Smith v Trustees of the Christian Brothers; Pearce v The Corporation of the Society of the Missionaries of the Sacred Heart
[2022] VSC 343
•21 June 2022
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
INSTITUTIONAL LIABILITY LIST
S ECI 2021 00868
BETWEEN
| JAMES SMITH | Plaintiff |
| v | |
| TRUSTEES OF THE CHRISTIAN BROTHERS | Defendant |
AND
S ECI 2021 00203
BETWEEN
| GARY PEARCE | Plaintiff |
| v | |
| THE CORPORATION OF THE SOCIETY OF THE MISSIONARIES OF THE SACRED HEART (ACN 004 222 306) | Defendant |
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JUDGE: | Irving AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 17 May 2022 |
DATE OF RULING: | 21 June 2022 |
CASE MAY BE CITED AS: | Smith v Trustees of the Christian Brothers; Pearce v The Corporation of the Society of the Missionaries of the Sacred Heart |
MEDIUM NEUTRAL CITATION: | [2022] VSC 343 |
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PRACTICE AND PROCEDURE – Subpoena objection – Whether legitimate forensic purpose – Whether subpoena oppressive – Supreme Court (General Civil Procedure) Rules 2015, Order 42A – ACN 096 450 770 (fka AJH Lawyers Pty Ltd) v Mathieson Nominees [2017] VSC 559.
CONTRACT – Proceedings include application to set aside settlement agreement under retrospective removal of barriers to actions for damages for personal injury resulting from child abuse – Limitation of Actions Act 1958, ss 27P, 27QA, 27QD and 27QE.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | J R C Gordon of counsel | Rightside Legal |
| For the Defendant | J C Hooper | Barry.Nilsson.Lawyers |
| For the non-party, Catholic Church Insurance Limited | A T Strahan QC with G S J Berlic of counsel | Gilchrist Connell |
TABLE OF CONTENTS
Introduction........................................................................................................................................ 1
Legislative Background.................................................................................................................... 1
Factual background........................................................................................................................... 4
Mr Smith (S ECI 2021 00868)....................................................................................................... 4
Mr Pearce (S ECI 2021 00203)...................................................................................................... 5
The deeds of release.......................................................................................................................... 5
The evidence filed on the summonses........................................................................................... 6
The terms of the subpoenas........................................................................................................... 10
CCI’s objections............................................................................................................................... 12
Plaintiffs’ submissions................................................................................................................... 14
Legal principles................................................................................................................................ 15
Consideration.................................................................................................................................... 16
Conclusion......................................................................................................................................... 19
HIS HONOUR:
Introduction
This ruling concerns objections made by Catholic Church Insurance Limited (CCI) and the defendants to subpoenas issued by the plaintiffs in two proceedings relating to allegations of historical abuse. The plaintiffs in both of the proceedings allege they were sexually assaulted as schoolboys. Both plaintiffs brought prior claims in relation to that abuse and entered into settlement deeds. They now seek to have those deeds set side pursuant to ss 27QD and 27QE of the Limitation of Actions Act 1958 (Limitation of Actions Act).
In each of the proceedings, the plaintiff has served a subpoena on CCI seeking production of certain documents; each plaintiff is represented by the same solicitors, each defendant is represented by the same solicitors and CCI is each defendant’s subrogated insurer. Accordingly, it is convenient to deal with both proceedings in one ruling.
Legislative Background
There has been continuing development in the law as it relates to historical abuse claims in Victoria. Those changes are at the heart of the dispute between the parties and it is therefore helpful to briefly address those developments.
In 2007, the New South Wales Court of Appeal handed down its decision in Trustees of the Roman Catholic Church v Ellis[1] (Ellis) in which it held, among other things, that an unincorporated association cannot (at common law) sue or be sued in its own name because, among other reasons, it does not exist as a juridical entity, and that because priests are not employees there can be no vicarious liability. The High Court refused special leave to appeal.[2]
[1](2007) 70 NSWLR 565.
[2]Ellis v Trustees of the Roman Catholic Church for the Archdiocese of Sydney [2007] HCATrans 697.
Legislation was enacted in response to the decision in Ellis. I refer to the Court of Appeal’s decision in Roman Catholic Trusts Corporation for Diocese of Sale v WCB[3] (WCB) and gratefully adopt the summary provided by Beach, Kaye and Osborn JJA who said at [6]-[13]:
[3](2020) 62 VR 234.
In 1996, there were two significant impediments to the successful prosecution of a claim for damages in respect of the abuse. First, under the provisions of the Limitation of Actions Act, as then in force, the plaintiff’s claim was almost certainly statute barred — the limitation period having expired in 1989, six years after the plaintiff turned 18 years of age. Secondly, with the possible exception of Bishop Fox, there was no realistically viable defendant against whom the plaintiff could make a claim. In particular, it was understood proceedings could not be brought against unincorporated church entities (the Ellis defence).
Legislation enacted in 2015 and 2018, however, significantly removed restraints with respect to these two issues, for claims of the kind made by the plaintiff.
First, on 1 July 2015, s 4 of the Limitation of Actions Amendment (Child Abuse) Act 2015 (Vic) (the Child Abuse Act) came into force, inserting div 5 into pt IIA of the Limitation of Actions Act. Broadly speaking, that division applies in respect of causes of action founded upon the personal injury of a person resulting from physical abuse or sexual abuse committed when the person was a child. Division 5 contains s 27P which abolished the limitation period for causes of action to which div 5 applied — whether the act or omission alleged to give rise to the personal injury occurred before or after the commencement of div 5. Thus, from 1 July 2015, there has been no limitation period in respect of claims for damages for personal injury caused by sexual or physical abuse perpetrated against a claimant when he or she was a child.
Secondly, on 1 July 2018, the Legal Identity of Defendants (Organisational Child Abuse) Act2018 (Vic) (the Legal Identity Act) came into force. Section 1 of the Legal Identity Act provided that its main purpose was:
to provide for child abuse plaintiffs to sue an organisational defendant in respect of unincorporated non-government organisations which use trusts to conduct their activities.
Section 7 of the Legal Identity Act provided for the nomination or appointment of an entity, often a trust associated with the relevant non-government organisation (NGO), to act as a proper defendant to a claim on behalf of the NGO, and to incur any liability arising from the claim on behalf of the NGO. The Diocese is an NGO within the meaning of s 5 of the Legal Identity Act. It nominated the defendant to act as the proper defendant to the plaintiff’s claim on its behalf pursuant to s 7 of the Legal Identity Act.
Notwithstanding the potential improvements in the plaintiff’s position brought about by the enacting of the Child Abuse Act and the Legal Identity Act, as at 1 July 2018, any viable claim the plaintiff may otherwise have had in respect of the abuse had been compromised by the terms of the Deed. There was then a third legislative enactment that potentially dealt with this issue.
On 18 September 2019, s 32 of the Children Legislation Amendment Act 2019 (Vic) (the Children Legislation Act) came into force, inserting ss 27QA to 27QF into div 5 of pt IIA of the Limitation of Actions Act. Relevantly, s 27QA(2) permitted an action of the present kind to be brought ‘on a previously settled cause of action’. Section 27QD permitted an application to be made to a court to set aside a settlement agreement which effected the settlement of the previously settled cause of action. Specifically, s 27QD(2) provided:
In a proceeding to which this section applies, application may be made to the court for the settlement agreement and any judgment or order giving effect to the settlement of the previously settled cause of action to be set aside.
[citations omitted]
There is no issue between the parties that the present proceeding is a proceeding to which s 27QD applies. Section 27QE(1) then sets out the court’s powers in relation to the setting aside of settlement agreements, as follows:
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.
In the WCB case, the Court of Appeal was asked to consider the construction of ss 27QD and 27QE and the meaning of ‘just and reasonable’ in circumstances where the Limitation of Actions Act does not prescribe the matters which the Court should have regard to in exercising this discretion.[4] In their concluding remarks, the Court of Appeal said at [156]:
For the sake of completeness, and in deference to the arguments made in this Court, we should say that, if we had been required to determine the plaintiff’s original application for ourselves, we would have had little hesitation in granting the application. Indeed, in our view, when all of the relevant circumstances are taken into account, it is difficult to see how there could be any conclusion other than that the plaintiff’s application must be granted. The settlement, entered into in a case which was statute barred and lacked a viable defendant, was, because of those facts, a very modest one which did not provide the plaintiff with appropriate compensation for the wrong done to him. In those circumstances, and notwithstanding the difficulties created by the elapse of time, it is, in our view, very plainly just and reasonable to set aside the Deed. Indeed, it would positively be unjust and unreasonable not to do so.
[4]Ibid [121].
Turning to the proceedings before this Court, the plaintiffs rely upon WCB and say that:
The Court of Appeal has ruled on such an application [to set aside a prior deed under ss 27QD and 27QE] and indicated that two matters that the court should consider in such an application are the limitations issue and the barriers to litigation in place at the time known colloquially as the Ellis Defence [sic].[5]
[citations omitted]
[5]Submissions on Interrogatories, filed by the plaintiff in proceeding S ECI 2021 00868, on 13 May 2022, [5].
Here, the plaintiffs contend that:
(a) at the time the deeds were entered into, the Ellis defence was available to the defendants as a bar to their respective claims; and
(b) the defendants have filed affidavit evidence intended to be relied upon which says if necessary, had the action not settled, the defendants would have nominated an appropriate defendant which could be sued by the plaintiffs.[6]
[6]Ibid [6].
It is documents concerning these issues that the plaintiffs now seek from CCI.
Factual background
The plaintiffs allege that the Trustees of the Christian Brothers (Trustees) and the Missionaries of the Sacred Heart (Missionaries) breached their respective duties of care to the respective plaintiffs and negligently exposed them to the risk of the abuse.
Mr Smith (S ECI 2021 00868)
Mr Smith alleges he was abused by Brother Edward Dowlan (now known as Ted Bales) of the Christian Brothers from 1986 to 1987. Mr Smith issued proceedings against the Christian Brothers Oceania Province (Oceania Province), who were later substituted by the Trustees in Mr Smith’s proceeding.
The Trustees have filed a defence in which it pleads that in about 2015, Mr Smith made a previous claim for damages against the Trustees in relation to the abuse, and that on 10 March 2017 that claim was settled for the sum of $165,000 (inclusive of costs and disbursements) pursuant to the terms set out in a deed of release signed by Mr Smith. The Trustees rely upon the deed of release as a legal bar to Mr Smith pursuing the cause of action in his current proceeding.
Mr Pearce (S ECI 2021 00203)
Mr Pearce alleges he was abused by Brother Mamo and Brother Frith of the Missionaries from 1977 to 1978. Mr Pearce issued proceedings in this Court against the Missionaries, who were later substituted by the Corporation of the Society of the Missionaries of the Sacred Heart (Corporation) in Mr Pearce’s proceeding.
The Corporation has filed a defence in Mr Pearce’s proceeding. It has pleaded that Mr Pearce’s claim is barred by reason of a clause in a deed executed by Mr Pearce on 22 March 2017.
Both Mr Smith and Mr Pearce have filed summonses in their respective proceedings seeking orders that their prior deeds be set aside in accordance with ss 27QD and 27QE of the Limitation of Actions Act and that the parts of their respective defendants’ pleadings that the prior deeds are a bar to the proceeding be struck out.
Pursuant to Order 42A of the Supreme Court (General Civil Procedure) Rules 2015 (Rules), Mr Smith served CCI with a subpoena dated 1 April 2022 and Mr Pearce served CCI with a subpoena dated 4 April 2022.
Both CCI and the defendant in each proceeding have filed notices of objection in accordance with the Rules.
The deeds of release
In March 2017, Mr Smith entered into a deed of release with the Trustees and Brother Clinch, the Province Leader of the Oceania Province of the Congregation of Christian Brothers (Smith Deed). The terms of the Smith Deed set out that Mr Smith had alleged that he was abused by Brother Dowlan and, as a result, suffered injury, loss and damage.
Mr Smith alleged that his loss and damage was caused or contributed to by the negligence or breach of duty of the Trustees and the Oceania Province. Both the Trustees and the Oceania Province recognised their pastoral obligations towards Mr Smith but did not admit liability for his claims or his loss, damage or injury. The Smith Deed sets out the terms of settlement reached including the releases. Those terms include that Mr Smith acknowledge the payment of $165,000 in ‘full extinguishment of his rights’ against the Trustees and the Oceania Province. It contains Mr Smith’s acknowledgment that the Trustees and the Oceania Province may plead the terms of the Smith Deed as a bar to any future claim or proceeding by Mr Smith relating to the alleged abuse.
Mr Pearce entered into a deed of release with the Corporation, among others, on 23 February 2017 (Pearce Deed). The terms of the Pearce Deed are similar to those of the Smith Deed. Mr Pearce’s allegations are set out, as is the Missionaries’ non‑admission of liability. The Pearce Deed records that the Missionaries (among others) will pay Mr Pearce the sum of $140,000 and Mr Pearce release the Missionaries in relation to the alleged abuse. The Pearce Deed includes a term that the Missionaries may plead the terms of the Pearce Deed in bar to any claim or proceeding by Mr Pearce relating to Brother Mamo and Brother Frith.
The evidence filed on the summonses
The plaintiffs’ applications made by way of summons to set aside their respective deeds are yet to be heard. As such, the parties have not yet been required to file written submissions. Both, however, have filed affidavits.
Mr Smith affirmed an affidavit on 22 October 2021, in which he deposes to a statement he made to Victoria Police in 2014 about Brother Dowlan’s abuse, following which, Brother Dowlan was charged and convicted. In 2015, Mr Smith contacted Arnold, Thomas & Becker Lawyers to investigate possible compensation for the abuse. In March 2017, Mr Smith was offered $165,000 inclusive of costs to settle his claim. Mr Smith deposes that while he thought the amount was inadequate, he:
[U]nderstood that there were technical legal defences available to the Church, involving how much time had elapsed since my abuse and also the way in which the Church was legally constructed, that meant I could not take my case to Court and succeed, and that I would have to accept the best settlement offer that was put to me.
Mr Smith says that this was the reason he accepted the offer and signed the deed of release.
Mr Daniel Creasey affirmed an affidavit on 18 January 2022, which has been filed by the defendant in opposition to Mr Smith’s application to set aside the deed. At the relevant time Mr Creasey was employed by Colin Biggers & Paisley (CBP), where he acted for various religious orders insured by CCI in relation to claims of historical sexual abuse. These claims included Mr Smith’s 2017 claim against the defendant. Mr Creasey deposes that given the large number of claims he managed, he does not have a specific recollection of Mr Smith’s claim but has been provided with copies of his handwritten notes from an informal settlement conference and the deed. In relation to the Ellis defence, Mr Creasey deposes:
[T]he legal defence known as the ‘Ellis defence’ was not a legal issue that informed my assessment of quantum when I was negotiating these claims. I would have felt very uncomfortable doing this work if the religious orders or CCI instructed me to take technical defences such as the Ellis defence in order to put downward pressure on potential settlements. I am confident that I did not raise the Ellis defence during this informal settlement conference because, to the very best of my knowledge, I never raised it or relied upon it during any informal settlement conference during my time at CBP. I recall that the Christian Brothers had gone on the public record in 2016 to say that they would continue to nominate entities backed by assets that complainants could sue. In this context, I considered the Ellis defence to be a non-issue among the parties at the time this prior claim was settled.
Mr Patrick Monahan swore an affidavit on 18 January 2022, which has been filed by the defendant. Mr Monahan is a senior partner at CBP and has acted for CCI and its insured since around 1999. He has managed hundreds of matters involving allegations of historical child sex abuse. In relation to the Ellis defence, Mr Monahan deposes to his view that commentators frequently and incorrectly assert the effect of the Ellis decision to be that a claimant could not sue the Catholic Church, whereas it was open to claimants to sue the archbishop/bishop of a diocese at the time the abuse occurred, or in the case of a religious order - the Provincial of that religious order at the time the abuse occurred, or where the abuse occurred at a school - the principal of that school.
Mr Monahan deposes that in an attempt to clarify this issue, by 2014 he was corresponding with various plaintiff lawyer firms in relation to claims brought against the Christian Brothers and other religious orders. In that correspondence Mr Monahan says he suggested a cooperative approach whereby, in each case, on receipt of the relevant details of the alleged abuse, Mr Monahan’s office would respond with information to enable claimants to identify the most appropriate defendant or defendants to sue in that particular case. Mr Monahan’s affidavit exhibits examples of such correspondence although he says that he has been unable to locate similar correspondence with the lawyers who represented Mr Smith and has no recollection of doing so, as he did not deal with that firm very much.
Mr Monahan also deposes that on 30 March 2016, in response to an ABC Radio online story, the Oceania Province published a media release which stated:
The Christian Brothers have and will continue to nominate a proper legal entity, backed by assets, to enable victims to commence civil proceedings, if that is the course victims and their lawyers are seeking.[7]
[7]Affidavit of Patrick John Monahan, filed by the defendant in proceeding S ECI 2021 00868, on 11 February 2022, [16].
Ms Amanda Doreen Tisler, the defendant’s solicitor in the Smith proceeding, affirmed an affidavit on 10 February 2022. Ms Tisler deposes to Waller Legal’s submission to the Royal Commission into Institutional Responses to Child Sexual Abuse dated 11 July 2016, referring with approval to the cooperative approach outlined by Mr Monahan. Ms Tisler exhibits a copy of that submission.
Ms Nicole Kelidis swore an affidavit on 21 April 2022, filed by the defendant. Ms Kelidis worked as a Claims Officer at CCI between June 2013 and May 2018. She estimates she attended over 150 informal settlement conferences and mediations around Australia. Ms Kelidis deposes that she cannot recall seeing a document outlining what CCI’s riding instructions were in relation to the operation of the Ellis defence but does not recall raising the Ellis defence in any of the claims she worked on to reduce or avoid payment of compensation. Ms Kelidis recalls that the practice adopted by CCI was to put up a proper defendant to avoid the wrong defendant being sued. At times, this involved CCI’s panel lawyers offering up the name of Provincial Council members, bishops or other senior members of a religious order as the correct defendant. Ms Kelidis recalls that in some cases where the ‘Trustees of the Christian Brothers’ were named as defendants in proceedings, CCI’s panel lawyers would communicate with the claimants’ lawyers to request the Trustees be substituted with a proper defendant to avoid any problem of the kind that arose in Ellis.
Ms Natasha Savic was a CCI Claims Officer from August 2014 to July 2018. On 21 April 2022, Ms Savic affirmed an affidavit, filed by the defendant in the Smith proceeding. Ms Savic deposes that she had many dealings with CBP in the course of her role at CCI. Ms Savic recalls:
[R]eferences in advices from CBP to ‘CCI’s riding instructions’ in relation to the operation of the potential Ellis defence.[8]
[8]Affidavit of Natasha Savic, filed by the defendant in proceeding S ECI 2021 00868, on 21 April 2022, [9].
Ms Savic deposes that the reference to ‘CCI’s riding instructions’ was a reference to the cooperative arrangement outlined by Mr Monahan whereby lawyers engaged by CCI would obtain and provide to claimants details of the proper defendants from the relevant religious order. Ms Savic recalls that this system was in place when she commenced with CCI although she cannot recall seeing any actual document defining CCI’s riding instructions. She believes that during her induction at CCI she was informed that the Ellis defence was not to be relied upon by CCI to avoid payment of compensation. Ms Savic says that in the informal settlement conferences she attended on behalf of CCI, the Ellis defence was never relied upon and the aim was to resolve claims prior to litigation being commenced. In Ms Savic’s view, the Ellis defence was not a legal barrier to claimants to receive compensation nor used by CCI to reduce the compensation paid.
Mr Creasey affirmed a supplementary affidavit on 21 April 2022. In this affidavit, Mr Creasey deposes that when he commenced working with CBP in September 2014, he was made aware, but cannot recall precisely how or by whom, that CCI had adopted a position in relation to the Ellis defence whereby CBP would obtain the name of the correct defendant from the religious order and provide that to the plaintiff’s lawyers and that CCI did not require advice from CBP on the operation of the Ellis defence because it was a non-issue and would not be relied upon to avoid paying compensation.
Mr Pearce affirmed an affidavit on 2 December 2021, in support of his application to set aside the deed. He deposes that in 2016, he engaged lawyers to approach the Missionaries for compensation for the alleged abuse. He says:
I knew that my legal position was weak. I knew that because of the way the law operated in relation to religious institutions I could not actually sue Sacred Heart because I would not succeed.
In March 2016, when he received his compensation payment of $140,000, Mr Pearce says:
I believed I had no choice but to accept whatever was offered to me as compensation. I believed I had to take what I could get and that I was effectively begging for money. I didn’t think there was another option available to me and that’s why I signed the Deed.
In Mr Pearce’s proceeding, the defendant has filed affidavits of Mr Monahan, Ms Tisler, Mr Creasey, Ms Kelidis and Ms Savic; all to substantially the same effect as those filed in Mr Smith’s proceeding.
The terms of the subpoenas
Following service of the subpoenas, the solicitors for the plaintiffs and CCI entered into discussions about the terms of the schedules of documents sought in each subpoena with a view to narrowing areas of disagreement. By letter dated 17 May 2022, the plaintiffs’ solicitors confirmed that, as at the date of the subpoena objection hearing, the plaintiffs had revised the terms of the schedules of documents sought.
In Mr Smith’s proceeding, the revised terms of the schedule of documents sought by the subpoena were:
1.In any litigated proceedings, against the Christian Brothers (including the Order, Congregation or Provincial) or the Trustees of the Christian Brothers notified or commenced between 2015 and 2018 which was indemnified wholly or partly by CCI, unredacted copies of:
(a)any defence(s) or draft defence; and any document recording discussion, instructions, decision making, press releases, public statements, file notes, or correspondence relating to the Ellis Defence, defendant identity, or legal defences which might colloquially be called the Ellis Defence.
2.Any instruction, riding instruction or standing instruction from CCI to any lawyer acting on its behalf or in its interest, issued between 2015 and 2018 directing, instructing or requiring that any Ellis Defence not be taken (or to be taken) in litigated proceedings for institutional childhood sexual abuse against any entity insured by CCI.
For clarity Ellis Defences include assertions that:
(a)an unincorporated association is not a legal entity capable of being sued at common law;
(b)an individual within an unincorporated association is vested with only their own knowledge or negligence and/or are not corporations sole; and
(c)a trust associated with a Church unincorporated association carries no legal liability for the behaviour of members of that unincorporated association.
In Mr Pearce’s proceeding, the revised terms of the schedule of documents sought by the subpoena were:
1.In any litigated proceedings, against the Missionaries of the Sacred Heart notified or commenced between 2015 and 2018 which was indemnified wholly or partly by CCI, unredacted copies of:
(a)any defence(s) or draft defence; and any document recording discussion, instructions, decision making, press releases, public statements, file notes, or correspondence relating to the Ellis Defence, defendant identity, or legal defences which might colloquially be called the Ellis Defence.
2.Any instruction, riding instruction or standing instruction from CCI to any lawyer acting on its behalf or in its interest, issued between 2015 and 2018 directing, instructing or requiring that any Ellis Defence not be taken (or to be taken) in litigated proceedings for institutional childhood sexual abuse against any entity insured by CCI.
For clarity Ellis Defences include assertions that:
(a)an unincorporated association is not a legal entity capable of being sued at common law;
(b)an individual within an unincorporated association is vested with only their own knowledge or negligence and/or are not corporations sole; and
(c)a trust associated with a Church unincorporated association carries no legal liability for the behaviour of members of that unincorporated association.
CCI’s objections
In addition to oral submissions made at the hearing, CCI relied upon its written submissions dated 16 May 2022, the affidavit of Ms Marini Mann sworn 16 May 2022 and the affidavit of Ms Jessica O’Dell affirmed 13 May 2022.
CCI seeks to have the subpoenas set aside on the basis that the subpoenas:
(a) constitute impermissible ‘fishing’;
(b) are being used improperly as a substitute for discovery; and
(c) are oppressive.
In relation to fishing, CCI submitted:
(a) in order to issue a subpoena, the plaintiffs must demonstrate a legitimate forensic purpose for seeking the documents;
(b) it is not permissible for the plaintiffs to issue a subpoena to see if there are any documents that might assist their cases, rather the plaintiffs must demonstrate that the documents sought are likely to assist their respective applications to set aside the deeds;
(c) in these cases the plaintiffs’ applications to set aside their deeds are not the subject of pleadings or written submissions so that the plaintiffs have not articulated the way in which they put their cases;
(d) in the absence of a clear articulation of the plaintiffs’ cases, the Court is left to try to discern the issues between the parties on the applications on the basis of the affidavit materials that have been filed;
(e) this does not form a basis on which the Court can be satisfied that the plaintiffs have identified a legitimate forensic purpose for seeking the documents sought by the subpoenas; and
(f) additionally, the plaintiffs’ written submissions concede they are impermissibly attempting to see whether there are any documents that would assist their case and even if documents were produced indicating the Ellis defence was taken in one or more litigated cases, the plaintiffs have not articulated how that would assist their cases.
CCI submitted that, based on the scope of documents sought, the plaintiffs are attempting to use the subpoena process as a substitute for discovery. CCI argued that it is no answer to this claim for the plaintiffs to argue that some of the documents sought by the subpoenas may be relevant to their applications. According to the authorities, mere relevance is not enough.
CCI’s oppression argument was put in the following way:
(a) CCI’s best estimate of the cost of complying with the subpoena as narrowed is approximately $200,000;[9]
[9]During oral submissions counsel for CCI clarified that there are 55 claim files marked in the CCI database as ‘litigated’ relating to the Christian Brothers and 13 claim files marked in the CCI database as ‘litigated’ relating to the Missionaries. Counsel provided adjusted costs estimates to comply with the subpoenas by looking at these files as $33,500 (Christian Brothers) and $7,900 (Missionaries), plus disbursements in both instances.
(b) this cost is based in part on the fact that CCI does not have a fully digitised searchable database of all documents on all claim files and the entry of data into the CCI database is not ‘highly reliable’;
(c) compliance with the subpoena will require some manual checking of files; and
(d) the expense of complying with the subpoena has to be considered against the possibility that nothing of use will be found and even if documents are found, they may be subject to claims of privilege.
Finally, CCI submitted that the terms of the subpoena were so broad and unspecific as to impermissibly require an exercise of judgment on the part of the subpoenaed party. This submission related to the plaintiffs’ proposed definition of the Ellis defence in the subpoena as ‘including’ three distinct assertions. CCI noted that the subpoena did not ask it to find documents where any of those assertions were pleaded in terms but rather documents ‘relating to the Ellis defence’ or ‘legal defences which might colloquially be called the Ellis defence’.
Plaintiffs’ submissions
The plaintiff did not take issue with CCI’s articulation of the legal principles relevant to determining objections to subpoenas. The plaintiffs however submitted that the authorities made clear that greater latitude is allowed in subpoenas addressed to third parties because there is no discovery power available in respect of such parties.
Counsel for the plaintiffs identified their legitimate forensic purpose for seeking the documents by reference to the evidence filed by the defendants in response to the plaintiffs’ applications to set aside the deeds. The plaintiffs say that by that evidence, the defendants have asserted that they would not have taken the Ellis defence against Mr Smith or Mr Pearce because CCI had a standing policy or issued riding instructions that the Ellis defence was not to be taken. The plaintiffs say an issue on the applications to set aside the deeds is whether or not CCI’s purported policy was adhered to in the period from 2015 to 2018. They seek the documents to determine whether, in the relevant period, CCI was taking the Ellis defence in the cases in which it said that there was an instruction not to do so.
The plaintiffs’ counsel conceded that not every document that might ultimately be produced in answer to the subpoena would provide compelling evidence but:
all of them have the same forensic purpose which is to demonstrate what was being done in actuality rather than hypothetically in the course of this period in which the defendants are claiming the Ellis defence was not likely to have been taken with the purpose of trying to prevent the plaintiff[s] from arguing that there was a barrier to [them] because it might be taken or might not be taken in his case.
The plaintiffs denied that it would be oppressive for CCI to comply with the subpoenas. The plaintiffs submitted that Ms O’Dell’s evidence was that CCI’s searches revealed the existence of 272 claim files relating to the Christian Brothers and 25 claim files relating to the Missionaries for the date range between 2013 to 2018. Counsel for the plaintiffs noted that the date range in the subpoenas had been narrowed to commence in 2015 and so he reasonably expected the number of claim files to be less. Indeed, the plaintiffs’ counsel submitted that the number of litigated claim files in the reduced date range was likely to be less than 55 Christian Brothers litigated files and 13 Missionaries litigated files identified by CCI’s counsel during the hearing. Further, the plaintiffs submitted that subpoenas sought only limited pleadings or draft pleadings on the litigated claim files.
In relation to the riding instructions documents, the plaintiffs’ counsel noted that the concept of riding instructions came from the evidence the defendants filed in response to the plaintiffs’ applications to set aside the deeds and that the purpose of that evidence was to persuade the Court that over this period there was a policy that CCI and its lawyers adhered to that meant the Ellis defence would not be taken. The nature of riding or standing instructions, being applicable to a general class of cases, meant, according to the plaintiffs’ counsel, that it would not be necessary for CCI to search all 272 claim files to identify the source of the instructions.
Legal principles
Derham AsJ in ACN 096 450 770 (fka AJH Lawyers Pty Ltd) v Mathieson Nominees[10] succinctly states the principles for determining whether a subpoena ought to be set aside at [20]:
[10][2017] VSC 559.
(a)it is necessary for the party at whose request the subpoena was issued to identify expressly and precisely the legitimate forensic purpose for which access to the documents is sought;
(b)except in cases where the subpoena is plainly too broad or merits the description of a fishing expedition, the judge should normally inspect the documents for the purpose of making a final decision as to whether a legitimate forensic purpose exists;
(c)however, the Court will not require production of subpoenaed documents, and will not permit access to subpoenaed documents, if the subpoena is expressed so broadly that the applicant cannot demonstrate, having identified a forensic purpose, that it is ‘on the cards’ or that there is a ‘reasonable possibility’ that the documents will materially assist the case of the party;
(d)a ‘fishing expedition’ is not a legitimate forensic purpose and will not be permitted;
(e)the relevance of a document to the proceeding alone will not substantiate an assertion of legitimate forensic purpose. There is no legitimate forensic purpose if the party is seeking to obtain documents to see whether they may be of relevance or of assistance in his or her case;
(f)a mere assertion of bad faith by an applicant or that something might be found demonstrating bad faith is not enough – the criteria set out in (c) must be satisfied; and
(g)where a party fails to demonstrate a legitimate forensic purpose, the Court should refuse access to the documents and set aside the subpoena.
[citations omitted]
Consideration
The parties have not yet filed written submissions on the plaintiffs’ applications to set aside their settlement deeds, but have filed evidence on those applications. That evidence strongly demonstrates the plaintiffs’ applications raise the issue of whether the plaintiffs settled their claims on a conservative basis because of the existence of the Ellis defence, in circumstances where the defendants’ evidence is that they would not have relied on the Ellis defence and this was known or should have been known by the plaintiffs. I am satisfied that the plaintiffs have identified a legitimate forensic purpose in seeking the documents: to establish whether the defendants did in fact plead the Ellis defence during the period in which their evidence is that they had stopped doing so. The defendants’ evidence is that those persons with responsibility for negotiating settlements were subject to standing or riding instructions not to take the Ellis defence. The source, scope and terms of those standing or riding instructions and the extent to which they were unwaveringly followed are clearly in issue on the plaintiffs’ applications.
There is a reasonable possibility that the documents sought, to the extent they indicate the terms and scope of the instructions and their application or non-application in practise, will materially assist the plaintiffs’ cases. This is because the documents are likely to demonstrate the status and scope of the instructions about when, whether and in what circumstances CCI and the defendants relied upon the Ellis defence in settling claims prior to the Legal Identity Act coming into force.
The plaintiffs issued the subpoenas in circumstances where the defendants indicated to them and the Court that the litigated claim files from the relevant period could not be identified. It remains unclear whether the defendants’ files include the documents sought by the plaintiffs’ subpoenas of CCI. They have not been discovered. I cannot accept CCI’s submission that by the subpoenas the plaintiffs are effectively seeking discovery. The scope of the documents sought goes directly to an issue in contest on the plaintiffs’ applications.
In these circumstances, CCI’s submission that the subpoenas represent a fishing expedition must be rejected.
If the plaintiffs are unsuccessful in their applications to set aside their settlement deeds, their proceedings will end. This is because the terms of the deeds allow the releases given by the plaintiffs to be pleaded as absolute defences to their claims. In addition, the parties have indicated that these two proceedings are the first in Victoria in which an application to set aside a prior settlement deed has been based solely on the existence of the Ellis defence, i.e. in which there is no issue about the limitation period because the Limitation of Actions Amendment (Child Abuse) Act 2015 had come into operation at the time the settlement deeds were entered into.
The documents sought by the plaintiffs go to the central issue on the plaintiffs’ applications, the extent of the defendants’ instructions not to take the Ellis defence at the relevant time and the extent to which those instructions were followed in practice at that time.
CCI has appropriately revised the scope of work required to be undertaken in response to the subpoenas as the plaintiffs have narrowed the scope of the subpoenas and in response to CCI’s own inquiries about the number of claim files that will need to be inspected. During the hearing, CCI’s counsel helpfully clarified that its best estimate is that there will be less than 55 claim files relevant to the Christian Brothers and 13 claim files relevant to the Missionaries. CCI estimated the cost to examine these files and respond to the subpoenas to be in the order of $33,500 in relation to Mr Smith’s subpoena and $7,900 in relation to Mr Pearce’s subpoena. Given the importance of the applications in the two proceedings and the likely centrality of the subpoenaed material to the issues raised by those applications, CCI’s submission that the subpoenas are oppressive cannot be accepted. On any view the estimate of time and money required to respond to Mr Pearce’s subpoena is relatively modest. The time and cost estimated to respond to Mr Smith’s subpoena, while perhaps not modest, is not so burdensome as to be oppressive.
CCI submits that it is unclear what is meant by ‘relating to the Ellis defence’ and that this term impermissibly requires the subpoena recipient to exercise its judgment to decide whether any particular document falls within that term. I cannot agree. The evidence filed by the defendants on the applications strongly demonstrates that CCI’s lawyers and claims officers are well acquainted with the concept of the Ellis defence and have referred to it using that very term. Additionally, the plaintiffs have defined the Ellis defence in the schedule to the subpoenas, using language from the parties’ negotiation of the scope of the subpoenas.
Finally, both CCI and the defendants put the Court on notice that they may object to inspection of any documents produced in response to the subpoenas on the basis of legal professional privilege and confidentiality. Both CCI and the defendants properly conceded that while the Court might take this into account in considering whether the subpoenas were oppressive, arguments about objections to inspection of documents were for another day. I am not satisfied that the issues of legal professional privilege and confidentiality, which will almost certainly arise in these matters, are of such a likely magnitude that compliance with the subpoenas will be oppressive.
Conclusion
For the reasons given above, the notices of objection filed by CCI and the defendants to the applicants’ subpoenas will be dismissed.
I will hear from the parties on the question of costs.
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