings through her litigation representative, Ms Sandra Sinclair, and the settlement reached between the parties to these proceedings requires Court approval under rule 9.70. Ms Sinclair is also the financial manager of Ms Budini's estate pursuant to orders made on 28 May 2021 by the New South Wales Civil and Administrative Tribunal under the Trustee and Guardian Act 2009 (NSW). 3 At various times, the applicants have made allegations against the respondents, Sunnyfield and Dr Mark Clayton, arising out of, or connected with, care and support provided by the respondents to Ms Budini prior to her removal from Sunnyfield's care in September 2016 to a high care facility. This settlement relates to claims made against the respondents in these proceedings at various times, including allegations of breaches of the Disability Discrimination Act 1992 (Cth), the Australian Consumer Law, and in tort, breach of contract, and equity. 4 The application for approval of a settlement is supported by the affidavit of Jacob Victor William White, affirmed 9 July 2021 (White Affidavit), the annexures to which include: (1) a deed of release and settlement comprising the proposed agreement to settle the proceeding (the proposed agreement) (Annexure JVW-15); (2) the letter of instruction from Harmers Workplace Lawyers to independent counsel dated 7 June 2021 (Annexure JVW-16); and (3) the opinion of independent counsel concerning the proposed agreement to settle this proceeding (the independent opinion) (Annexure JVW-19). 5 In addition and importantly, Mr White deposes to the undertakings given by the applicants' lawyers to not pursue the first applicant or her litigation representative for any unpaid legal fees. 6 Specifically, Ms Budini seeks the following the orders: (1) Pursuant to r 9.70 of the FCR, the agreement to settle this proceeding, as set out in the deed of release and settlement marked Annexure JVW-15 to the White Affidavit, be approved. (2) Pursuant to s 37AG(1)(a) of the Federal Court of Australia Act 1976 (Cth) (FCA Act), to prevent any prejudice to the proper administration of justice, Annexures JVW-15, JVW-16 and JVW-19 and Exhibit JVW-17 to the White Affidavit be treated as confidential to the parties in this proceeding and until further order: (a) must be marked as confidential to the parties on the Court's Electronic Court File; and (b) must not be available for public inspection, disclosed in open court or disclosed in the open part of any court transcript. (3) There be no order as to costs, such that each party bears their own costs. 7 I was also assisted by submissions filed by the applicants in support of the interlocutory application for approval of a settlement and confidentiality orders. 8 For the reasons set out below, I am satisfied the settlement should be approved, and the confidentiality orders should be made. 2. COURT APPROVAL 9 Rules 9.70 and 9.71 of the FCR provide a regime for court approval of a settlement of proceedings involving a person under a disability. Those rules provide: 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. 10 While not expressly a requirement of the rules, the ultimate question for the Court in assessing whether to approve a settlement so as to make it binding on a person under legal incapacity is whether the Court is satisfied that the settlement is in the applicant's best interests, or beneficial to the applicant's interests: James v WorkPower Inc [2019] FCA 1239 (James) at [11] (Mortimer J); Mununggurr v Channel Seven Sydney Pty Ltd [2019] FCA 2188 (Mununggurr) at [5] (Rares J); Fish v NSW Department of Education and Training [2018] FCA 434 (Fish) at [18] (Gleeson J); and Butler v Djerriwarrh Employment & Education Services Inc [2015] FCA 296 at [11] (Mortimer J). 11 As to the manner in which that assessment is made, Mortimer J explained in Scandolera (by his next friend Robinson) v Victoria (Department of Education and Early Childhood Development) [2015] FCA 1451; (2015) 331 ALR 525 that: 27. 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) 71 NSWLR 1; [2007] NSWSC 336 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. 28. The Court is assisted in that 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. However 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 … 29. The determination 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 applicants if the proceeding were continue[d]: see Fisher at [35]–[37]. 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. 12 First, while the opinion of independent counsel does not bind the Court, I have given that opinion significant weight, given the extent of counsel's relevant experience and the careful evaluation undertaken by counsel in reaching the view that the settlement is in Ms Budini's best interests: see by analogy Re Barbour's Settlement; National Westminster Bank Ltd v Barbour [1974] 1 All ER 1188 at 1191 (cited with approval in Modra v Victoria (Department of Human Services Victoria & Department of Education and Early Childhood Development) [2013] FCA 1041 at [12] (Tracey J)). Counsel's opinion fairly sets out the benefits of the proposed agreement and the potential risks if the matter were to proceed to trial including the time it may take for the proceeding to reach judgment with the consequential prolongation of the applicant's current circumstances. 13 Secondly, I have also given significant weight to the fact that undertakings have been given by Harmers Workplace Lawyers who are the solicitors for the applicants, not to claim any costs in connection with the proceeding from Ms Budini or Ms Sinclair, while counsel for the applicants gave an undertaking not to claim any costs (in addition to those already paid) from Ms Budini or Ms Sinclair. The purpose of offering these undertakings was to ensure that the entire settlement sum would go to the benefit of Ms Budini with the exception of the cost of obtaining the independent opinion of counsel. 14 Thirdly, that being so, the proposed settlement would guarantee a benefit to Ms Budini in the immediate to near future, affording protection to her financial interests and potentially improving her quality of life. This is particularly significant where Ms Budini has already exceeded the life expectancy of a person with Down Syndrome. 15 In short, having considered the terms of the proposed settlement, I am satisfied that the settlement is in Ms Budini's best interests. 3. CONFIDENTIALITY 16 As the applicants submit, the Court has the power to make suppression and non-publication orders pursuant to section 37AG of the FCA Act, subsection (1) of which provides that: 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). 17 Section 37AG(2) further provides that a suppression order or non-publication order must specify the ground or grounds on which the order is made. 18 In Elliott v Victoria (Department of Education & Training) [2018] FCA 1029, Mortimer J upheld an application for orders pursuant to s 37AG of the FCA Act preserving the confidentiality of the opinion given by counsel in the context of approving a proposed settlement and the terms of settlement. An indication of the sorts of considerations which are relevant in such cases can be gleaned from the following passage in her Honour's reasons for so holding: 24. … I am satisfied that the protection afforded by the prospect of a confidentiality regime under s 37AG as to the final terms of settlement, including but not limited to any payment made, has encouraged and facilitated the resolution of the proceeding. I consider it unlikely that such a settlement would have occurred without the prospect of such protection. The interests of the administration of justice are served by the making of limited orders to preserve the confidentiality of the terms, and of counsel's opinion. The interests of justice are served not only for these parties, but so that future parties can also have confidence the Court may be prepared to facilitate the resolution of these kinds of proceedings by including such orders in any approval of a settlement. The resources of the parties and the Court have been conserved, and finality has been brought to a dispute which would have been intensive and time consuming for all concerned. Instead, the parties and potential witnesses on both sides, including the teachers involved, and [the applicant] and her family, can move on. It is to be hoped that the future will be positive for [the applicant]. 19 Furthermore as the applicants submit, while the Court must act judicially and consider each case on its own merits, orders preserving the confidentiality of the opinion of an independent lawyer, and the terms of agreement reached to settle a proceeding, are commonly made in this context: see eg James at [18] (Mortimer J); Mununggurr at [15]–[16] (Rares J); and Fish at [31]–[32] (Gleeson J). 20 I am satisfied that it is appropriate to make the limited orders sought pursuant to s 37AG(1)(a) of the FCA Act to preserve the confidentiality of the letter of instruction to counsel and attached bundle of documents, the opinion given by counsel, and the terms of the settlement. In reaching this view, I accept that it is likely that the protection afforded by the prospect of confidentiality orders under s 37AG(1)(a) as to the final terms of settlement encouraged and facilitated the resolution of the proceedings in the mediation conducted pursuant to court orders. Indeed, in my view it is unlikely that agreement would otherwise have been reached. In reaching the view that the confidentiality orders are necessary to prevent prejudice to the proper administration of justice, I have also had regard to the importance of ensuring that future parties in other matters can be confident that the Court may facilitate the resolution of these kinds of proceedings by including such orders in any approval of a settlement. I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Perry. Associate: Dated: 10 December 2021