Overcoming a post-judgment barrier to settlement

Parties to concurrent appeals often struggle to find common ground when attempting to settle disputes.

Matters relating to perception around the relative importance of different findings to truth – the so-called "Rashomon effect"; concerns as to reputational damage and the human response to adverse findings of fact or credit, amongst others, can each influence the willingness of parties to engage in sensible commercial negotiations. These epistemic problems are exacerbated if both parties have an equal, and presumably contradictory, belief in the strength of each side of the argument.

Bradken Limited v Norcast S.ar.L [2013] FCAFC 123 and Rules 39.11 and 39.05(f) of the Federal Court Rules 2011 (Cth) provides a mechanism for parties to consent to primary (trial) orders being set aside. This removes the level of perception and has the effect of releasing the parties concerned from any adverse orders, or the legal consequence of such orders, made against them.

In Bradken, the parties applied, unsuccessfully, for orders that an appeal be allowed by consent, without any adjudication on the merits. The Full Court was not prepared to allow the appeal in circumstances where it was not satisfied of error in the primary judge's reasons.

The Court recorded that "there was another means by which the parties could have procured the outcome which they sought, but without seeking the imprimatur of the Full Court (in the sense explained in Telstra^[1]about the existence of appealable error and without the implicit consequence that the error or errors were pervasive across the grounds of appeal. That means was the use of Rules 39.05(f) and 39.11.”

The Full Court in Bradken stated that “It should not be thought that Telstra provides any impediment whatsoever for the settlement of appeals in the Court.” The orders setting aside the declarations granted by the primary judge, and dismissing the primary action, were made by consent pursuant to the Rules. The appeal was discontinued.

The Full Court most recently made orders in accordance with Bradken in the proceeding of Termite Resources NL (in liq) v Meadows (No 2) [2019] FCA 354. The Full Court made orders on 5 March 2020 setting aside the judgment in Termite, and in effect relieving the former directors as to the legal effect of adverse findings in that matter. Here, although the Appeal Court had heard argument, it had not determined the appeals nor given direction as to likely outcomes.

Bradken and Termite allow both parties to resolve primary and appeal proceedings with a commercial settlement and setting aside of judgment, thus removing the perception of an adverse judgment.

^[1] Telstra Corporation Limited v Minister for Broadband, Telecommunications and Digital Economy (2008) 166 FLR 64 (Telstra).^{Back to article}