Pool (a pseudonym) v Trustees of the Marist Brothers; Property Group & Anor (No 3)
[2021] ACTSC 89
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
| Case Title: | Pool (a pseudonym) v Trustees of the Marist Brothers Property Group & Anor (No 3) | ||||
| Citation: | [2021] ACTSC 89 | ||||
| Hearing Dates: | 3 May 2021 – 6 May 2021 | ||||
| Decision Date: | 13 May 2021 | ||||
| Before: | Elkaim J | ||||
Decision: |
| ||||
Catchwords: | CIVIL LAW – PROFESSIONAL NEGLIGENCE – Historical Child Sex Abuse – Negligence arising from settlement of claim – | ||||
| breach of retainer – Limitation Act – whether claim is statute barred | |||||
| Legislation Cited: | Civil Law (Wrongs) Act 2002 (ACT) s 35 Limitation Act 1985 (ACT) ss 11, 21C | ||||
| Cases Cited: | Badenach v Calvert [2016] HCA 18; 257 CLR 440 Bull v Attorney General for New South Wales [1913] HCA 60; 17 CLR 370 Dougall v Melville [2017] NSWCA 309 Moss v Eaglestone [2011] NSWCA 404; 257 FLR 96 New South Wales v Lepore [2003] HCA 4; 212 CLR 511 Pool (a pseudonym) v Trustees of the Marist Brothers Property Group & Anor (No 2) [2021] ACTSC 82 Province Leader of the Oceania Province of the Congregation of the Christian Brothers v Lawrence [2021] WASCA 77 Talacko v Talacko & Ors [2021] HCA 15 Trustees of the Roman Catholic Archdiocese of Sydney v Ellis [2007] NSWCA 117; 70 NSWLR 565 | ||||
| Texts Cited: | Matthews, Ben and Dallaston Elizabeth, ‘Reform of civil statutes of limitation for child sexual abuse claims: seismic change and ongoing challenges’ (2020) 43(2) UNSW Law Journal 386 | ||||
| Parties: | Peter Pool (a pseudonym) (Plaintiff) Trustees of the Marist Brothers Property Group ARBN 064 875 510 (First Defendant) Jason Dean Parkinson t/as Porters Lawyers (Second Defendant) | ||||
| Representation: | Counsel | ||||
| G Stretton SC (Plaintiff) | |||||
| D Villa SC (Second Defendant) | |||||
| Solicitors | |||||
| Sneddon Hall & Gallop (Plaintiff) McInnes Wilson Lawyers (Second Defendant) | |||||
| File Number: | SC 149 of 2019 | ||||
| ELKAIM J: |
1. The plaintiff originally sued two defendants, the trustees of the Marist Brothers (essentially a school) and a solicitor (Mr Parkinson).
2. The case against the first defendant has been resolved. The hearing before me is concerned with the second defendant.
3. By way of background the plaintiff, who was born in 1971, attended the first defendant’s school. Between 1980 and 1985, the plaintiff was sexually abused by staff members at the school.
4. The plaintiff consulted the second defendant in March 2008 with the intent of commencing proceedings against the first defendant to compensate him for the damages he suffered as a result of the abuse.
5. The retainer of the second defendant gave rise to what, for the purposes of this introduction, I will refer to as the ‘usual obligations’ owed by a solicitor to a client.
6. The second defendant made a claim, on behalf of the plaintiff, against the first defendant. The proceedings were commenced in the Supreme Court on 22 August 2008. There were 21 defendants, presumably intended to cover all of the abusers and their employers. I will refer to them collectively as the Marist Brothers.
7. The plaintiff had unfortunately also been abused by a member of his family (his mother’s cousin) before he attended the first defendant’s school. He says that he told the second defendant about this abuse by way of an email on 21 May 2009.
8. The second defendant does not admit that he was informed of the earlier abuse. While he admits having seen the email he does not concede the import relied upon by the plaintiff nor does he accept that it should have generated any inquiry (even of the plaintiff).
9. On 22 March 2010 the plaintiff settled his claim against the first defendant for the sum of $80,000 inclusive of costs. The net benefit to the plaintiff was approximately $42,000.
10. The plaintiff says that the second defendant “improperly pressured” him to reach the settlement and noted that he had previously been advised that his claim was worth about $250,000 plus costs.
11. The improper pressure is said to arise from the contents of an expert report by a Dr Brown, a consultant psychiatrist who had prepared a report on behalf of the defendants (Exhibit A, Tab 1.3). The report, in its history, records the earlier abuse. The plaintiff asserts that the second defendant said the report was so harmful to the plaintiff’s case that he ought to settle for the $80,000.
12. The plaintiff says that in fact the report from Dr Brown was not harmful to his case and he was not provided with a copy of the report until after a deed concluding the settlement had been executed. The most that had occurred is that during a discussion about settlement on 28 March 2010, Mr Parkinson had the report in his hand and referred to it. The plaintiff says that he certainly was not given a copy and he did not read it.
13. The plaintiff says that the conduct of the second defendant in relation to Dr Brown’s report amounted to a breach of his retainer. Had the report been properly explained to the plaintiff, including being shown to the plaintiff, he would not have settled his claim and he would ultimately have received a far greater sum if the claim had been pursued.
14. The above is not the only allegation against the second defendant.
15. In August 2016 the Limitation Act 1985 (ACT) was amended so as to remove any time limit on proceedings arising from the sexual abuse of a child.
16. After contacting the second defendant in 2016, the plaintiff says that in February 2017 the second defendant wrote to the plaintiff telling him that he could reopen his case against the first defendant notwithstanding the 2010 settlement. The plaintiff gave instructions to the second defendant to reopen the case. Accordingly the second defendant made a claim against the first defendant for further compensation.
17. In once again acting for the plaintiff the second defendant took on the same obligations owed to the plaintiff.
18. The second claim was also resolved, this time on 29 March 2017, for the sum of $33,000 inclusive of costs. The plaintiff received $27,500 from the settlement.
19. Ultimately therefore the plaintiff, from the two settled claims, received $69,500 and the second defendant received $55,500. The plaintiff says that the second defendant was more concerned with his costs than the plaintiff’s interests.
20. The plaintiff says that between giving instructions to reopen the claim and its resolution he was not given proper advice. Had he been given such advice he would not have resolved the claim for $33,000 and would have pursued the first defendant for a much larger amount.
21. The plaintiff now claims from the second defendant the difference between the money he received as a result of the two settlements and the amount he would have received had he been properly advised and not settled the claims as stated above.
22. In addition the plaintiff says that he has suffered psychological injury as a result of the second defendant’s actions. He claims general damages for this injury and also economic loss stemming from the injury.
23. Generally, the second defendant says that he was not professionally negligent at all. Further the plaintiff’s 2010 claim is in any event barred by the Limitation Act. In this respect the plaintiff said he relied upon s 21C, stating that his action substantially arose from sexual abuse to him as a child and was in the nature of a personal injury claim. He also relied on the general limitation section (s 11), submitting that the cause of action had not accrued until sometime after the act of negligence.
24. The second defendant says that the plaintiff was given a copy of Dr Brown’s report and the report was detrimental to the plaintiff’s case.
25. In addition, the second defendant says that by the time the matter was settled he had, for a number of reasons, come to the view that the plaintiff may not have been a reliable witness. Further, at the time, cases of a similar nature were not easily won, a complication being the limitation period that existed at the time.
26. The second defendant specifically says, in paragraph 15 of the Amended Defence, that the plaintiff did not disclose the prior abuse to the second defendant before the receipt of Dr Brown’s report.
27. In relation to the second settlement in 2017 the second defendant says that he did not approach the plaintiff to reopen the case. Rather he was approached by the plaintiff. He says that the plaintiff was told that the reopening was unlikely to lead to the plaintiff receiving more money.
28. The evidence in chief of each witness was largely given by affidavit. The plaintiff was closely cross-examined on his affidavit, the apparent attempt being to establish the following:
(a) The plaintiff was always made aware of the risks associated with litigation. (b) The plaintiff knew of the costs implications of running his case and in particular that costs awarded by a court would not cover his actual legal costs. (c) The plaintiff did not disclose to the second defendant the earlier abuse. (d) The plaintiff was told that there were elements of the history given by him, both to his solicitor and to medical practitioners, which might affect his reliability (and therefore chances of success) in the litigation. (e) The attitude taken by the defendants (the Marist Brothers), in particular their obstructive denial of matters that should not have been in dispute, was such that the costs necessary to overcome these obstacles may have rendered the gains in the case to be nugatory. 29. In relation to the last point mentioned, this case highlights the fundamentally obstructive conduct that had been displayed by the defendants in the abuse claim, apparently shared in many cases of the same nature, in defending litigation and in particular in unconscionably denying allegations of abuse of children by known paedophiles and even going so far as to deny that Marist Brothers schools were in fact schools run by the Marist Brothers.
30. I make the above observation not as a general statement of my views on the conduct of the Marist Brothers but to give some context to the attitude of the second defendant in envisaging the extent of costs that would need to be expended to prove even the most basic elements of the claim and also on the likely effect on the plaintiff in dealing with the claim.
THE 2010 CLAIM
The Limitation argument
31. As described above the plaintiff’s allegations against the second defendant encompass both acts of breach in 2010 and in 2017. In respect of the former the second defendant says that the plaintiff’s claim is barred by the Limitation Act.
32. The plaintiff’s response is by way of reliance on a number of sections of the Limitation Act. The sections include ss 11 and 21C. The plaintiff’s senior counsel made it clear that these were the only two sections of the Limitation Act relied upon (transcript page 243-244).
33. Primarily the plaintiff says that his action is permitted by s 21C. This section states:
21C Personal injury resulting from sexual abuse of child (1) This section applies to an action on a cause of action for the death or personal
injury of a person—
(a)
if the cause of action substantially arises from sexual abuse to which the person was subjected when the person was a child; and
(b)
whether liability for the death or personal injury arises in tort or contract or on another form of action (including breach of statutory duty); and
(c)
whether the cause of action accrues before, on or after the commencement of the Justice and Community Safety Legislation Amendment Act 2016 (No 2), section 3.
(2)
An action on the cause of action is maintainable at any time and is not subject to any limitation period under this Act, despite anything elsewhere in this Act or another territory law.
(3) This section does not limit—
(a)
the inherent jurisdiction, implied jurisdiction or statutory jurisdiction of a court; or
(b)
any other powers of a court under a law in force in the Territory, a rule of court, or any other practice of the court.
Example—par (b)
a court’s power to summarily dismiss or permanently stay proceedings where the passage of time has a prejudicial effect on the defendant that is so serious that a fair trial is not possible
(4) In this section:
sexual abuse includes the following:
(a) an offence of a sexual nature;
(b) misconduct of a sexual nature.
subjected, in relation to sexual abuse, includes witness.
34. The plaintiff’s argument is that his action is for personal injury and it “substantially arises from sexual abuse to which the person was subjected when the person was a child”.
35. Firstly, is this an action for personal injury? The plaintiff says it is, because he has claimed that as a result of the negligence of the second defendant, he suffered injury of a psychological nature, even if only an aggravation of a pre-existing depression. In the only medical report relied upon in support of the personal injury claim Dr Knox, a consultant psychiatrist, says this (at page 6) in his report of 9 July 2020:
It is likely however that given the content of his recollections of these events [referring to 2010 and 2017] his underlying insecurity and sense of mistrust, along with the other deficits he has in his personality, were aggravated to some extent by his perception of the lack of appropriate support for him.
36. In an interlocutory decision I gave on admissibility of certain evidence (Pool (a pseudonym) v Trustees of the Marist Brothers Property Group & Anor (No 2) [2021] ACTSC 82), I referred to the New South Wales Court of Appeal decision in Moss v Eaglestone [2011] NSWCA 404; 257 FLR 96. In this decision Allsop P (as he then was) described the nature of a case against a solicitor. His Honour said, from [20]:
20 The first step in the analysis is to understand the nature of the appellant's action against the respondent insofar as it is a claim for the loss of the right to sue in defamation. It is to be noted at the outset, that there was no argument before the primary judge that either the principal proceeding or the claim against the respondent was hopeless or for some reason bound to fail. That said, the pleading was in a form inviting a strike out application.
21 The loss of a right of or chose in action by the wrongful conduct (whether in contract or tort) of a solicitor may entitle the client to sue the solicitor. The suit against the solicitor, if available, will be for the loss of the right or chose in question and its value. The task of the court (if liability be shown) is to value the lost right or chose. In Kitchen v Royal Airforce Association [1958] 1 WLR 563 at 575 Lord Evershed MR (with whom Parker LJ and Sellers LJ agreed) said:
"... what the court has to do (assuming that the plaintiff has established negligence) in such a case as the present, is to determine what the plaintiff has by that negligence lost. The question is, has the plaintiff lost some right of value, some chose in action of reality and substance? In such a case, it may be that its value is not easy to determine, but it is the duty of the court to determine that value as best it can."
22 The action is for the loss of the chose in action. The wrong is actionable in tort if something of value has been lost; a claim in contract will be available if there has been a breach of contract. Here it can be accepted that the action is one in contract or tort for the asserted negligent performance of the retainer or for failure to follow instructions. The assessment of the value of that lost chose (in tort or contract) is to be undertaken, not on the balance of probabilities as to what would have happened in the action, but by reference to the chances of success and the difficulties involved, even if the assessment is less than 50 per cent: Kitchen at 576 (Parker LJ), The Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54; 174 CLR 64 at 119 (Deane J), cited in Sellars v Adelaide Petroleum NL [1994] HCA 4; 179 CLR 332 at 354 (Mason CJ, Dawson J, Toohey J and Gaudron J). Young CJ in Nickolaou v Papasavas, Phillips & Co [1988] VR 682 at 687 said of a professional negligence action against a solicitor for failing to bring proceedings to recover damages for personal injury:
"The present case, however, is not a personal injuries case. The loss which the first appellant suffered as a result of the respondents' negligence was not injury to his person, but the loss of a chance of recovering damages for the personal injuries alleged to have been sustained by him in the accident on 4 September 1976. In assessing the value of that chance it is first of all necessary to estimate the first appellant's prospect of establishing in an action instituted within the limitation period that the unidentified driver was negligent and that his negligence caused the accident.
...
Having estimated the first appellant's prospect of obtaining a judgment against the Incorporated Nominal Defendant, the next step in valuing the first appellant's lost chance is to estimate as best the court can what damages the first appellant might have recovered if the action had been brought."
23 On appeal the majority of the High Court in Nickolaou v Papasavas, Phillips & Co [1989] HCA 11; 166 CLR 394 at 402-403 (Wilson J, Dawson J, Toohey J and Gaudron J) specifically endorsed these comments saying:
"The Full Court rejected the approach taken by the trial judge, that damages should be assessed as at the date of the hearing of the claim against the solicitors. Young C.J. stressed that the action giving rise to the appeal was 'not an action for damages for personal injuries, but an action for damages for breach of duty as a solicitor, whether sounding in contract or in tort'. Furthermore, said the Chief Justice, the loss which Mr. Nikolaou suffered by reason of the respondent's negligence 'was not injury to his person, but the loss of a chance of recovering damages for the personal injuries alleged to have been sustained by him in the accident on 4th September 1976'."
24 In Johnson v Perez [1988] HCA 64; 166 CLR 351 handed down on the same day as Nickolaou, Wilson J, Toohey J and Gaudron J said the following at 367:
"The starting point is that 'a plaintiff who has been injured by the negligence of the defendant should be awarded such a sum of money as will, as nearly as possible, put him in the same position as if he had not sustained the injuries': Todorovic v. Waller [1981] HCA 72; (1981) 150 CLR 402, at p 412; see also Livingstone v. Rawyards Coal Company (1880) 5 App Cas 25, at p 39. In each of the present cases the respondent would, but for the negligence of his solicitor, have recovered damages for personal injuries against his employer. It is that loss for which he is to be compensated; he is not to be compensated as if his claim against his solicitor was a claim for damages for personal injuries."
25 All these statements can be accepted as uncontroversial. The relevance of these expressions of principle depends on the context. Once it is proved that the chose lost was of real value, its value is to be assessed not by proof on balance of probabilities as at the date of the negligence action as if the solicitor were the defendant in the personal injuries claim, but by reference to loss of a valuable chance. That valuation is to be made at the time of the loss of the chose, although evidence of later events can be admitted in certain circumstances. What is clear, however, is that in seeking to prove the value of the lost chose, the plaintiff would be entitled and required to lead evidence of what would or might have occurred at trial by way of appropriate evidence to be led. Thus, it would be important in the preparation and running of any such case for the plaintiff to bring the best available evidence that would have been available, including in particular the evidence on damages, had the matter been prepared and brought to trial by the solicitor in the manner and at the time required by good practice or by following instructions.
26 The professional negligence action may be in contract or tort or both. It will or may involve questions of the terms and extent of the solicitor's retainer, the scope and content of the duty of care, whether the duty was breached, any contributory negligence and the value of the lost chose, including the prospects of succeeding and of proving the damages said to have been suffered and any prospect of settlement.
37. The case described in Moss is in my view of the same nature as the present matter. The plaintiff is claiming that his case should not have been settled, that he was coerced into agreeing to the defendants’ offer. He is essentially saying that he lost “the right of or chose in action by the wrongful conduct (whether in contract or tort) of a solicitor…” Put another way, the solicitor, by his breach of duty or contract, deprived the plaintiff of pursuing his case either to a more profitable settlement or to judgment.
38. Notwithstanding the allegation of an aggravation of his condition I do not think this is a personal injury case.
39. I should add here, although I will be returning to it in respect of the argument made concerning s 11, that notwithstanding the sparsity of expert evidence, the plaintiff’s case was that the damages that arose following the settlement in 2010 were significant including both general damages and economic loss. I stress that this claim was made in addition to, and separately from, the damages arising from the loss of the chance to have pursued his claim against Marist Brothers.
40. Next, I do not think that the cause of action here “substantially arises from sexual abuse to which the person was subjected when the person was a child” (s 21C(1)(a)).
41. There is no doubt that the plaintiff was sexually abused as a child. There is no doubt that the original claim brought by the second defendant, had s 21C then been in force, would have arisen from his sexual abuse as a child. But that is a different case.
42. The present case arises squarely from the asserted negligence or breach of contract of the solicitor in forcing the settlement. It is immaterial what the original case was based upon. It could have arisen from a motor car accident or any other tort or breach of contract. The plaintiff’s case is that the solicitor acted in breach of his duty, either in tort or contract or both. The cause of action arises from the solicitor’s alleged breach of duty.
43. The plaintiff submitted that in approaching s 21C I should treat it as beneficial legislation carrying with it a beneficial, and accordingly broad, interpretation of its terms. I agree that the legislation is beneficial and “like all such Acts should be construed beneficially” (Bull v Attorney General for New South Wales [1913] HCA 60; 17 CLR 370 at 384).
44. However no matter how beneficially I interpret s 21C I cannot import into it a meaning which its plain words do not allow. This section was introduced to allow persons who had been abused as children to sue their abusers, or their abusers’ employers, for damages notwithstanding the passage of time. The section is addressed at providing a means of redress to victims of abuse. The beneficial interpretation might cater for, perhaps, definitions of sexual abuse or relationships of abusers to their employers. But it does not, in my view, extend to a professional negligence action, notwithstanding that the original proceedings substantially arose from sexual abuse to the plaintiff as a child.
45. Turning now to s 11, the plaintiff, a little unusually but probably no less effectively, provided his submissions through an advice of counsel (both senior and junior) dated 26 March 2019.
46. The Advice correctly identifies the important question, namely when did the cause of action “accrue” for the purposes of s 11. The advice says, at [12]:
In order for time to start running, the plaintiff must suffer actual as opposed to prospective or contingent damage. However, actual damage is not synonymous with the whole of the plaintiff’s damage; so long as the plaintiff has suffered a loss, even if that loss is ongoing and has yet to coalesce, time begins to run.
47. The difficulty facing the plaintiff is that it was an unequivocal part of his case that he “spiralled into depression” immediately after the settlement in March 2010 and this was to an extent that he suffered general damages and economic loss. When I asked senior counsel about the quantum of these damages, he said they were “significant” (Transcript page 237). It must follow that the cause of action accrued with the incurring of this loss.
48. The Advice continues at [15]:
There are a number of different ways of analysing this factual matrix. They include:
(a) That the cause of action in tort did not accrue until the plaintiff’s damage became irrecoverable following the settlement in March 2017. This is because the damage which had occurred to the plaintiff in March 2010 was only prospective and contingent given the concealment by Marist in relation to its knowledge of the facts and circumstances surrounding the assaults on the plaintiff. Thus, time did not start running for a cause of action in tort until March 2017. (b) An alternative analysis is that a separate cause of action arose under either tort or contract on and from 29 March 2017 when Porters committed a further breach of its duties arising from the 2008 retainer. Such an action would be either a separate action for breach of contract or an action on a fresh breach of duty of care in tort. As regards the latter possible cause of action, the cause of action in tort is sufficiently distinct from the earlier action given the removal of the limitation period regarding child sexual abuse with retrospective effect in August 2016.
49. Paragraph 15(b) seems to be suggesting that a separate cause of action arose in March 2017. At [17] it is said that of the two possibilities described in [15] that subparagraph (b) is more likely to be the correct approach. But if this is saying that there is a separate case derived from the events in 2017, then any limitation argument is simply not applicable. The second defendant accepts that there is no limitation argument in respect of the events in 2017.
50. An avenue that I initially thought might have assisted the plaintiff is derived from the decision of the New South Wales Court of Appeal in Dougall v Melville [2017] NSWCA 309. McColl JA (with Payne JA and Davies J agreeing) said this from [74]:
74 Accordingly, in order for the respondent’s causes of action to accrue, there had to be some actual, measurable damage, beyond what can be regarded as negligible; prospective loss is not enough.
75 For this reason, the appellants’ first submission that the causes of action accrued on or about 25 May 2007 should be rejected. As at that date it is not apparent that the respondent had suffered any measurable loss in relation to his knee injuries. However, for the reasons which follow, the operations case should be upheld.
76 In my view, the respondent’s causes of action can be taken to have accrued once the impact of the settlement of the first WC claim, and on his mooted case, the loss of his ability to recover either workers compensation benefits or work injury damages in relation to the injuries to his knees, became “known or apparent”. As is apparent from the respondent’s statement referred to earlier in these reasons, his claim of loss both in the negligence and misrepresentation claims turn on the proposition that he was totally incapacitated from work after his knee surgery. That is also evident from the particulars given attributing his serious financial loss to his total loss of earning capacity from the date of his surgery, surgery said to have been necessitated by the injury he suffered arising “from the nature and conditions of his employment with Toll”.
51. The second defendant submitted that Dougall could be distinguished from the present case on a number of bases, some of which were certainly arguable. The importance to me however is that the assertion of a significant and identifiable loss immediately following the settlement cannot be regarded as “negligible” and must have triggered the accrual of the cause of action. That being so, the commencement of the cause of action in 2010 was out of time.
52. It follows that the plaintiff’s case, to the extent that it asserts a breach of tortious duty or contract arising from the plaintiff settling the then current proceedings in March 2010, must fail. This is derived from:
(a)
the plaintiff’s claim for significant damages arising from the almost immediate onset of a significant depression, thus triggering the accrual of the cause of action shortly after 22 March 2010. The commencement of proceedings in 2019 was thus outside the six year limitation period.
(b)
The inability of the plaintiff to rely upon s 21C of the Limitation Act because I do not think the proceedings were a personal injury action (notwithstanding his claim for damages usually associated with a personal injury claim), but more importantly, these proceedings do not substantially arise from the sexual abuse of the plaintiff as a child.
If the Limitation Act defence had failed
53. I would have reached the following conclusions had there not been a time bar.
54. The parties agreed that the relevant principles for liability in a case of this type are set out in Badenach v Calvert [2016] HCA 18; 257 CLR 440 at [57]:
Subject to statutory or contractual exclusion, modification or expansion, the duty of care which a solicitor owes to a client is a comprehensive duty which arises in contract by force of the retainer and in tort by virtue of entering into the performance of the retainer. The duty is to exercise that degree of care and skill to be expected of a member of the profession having expertise appropriate to the undertaking of the function specified in the retainer. Performance of that duty might well require the solicitor not only to undertake the precise function specified in the retainer but to provide the client with advice on appurtenant legal risks. Whether or not performance of that duty might require the solicitor to take some further action for the protection of the client's interests beyond the function specified in the retainer is a question on which differences of view have emerged. That question was not addressed in argument, and need not be determined in this appeal.
(Citations omitted)
55. The second defendant unquestionably had “expertise appropriate to the undertaking of the function specified in the retainer”. I do not think he exercised “that degree of care and skill” that was accordingly expected of him.
56. In breach of his retainer, I think the second defendant effectively coerced the plaintiff into agreeing to the settlement on 22 March 2010. I cannot say his motivation, as to some degree suggested by the plaintiff, was simply to secure his own costs. But, in my view:
(a) The email of 21 May 2009 sent by the plaintiff to Ms Donald, if not clearly indicating an episode of abuse preceding the abuse at Marist Brothers, was of sufficient clarity to generate further investigation. The second defendant said he had seen this email some time before the settlement documents were signed, although it may possibly have been on the same day. The second defendant specifically states (at [83] of the second defendant’s affidavit) that he said to the plaintiff: You hadn’t mentioned the earlier abuse when we were preparing your claim and your affidavit…
(b) The email states: Can you check if the name [SN] shows up on your radar. This was a man who exposed me to abuse in the early eighties. He was my mum’s cousin who started life as a Christian brother. I found this out last night and it may be a link to what happened to me in Sydney with the Marist Brothers and may also be a link to Canberra? My Auntie suspected his inappropriate behaviour.
(c)
The second defendant correctly submitted that there were some inconsistencies in the email which could have given rise to questions about its interpretation. For example, the plaintiff was already attending Marist Brothers in “the early eighties” so that this abuse could not have preceded that by the brothers. But these inconsistencies do not overlay the clear message of abuse by a person other than the brothers being sued. At the very least the email should have generated questions of the plaintiff.
(d)
However, notwithstanding the email, the second defendant, on 22 March 2010, effectively ignored it, preferring instead to make a great deal of the report of Dr Brown that had been served by the Marist Brothers. When discussing this report he did not even ask the plaintiff what had been intended by the email.
(e)
In his affidavit, in particular at [83], the second defendant sets out in summary form what he said to the plaintiff on 22 March 2010. While it is true that some matters not concerning the report were covered by the second defendant, it is abundantly clear that Dr Brown’s report was at the core of his advice to the plaintiff that he should accept the offer of $80,000 inclusive of costs.
(f)
The second defendant accepted that victims of sexual abuse as children grew up to be vulnerable persons. He accepted that the plaintiff was a vulnerable person. Nevertheless:
(i)
He organised the settlement meeting to occur one day before the expiry of the offer.
(ii)
He did not suggest to the plaintiff that he consider the offer overnight, let alone that he might ask the opposing solicitors for extra time. The second defendant said he thought such a request would have been granted.
(iii)
He did not obtain particulars of the earlier abuse by the relative, so that it could be provided to Dr Klug, for a further opinion of its impact on his original opinion.
(iv)
The second defendant was an experienced common law solicitor, and in particular well experienced in dealing with the claims of sexual abuse victims. I have no doubt that any such solicitor would have encountered, in persons of fragile mental health, examples of inconsistencies in histories and matters later recalled. It would have been quite easy, if not quite normal, to have a medical expert review an opinion in the light of further evidence. To give the plaintiff the impression, which he unquestionably did, that his case had been significantly weakened by Dr Brown’s report was in my view in breach of his retainer and his duty of care.
(v)
He did not properly analyse the report of Dr Brown so as to provide the plaintiff with a proper overview of its import. Such an analysis would have revealed that the report was not nearly as detrimental to the plaintiff’s case as emphasised by the second defendant.
(vi)
In relation to the contents of [83] I have significant doubts as to the reliability of the second defendant’s recollection. For unknown reasons (in respect of which I draw no inference against the second defendant) there was no file note available to the second defendant to refresh his memory of that day. He was first asked to recollect the events of 22 March 2010 about two months before his affidavit was affirmed on 22 January 2021. In other words, he was relying on his recollection of an event which had occurred more than nine years earlier.
(vii)
To the extent that there is any dispute between the evidence of plaintiff (and his wife) against that of the second defendant, about what was said on 22 March 2010, I prefer the evidence of the plaintiff and his wife. The meeting on that day was a very significant feature in their lives. The second defendant was dealing with one of many clients in a no doubt often repeated discussion about settlement. In this regard I note that no issue was taken as to the credibility of the plaintiff and his wife. Although some questions were raised about the reliability of their evidence, I am satisfied that they were entirely truthful, despite some small inconsistencies between them, as to what occurred at the meeting.
(viii)
He effectively abandoned the assessment of the case carried out by his employee, Mr Blain, some two months earlier, apparently, and mostly, because of Dr Brown’s report, which as I have emphasised above is neither as detrimental as suggested nor as incapable of meeting, as seemingly assumed by the second defendant.
(ix) Mr Blain, in his affidavit sworn on 14 October 2020, at [23], said this: As at 20 January 2010 I considered that a modest assessment of the value of the plaintiff’s claim against Marist was approximately $160,000 plus costs, broken down as follows:
General damages: $100,000 Economic loss: $50,000 Treatment: $10,000 (x) If costs of say $50,000 was allowed, the second defendant was recommending a figure constituting an almost 70% decrease on the “modest” assessment made only two months before.
(xi) Although both senior and junior counsel had been fairly closely involved in the matter neither of them appears to have been consulted about the appropriateness of the settlement. The second defendant made much of an email from junior counsel stating that some of the plaintiff’s allegations of abuse were unusual. I do not see any credit issue against the plaintiff arising if the matter had gone to trial. Every allegation was unusual. The plaintiff was disclosing the most perverse and unusual conduct of assorted paedophiles masquerading as religious teachers. The plaintiff was asked to be a “Christian soldier” while he was being abused. Everything was unusual.
(xii) I also have significant doubts about a particular aspect of the chronology. It was suggested by the second defendant that the report of Dr Brown was served on him together with the reinstatement of the offer of $80,000 inclusive of costs. This was confirmed by his senior counsel (transcript page 258-259). The offer however was made on 9 March 2010 (and received on 14 March). The report of Dr Brown was served on 25 February 2010. It was then sent to Mr Tuscano of counsel, who responded on 9 March 2010 saying that the report was “supportive in some respects”. He then added: “The difficulty is that there is additional history of given (sic) relevant to credit both at the school and unrelated to the accident”.
(xiii) First, there was no reason that the plaintiff could not have been provided with a copy of Dr Brown’s report before the settlement date. There was certainly no need for urgent attention as suggested by the second defendant. Second, as I have already observed, the report is not as bleak as made out by the second defendant.
57. Accordingly, I would have easily found that the second defendant breached, in tort and contract, his retainer with the plaintiff.
58. The next step would have been to assess damages. The plaintiff relied, as a submission, on an Advice prepared by Mr Richards OAM, a barrister, on 25 April 2021, in which he suggested a range of damages in 2010 of between $317,050 and $376,770 plus costs. In reaching his figures Mr Richards had access to information supplied by the plaintiff, the medical reports of Drs Klug, Brown and Roberts and some correspondence providing particulars at the relevant time.
59. The second defendant accepted that the figures mentioned above, as assessed by Mr Blain, were a reasonable assessment of the claim, at least as at January 2010. The plaintiff took the same approach (Transcript page 256). Noting again that Mr Blain’s assessment was “modest”, I think a reasonable approach would be to assess the plaintiff’s damages in 2010, had he proceeded to hearing, at $275,000 plus costs.
60. This approach is in accordance with the recent High Court case of Talacko v Talacko & Ors [2021] HCA 15 where at [43] it is stated:
Damages are assessed as the amount by which the value of the right has diminished from the value it would have had if the acts comprising the tort had not been committed.
61. I will immediately reduce this amount to $250,000 to take into account that a portion of the damages would have been attributed to solicitor and client costs incurred by the plaintiff. The next step is to discount the $250,000, remembering that the plaintiff’s claim is for the loss of a chance and that chance would have encountered several risks, in particular bearing in mind the obstructive course being taken by Marist Brothers at the time as well as the law emanating from cases such as New South Wales v Lepore [2003] HCA 4; 212 CLR 511 and Trustees of the Roman Catholic Archdiocese of Sydney v Ellis [2007] NSWCA 117; 70 NSWLR 565.
62. Perhaps most significantly there is a chance that all or some of the perpetrators of abuse upon the plaintiff might have been accepted over his evidence. While I have no doubt he would have given truthful evidence his memory, as he concedes, was subject to fluctuations as to the identity of the abusers.
63. Working out the discount involves a degree of speculation but as said in Talacko at
[46] : The diminution of the value of those rights might be difficult to assess but "the common law does not permit difficulties of estimating the loss in money to defeat an award of damages".
(Citations omitted)
64. I think a discount of 20% is appropriate, thus bringing the notional damages down to $200,000. Although I have some doubts about the correctness of the concession, the plaintiff accepted that a payment received by the plaintiff of $76,415, made under the National Redress Scheme, should be deducted. The resulting verdict in favour of the plaintiff arising from the 2010 breach of the retainer would have been $123,585.
65. Although not strictly relevant, I note that the current awards for cases of this type are significantly higher. For example, in Province Leader of the Oceania Province of the Congregation of the Christian Brothers v Lawrence [2021] WASCA 77 there was an award of $1,498,122.
66. I would not have allowed any additional damages arising from the plaintiff’s mental health condition following his settling of his case in March 2010. Even if the case could be styled as a personal injury claim, I think any damages would have been precluded by s 35 of the Civil Law (Wrongs) Act 2002 (ACT), which states:
35 Mental harm—damages
(1) Damages must not be awarded for pure mental harm to a person resulting from negligence unless the harm consists of a recognised psychiatric illness.
(2) Damages must not be awarded for economic loss for consequential mental harm to a person resulting from negligence unless the harm consists of a recognised psychiatric illness.
67. The only expert medical reports dealing with the plaintiff’s condition after the settlement are the two reports of Dr Knox dated 3 June 2019 and 9 July 2020 respectively. It is only the latter of these reports that comments on the plaintiff’s condition arising from the alleged breach of the retainer. Dr Knox is a consultant psychiatrist. These are some excerpts from his second report:
At this distant point in time I am not able to assert that any of your client’s symptoms can be specifically, and in isolation from his overall condition, connected to the settlement processes in 2010 and 2017. It is likely however that given the content of his recollections of these events, his underlying insecurity and sense of mistrust, along with the other deficits he has in his personality, were aggravated to some extent by his perception of the lack of appropriate support for him.
…
I do not believe your client warrants further formal psychiatric or psychological treatment, with him having obtained this usefully in the past, and rehabilitated his life as far as might be achievable under the circumstances. He has moved ahead very constructively in involving himself in counselling training and work. I believe support for this is likely to be more productive in the longer term than to again return him to the unhelpful status of a patient.
68. At best the plaintiff may be viewed as having suffered an aggravation of a pre-existing depressive condition. However, I cannot glean from anything said by Dr Knox, the identification of a recognised psychiatric illness arising from the plaintiff’s dealings with his former solicitor.
THE 2017 CLAIM
69. The plaintiff’s claim was pleaded as a breach of the terms of the retainer made between the parties in 2008. The second defendant admitted that his representation of the plaintiff in 2016 and 2017 was pursuant to this retainer.
70. It is necessary however to look at the precise terms of the retainer. Paragraph 16 of the Statement of Claim states:
In March 2008, the plaintiff consulted the second defendant who agreed to act on his behalf to seek damages from the first defendant for the sexual assaults perpetrated by the Perpetrators on the plaintiff.
71. The Perpetrators are identified in paragraph 4 of the Statement of Claim as Brothers Kostka, Gregory Sutton, Jerome Hinkman, Coman Sykes and Paul Lyons.
72. Paragraph 5 of the Defence admits paragraph 16 of the Statement of Claim. Although this admission is not qualified it must be restricted to the terms of the allegation which is admitted. The importance of this is that the retainer cannot be interpreted to extend to any perpetrators of sexual abuse who were not named in paragraph 4.
73. At the same time however the Deed of Release executed by the plaintiff on 29 March 2010 would only be a bar to further proceedings in respect of abuse by specific Brothers if those Brothers were named in the deed. The persons named in the deed are Brothers Chute (Kostka), Sutton, Evans, McCabe and Mr Lyons.
74. The reliance upon the deed as preventing the reopening of the case, as asserted by the second defendant, can only apply to the extent that any reopening made allegations against the above persons named in the deed.
75. I note here that the legislation in the ACT removing the limitation period in respect of sexual abuse of children claims (s 21C), unlike some other jurisdictions, did not extend to leave to set aside deeds of release that had been previously executed, as had occurred with the plaintiff here.
76. Combining this point with the above observation concerning the breadth of the retainer, any reopening of the case pursuant to the retainer would be restricted to allegations against the Perpetrators named in paragraph 4 of the Statement of Claim but not named in the deed.
77. The only two persons fitting within this category are Brothers Sykes and Hinkman. These are precisely the two persons identified by the second defendant, in his evidence, as being persons who the plaintiff would be free to sue. His evidence was as follows (Transcript page 203):
But in terms of the same allegations that are in those 2008 proceedings or 2009, whenever they were - - -?---No, because there's the deed.
- - - you would say that they are finished?---Yes, they are finished. But he's free with those
two others that he brought up.78. The two that “he brought up” were Brothers Sykes and Hinkman. It is clear however from the plaintiff’s evidence (Transcript page 38) that he could not identify these two brothers until 2019 and therefore well after his contact with the second defendant in 2016 and 2017.
79. The effect of these observations is that there was no avenue available to the second defendant to reopen the case within the bounds of the 2008 retainer. I specifically asked senior counsel for the plaintiff to outline the case in respect of 2017 (Transcript page 247):
HIS HONOUR: All I'd like you to do is tell me what are the alleged acts of negligence or breach of retainer in respect of 2017?
MR STRETTON: Yes. First of all, Ms Ross wrongly and negligently, we say, advising the plaintiff that the removal of the limitation period did not affect his case. Secondly, that all that could be done at that stage was to negotiate a further cost settlement as a result of the information that there had not been a full disclosure about the defendant's knowledge and had now been found out.
HIS HONOUR: So it was wrong to say, 'The best we can do is get a top up of costs arising from those matters'?
MR STRETTON: Correct. Exactly. And that the advice should have been given, in my submission, that while it may well have provided an avenue for a costs top up, it certainly provided an avenue for a reconsideration or re-opening of the case.
Your Honour, also it was ascertained in 2017 that there was indeed evidence available that Mr Sutton, or Brother Sutton in particular had previously abused children and that was known or ought to have been known to the Marist.
HIS HONOUR: Was Sutton not a subject of the 2010 proceedings, or whenever they were started?
MR STRETTON: He was one of the Marist Brothers.
HIS HONOUR: Why wouldn't have he been covered by the Deed of Release?
MR STRETTON: Your Honour, the thing that opened - the matter that opened that up was the new evidence because previously the Lepore situation was a hurdle or a trouble to the solicitors because they didn't have evidence that would sheet it home to the brothers. But what happened as a result of the Royal Commission was that evidence was then available that the Marist Brothers probably were certainly aware but at the very least ought to have been aware of the activities of Brother Sutton. That new fact ought to have given rise at least to advise to the plaintiff that that gave him a chance to re-open his case.
80. Two matters arise from the above exchange between senior counsel and myself:
(a) The only matter identified as falling within the retainer related to Brother Sutton. The submission seems to have been that because it was discovered that the Marist Brothers had long-standing knowledge about Brother Sutton, that would give rise to an opportunity to override, or set aside, the deed of release. As to any legal basis, or legal mechanics, upon which such an action might have been undertaken, senior counsel was silent. (b) Nothing critical was said about the negotiation of the cost settlement. 81. I have noted above that the ACT legislation did not give leave to attack previously made, and otherwise legally enforceable, deeds of release. The inequity flowing from the ACT approach, and the obstacles facing victims in the face of deeds of release was described in an article by Professor Matthews and Ms Dallaston, published in the UNSW Law Journal (2020) at 405:
C Approach to Revival of Previously Settled Claims
The third area of inconsistency is that several jurisdictions’ reforms included a provision enabling a plaintiff to revive an action that had been settled by deed in cases where the court accepts ‘it is just and reasonable to do so’. Queensland was the first jurisdiction to enact this reform. This special exception to res judicata is consistent with the retrospective application of the abolition of the limitation period, and recognises that in the pre-reform era, some plaintiffs may not have not received a fair opportunity to have their claim for damages arising from child sexual abuse decided by a court, or by a fair settlement negotiation, and felt compelled to accept a settlement amount despite its clear inadequacy. These circumstances of injustice include those where there was no real dispute about the defendant’s liability, but where the plaintiff felt compelled to accept a small offer of compensation in return for a defendant agreeing not to defeat the claim outright by relying on the expiry of time. They may include other cases where the plaintiff’s agreement to accept a settlement offer was otherwise unduly influenced by an imbalance of power. The policy basis for the revival of previously settled claims is therefore that in such cases, it may be ‘just and reasonable’ to allow a plaintiff to commence the action again, so that a justifiable outcome may be obtained unaffected by the defendant’s former unjust reliance on the expiry of time, other power imbalance, or other circumstance of injustice.
To date, these provisions have been enacted in Queensland, Victoria, Western Australia and the Northern Territory. The most recent development occurred in Victoria. Reforms announced in June to align Victoria’s approach with several other states and territories were promptly enacted by the Children Legislation Amendment Act 2019 (Vic) and commenced on 18 September 2019. The provisions require the plaintiff to seek leave from the Court, and empower the Court to grant leave to commence the action if it is shown to be ‘just and reasonable’. The prior settlement agreement and related agreements will be set aside to the extent necessary. On hearing the action, which typically is likely to involve quantum only but may potentially extend to liability, the Court will take into account any amount already paid under the original settlement agreement in arriving at a decision as to damages.
However, these reforms have not been made in the Australian Capital Territory, South Australia, or Tasmania, and it is insufficiently clear that the New South Wales provisions apply to these situations. Accordingly, this creates further substantial inequality in the legislative entitlements of plaintiffs across the nation. The first clear issue in this respect is therefore that the Australian Capital Territory, South Australia and Tasmania, and possibly New South Wales, need to remove this inconsistency by making appropriate reforms.
(Citations omitted)
82. It must follow therefore that no breach of the retainer has been established concerning the second defendant’s actions on behalf of the plaintiff in 2017.
83. Once again, in case I am wrong in this conclusion, there are a number of matters that I will say about the second defendant’s conduct in 2016 and 2017.
84. I will start with a chronology. The plaintiff telephoned Porters on about 3 November 2016. He spoke to a receptionist who notified the second defendant and an employee, Ms Heather Ross, about the call. The receptionist said the plaintiff had told her that “he finished up about six years ago, when Mia was here and he wanted to see if there was an expansion with what he can claim”.
85. Ms Ross telephoned the plaintiff on 5 December 2016 and told him that she had “looked at the matter but believe can’t improve on the settlement”. She said that unfortunately Porters “can’t do anything further for you – Marists not willing to extend”.
86. Two days later the plaintiff wrote to the second defendant, by email, stating:
I spoke with Heather through the week and she indicated that it would not be worthwhile re- opening my case. I accepted what she said, however I find this very defeating particularly now that I have successfully charged Chute and Gregory with sentencing in January.
I understand the abuse I suffered prior to the brothers and Lyons affected my outcome years ago, however it still happened and has not been compensated fairly.
87. Before proceeding further, I make the observation that the terms of the email indicate the extent to which the plaintiff had understood, from the second defendant, that Dr Brown’s report had had a very detrimental effect on his case.
88. Ms Ross wrote to the plaintiff on 10 February 2017, stating:
After the Royal Commission issued their findings, we contacted former clients as we were of the opinion that they had been charged more legal fees than should (sic) been necessary for us to have to prove the case on a “circumstantial” basis, rather than if the Marist Brothers had immediately admitted that they knew Kostka was a risk to children.
…
Subsequent to your telephone conversation with the writer late last year, discussions were held with the solicitors for the Marist Brothers regarding further compensation for certain claims. The Marist Brothers have indicated that they are willing to negotiate an additional “top up” of the compensation already paid to you.
In the circumstances, we recommend that you make an initial offer in the sum of $80,000.00. We expect that they will reject this offer and make a counter-offer when we meet in Sydney on 21-22 February 2017.
89. Ms Ross ended her letter stating that Porters’ legal fees would not exceed $20,000. Although the letter was sent to an address from which the plaintiff had moved, a copy of the letter was emailed to the plaintiff on 13 February 2017.
90. Also on 13 February 2017 the plaintiff sent an email to the second defendant in which he asked:
Can you please confirm if I have signed a deed of release, I am currently seeking a second opinion on my case as I feel that you have not explained clearly the reasons why I cannot revisit.
91. Later that day the plaintiff responded to Ms Ross providing his new residential address and asking about Brother Sutton, noting that Ms Ross’s letter had concerned Brother Kostka.
92. Still on the same day Ms Ross responded stating that no further compensation was available because Brother Sutton had been found guilty. She then set out the basis upon which further monies might be obtained:
The re-opening is because they said that they were not aware of the risk that Kostka’s (sic) proposed. This was a lie, as they knew Kostka was a risk as far back as in about 1969; when they gave him a warning about his behaviour.
As they did not admit what they knew we were required to do extra work to prove that they didn’t know and this extra work cost you extra in fees - it is this extra that you were required to pay for fees and we are seeking to have you reimbursed…
…
I hope this makes clear the basis of why we are arguing you should be given more money despite the fact that your matter is completely settled and, in law, you are not actually entitled to come back to them for more money.
93. Ms Ross was clearly endeavouring to explain to the plaintiff that he did not have any avenue for reopening his case other than through a reimbursement of costs that had been unnecessarily expended. The plaintiff responded:
Thank you for explaining, that now makes sense. I was thinking emotionally. I just felt that they had taken further advantage. Hopefully they will make things right with the top up proposal.
94. It was then apparent that the plaintiff had accepted the advice given by Ms Ross and was instructing her to pursue the ‘top up’ proposal. Arguably this amounted to a refinement, and limiting, of the original retainer.
95. On 17 February 2017 the plaintiff sent an email to Ms Ross in which he instructed her to proceed with the counteroffer she had proposed ($80,000) but noting the costs limit of $20,000 and adding as an extra condition that his son be provided with a scholarship “until year 12”. I am not sure of the monetary value of such a scholarship, but I assume it would have been a substantial amount. The offer was therefore for a much greater sum than $80,000. The entire offer, as envisaged by the plaintiff, was not put to the other side, although Ms Ross did say the scholarship proposal had previously been rejected. Nevertheless it was incumbent upon her to have put the offer as instructed.
96. As I expressed during discussion with counsel, I was concerned about the true nature of the further negotiations with Marist Brothers. The dealings with the opposing solicitors were put to the plaintiff as an endeavour to seek a reimbursement of costs. When one goes back to the settlement in 2010 it can be seen that the costs had been significantly reduced in order to maximise the benefit to the plaintiff. While I certainly do not criticise the second defendant (and the two counsel involved) for reducing their costs, strictly speaking there had not been an overpayment of costs by the plaintiff.
97. It is clear from the correspondence from Carroll & O’Dea, the solicitors for the Marist Brothers in 2017, that they did not regard the discussions as being limited to costs. This is evident from them attributing $3,000 (10% of the settlement sum) to a Medicare Notice of Charge. Although the second defendant did not agree with this approach, and no doubt the plaintiff received the whole of the $3,000, it does draw into question the true nature of the negotiations in 2017.
98. Unlike the approach I took in relation to the 2010 allegations, I find it impossible to assess damages that would have flowed from a breach of the retainer in 2017. This is because I do not know the nature of the allegations against the two brothers (Sykes and Hinkman) and cannot compare their involvement compared to the abuse administered by other brothers.
Costs
99. The plaintiff’s action has failed. Normally costs would follow the event so that the plaintiff would pay the second defendant’s costs of the proceedings. I note that there has been a previous costs order in favour of the second defendant (made by me on 27 April 2021).
100. Notwithstanding the usual standard as to costs following the event, it is equally well known that costs are in the discretion of the court so that a just result is achieved.
101. In my preliminary view, having regard to the plaintiff having succeeded in establishing a breach of the retainer by the second defendant in 2010, including my finding of the second defendant having improperly and unnecessarily coerced the plaintiff into the settlement, I think each party should pay its own costs of the proceedings, other than in respect of previously made orders.
102. I am not however aware as to whether there are other reasons, such as offers of compromise, which might affect my decision on costs. Accordingly, I will invite further submissions on costs from the parties.
Orders
103. I make the following orders:
(i) Judgment for the second defendant on the plaintiff’s claim.
(ii) Subject to further order, and without prejudice to the order made on 27 April 2021, each party is to pay its own costs of the proceedings.
I certify that the preceding one hundred and three [103] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Justice Elkaim.
Associate:
Date: 13 May 2021
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