DZY v Trustees of the Christian Brothers
[2023] VSC 124
•21 March 2023
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
INSTITUTIONAL LIABILITY LIST
S ECI 2021 02662
BETWEEN:
| DZY (A PSEUDONYM) | Plaintiff |
| v | |
| TRUSTEES OF THE CHRISTIAN BROTHERS | Defendant |
---
JUDGE: | Irving AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 28 February 2023 |
DATE OF JUDGMENT: | 21 March 2023 |
CASE MAY BE CITED AS: | DZY v Trustees of the Christian Brothers |
MEDIUM NEUTRAL CITATION: | [2023] VSC 124 |
---
CONTRACT – Settlement agreement – Application to set aside two prior settlement agreements – Historical instances of sexual abuse – Corporate entity to sue not available to the plaintiff at time of settlement agreements – Limitation period expired at time of settlement of agreements – Agreement to set aside settlement agreements as to general damages and medical expenses only – Plaintiff advised not to claim in respect of economic loss in prior claim and gave release against future claims by deeds – Consideration of Limitation of Actions Act 1958 (Vic), ss 27QA(2), 27QD and 27QE – Whether just and reasonable to set aside both settlement agreements in part or in their entirety – Considered Pearce v Missionaries of the Sacred Heart [2022] VSC 697 – Considered WCB v Roman Catholic Trusts Corporation for the Diocese of Sale (No 2) [2020] VSC 639 – Considered Roman Catholic Trusts Corporation for the Diocese of Sale v WCB (2020) 62 VR 234 – Considered TRG v Board of Trustees of the Brisbane Grammar School (2020) 5 QR 440 – Application allowed.
---
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Dr E Kelly | Judy Courtin Legal |
| For the Defendant | Mr S Hay KC Mr C Morshead | Carroll & O’Dea Lawyers |
TABLE OF CONTENTS
No table of contents entries found.
HIS HONOUR:
Introduction
The plaintiff alleges that, while a student in Grades 3 to 6 at St Alipius Boys School in Ballarat, he was abused by Brother Gerald Leo Fitzgerald (Brother Fitzgerald) and Brother Robert Best (Brother Best). The plaintiff was a student at the school from 1964 and until 1968. The plaintiff has commenced a proceeding in negligence and vicarious liability against the Trustees of the Christian Brothers (defendant). He seeks damages for the injury, loss and damage caused by the alleged abuse, including damages for economic loss.
The defendant has filed a defence in the proceeding in which it does not admit the abuse but admits that in 2017 Brother Best was convicted of one count of indecent assault relevant to the abuse on the plaintiff. The defendant relies on the terms of two previous settlement agreements (Deeds) as a bar to the plaintiff’s proceeding.
The plaintiff has filed an application under s 27QD and s 27QE of the Limitation of Actions Act 1958 (Vic) (Act) to set aside the Deeds to the extent they are a bar to his current proceeding.
This judgment is about whether the Court should set aside the whole or only part of the Deeds. The defendant submitted that the Court should set aside only part of the Deeds, which would allow the plaintiff to continue his proceeding but not his claim for economic loss. The plaintiff argued that the Court should set aside the whole of the Deeds so that he can continue to pursue the entirety of his current proceeding, including his claim for economic loss.
For the reasons given below, I am satisfied that it is just and reasonable to set aside the whole of the Deeds.
Material relied upon
In support of his application, in addition to oral submissions at the hearing, the plaintiff relied upon:
(a) the plaintiff’s affidavit affirmed 9 December 2022;
(b) the affidavit of the plaintiff’s solicitor, Sarah Gail Kivinen affirmed 9 December 2022; and
(c) written submissions dated 17 February 2023.
In opposition to the plaintiff’s summons, the defendant, in addition to its counsel’s oral submissions, relied upon:
(a) the affidavit of the defendant’s solicitor, Joshua Dale sworn 10 February 2023;
(b) the supplementary affidavit of Joshua Dale sworn 21 February 2023; and
(c) written submissions dated 21 February 2023.
Background
The parties were in agreement that the only issue in dispute was the operation of the Deeds with respect to the plaintiff’s right to make a claim against the defendant for economic loss. I understood this to mean that the parties agreed that, other than in relation to the plaintiff’s claim for economic loss, the evidence before the Court was sufficient basis upon which the Court could be satisfied that it was just and reasonable to set aside the previous agreements. Accordingly, the background set out below focusses on the evidence relevant to the outstanding issue in dispute.
At the request of the plaintiff’s current solicitors, Dr Matthew Tagkalidis prepared a psychiatric assessment report for the plaintiff, dated 13 October 2020. On the basis of material available to Dr Tagkalidis and his interview of the plaintiff, he diagnosed the plaintiff as suffering from a chronic Dysthymic Disorder (Persistent Depressive Disorder in the DSM V), complex Post Traumatic Stress Disorder with associated personality disruption, and chronic Alcohol Abuse and Dependence. Dr Tagkalidis was of the opinion that the plaintiff’s psychiatric injury is unlikely to remit with further treatment meaning the plaintiff’s psychiatric condition is stable and permanent.
Dr Tagkalidis was asked to provide his opinion on the impact of the abuse on the plaintiff in the areas of education and employment. Dr Tagkalidis’ opinion is that the plaintiff clearly had the intellectual capacity to complete his secondary schooling and that his working career has been hampered by poor self-worth and low confidence, angry outbursts with male figures and a lack of tolerance of authority figures and workplace hierarchies, all directly the result of the abuse. Dr Tagkalidis’ opinion is that, but for the long lasting effects of the abuse, the plaintiff would have had a substantially more productive working life.
The affidavit material filed on the application exhibited a large volume of documents including contemporaneous records relevant to the Deeds signed by the plaintiff on 14 December 2012 (2012 Deed) and 9 December 2015 (2015 Deed).
Prior settlement of 14 December 2012
The plaintiff contacted the firm of Waller Legal in January 2011 requesting assistance to pursue his claim against the defendant. Dr Waller became his solicitor.
On 11 January 2011, Dr Waller wrote to the plaintiff regarding his claim and the difficulties it faced due to the expiration of the time limit and the Ellis defence. In particular, Dr Waller noted that ‘[v]arious difficulties associated with your case have been discussed with you. In particular, these difficulties include the expiration of the limitation of actions period and difficulties encountered in identifying the correct Catholic entity to sue.’[1] Dr Waller indicated that she was in discussions with the legal representatives of the defendant and their insurer and that ‘progress had been made in reaching agreement on an alternative dispute resolution process’.
[1]The reference to identifying the correct entity to sue is a reference to the effect of Trustees of the Roman Catholic Church v Ellis & Anor (2007) 70 NSWLR 565. The inability of a plaintiff to pursue a claim against an unincorporated association is colloquially known in this context as the ‘Ellis defence’.
In September 2011, on the advice of Dr Waller the plaintiff approached the Ballarat Centre Against Sexual Assault (Ballarat CASA) for counselling about the impacts of childhood sexual abuse.
On 20 September 2011, Dr Waller wrote to the plaintiff confirming his instructions to investigate a claim for compensation in relation to his abuse by Brother Fitzgerald and Brother Best.
On 12 October 2011, Dr Waller wrote to the plaintiff stating she had met with the solicitors for the defendant who had indicated their intention to agree to an alternative dispute resolution (ADR) process.
On 20 December 2011, Ms Gunn, Manager of Ballarat CASA, prepared a report in which she opined that the plaintiff had experienced depression and high levels of anxiety. Ms Gunn stated the plaintiff had self-harmed and engaged in high risk-taking behaviour due to his sense of worthlessness and suppressed anger.
In March 2012, Dr Waller sent the plaintiff to be assessed by Professor Lorraine Dennerstein. On 6 March 2012, Professor Dennerstein prepared a medico legal report in relation to the plaintiff. Professor Dennerstein’s report outlined the plaintiff’s educational and occupational history before detailing the plaintiff’s description of the abuse. Professor Dennerstein was asked by Waller Legal to comment on the plaintiff’s employment history and whether his capacity for employment had been affected by the abuse. In response, she stated that the plaintiff had started to avoid school from around Grade 4 onwards and that as a result his educational attainment was severely curtailed, being barely literate by the time he left school. Professor Dennerstein concluded that this had severely impacted the plaintiff’s employability and life chances and that, in addition, he had difficulty dealing with older males and males in authority which adversely affected his capacity for employment.
On 2 May 2012, Dr Waller wrote to the plaintiff advising him that she was in ongoing discussions with the defendant and their insurer about an ADR process.
On 23 May 2012, Dr Waller wrote to the plaintiff advising him that the defendant and their insurers had agreed on an ADR process involving the parties exchanging relevant material and then attending a conference.
On 6 September 2012, Dr Waller advised the plaintiff that his matter had been selected for inclusion in the agreed ADR process and the settlement conference was scheduled for 21 November 2012. The agreed ADR process, as explained by Dr Waller, involved the defendant providing the plaintiff’s solicitor with relevant documents about Brother Best and the plaintiff’s school records and then the plaintiff providing the defendant and their insurer with a draft statement of claim.
On 12 September 2012, Dr Waller wrote to the plaintiff informing him that a settlement conference with the defendant had been scheduled for 21 November 2012 and requesting the plaintiff attend a preliminary conference on 21 September 2012 with Dr Waller and a barrister, Mr Tim Seccull, to discuss the plaintiff’s case.
On 17 September 2012, Dr Waller briefed Mr Seccull to provide advice, confer and prepare a draft statement of claim for the agreed ADR process. Dr Waller requested specific advice about the implications arising from The Trustees of the Roman Catholic Church v Ellis and Anor,[2] the decision giving rise to what is colloquially known as the Ellis defence.
[2]Ibid.
On 21 September 2012, the plaintiff met with Dr Waller and Mr Seccull. Mr Seccull advised the plaintiff his matter was legally complex because of the Ellis defence and the expiration of the time limit to commence a proceeding in the Court. The notes of the conference state that the plaintiff was, at that time, on a carer’s pension but had previously worked casually ‘on Maxitrans’. The note appears to record the plaintiff’s instructions that:
I had some trouble with center link (sic) – I got over paid (sic) – trouble in 2009 – after separation I went to centre link (sic) to get family payments for the kids bc kids with me… I was starting the business.. I got some financial assistance re new business. Aparently (sic) you are not allowed to receive both forms of assistance.
I got 12 months probation. Went to court. Charged and extenuating circumstances. 2009 defrauding centre link (sic).[3]
[3]The evidence before the Court included a letter dated 7 August 2009 to the plaintiff from a Centrelink Authorised Review Officer. The letter contains the decision of the Authorised Review Officer refusing the plaintiff’s request that Centrelink consider pursuing him for repayment of a Newstart Allowance overpayment $8,014.41 but not pursuing the criminal prosecution of the plaintiff in relation to the debt. A copy of the order made by the Ballarat Magistrates’ Court on 25 November 2009 was also before the Court, the terms of which show the plaintiff was sentenced in relation to one count of the federal offence of obtaining financial advantage from a Commonwealth entity and received a 12 month good behaviour bond without conviction.
A further handwritten note of the meeting also records under a heading ‘TS’, which I take to be a reference to Mr Seccull, ‘eco = don’t claim b/c of DSS [illegible word] etc’. It is not clear whether these words indicate instructions or advice or a note of an issue for further consideration. I note Dr Waller’s letter to the defendant’s solicitor dated 5 December 2012, referred to below, indicates the plaintiff gave his instructions not to claim economic loss on 21 November 2012.
The plaintiff deposed that he can only recall small parts of the meeting because he was drinking heavily at the time. He recalls feeling very anxious and being unable to think or communicate properly. The plaintiff said he couldn’t take in what Dr Waller and Mr Seccull were saying.
On 16 October 2012, Ms Andrea Lockhart, the plaintiff’s support worker from Ballarat CASA, stated in a record of a letter prepared for the plaintiff for an unrelated purpose, that the plaintiff met with his legal team on 21 September 2012 and ‘found this experience extremely distressing and overwhelming, and for the following week his anxiety increased significantly’.
On 22 October 2012, Dr Waller wrote to Mr Harrison, a solicitor at the firm of Carroll O’Dea Lawyers, being the defendant’s legal representatives, enclosing the plaintiff’s ADR statement.
The ADR statement commences with a statement that the document was created solely for use at the ADR process agreed to by the plaintiff’s solicitor and the defendant’s solicitor. The ADR statement then sets out the allegations of abuse before stating that as a result of that abuse, the plaintiff has suffered shock, personal injury, loss and damage. Under the heading ‘Particulars of Loss and Damage’ the statement records that as a consequence of the abuse the plaintiff’s ‘personal, educational and vocational development has been significantly impaired’. The statement then says ‘[f]ull particulars of any claim for loss of earnings or loss of earning capacity will be provided prior to trial.’
On 7 November 2012, Dr Waller wrote to Mr Harrison enclosing copies of the medico-legal report of Professor Dennerstein dated 6 March 2012, the report of Ms Gunn prepared for the Victims of Crime Assistance Tribunal and the plaintiff’s ADR statement.
On 18 November 2012, the plaintiff’s legal team prepared a document entitled ‘Pecuniary Loss’ in relation to the plaintiff’s claim. In this document, under the heading ‘Loss of earnings’ the option ‘No’ has been circled, and the word ‘Details’ has been struck through.
A file note on Waller Legal’s file dated 20 November 2012, in a section entitled ‘Eco’ records ‘No, b/c of DSS etc, generals only!!!’. Joined by lines from the word ‘DSS’ are ‘$75,000’ and ‘and on a carers pension etc ??’.
On 21 November 2012, the plaintiff attended the settlement conference with Dr Waller, Mr Seccull and Ms Lockhart. It appears that the day commenced with the plaintiff and Ms Lockhart meeting with his legal team before his legal team went into a separate room to conduct negotiations with the defendant’s legal team. Again, due to his high anxiety and heavy drinking the plaintiff can only recall snippets of that day and said he struggled to process what was being said. He recalls sitting at a big table and thinking if the windows were not sealed he would jump out. The plaintiff recalls mentioning to Dr Waller and Mr Seccull that the abuse had impacted his employment and being told something about a possible impact on his Centrelink benefits. The plaintiff cannot recall all of this conversation but thinks Mr Seccull advised him to focus on what happened at the school. He accepted that advice.
On 21 November 2012, Dr Waller prepared a file note of her conference with the plaintiff, Ms Lockhart and Mr Seccull. That note records ‘[a] lot of legal issues and hurdles’. The note also records Mr Seccull’s advice that there was a risk that if the plaintiff claimed loss of earnings, Centrelink might claim. Below this entry is an entry recording that the plaintiff instructed his lawyers not to include loss of earnings in his claim.
The negotiations took a few hours and were conducted by Dr Waller and Mr Seccull in another room with representatives of the defendant. The plaintiff was given a final offer which he considered over the days following the conference. Dr Waller and Mr Seccull told the plaintiff they could run his case if he did not accept the defendant’s offer but there would be lots of legal difficulties and hurdles. The plaintiff deposed that he felt he had no choice but to accept the offer because the legal barriers were too great. He thought he would fail if he went to Court and would have to pay the defendant’s legal costs.
On 26 November 2012, Carroll O’Dea Lawyers wrote to Dr Waller confirming the defendant’s open settlement offer of $80,000 inclusive of costs and enclosing a deed of release.
On 29 November 2012, Dr Waller wrote to the plaintiff about the offer made at the settlement conference and confirmed her advice that his claim had ‘a number of significant legal technical difficulties. These were discussed with you at length. In summary, however, the key problems are that your claim is out of time, and technical problems are encountered when trying to sue Catholic Defendants.’ In this letter Dr Waller noted that Mr Seccull had opined that if the plaintiff ran his case in Court:
and had absolutely no legal difficulties, a jury might award you somewhere in the range of $75,000 - $150,000 in compensation by way of general damages…I confirm your instructions that there is no loss of earning component to your claim, nor do you have any past out of pocket expenses.
Dr Waller noted the defendant’s offer of $80,000 ‘all in’ was well within Mr Seccull’s assessment of the range of compensation the plaintiff might expect from a jury if his case had no problems. Dr Waller noted the plaintiff’s claim did in fact have problems and offered her opinion that therefore the defendant’s offer was ‘within the range of fair and reasonable’.
On 5 December 2012, Dr Waller prepared a file note of her telephone conversation with Mr Harrison. This note appears to record Dr Waller’s request that Mr Harrison provide an amended deed noting there was no claim for economic loss. In an email to Mr Harrison on the same day Dr Waller said:
Our ADR refers to an economic loss component. We received instructions on the day not to include a loss of earnings component.
This matter was put to you on the basis that there was no claim for economic loss.
…
Can you please amend the release to say that there is no claim for loss of earnings. I think this could be inserted after 1.1.2. It’s important that any release reflects that there is no loss of earnings component.
On 10 December 2012, Carroll O’Dea Lawyers sent Dr Waller the amended deed of release.
On 13 December 2012, Dr Waller prepared a file note of a conversation with the plaintiff in which she records ‘wants to accept offer’ and ‘release is amended to exclude loss of earnings. Viv to email amended release.’
Also on 13 December 2012, the plaintiff signed an Instructions to Settle Claim form provided by Waller Legal. This pro forma document included a paragraph in the following terms:
I understand that this brings to an end all claims to compensation in relation to this event once and for all, regardless of any developments in the future. This is a once and for all settlement including all and any claims that I may have about the abuse which is the subject of this claim.
On 13 December 2012, Dr Waller wrote to Mr Harrison confirming that the plaintiff had accepted the defendant’s offer of $80,000 inclusive of costs and that the executed deed would be returned in due course.
On 14 December 2012, the plaintiff signed the 2012 Deed. The 2012 Deed contained the following relevant clauses.
Clause 1.1.2 records that the plaintiff alleges:
during his time at the school he was unlawfully assaulted or otherwise subjected to maltreatment by Brother Robert Best and Brother Fitzgerald and further alleges that as a result of such unlawful acts he has sustained loss, damage and injuries and he may require specialist counselling and/or other therapy (“the claims”). The [plaintiff] does not allege that he has suffered any economic loss and makes no demand for this as part of the claims. Full details of the claims are more fully set forth in ADR Statements filed on behalf of the [plaintiff] and medical report of Professor Dennerstein dated 6 March 2012.
Clause 2.2 states:
The Parties acknowledge that the agreed sum does not make any allowance for economic loss incurred by the [plaintiff].
Clause 3.1 states:
The [plaintiff] for himself, his executors, administrators, dependants, heirs and assigns hereby releases and forever discharges the [defendant]…from any claim, proceeding, action, cause of action or charge that he may have or may have had against the [defendant]…with respect to the claims.
Clause 3.2 states:
The [plaintiff] acknowledges having been informed of his right, and having been allowed reasonable time, to seek independent legal advice prior to his signing of this Deed of Release.
Clause 4.1 states:
The [plaintiff] acknowledges and agrees that:
4.1.1he will make no further claim for damages, expenses, treatment costs or compensation;
4.1.2nothing in this Deed constitutes an admission of liability by the [defendant]…in respect of the claims;
4.1.3 this Deed may be pleaded by the [defendant]...as a bar to any claim, action, cause of action, charge or any other proceeding commenced against them or any other person;
arising out of or in connection with the acts, facts or circumstances constituted by the claims.
The 2012 Deed includes an independent solicitor certificate signed by the plaintiff’s solicitor on 14 December 2012. The certificate records that the plaintiff’s solicitor explained the purport and effect of the 2012 Deed to the plaintiff, who appeared to the plaintiff’s solicitor to understand the purport and effect of the 2012 Deed.
On 23 December 2012, Dr Waller wrote to the plaintiff enclosing a cheque for $56,699, being the agreed settlement sum minus legal costs.
The evidence before the Court included an extract of an undated statement prepared by the plaintiff. The document is headed ‘Statement in the matter of Case Study 28’, which I take to be a reference to a case study in the Commonwealth Royal Commission into Institutional Responses to Child Sexual Abuse (Royal Commission). A version of this document dated 11 May 2015 was exhibited to the affidavit of Joshua Dale. Under the heading ‘Civil proceedings’ the plaintiff recounts his first contact with Waller Legal, including the advice he received that ‘litigation would be difficult because time limits had run out. Additionally that it was difficult to sue Catholic related entities.’ The plaintiff described the ADR settlement conference that had taken place in November 2012. He said:
I accepted [the $80,000 offer] because I felt the choice given to me was to either accept the settlement or take it through the court system. I really had no choice, because I couldn’t go through the court system again. I had been told by legal advisers that they were happy to run my case but realistically there were a lot of difficult legal issues and hurdles and that (sic) my case would be difficult.
It felt as though the [defendant] did not recognise that I was a human being. Throughout the mediation process, I did not feel as if they acknowledged the difficulties I was going through. I was not after an apology from the [defendant] for the abuse.
I felt that the settlement was absolutely meaningless, and I had no feeling of any sense of achievement. I felt like I had just been abused again. I really wish I hadn’t even gone through that process.
Prior to settlement of 9 December 2015
On 3 May 2013, Dr Waller attended the Victorian Parliamentary Inquiry into the Handling of Child Abuse by Religious and Other Organisations where she became aware that a witness was reading from documents that indicated the defendant was aware that Brother Fitzgerald was engaging in inappropriate activities with boys from the early 1950s. Dr Waller communicated this news to the plaintiff and stated that she was disappointed that the defendant had not disclosed that material to her during the earlier negotiations and that this lack of disclosure was unfair to the plaintiff. Dr Waller informed the plaintiff she had undertaken preliminary discussions with the defendant about topping up his settlement amount on ‘moral grounds’ because of the defendant’s relevant non-disclosure.
The plaintiff deposed that he consented to Dr Waller seeking a top up of his earlier settlement but was concerned that seeking a top up would make him ineligible for any redress scheme that may be established as a result of a recommendation by the Royal Commission.
In July 2014, the plaintiff made a statement to police about Brother Best’s abuse. He deposed that he found the process very stressful and that it took a long time.
On 7 January 2015, Dr Waller wrote to Mr Harrison inviting the defendant to consider making a further ex gratia payment to the plaintiff on a ‘plus costs’ basis due to their failure to disclose all relevant material during the 2012 settlement process. Dr Waller noted that the documents relevant to Brother Fitzgerald were provided to her office only after she requested them and some eight months after they were disclosed in the Parliamentary Inquiry. By that time a number of cases involving Brother Fitzgerald had already been resolved.
On 14 March 2015, the plaintiff’s General Practitioner, Dr Sanderson, noted the plaintiff was ‘stressed by prospect of going to Court about child sexual abuse’, ‘breakdown 6 weeks ago’ and ‘improved then relapsed again this week’. Dr Sanderson prescribed anti depressant medication for the plaintiff.
On 31 March 2015, the plaintiff saw Dr Sanderson again who prescribed more anti depressant medication.
Around May 2015, the plaintiff gave evidence at the Royal Commission.
On 3 July 2015, Dr Waller wrote to Mr Harrison confirming an in principle agreement had been reached between them to top up the plaintiff’s settlement sum.
A file note, dated 28 July 2015, of a conversation between Mr Harrison and Dr Waller which took place on 20 July 2015 records that Mr Harrison discussed the possibility of an additional payment of $20,000 to the plaintiff.
On 27 July 2015, Dr Waller prepared a file note of a telephone conversation with the plaintiff. Dr Waller records the plaintiff’s acceptance of the amount of the top up, being $20,000. Dr Waller also records the plaintiff’s concern that the terms of any proposed deed should not preclude him from seeking assistance and counselling in the future, particularly because the plaintiff had found the experience of the Royal Commission ‘tough’.
On 28 July 2015, Dr Sanderson saw the plaintiff and noted ‘anti depressant – short tempered – withdrew but still is aggressive’.
On 28 July 2015, Dr Waller wrote to Mr Harrison stating that the plaintiff had indicated his reluctance to sign any further deed of release that would prevent him from approaching the defendant for assistance with counselling expenses. Dr Waller told Mr Harrison that since giving evidence at the Royal Commission the plaintiff had been going through a difficult time emotionally and might need assistance beyond the service Ballarat CASA were providing for free.
On 16 September 2015, Dr Waller wrote to the plaintiff confirming the defendant had offered a further ex gratia payment of $20,000 plus $4,400 in legal costs and the provision of 10 counselling sessions.
On 16 September 2015, Ms Zelez, a solicitor at Waller Legal, prepared a file note of her telephone conversation with the plaintiff. The note records the plaintiff’s reluctance to sign a second deed of release because he did not want to exclude himself from the possibility of applying to a redress scheme in future. The same note states ‘[h]e doesn’t seem to understand what happened at the settlement conference.’ The same sentiments are recorded in a Waller Legal File Review document prepared by Ms Zelez and related to the plaintiff’s matter dated 18 September 2015.
On 18 September 2015, Dr Waller prepared a file note of her conversation with the plaintiff in which she advised him that signing a second deed of release would not alter his legal position. The terms of the file note suggest that the plaintiff and Dr Waller discussed the redress scheme that the Royal Commission had suggested should be set up, with Dr Waller explaining that there was no certainty that suggestion would be implemented.
On 30 September 2015, Ms Zelez recorded in a Waller Legal File Review document that the plaintiff raised dental expenses.[4] The note also records advice given to the plaintiff that he ‘doesn’t have a legal claim’ and ‘signing 2nd deed won’t make things worse’.
[4]Part of the abuse alleged by the plaintiff involved Brother Best pushing the plaintiff into a brick wall, causing the plaintiff to chip his tooth.
On 1 October 2015, Ms Zelez prepared a file note of her conversation with the plaintiff in which he requested a written letter of advice about the defendant’s offer.
On 8 October 2015, Ms Zelez prepared a further Waller Legal File Review document. This document records the plaintiff’s request that Waller Legal put its recommendation that he accept the defendant’s offer and sign the further deed in writing.
On 8 October 2015, the plaintiff signed an Instructions to Settle Claim form provided by Waller Legal but did not return it to Waller Legal on this date. The document records:
I understand that this brings to an end all claims to compensation in relation to the abuse I experienced at St Alipius Primary School once and for all, (unless a new law is passed setting aside earlier settlements and releases). In the absence of law reform this is a once and for all settlement including all and any claims that I may have about the abuse which is the subject of this claim.
Waller Legal have provided me with legal advice based on the current state of the law and the defences currently raised by the Defendants. Waller Legal cannot provide legal advice based of (sic) possible changes to the law in the future.
On 14 October 2015, Dr Waller wrote to the plaintiff confirming her advice that signing the additional deed of release would not affect the plaintiff’s legal rights any more than they were already affected by the deed of release he had signed on 14 December 2012.
The plaintiff deposed that on 14 October 2015 he received the letter from Dr Waller. The plaintiff said he felt like he had no choice and that he had signed away his rights in 2012. He deposed to feeling ashamed and confused. He accepted the offer.
On 16 October 2015, Ms Zelez emailed Mr Dale, informing him that the plaintiff had provided instructions to accept the defendant’s offer.
On 5 November 2015, Dr Waller wrote to the plaintiff confirming his acceptance of the defendant’s offer and enclosing the deed of release and Medicare documentation for the plaintiff to sign.
On 25 November 2015, Dr Waller wrote to the defendant’s solicitors enclosing the deed of release executed by the plaintiff. The plaintiff deposed that he recalls receiving the back page of the deed to sign but does not recall if Dr Waller sent him the full deed before he signed the signature page on 9 December 2015. Waller Legal’s file indicates the complete deed had been sent to the plaintiff.
On 9 December 2015, the plaintiff signed the 2015 Deed. The 2015 Deed contained the following relevant clauses.
Clause 1.1.2 contained a statement that the plaintiff:
does not allege that he has suffered any economic loss and makes no demand for this as part of the claims.
Clause 1.1.5 stated that the plaintiff:
has not suffered any economic loss or diminished earning capacity as a result of the claims and…his loss does not comprise any economic loss or diminished earning capacity.
By clause 2.2.4 the plaintiff acknowledged that the agreed sum was paid:
in full and final settlement of all loss and damage sustained by the [plaintiff] as a result of the claims solely as an ex-gratia payment for non-economic loss.
Clause 2.4 recorded the plaintiff’s agreement:
to pay out of the agreed sum any moneys repayable by the [plaintiff] to any person or body whether in respect to social services, sick leave payments, make up pay, accident pay or any charges or moneys assessed under the Health & Other Services (Compensation) Act 1995 (sic) (Cth) and any social services (Centrelink) legislation of the Commonwealth of Australia and any other relevant legislation.
The plaintiff, by clause 3, released the defendant:
from any claim, proceeding, action, cause of action or charge that he may have or may have had against the [defendant] with respect to the claims.[5]
[5]The claims were defined in clause 1.1.2 of the deed which carved out economic loss claims but incorporated the ADR statement, the report of Professor Dennerstein dated 6 March 2012 and the letter of Waller Legal dated 7 January 2015.
By clause 7 the plaintiff acknowledged that the 2015 Deed did not amount in any way to a waiver of the 2012 Deed, which remained in full force and effect.
On 23 December 2015, Dr Waller wrote to Mr Harrison confirming receipt of the settlement sum as provided for in the 2015 Deed. On the same day Dr Waller wrote to the plaintiff enclosing a cheque for $20,000 and a copy of the fully executed 2015 Deed. The plaintiff deposed that he recalls reading the 2015 Deed and feeling concerned about the clauses that said he had not suffered economic loss as this was not correct. The plaintiff said he did not discuss his employment or his economic loss with anyone at Waller Legal in 2014 or 2015 but recalls speaking to someone at Waller Legal about his concerns.
On 21 January 2016, the plaintiff wrote to Ms Zelez expressing concerns about clauses 1.1.2 and 1.1.5 of the 2015 Deed because the abuse had, in the plaintiff’s view, caused him ‘economic loss and diminished earnings’. The plaintiff stated that he had been under a lot of stress because of his criminal case involving Brother Best, Centrelink, his family and the Royal Commission. The plaintiff said he had made many mistakes and thought signing the 2015 Deed with the inclusion of these clauses was a further mistake. The plaintiff said he did not understand why these clauses were in the 2015 Deed and that they were inconsistent with statements he had included in his impact statement in the criminal proceeding against Brother Best.
On 21 January 2016, Ms Zelez prepared a file note of a telephone conversation with the plaintiff in which he expressed concerns about clauses 1.1.2 and 1.1.5 of the 2015 Deed. Ms Zelez records her advice that loss of earnings was excluded from his claim because it was ‘difficult’ and because of Centrelink issues. No elaboration of the difficulties was recorded in the note.
On 27 January 2016, Ms Zelez prepared a file note of Dr Waller’s telephone conversation with the plaintiff in which the plaintiff stated he was worried about the terms of the 2015 Deed excluding any claim for economic loss because he has suffered economic loss. The note records that Dr Waller stated the plaintiff did not claim economic loss to ‘protect him from issues re social security benefits’ and ‘in order to avoid issues of repayment to social security – means he didn’t claim for it’. Dr Waller also said ‘we want to avoid Medicare + Centrelink’. She advised the plaintiff the clauses were standard in deeds of this type.
The plaintiff deposed that he spoke with Dr Waller about his concerns and was told the relevant clauses were standard and used to avoid repayment of social security benefits.
Submissions
The defendant did not oppose the Deeds being set aside to the extent necessary to allow the plaintiff’s claim for general damages and/or medical expenses to proceed. The defendant acknowledged that the availability of a limitations defence and/or the Ellis defence at the time of the Deeds may have affected the level of quantum reflected in the Deeds in relation to general damages.
The defendant did oppose the Deeds being set aside insofar as they bar the plaintiff’s current claim for economic loss.
The defendant submitted that, similar to the facts in Pearce v Missionaries of the Sacred Heart (Pearce),[6] the Deeds expressly provided that the plaintiff made no claim for economic loss. The defendant submitted that there is nothing in the evidence before the Court to suggest that the plaintiff’s decision to forego an economic loss claim was affected by any previous legal barrier such as the availability of a limitation defence and/or the Ellis defence but rather arose from unrelated factors.
[6][2022] VSC 697 (Pearce).
The defendant submitted that:
(a) the plaintiff was legal represented throughout the entire period of the previous claims by a law firm specialising in personal injury claims involving historical abuse and his barrister, Mr Seccull;
(b) the plaintiff’s decision to pursue the ADR process at the time of the Deeds was reflective of Dr Waller’s ‘trauma informed’ practice;
(c) all parties executed the Deeds and the plaintiff’s solicitor signed an Independent Solicitor Certificate certifying that they had explained the effect of the relevant deed to the plaintiff;
(d) there is no evidence of any pressure being placed on the plaintiff to settle his claim at the time of signing the Deeds;
(e) Mr Seccull’s advice to the plaintiff on quantum, provided prior to the 2012 settlement conference, did not include an assessment of economic loss in line with the plaintiff’s instructions not to pursue such a claim;
(f) while the plaintiff may have experienced anxiety and heavy alcohol use at the time of the settlement conference on 21 November 2012, the defendant’s final offer was not accepted by the plaintiff until several days after the settlement conference;
(g) the plaintiff has acknowledged that he felt like he was given plenty of time to think about the offers before he signed the Deeds;
(h) had the plaintiff’s claim not resolved during the ADR process, the defendant would have had the benefit of obtaining responsive evidence to test the plaintiff’s claim, including medico-legal reports and materials relevant to quantum such as school, employment, taxation and medical records;
(i) the plaintiff provided his legal team with material relevant to consideration of an economic loss claim;
(j) the plaintiff expressly instructed Waller Legal not to make a claim for economic loss;
(k) at no point prior to the Deeds did the plaintiff or his solicitors ever provide the defendant with employment records, superannuation records, Centrelink records, reference letters or details of the expected salaries for a career in the Merchant Navy;
(l) Waller Legal on behalf of the plaintiff specifically requested the defendant’s solicitor amend the 2012 Deed to state that there was no allowance for economic loss and told the defendant’s solicitor this was due to the plaintiff’s instructions;
(m) as a result clauses 1.1.2 and 2.2 were included in the 2012 Deed and clauses 1.1.2, 1.1.5 and 2.2.4 were included in the 2015 Deed to expressly indicate that the plaintiff made no claim for economic loss;
(n) at the time of the Deeds there was both a lack of evidence to substantiate an economic loss claim and the available evidence weighed against such a claim;
(o) the 2015 Deed related solely to a top up to reflect the impact of the defendant’s non-disclosure of evidence relevant to Brother Fitzgerald, and did not involve a broader revisiting of the 2012 settlement;
(p) the plaintiff, consistent with the limited nature of the 2015 top up, did not discuss economic loss or his employment with his solicitors in 2014 or 2015;
(q) the plaintiff’s concerns about the lack of an economic loss claim and the impact of the terms of the 2015 Deed in that respect, were raised with Waller Legal on 27 January 2016. Waller Legal’s advice about the reasons an economic loss claim was not pursued did not identify any potential limitations or proper defendant issues. Rather the reasons given related to protecting the plaintiff from the possibility of having to repay money to Centrelink;
(r) the plaintiff accepted that advice; and
(s) while the limitations period had been abolished for the plaintiff’s cause of action against the defendant by the time of the 2015 Deed, this had no impact on the plaintiff’s legal position because the terms of the 2012 Deed remained binding and the set aside legislation had not been enacted.
I interpolate here to note that:
(a) the factors identified by the defendant in paragraph 92, subparagraphs (a), (b), (c), (d), (f), (g) and (h), are relevant to the plaintiff’s claim for general and special damages and his economic loss claim; and
(b) the defendant’s submissions properly acknowledge the very limited scope of the 2015 negotiations such that the 2015 Deed confirms the basis of the 2012 settlement and the plaintiff’s releases recorded in the 2012 Deed.
Relevant legislative provisions and principles
Sections 27QA(2) and 27QD of the Act allow a plaintiff to apply to the Court for an order setting aside a settlement agreement relating to a previously settled cause of action.
Section 27QE sets out the Court’s powers in respect of previously settled causes of action:
Court’s powers—previously settled causes of action
(1)On an application under section 27QD or otherwise in a proceeding on an action referred to in section 27QA(2), the court, if satisfied that it is just and reasonable to do so—
(a)may make an order setting aside the settlement agreement and any judgment or order giving effect to the settlement of the previously settled cause of action, whether wholly or in part; and
(b)may make any other order that it considers appropriate in the circumstances.
(2)In hearing and determining any action to which this Division applies on a previously settled cause of action, the court, if satisfied that it is just and reasonable to do so—
(a)when awarding damages in relation to the action, may take into account any consideration (whether monetary or non-monetary) paid, payable or given or to be given under—
(i)a settlement agreement set aside under this section; or
(ii)any other agreement related to the settlement that has been set aside under this section; and
(b)when awarding costs in relation to the action, may take into account any amounts paid or payable as costs under—
(i)a settlement agreement set aside under this section; or
(ii) any other agreement related to the settlement that has been set aside under this section.
The history of the suite of legislative changes relevant to this application was set out by Keogh J in WCB v Roman Catholic Trusts Corporation for the Diocese of Sale (No 2) (WCB (No 2)).[7] They were also the subject of discussion by the Court of Appeal in Roman Catholic Trusts Corporation for the Diocese of Sale v WCB (WCB).[8] I adopt these summaries.
[7][2020] VSC 639, [95]–[116] (WCB (No 2)).
[8](2020) 62 VR 234, [6]–[12] (WCB).
As the Court of Appeal observed in WCB:
The legislative changes, which preceded the introduction of ss 27QD and 27QE in the Limitation of Actions Act, were designed to address those two obstacles that confronted claimants in the position of the plaintiff. Specifically, as mentioned, the Child Abuse Act amended the Limitation of Actions Act by inserting Division 5 into pt IIA of the Act, which included s 27P. That amendment removed the limitation period for a cause of action founded on the death or personal injury resulting from physical, sexual or psychological abuse of a minor. The Legal Identity Act removed the other obstacle to litigation, by providing for the nomination by an unincorporated association of an entity that is capable of acting as the proper defendant in the proceeding.
By those two Acts, the Parliament recognised, and addressed, two principal impediments to claims for historical sexual abuse, which Parliament considered to be unjust and unfair. It was in that context that ss 27QD and 27QE were introduced to the Limitation of Actions Act. Understood in that light, those provisions were introduced to enable claimants, who had suffered historical sexual abuse, to be able to litigate their claims for that abuse, notwithstanding that, by reasons of unfair legal obstacles that had previously obstructed their path, they had previously resolved those claims on terms that were not just and reasonable. [9]
[9]Ibid [110]–[111].
The term ‘just and reasonable’ is not defined in the Act. The Court’s discretion must be exercised based on the facts and circumstances of a particular case. As the Court of Appeal stated in WCB, the historical context in which ss 27QD and 27QE were introduced into the Act provides an appropriate guide to understanding the purpose and intention of those provisions and the ‘content of the phrase ‘just and reasonable’’.[10]
[10]Ibid [112].
In determining whether it is just and reasonable to set aside a settlement agreement ‘it is relevant to consider whether the agreement constituted a just and fair resolution of the claim made by the plaintiff’.[11] It is appropriate and necessary for the Court to take into account the relevant historical context which led to the introduction of ss 27QD and 27QE into the Act, including recent legislative changes which removed the ‘unjust and unfair’ legal barriers of defences relating to limitation periods and identification of appropriate defendants.
[11]Ibid [117].
In determining whether it is just and reasonable to set aside a previous settlement agreement, there is no exhaustive list of relevant considerations. The defendant submitted, and the plaintiff agreed, that the authorities indicate the following potentially relevant factors:
(a) the specific terms of the previous deed, the intentions of the parties at the time and the binding nature of the previous deed;
(b) whether the party applying to set aside the previous deed was legally represented and, if so, the extent of advice received prior to entering into the previous deed;
(c) the circumstances of the previous deed, including the factors informing the amount to be paid, such as:
(i) an analysis of the evidence, including medical evidence, in the parties’ possession at the time of the previous deed;
(ii) whether the settlement process was reasonable, the respective bargaining position of the parties at the time and whether there was any undue pressure to settle;
(d) in an appropriate case, any prejudice to the defendant due to the lapse of time, including the loss of documentary evidence, death or unavailability of witnesses and the effect of time on the quality of the evidence; and
(e) any disadvantage to the defendant, including financial disadvantage, as a result of the previous deed being set aside.
The party seeking to set aside the previous settlement bears a positive burden of demonstrating that it is just and reasonable that the discretion be exercised in their favour. Compelling reasons are not required.[12]
[12]WCB (No 2) (n 7) [145].
The decision in Pearce
The defendant urged the Court in considering the plaintiff’s application to follow the line of reasoning of Forbes J in Pearce.
Pearce involved an application to set aside a prior settlement agreement under the same legislative provisions relied upon by the plaintiff in this matter. Forbes J set aside the part of the prior settlement that operated as a bar to Pearce’s claim for general and special damages. Her Honour was not persuaded, on the evidence, that it would be just and reasonable to set aside the part of the prior settlement agreement that extinguished Pearce’s claim for economic loss.
Forbes J’s reasons for this aspect of her decision are set out in the following paragraphs:
It was not contested that the prior claim never advanced a claim for economic loss on Pearce’s behalf. Although Pearce said he wished to make such a claim, he accepted his solicitor’s advice not to do so. No reasons were advanced for that forensic decision. I can observe from the medical material available at the time that there was divergent medical opinion as to whether the abuse alleged had had some impact or no impact on his capacity for employment. The reports from the treating practitioners did not address the issue. The report of Dr Triggs noted that he worked with racehorses after leaving school and then worked for 30 years as a chef, which he did not find to be a fulfilling career. Pearce described to Dr Triggs the loss of opportunity for further study and expressed a childhood interest in studying law.
I have no information as to the reasons why Pearce was advised not to make a claim for economic loss. There is certainly nothing to suggest that the claim was confined as it was because of the risk of a legal barrier posed by a potential Ellis defence. The deed, by provision 9 states:
The parties acknowledge that no claim for economic loss has been made and that the Settlement Sum does not include an economic loss component.
Bearing in mind as I must that setting aside a settlement deed disturbs the legal rights and obligations of both parties, I am not satisfied that it would be just and reasonable to set aside the deed insofar as it would permit the plaintiff to make a claim for economic loss now when, with the benefit of legal advice that he accepted at the time, he elected not [to] do so in the prior claim. The evidence does not demonstrate that the difficulty in nominating a viable defendant played any part in the decision to confine the claim to exclude economic loss. I am not satisfied that the decision to do so was influenced by any difficulty in the legal identity of the defendant.[13]
[13]Pearce (n 6) [108]–[110].
The settlement agreement in Pearce was made in March 2017 and involved payment of a sum of $140,000. Pearce was represented in those negotiations by Waller Legal. At the time of the settlement, Pearce did not face the difficulty of an expired limitation period.[14] There was no dispute that the Missionaries of the Sacred Heart was an unincorporated non-government organisation and that at the time of the settlement Pearce did not have the benefit of the Legal Identity of Defendants (Organisational Child Abuse) Act 2018 (Vic). In short, at the time of the settlement Pearce faced the possibility of the Ellis defence but not issues arising from an expired limitation period.
[14]Any limitation period in respect of claims for personal injury as a result of physical or sexual abuse that occurred when a person was a minor were removed by amendments made to the Limitation of Actions Act 1958 (Vic) in 2015.
Forbes J’s judgment outlines the evidence before the Court about the conduct and resolution of the prior claim. The evidence relevant to any claim by Pearce for economic loss is scant:
(a) in a letter to Catholic Church Insurance (CCI) providing preliminary advice on quantum before the settlement conference, the solicitor for the Missionaries noted that Pearce was not pursuing a claim for economic loss although his medico-legal expert’s report supported an impact on earning capacity;[15]
[15]Pearce (n 6) [34].
(b) CCI’s claims officer’s notes of the settlement conference noted the potential of the claim as ‘between 130,000 and $150,000 depending on how eco loss is framed by the claimant’;[16]
[16]Ibid [35].
(c) there was no evidence of any contemporaneous notes from those advising Pearce at the settlement conference;[17]
[17]Ibid [36].
(d) the assessment of damages put by Pearce’s counsel at the settlement conference was framed in terms of an amount for general damages, past and future medical expenses and legal costs;[18]
(e) the notes of both CCI’s solicitor and claim’s officer record the plaintiff’s counsel stating ‘[t]his isn’t a claim for eco loss’;[19] and
(f) CCI’s claims officer’s notes then recorded ‘[a]bsent a claim for economic loss [counsel] says generally put under [general damages] how its impacted @ school and after school – impacted behaviours’.[20]
[18]Ibid [37].
[19]Ibid [38].
[20]Ibid [39].
In relation to Pearce’s claim for economic loss, Forbes J’s reasons state:
At no stage was Waller Legal instructed to pursue an economic loss claim. The fact that the claim was not made in respect of economic loss was set out in:
(a) The letter to CBP of 18 July 2016 where it was said:
Whilst we are not instructed to prepare a formal loss of earnings component for the purpose of ADR, Gary feels that his education was significantly affected by the abuse and consequently impacted upon his career opportunities. Further, in recent years and particularly during the criminal proceedings, Gary instructs that his work capacity has diminished in part due to his psychological difficulties.
(b)The file notes of the settlement conference where it was recorded that Pearce’s counsel confirmed that there was no claim made for economic loss.
(c)The Calderbank letter of 3 February 2017, which confirmed that Waller Legal was instructed not to claim loss of earnings.
…
Pearce agreed that he made no claim for economic loss and said he didn’t fully understand why that was. He said a claim for economic loss was not discussed with him by his lawyers. [21]
[21]Ibid [56], [60].
Forbes J summarised the submissions of the parties relevant to the economic loss claim. Her Honour noted Pearce’s counsel submitted that Pearce had sought to take legal action for pain and suffering and economic loss, but instead was required to participate in an ADR process and accept a settlement that did not reflect the true value of his legal claim. Her Honour went on to state that the defendant submitted that despite Pearce’s wish to claim economic loss, he instructed Waller Legal not to pursue such a claim and that there was no explanation for the failure to make an economic loss claim.
Consideration
Setting aside a settlement deed disturbs the binding legal rights and obligations of both parties. This is an important factor to be considered by the Court in determining whether it is just and reasonable to set aside a deed of settlement.
In this case the defendant appropriately conceded that the settlement reached by the parties and recorded in the 2012 Deed may have been affected by a potential limitations defence and/or Ellis defence. Specifically the defendant acknowledged that this may have affected the quantum of general damages reflected in the settlement sums reached by the Deeds.
The defendant also acknowledged that the circumstances leading to the 2015 Deed did not involve a wholesale renegotiation of the agreement struck in 2012. The defendant agreed that at the time of the 2015 Deed the plaintiff appropriately understood that he remained bound by the terms of the 2012 Deed.
The defendant invited the Court to follow Forbes J’s line of reasoning in Pearce. I understood this submission to be advanced in two ways. First, that where a plaintiff was motivated in settlement negotiations by factors unconnected with either the limitation defence or the Ellis defence – being reasons unconnected to the mischief the legislation was designed to address – the Court should not be satisfied that it is just and reasonable to set aside the prior settlement. In support of this aspect of the defendant’s submission, counsel pointed to the words ‘whether wholly or in part’ in s 27QE(1)(a) of the Act and submitted that for these words to have any work to do the Court must identify a case, such as this one, where the reason part of a claim was abandoned was unconnected to the limitations defence, the Ellis defence or any impugned quality of the consent to the settlement sought to be set aside. Secondly, I understood the defendant to be submitting that the facts in Pearce are sufficiently similar to the facts in this case such that the same result should follow.
I cannot accept the defendant’s submission that where the motivation of a plaintiff is not directly connected to the limitation defence, the Ellis defence or problems with the quality of the consent, the Court should not be satisfied that it is just and reasonable to set aside a settlement deed. While the circumstances of a particular case may result in the Court reaching that conclusion, it appears to me that to make this a sort of blanket rule would alter the current statutory test. As Fraser JA noted in TRG v The Board of Trustees of the Brisbane Grammar School,[22] with the agreement of Morrison and Mullins JJA, in relation to the wording of corresponding legislation in Queensland:
The use of the expression “just and reasonable” to identify the only ground for such an order, the fact that the power is conferred upon courts, and the absence of any express identification of the material factors or the relative weight or significance to be attributed to any of them, compel the conclusion that the legislative purpose encompasses account being taken of the interests of both parties to the settlement in deciding whether it is just and reasonable to set aside the settlement agreement, the relative significance or weight to be given to the material factors in that exercise depending upon a judicial assessment of the particular circumstances of each case.
[22](2020) 5 QR 440, [28].
I also note that in Pearce, Forbes J set out the historical barriers that led to the legislative changes that provide the context against which the ‘clear and unambiguous’[23] statutory test of ‘just and reasonable’ is to be understood before stating:
The provision does not prescribe matters that are relevant for consideration. A single question arises for a determination: whether it is just and reasonable to set aside the settlement deed. Relevant to that question is whether the agreement sought to be set aside constituted a just and fair resolution of Pearce’s claim.[24]
[23]Pearce (n 6) [81].
[24]Ibid [84].
In my view the fact that Forbes J found that the plaintiff’s decision in Pearce not to pursue a claim for economic loss was not because of a risk of a legal barrier posed by the Ellis defence cannot detract or distract from the single question for determination: whether it is just and reasonable to set aside the settlement deed. That question must be determined on the particular facts of the case before the Court.
The defendant submitted that the facts of this case provided a stronger basis than the facts in Pearce for the Court to be satisfied that it is not just and reasonable to set aside the Deeds to allow the plaintiff to pursue his economic loss claim.
The plaintiff’s case bears some similarities to the facts of Pearce. In both matters:
(a) the plaintiff desired to make a claim for economic loss but accepted his solicitors’ advice not to pursue that claim;
(b) counsel representing the plaintiff at the settlement conference framed his assessment of damages in terms of amounts for general damages; and
(c) the terms of the settlement deeds explicitly acknowledged that the plaintiff was making no claim for economic loss and that the settlement sums did not include an economic loss component.
There are however, significant differences between the two cases such that the cases are distinguishable:
(a) the plaintiff in Pearce was not subject to the limitations period issue at the time he entered into a settlement deed. In this case the plaintiff faced both the limitations period and the Ellis defence issues;
(b) in Pearce the plaintiff never instructed his solicitor to pursue an economic loss claim. This was communicated by Pearce’s solicitor to the solicitor for the defendant in that case in writing well before the settlement conference. In this case the plaintiff pursued his economic loss claim up until the day of the settlement conference. The plaintiff continued to maintain that he had suffered economic loss and expressed his concern about the releases in the Deeds against such a claim;
(c) in Pearce there was no explanation for the plaintiff’s failure to make an economic loss claim, although her Honour noted the medical evidence did not all point to a link between the alleged abuse and an impact on his capacity for employment.[25] The defendant in this case acknowledged that it was provided with material, including Professor Dennerstein’s medicolegal report and the plaintiff’s ADR statement, that was potentially relevant to an economic loss claim at the time of the 2012 settlement negotiations. The medical evidence in this case is not of the same equivocal quality as the medical evidence in Pearce;
[25]Ibid [108].
(d) in Pearce the Court found that although the plaintiff wished to make a claim for economic loss, he accepted his solicitor’s advice not to do so. Forbes J noted that the reasons for that forensic decision were not before the Court.[26] In this case there is an explanation for the failure to pursue the economic loss claim, being the desire to avoid the possibility the Department of Social Services would seek repayment of benefits paid to the plaintiff from the settlement sum;
(e) in Pearce the timing and extent of the advice not to pursue an economic loss claim was not disclosed although it was clear that the decision was made well before the settlement conference. In this case, the plaintiff was advised on the day of the settlement conference by his solicitor and counsel not to make a claim for economic loss. The notes of that advise are brief. During the same conference the plaintiff’s solicitor and counsel confirmed their earlier advice to the plaintiff that his claim faced ‘[a] lot of legal issues and hurdles’. The evidence before the Court was that the plaintiff was experiencing significant anxiety at the time of the 2012 settlement conference and in 2015 his solicitor noted that he did not appear to understand what had happened at that conference; and
(f) in Pearce there was no evidence of the plaintiff continuing to assert economic loss once the decision had been made not to include it in his claim and up to the filing of his new proceeding. In this case, after receiving advice about the possibility of the Department of Social Services making a claim on any settlement sum, the plaintiff instructed his solicitor not to claim for economic loss. There is, however, also evidence of the plaintiff’s disquiet about those terms of the Deeds recording that he was not making a claim for economic loss because he asserted that he did suffer economic loss as a result of the alleged abuse and wished to preserve his rights to make an economic loss claim in the future.
[26]Ibid.
The defendant submitted that the plaintiff’s instructions to his lawyers not to pursue an economic loss claim were motivated by a desire to shield the plaintiff from the possibility that he would have to use some of the settlement to repay Centrelink and that this demonstrates that his motivation for not pursuing an economic loss claim was unrelated to either the limitations period issue or difficulty in nominating a viable defendant. While it is reasonably clear that was the content of the advice given to the plaintiff, that assessment does not take into account that the advice was given, seemingly for the first time, on the day of the settlement conference and during the part of the conference when the plaintiff’s solicitor and barrister reiterated the issues the plaintiff’s case faced because of the limitations and Ellis defence issues. The plaintiff’s evidence was that on that day he was highly anxious and that, due to his heavy drinking, he cannot recall all of his conversation with his lawyers. The plaintiff’s evidence was that he accepted the advice his lawyers gave him on the day of the settlement conference. Given this confluence of circumstances it is not possible to isolate the plaintiff’s motivation for instructing his solicitor not to pursue his economic loss case solely to the possibility of a Centrelink repayment. That factor was undoubtedly part of the reason for the plaintiff’s instructions but it is not possible to find, on the totality of the evidence, that it was the sole or dominant motivation, divorced from consideration of the other problems with his case.
The plaintiff submitted that it is reasonable to infer that the plaintiff’s desire to protect all of the settlement sum from a possible Centrelink repayment was, at least in part, motivated by the modest settlement sum involved. That sum, submitted the plaintiff, was directly related to the issues around the expiry of the limitation period and the Ellis defence the plaintiff’s case faced. While that may have been the case, the plaintiff’s evidence was not to that effect. His evidence was that he could not recall all of the content of his conversations with his lawyers on the day of the settlement conference, that he accepted his lawyers’ advice and that he felt he had no choice but to accept the defendant’s offer because the legal barriers his case faced were too great.
I accept that the plaintiff was legally represented throughout the entire period of his prior claims for compensation. I also accept that there is no evidence that the plaintiff was pressured to enter into the Deeds and that he had legal advice explaining the effects of the Deeds. I am, however, satisfied that it is just and reasonable to set aside the Deeds in their entirety for the following reasons.
First, the evidence shows that the plaintiff was repeatedly advised by his lawyers that his case faced significant issues, being the limitations issue and the availability of the Ellis defence. This advice was given to the plaintiff on 11 January 2011, at the preliminary conference on 21 September 2012, on 21 November 2012 being the day of the settlement conference, on 29 November 2012 while the plaintiff was considering the defendant’s final offer and in the Instructions to Settle Claim document signed by the plaintiff on 13 December 2012.
Second, the plaintiff’s evidence was that he felt he had no choice but to accept the defendant’s final offer because the legal barriers were too great, that his case would fail if he went to court and he would have to pay the defendant’s legal costs.
Third, the evidence before the Court suggests the plaintiff was first advised about the possibility of the Centrelink repayment on the day of the settlement conference, immediately prior to his lawyers conducting the negotiation with the defendant and during the same part of that conference his lawyers reiterated their advice about the limitations and Ellis defence issues in his case. The plaintiff’s instructions not to pursue his economic loss claim should be viewed against all of the circumstances. In my view it is not possible to find that the limitations and the Ellis defence issues had no material influence on the plaintiff’s decision not to pursue his economic loss claim.
Fourth, there is no evidence that the plaintiff’s instructions not to pursue his economic loss claim, or his solicitor’s advice in relation to that claim, was influenced by a lack of supporting evidence. The defendant put further documentary material before the Court but there was no evidence that this material formed a basis for the plaintiff’s lawyers’ advice not to make a claim for economic loss. The defendant conceded that it had been provided with some potentially relevant material. I also accept the plaintiff’s submission that many cases proceed to mediation before all the potentially relevant evidence is assembled.
Fifth, the plaintiff’s evidence, consistent with the documents created by his Ballarat CASA support person and his treating doctor’s records, was that he was experiencing significant anxiety at the times of both settlements and that his ability to comprehend the advice he was given was compromised. The file note created on 16 September 2015 by his solicitor also noted that the plaintiff did not seem to understand what happened at the settlement conference in 2012.
Sixth, excepting the loss of the plaintiff’s releases given in the Deeds, the defendant has not submitted it would suffer additional prejudice, such as the unavailability of documentary evidence, if the Deeds were set aside.
Seventh, the evidence before the Court in relation to the 2015 Deed was that the plaintiff was advised the 2015 Deed would not affect his rights any more than the 2012 Deed had already affected them. The plaintiff’s evidence was that he signed the 2015 Deed because he felt he again had no choice because he had signed away his legal rights by entering into the 2012 Deed. This means that the factors that led the plaintiff to sign the 2012 Deed continued to materially influence the plaintiff’s decision to enter into the 2015 Deed.
During the hearing the plaintiff’s counsel argued that the terms of the Deeds did not in fact release the defendant from the plaintiff’s later claim from economic loss as a result of injuries sustained by the alleged abuse. Given my decision that the Deeds should be set aside in their entirety, it is unnecessary for me to decide whether, on their proper construction, the Deeds do in fact preclude the plaintiff from making his claim for economic loss.
Conclusion
For the reasons given above I am satisfied that it would be just and reasonable to set aside the Deeds in their entirety.
Prior to the hearing of the plaintiff’s application both the plaintiff and defendant provided their proposed orders to the Court. While the parties’ proposed orders on the substantive application were necessarily different, both the plaintiff and defendant proposed that the cost of the application be the parties’ costs in the proceeding.
I will make orders consistent with the orders sought by the plaintiff.
5