Trustees of the Christian Brothers v DZY

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S EAPCI 2023 0044

TRUSTEES OF THE CHRISTIAN BROTHERS	Applicant
v
DZY (a pseudonym)[1]	Respondent

[1]To ensure that there is no possibility of identification, this judgment has been anonymised by the adoption of a pseudonym in place of the name of the respondent.

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JUDGES:	BEACH, MACAULAY and LYONS JJA
WHERE HELD:	Melbourne
DATE OF HEARING:	22 November 2023
DATE OF JUDGMENT:	23 April 2024
MEDIUM NEUTRAL CITATION:	[2024] VSCA 73
JUDGMENT APPEALED FROM:	[2023] VSC 124 (Irving AsJ)

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LIMITATION OF ACTIONS – Settlement agreements – Historical sexual abuse – Application to set aside settlement agreements under Limitation of Actions Act 1958, s 27QE – Associate judge set aside settlement agreements in whole – Whether error in finding just and reasonable to set aside settlement agreements in whole – Applicable standard of appellate review – Warren v Coombes ‘correctness’ standard applicable – Meaning of ‘just and reasonable’ – Error in finding just and reasonable to set aside settlement agreements in whole – Application for leave to appeal granted – Appeal allowed – Settlement agreements set aside in part to allow claim for general damages only to proceed – Economic loss claim excluded.

Limitation of Actions Act 1958, ss 27QA(2), 27QD, 27QE.

GLJ v The Trustees of the Roman Catholic Church for the Diocese of Lismore [2023] HCA 32, applied; House v The King (1936) 55 CLR 499; Warren v Coombes (1979) 142 CLR 531; Fox v Percy (2003) 214 CLR 118; Roman Catholic Trusts Corporation for the Diocese of Sale v WCB (2020) 62 VR 234, considered; Hunt v Holcombe [2018] VSCA 248, not followed.

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Counsel
Applicant:		Mr SD Hay KC with Mr CT Morshead
Respondent:		Dr G Boas with Dr E Kelly
Solicitors
Applicant:	Carroll & O’Dea Lawyers
Respondent:	Judy Courtin Legal

TABLE OF CONTENTS

JUDGMENT OF BEACH AND MACAULAY JJA:

Introduction and summary

Statutory context

Proposed grounds of appeal and issues to be decided

Background

DZY’s Centrelink history

2012 Deed

2015 Deed

Relevant statutory provisions

Reasons of the associate judge

What is the applicable standard of appellate review?

The High Court’s decision in GLJ

Submissions

Consideration

What is the content of ‘just and reasonable’ in s 27QE?

In deciding it was just and reasonable to set aside the deeds, did the associate judge act on a wrong principle or draw an inference that was not open?

Submissions

Consideration

Conclusion

LYONS JA:

BEACH JA
MACAULAY JA:

Introduction and summary

In December 2012, the Trustees of the Christian Brothers (the ‘Trustees’) and a representative of the Congregation of Christian Brothers (the ‘Congregation’) agreed to pay $80,000 (inclusive of costs) to the respondent, DZY, in exchange for his promise to release them from liability for a claim he proposed to issue in a court. DZY had alleged that he was sexually assaulted by Brother Robert Best and Brother Gerald Fitzgerald, both members of the Congregation, between 1964 and 1968 when DZY was a student at a school operated by the Congregation. The agreement was recorded in a deed (the ‘2012 deed’).
By a further deed made in December 2015 (the ‘2015 deed’), and without undoing the effect of the 2012 deed, the Trustees and the Congregation (together, the ‘Christian Brothers’) agreed to pay DZY a further $20,000 (plus costs) in exchange for the same promises DZY had made under the earlier deed in respect of the same alleged assaults.
On both occasions, DZY was represented by a solicitor and counsel, and his solicitor certified in writing that she gave DZY independent legal advice before he signed each deed. Importantly, both deeds recorded that DZY did not allege that he suffered any economic loss — that is, loss of earning capacity — by reason of the alleged assaults. He made no demand for such loss as part of his claims. DZY expressly agreed, in both deeds, not to bring any further claim for damages arising from the alleged assaults and, if he did so, that the Christian Brothers could rely on the deeds as a bar to any such proceeding.
Notwithstanding those deeds, in July 2021 DZY commenced a proceeding against the Trustees in the trial division of the Supreme Court of Victoria seeking damages for personal injuries suffered as a result of the alleged assaults. DZY claimed damages both for pain and suffering and for economic loss. The Trustees pleaded the 2012 deed and the 2015 deed as a bar to DZY’s cause of action.
By summons filed in the proceeding, DZY applied to have the two deeds set aside. The Trustees did not resist DZY’s application insofar as he wished to pursue his claim for general damages. However, they sought to maintain the effect of the deeds insofar as they barred any claim for economic loss. The application was heard by an associate judge.[2] He ordered that the deeds be set aside in their entirety without distinction as to their operation in respect of particular heads of loss and damage.[3]
[2]A judge of the trial division ordered that hearing and determination of the application be referred to the associate judge pursuant to r 77.05 of the Supreme Court (General Civil Procedure) Rules2015.
[3]DZY (a pseudonym) v Trustees of the Christian Brothers [2023] VSC 124 (‘Reasons’).
The Trustees have applied for leave to appeal the associate judge’s order, confined to its operation in respect of DZY’s claim for damages for economic loss.
Before describing the Trustees’ proposed grounds of appeal, it is necessary to give some further context to DZY’s application and the associate judge’s order.

Statutory context

At the time DZY executed each of the deeds, any action for damages for personal injury accruing from tortious wrongdoing as far back as 1964 and 1968 was likely to be met by a defence under the Limitation of Actions Act 1958 (the ‘Act’). That Act required that such claims be brought, in the case of a child victim, within a period of six years of that child reaching legal majority.[4] Applications could be made to extend the limitation period,[5] but success was not assured and the process could be long, difficult and costly.
[4]Limitation of Actions Act 1958, ss 5, 23 (the ‘Act’). That period had long expired for DZY by 2012.
[5]Ibid s 23A.
Further, as a result of the decision of the New South Wales Court of Appeal in Trustees of the Roman Catholic Church vEllis,[6] any action against an unincorporated association — such as the Congregation — was likely to fail for want of a solvent legal entity that was liable for the claimed loss. Such a defence became known as the ‘Ellis defence’.
[6](2007) 70 NSWLR 565; [2007] NSWCA 117 (‘Ellis’).
In a series of enactments, the Victorian Parliament moved to address problems facing those who claim to have suffered personal injuries as a result of physical or sexual abuse while a minor (‘child abuse’), perpetrated on them long ago by persons acting under the auspices of an unincorporated association. Relevantly, those enactments were to the following effect:
(a)from 1 July 2015, to remove any limitation period for an action founded on the personal injury to a person resulting from child abuse;[7]
(b)from 1 July 2018, to require the nomination or appointment of an entity to act as the proper defendant on behalf of an unincorporated non-government organisation in child abuse cases and bear the liability of the unincorporated organisation — in other words, to overcome the Ellis defence;[8] and
(c)from 18 September 2019, to provide that an action for personal injury resulting from child abuse may be brought on a previously settled cause of action (as defined) by allowing a plaintiff to apply to the court to set aside settlement agreements on the basis that it is ‘just and reasonable’ to do so.[9]
[7]The Act, s 27P, inserted by the Limitation of Actions Amendment (Child Abuse) Act 2015.
[8]Legal Identity of Defendants (Organisational Child Abuse) Act 2018, ss 7–8.
[9]Amendments to pt IIA of the Act inserted by the Children Legislation Amendment Act 2019, in particular ss 27QA–27QF.
The 2012 deed was made before any of these statutory changes. The 2015 deed was made after the limitation defence was removed but while the Ellis defence remained available to defendant organisations.

Proposed grounds of appeal and issues to be decided

In deciding that it was just and reasonable to set aside the two deeds pursuant to s 27QE of the Act, the associate judge considered a number of matters. Those matters included:
(a)the extent to which the existence of the limitation defence and the Ellis defence played any role in DZY’s decision not to pursue an economic loss claim in 2012 or 2015;
(b)the role played in that decision by DZY’s desire to preserve a benefit he received from the Department of Social Security (‘DSS’);
(c)various other particular factors supporting or undermining a conclusion that DZY ever intended to bring a claim for economic loss; and
(d)DZY’s capacity to comprehend advice at the time of the settlements, and his stated belief that he felt he had ‘no choice’ but to settle.
For clarity, it is useful to emphasise the limits of the Trustees’ argument. The Trustees concede, as they did before the associate judge, that it is just and reasonable that DZY be permitted to pursue his claim for general damages arising from the alleged assaults. They concede, in effect, that the existence of the limitation defence and/or the Ellis defence may have had an unjust impact on the negotiation of the amount to settle DZY’s claim. However, because DZY did not seek to advance any claim for economic loss and — as the Trustees would have it — his reason for not doing so had nothing to do with the limitation defence, Ellis defence or any conduct on the part of the Trustees, the court could not be satisfied that it is just and reasonable to set aside the deeds to permit that claim now to be advanced.
The full terms of the Trustees’ proposed grounds are extensive. It is sufficient to paraphrase them:
Ground 1: the associate judge erred by applying a wrong legal principle in finding that it was just and reasonable to set aside the deeds after finding that DZY’s explanation for not pursuing an economic loss claim was to avoid repayment of DSS benefits, and also not finding that either the limitation defence or the Ellis defence played any role in that decision.
Ground 2: the associate judge erred in finding that DZY’s ability to comprehend advice was compromised in 2012, by failing to take into account certain other evidence.
Ground 3: the associate judge erred in finding that DZY felt he had ‘no choice’ but to accept the offers made in 2012 and 2015, as such a finding was not reasonably open or was made by failing to take into account other evidence.
Ground 4: the associate judge erred by not taking into account the lack of evidence to support DZY’s economic loss claim at the time of the 2012 and 2015 deeds.
Ground 5: the associate judge erred in finding that DZY had continued to assert his loss of earnings claim after the 2012 and 2015 deeds were executed, by failing to take into account material considerations.
Ground 6: the associate judge erred by taking into account the opinion of a particular doctor in 2020 as being relevant to the impact of the alleged abuse on DZY’s education and employment.
Grounds 1, 4, 5 and 6 all broadly concern DZY’s reason for not making an economic loss claim in 2012 or 2015. Grounds 2 and 3 concern more general questions about his state of mind at those times. Although the parties addressed each ground individually in their written cases, at the oral hearing they were content to treat all the issues enumerated under grounds 2–6 as elements of the single issue raised by ground 1. For that reason, it is convenient to address a single question, namely:
In finding that it was just and reasonable to set aside the deeds, did the associate judge act on a wrong principle or draw an inference that was not open (ground 1)?
All of the proposed grounds of appeal assert legal error on the assumption that the associate judge’s decision was made in the exercise of a discretion, and that the applicable standard of appellate review was that laid down in House v The King (‘House’).[10] Shortly before the hearing of the application for leave to appeal, the High Court delivered its decision in GLJ v The Trustees of the Roman Catholic Church for the Diocese of Lismore (‘GLJ’).[11] In GLJ, the High Court held that a decision pursuant to s 67 of the Civil Procedure Act2005 (NSW) to permanently stay a proceeding was not an exercise of discretion. Therefore, an appeal from such a decision was to be decided on the ‘correctness’ standard of appellate review as laid down in Warren v Coombes.[12]
[10](1936) 55 CLR 499, 504–505 (Dixon, Evatt and McTiernan JJ); [1936] HCA 40 (‘House’).
[11][2023] HCA 32 (‘GLJ’).
[12](1979) 142 CLR 531, 551–2 (Gibbs ACJ, Jacobs and Murphy JJ); [1979] HCA 9.
By supplementary written submissions and in oral argument, the Trustees submitted that, applying GLJ by analogy, the associate judge’s decision to set aside the settlement agreements pursuant to s 27QE of the Act was not an exercise of discretion, and that the appropriate standard of appellate review was the correctness standard. DZY submitted that the House standard remained applicable.
Logically, the first question to be resolved in this matter would be the appropriate standard of appellate review. As we explain below, however, it is our view that the associate judge made an error of a kind described in House in any case. Strictly speaking, it is therefore unnecessary to determine whether the Trustees need only persuade the Court that a different decision should have been made irrespective of whether any specific error is identified. In any event, we have reached a firm view that the appropriate standard of review is the correctness standard, having regard to GLJ. We also take the view that a different decision should have been made — namely, that the deeds should not be set aside insofar as they bar DZY from pursuing an economic loss claim.
After setting out the background facts in further detail, the relevant legislation and the associate judge’s reasons, we will consider the appropriate standard of appellate review and then the question set out at [15] above.

Background

The following account is drawn substantially from the reasons of the associate judge.

DZY’s Centrelink history

Records tendered in evidence showed that DZY had been paid a Commonwealth benefit from Centrelink called the ‘Newstart Allowance’ for various periods of time between July 1997 to March 2001, and July 2006 to September 2007. From January 2009, he received a Commonwealth ‘Carer Payment’, later telling his solicitor that he received this carer’s pension for caring for his son, who suffers from depression and anxiety.
In 2007, Centrelink decided to recover a debt of $8,014.41 from DZY as an overpayment of the Newstart Allowance, on the basis that DZY was also in receipt of a different benefit under the New Enterprise Incentive Scheme. He appealed that decision but was unsuccessful. Furthermore, DZY was charged on 9 April 2009 with obtaining a financial advantage — that is, the Newstart Allowance — knowing or believing he was not entitled to it. He was sentenced in the Ballarat Magistrates’ Court on 25 November 2009 and received a 12‑month good behaviour bond without conviction.[13]
[13]Reasons, n 3.
These matters form part of the background relevant to the instructions DZY gave and advice he was given on the topic of DSS benefits, and his decision not to pursue an economic loss claim against the Christian Brothers.
DZY continued to receive the carer’s pension at the time he engaged Waller Legal in 2011.

2012 Deed

In January 2011, DZY contacted the law firm of Waller Legal and engaged them to act on his behalf for a claim against the Christian Brothers in relation to the alleged assaults.[14] On 11 January 2011, Dr Vivian Waller of Waller Legal wrote to DZY confirming her instructions to act on his behalf. She also noted that ‘[v]arious difficulties associated with your case have been discussed with you. In particular, these difficulties include the expiration of the limitation of actions period and difficulties encountered in identifying the correct Catholic entity to sue’.[15]
[14]Ibid [12].
[15]Ibid [13].
Dr Waller commenced discussions with the solicitors for the Christian Brothers concerning DZY’s claim. In March 2012, following a referral from Dr Waller, psychiatrist Professor Lorraine Dennerstein produced a medico-legal report concerning DZY.
By May 2012, the Christian Brothers agreed to progress DZY’s claim through an alternative dispute resolution (‘ADR’) process, with an exchange of relevant materials and then a settlement conference.[16] Later, Dr Waller informed DZY that the settlement conference had been scheduled for 21 November 2012. She asked DZY to attend a preliminary conference on 21 September 2012 with herself and Timothy Seccull of counsel.[17]
[16]Ibid [16], [20].
[17]Ibid [22].
At the meeting on 21 September 2012, DZY met with Dr Waller and Mr Seccull. A file note recorded that DZY gave instructions, including as to ‘trouble with center link [sic]’, and that he was charged for ‘defrauding centre link [sic]’ and received ‘12 months probation’. It also recorded that Mr Seccull advised that the claim was ‘legally complex’ and explained the issues of ‘who to sue and time limits’. Another handwritten note of the same date from Dr Waller’s file recorded, ‘Eco = don’t claim b/c of DSS [illegible] etc’. The associate judge was unable to determine whether that note — clearly a reference to a claim for economic loss — recorded advice given to DZY or his instructions to the lawyers.
DZY deposed that he could only recall small parts of the meeting with his legal team on 21 September 2012, and that when he met with them he was drinking heavily, very anxious, unable to communicate or think properly and could not take in what his legal advisers were saying. He later told Ms Andrea Lockhart, his support worker from the Ballarat Centre Against Sexual Assault (‘CASA’), that he found the meeting on 21 September 2012 to be extremely distressing and overwhelming, with a significant increase in his anxiety for the following week.[18]
[18]Ibid [26]–[27]. See also Reasons, [126].
By early November 2012, the following material was provided by Waller Legal to the Christian Brothers:
(a)the medico-legal report of Professor Lorraine Dennerstein, addressing the impact of the abuse on DZY’s education and employability;[19]
(b)a Victims of Crime Assistance Tribunal report of Ms Shireen Gunn, the manager of Ballarat CASA, in which she opined that DZY had experienced depression and high levels of anxiety;[20] and
(c)an ADR statement which set out the allegations of abuse and the particulars of loss and damage claimed by DZY, including a statement that DZY’s educational and vocational development had been ‘significantly impaired’ and that full particulars of loss of earnings/earning capacity would be provided prior to trial.[21]
[19]Ibid [18], [30].
[20]Ibid [17], [30]. See also Reasons, [126].
[21]Ibid [28]–[30].
Waller Legal prepared a document entitled ‘Pecuniary Loss’ in relation to DZY’s claim on 18 November 2012. Under the heading ‘Loss of earnings’ the option ‘No’ was circled, while the word ‘Details’ was struck through.[22] A file note on Waller Legal’s file dated 20 November 2012 contained a section entitled ‘Eco’, which recorded ‘No, b/c of DSS etc, generals only!!!’. Joined by lines from the word ‘DSS’ were the words ‘$75,000’ and ‘and on a carers pension etc ??’.[23]
[22]Ibid [31].
[23]Ibid [32].

The settlement conference was held on 21 November 2012. DZY attended with Dr Waller, Mr Seccull and Ms Lockhart.[24] The day commenced with DZY and Ms Lockhart meeting with DZY’s legal team before the legal team went into a separate room to conduct negotiations with the Christian Brothers’ legal team. Again, due to his high anxiety and heavy drinking, DZY said he could only recall snippets of that day and that he struggled to process what was being said. He recalled sitting at a big table and thinking that if the windows were not sealed he would jump out.[25]
[24]Ibid [33].
[25]Ibid. See also Reasons, [118(e)], [126].
A file note of Dr Waller dated 21 November 2012 recorded advice given to and instructions received from DZY at the settlement conference. Among other things, there was a note about DZY’s carer pension, followed by a note of Mr Seccull’s advice that if DZY claimed for lost earnings there was a risk that Centrelink ‘might claim’.[26] Dr Waller then noted DZY’s instructions not to include loss of earnings in his claim.[27] DZY gave evidence that he recalled mentioning to his legal advisers that the abuse had impacted his employment and being told something about a possible impact on his Centrelink benefits. He could not recall all of this conversation but thought Mr Seccull advised him to focus on what happened at the school. He said he accepted that advice.[28]
[26]Ibid [34].
[27]Ibid.
[28]Ibid [33].
At the settlement conference, DZY was given a final offer of $80,000 (including costs), which he considered over the course of about three weeks following the conference.[29]
[29]Ibid [35].
On 26 November 2012, the Christian Brothers’ solicitors wrote to Dr Waller, confirming the final offer and enclosing a deed of release.[30] On 29 November 2012, Dr Waller wrote to DZY about the final offer and confirmed her advice that his claim had significant legal technical difficulties, including his claim being out of time and problems when trying to sue Catholic defendants. In her letter, Dr Waller noted Mr Seccull’s assessment of the range of compensation DZY might expect from a jury if his case had no problems as ‘somewhere in the range of $75,000 to $150,000 in compensation by way of general damages’. She also confirmed DZY’s instructions ‘that there is no loss of earning component to your claim’. Dr Waller noted DZY’s claim did, in fact, have problems. Apart from the time limit issue and the Ellis defence, there was also the possibility that DZY’s ‘difficulties’ could be said to have stemmed from his ‘problems at home when [he was] a child’. She offered her opinion that the final offer was ‘within the range of fair and reasonable’.[31]
[30]Ibid [36].
[31]Ibid [37]–[38].
Dr Waller recommended that DZY accept the Christian Brothers’ settlement offer of $80,000 (including costs) as ‘this is well within Tim [Seccull]’s assessment of the range of compensation you might receive from a jury if your case had no problems, which it does. The offer then, is within the range of fair and reasonable’.[32] She expressed the hope that her advice would assist DZY in making his decision.
[32]Ibid.
Dr Waller sent an email to the Christian Brothers’ solicitors on 5 December 2012 requesting that they amend the proposed deed of release to note that no claim for economic loss was made.[33]
[33]Ibid [39].
DZY signed an Instructions to Settle Claim form provided by Waller Legal on 13 December 2012. That document included a paragraph to the effect that entering a settlement brings to an end all claims to compensation in relation to this event once and for all, regardless of any developments in the future.[34]
[34]Ibid [42].
On 14 December 2012, DZY signed the 2012 deed. The deed included clauses 1.1.2 and 2.2, stating that no allowance was made for economic loss in the settlement in the following terms:
The Releasor [DZY] does not allege that he has suffered any economic loss and makes no demand for this as part of the claims.
The Parties acknowledge that the agreed sum does not make any allowance for economic loss incurred by the Releasor.
By clauses 2.3 and 2.5 of the deed DZY acknowledged that the agreed sum was to be paid subject to any deduction required under any ‘social services (Centrelink) legislation’, and undertook to pay out of the agreed sum any monies repayable by DZY ‘in respect to social services’ under such legislation.
The deed also contained clauses to the effect that DZY released and discharged the Christian Brothers from all liability for claims arising from the alleged sexual assaults, agreed to make no further claims for ‘damages, expenses, treatment costs or compensation’ arising from those events and agreed that the Christian Brothers could rely on the deed as a bar to any such claim.
Finally, the 2012 deed included an independent solicitor certificate signed by DZY’s solicitor on 14 December 2012. The certificate records that DZY’s solicitor explained the purport and effect of the 2012 deed to DZY, who appeared to DZY’s solicitor to understand the purport and effect of the 2012 deed.[35]
[35]Ibid [50].
In his affidavit, DZY said ‘I felt like I had no choice but to accept the offer because the legal barriers were too great’. He also expressed concern about having to pay the Christian Brothers’ legal costs if he lost.

2015 Deed

In May 2013, Dr Waller discovered, during evidence at the Victorian Parliamentary Inquiry into the Handling of Child Abuse by Religious and Other Organisations, that the Christian Brothers were aware that Brother Fitzgerald was engaging in inappropriate activities with boys from the early 1950s.[36] She discussed with DZY the prospect of applying to the Christian Brothers to top up the settlement amount, and obtained his instructions to do so.[37] In early 2015, Dr Waller wrote to the Christian Brothers’ solicitors, inviting the Christian Brothers to consider making a further ex gratia payment to DZY on a ‘plus costs basis’, due to the Christian Brothers’ failure to disclose all relevant materials during the 2012 settlement process.[38]
[36]Ibid [53].
[37]Ibid [53]–[54].
[38]Ibid [56].
In July 2015, DZY gave instructions to Waller Legal to accept a further payment of $20,000 from the Christian Brothers.[39]
[39]Ibid [62].
On 8 October 2015, DZY signed an Instructions to Settle Claim form provided by Waller Legal but did not return it to Waller Legal at that time. This form contained certain acknowledgments, including that entering a settlement would bring an end to all claims for compensation once and for all, in the absence of any law reform.[40]
[40]Ibid [71].
Between July 2014 and May 2015, DZY was involved in legal processes relating to the alleged abuse, including making a police statement and giving evidence at the Commonwealth Royal Commission into Institutional Responses to Child Sexual Abuse (the ‘Royal Commission’).[41] DZY reported that he found these processes very stressful and ‘tough’.[42] Between March and July 2015, DZY’s general practitioner prescribed him anti-depressant medication.[43] Dr Waller told the Christian Brothers’ solicitors that, since giving evidence at the Royal Commission, DZY had been going through a difficult time emotionally and might need assistance beyond his current CASA services.[44]
[41]Ibid [55], [59].
[42]Ibid [55], [57], [62].
[43]Ibid [57]–[58], [63].
[44]Ibid [64].
Between July and October 2015, DZY had expressed concerns to Dr Waller about the terms of any deed, including whether it might preclude him from obtaining counselling in the future, or from participating in any ‘redress scheme’ as had been suggested by the Royal Commission. Dr Waller and the Christian Brothers’ solicitors corresponded in respect of further counselling as part of the 2015 settlement and 10 such counselling sessions were included as part of the settlement.[45]
[45]Ibid [64]–[65].
DZY signed the 2015 deed on 9 December 2015. That deed included clauses 1.1.2, 1.1.5 and 2.2.4 indicating, again, that no claim for economic loss was made as part of the claim.[46] The clauses were in substantially the same terms as those from the 2012 deed set out at [39] above, and included an acknowledgment in cl 2.2.4 that the ex gratia payment was ‘for non-economic loss’. The 2015 deed also included an independent solicitor certificate signed by DZY’s solicitor on 24 November 2015, to the same effect as that in the 2012 deed.
[46]Ibid [77]–[83].
DZY deposed to feeling confused and ashamed at the time of accepting the 2015 offer.[47] He also told a solicitor at Waller Legal that he had been under a lot of stress because of a pending criminal case concerning Brother Best, Centrelink issues, his family and the Royal Commission.[48] Dr Waller sent DZY a copy of the fully executed 2015 deed on 23 December 2015. DZY deposed that he recalled reading the deed and feeling concerned about clauses stating he did not suffer economic loss as he believed that was not correct.[49]
[47]Ibid [73].
[48]Ibid [85].
[49]Ibid [84].
In January 2016, DZY had communications with Waller Legal about the settlement and the lack of an economic loss claim. The evidence of those communications was recorded in a letter from DZY and file notes made by the firm, namely:
(a)DZY’s letter of 21 January 2016 to Waller Legal. In that letter, DZY expressed concerns about clauses 1.1.2 and 1.1.5 of the 2015 deed because the abuse had, in his view, caused him ‘economic loss and diminished earnings’. He said that he had been under a lot of stress, this was a ‘mistake’ and he did not understand why these clauses were there as they were inconsistent with other statements he had made;[50]
(b)A Waller Legal file note of a telephone conversation between DZY and a solicitor on 21 January 2016. That note recorded that the solicitor advised DZY that a claim for loss of earnings had been excluded from his claim as it was ‘difficult’ and because of Centrelink issues;[51] and
(c)A Waller Legal file note of a telephone conversation between DZY and Dr Waller on 27 January 2016. That note recorded that DZY was worried about the terms of the 2015 deed excluding a claim for economic loss, because he had suffered economic loss. Dr Waller told him that an economic loss claim had not been made so as to avoid ‘Medicare + Centrelink’ social security issues and that the clauses excluding such a claim were standard in deeds of this type.[52]
[50]Ibid [85].
[51]Ibid [86].
[52]Ibid [87]. See also Reasons, [88].
As previously stated, in July 2021 DZY commenced the proceeding that gave rise to the application to set aside the two deeds.

Relevant statutory provisions

Division 5 of pt IIA of the Act concerns actions for personal injury resulting from child abuse. Within that division, since 18 September 2019, s 27QA(2) provides that an action may be brought on a ‘previously settled cause of action’.[53] A previously settled cause of action is defined to mean a child abuse action that was settled by a settlement agreement made before 1 July 2018. On that date the second of the two barriers for plaintiffs in child abuse actions — the Ellis defence — was overcome by legislation. Prior to the enactment that overcame the Ellis defence, the date by which a settlement had to be settled to meet the definition was 1 July 2015. That date corresponded to the legislative removal of the time limit for bringing a child abuse action, the first of the two legal barriers.
[53]The Act, s 27QA(2).
Section 27QD permits an application to be made to the Supreme Court to set aside a settlement agreement in respect of a previously settled cause of action (as defined). Section 27QE sets out the court’s powers when such an application is made:
27QE Court’s powers—previously settled causes of action
(1) On an application under section 27QD or otherwise in a proceeding on an action referred to in section 27QA(2), the court, if satisfied that it is just and reasonable to do so—
(a)may make an order setting aside the settlement agreement and any judgment or order giving effect to the settlement of the previously settled cause of action, whether wholly or in part; and
(b)may make any other order that it considers appropriate in the circumstances.
(2)In hearing and determining any action to which this Division applies on a previously settled cause of action, the court, if satisfied that it is just and reasonable to do so—
(a)when awarding damages in relation to the action, may take into account any consideration (whether monetary or non-monetary) paid, payable or given or to be given under—
(i)a settlement agreement set aside under this section; or
(ii)any other agreement related to the settlement that has been set aside under this section; and
(b)when awarding costs in relation to the action, may take into account any amounts paid or payable as costs under—
(i)a settlement agreement set aside under this section; or
(ii)any other agreement related to the settlement that has been set aside under this section.
By s 27R the court’s inherent jurisdiction and powers deriving from the common law or other Acts or rules of court are expressly preserved. A note to that section provides an example of a preserved power, being a power to summarily dismiss or permanently stay proceedings where the lapse of time has such a seriously burdensome effect on the defendant that a fair trial is not possible.

Reasons of the associate judge

The Christian Brothers filed a defence to DZY’s claim filed in July 2021, relying on the 2012 deed and the 2015 deed as complete bars to that claim or, in the alternative, alleging that the amounts paid pursuant to them should be taken into account in any award of damages. DZY filed a List of Special Damages claiming an economic loss of between $1,814,528 to $2,207,466.
In support of his application that the 2012 deed and 2015 deed be set aside pursuant to ss 27QD and 27QE of the Act, DZY relied upon his own affidavit and an affidavit of his new solicitor, Sarah Kivinen. In opposition to DZY’s application, the Christian Brothers relied upon two affidavits of the Christian Brothers’ solicitor, Joshua Dale.
Significantly, no deponent was called to give oral evidence or be cross-examined.
As mentioned, the Christian Brothers submitted that the Court should only set aside part of the deeds, as had been ordered in Pearce v Missionaries of the Sacred Heart (‘Pearce’),[54] which would allow DZY to continue his proceeding but not his claim for economic loss.[55]
[54][2022] VSC 697.
[55]Reasons, [4], [110].
In his reasons given for setting aside the deeds in their entirety, the associate judge:
(a)reviewed the affidavit material filed by the parties, including contemporaneous records relevant to the deeds, and made various findings of fact;[56]
(b)summarised the Christian Brothers’ written and oral submissions;[57]
(c)reviewed the relevant legislative provisions, ss 27QD and 27QE of the Act, and the meaning of the phrase ‘just and reasonable’;[58]
(d)discussed the decision in Pearce, where Forbes J set aside part of a prior settlement that operated as a bar to a claim for general and special damages but did not set aside the part of the prior settlement that extinguished a claim for economic loss;[59]
(e)identified the single question for determination upon an application under ss 27QD and 27QE as being whether it is just and reasonable to set aside a previous settlement, to be determined on the particular facts of the case before the Court;[60]
(f)distinguished the case from Pearce on several grounds;[61] and
(g)accepted that DZY was legally represented throughout the entire period of his prior claims for compensation and that there was no evidence that DZY was pressured to enter into the deeds.[62]
[56]Ibid [11]–[88].
[57]Ibid [89]–[93].
[58]Ibid [94]–[101].
[59]Ibid [102]–[108].
[60]Ibid [113]–[115].
[61]Ibid [118].
[62]Ibid [121].
Having done so, the associate judge was satisfied that it was just and reasonable to set aside the 2012 deed and the 2015 deed in their entirety. He explained his conclusion by reference to seven points:
First, the evidence shows that the plaintiff was repeatedly advised by his lawyers that his case faced significant issues, being the limitations issue and the availability of the Ellis defence. This advice was given to the plaintiff on 11 January 2011, at the preliminary conference on 21 September 2012, on 21 November 2012 being the day of the settlement conference, on 29 November 2012 while the plaintiff was considering the defendant’s final offer and in the Instructions to Settle Claim document signed by the plaintiff on 13 December 2012.
Second, the plaintiff’s evidence was that he felt he had no choice but to accept the defendant’s final offer because the legal barriers were too great, that his case would fail if he went to court and he would have to pay the defendant’s legal costs.
Third, the evidence before the Court suggests the plaintiff was first advised about the possibility of the Centrelink repayment on the day of the settlement conference, immediately prior to his lawyers conducting the negotiation with the defendant and during the same part of that conference his lawyers reiterated their advice about the limitations and Ellis defence issues in his case. The plaintiff’s instructions not to pursue his economic loss claim should be viewed against all of the circumstances. In my view it is not possible to find that the limitations and the Ellis defence issues had no material influence on the plaintiff’s decision not to pursue his economic loss claim.
Fourth, there is no evidence that the plaintiff’s instructions not to pursue his economic loss claim, or his solicitor’s advice in relation to that claim, was influenced by a lack of supporting evidence. The defendant put further documentary material before the Court but there was no evidence that this material formed a basis for the plaintiff’s lawyers’ advice not to make a claim for economic loss. The defendant conceded that it had been provided with some potentially relevant material. I also accept the plaintiff’s submission that many cases proceed to mediation before all the potentially relevant evidence is assembled.
Fifth, the plaintiff’s evidence, consistent with the documents created by his Ballarat CASA support person and his treating doctor’s records, was that he was experiencing significant anxiety at the times of both settlements and that his ability to comprehend the advice he was given was compromised. The file note created on 16 September 2015 by his solicitor also noted that the plaintiff did not seem to understand what happened at the settlement conference in 2012.
Sixth, excepting the loss of the plaintiff’s releases given in the Deeds, the defendant has not submitted it would suffer additional prejudice, such as the unavailability of documentary evidence, if the Deeds were set aside.
Seventh, the evidence before the Court in relation to the 2015 Deed was that the plaintiff was advised the 2015 Deed would not affect his rights any more than the 2012 Deed had already affected them. The plaintiff’s evidence was that he signed the 2015 Deed because he felt he again had no choice because he had signed away his legal rights by entering into the 2012 Deed. This means that the factors that led the plaintiff to sign the 2012 Deed continued to materially influence the plaintiff’s decision to enter into the 2015 Deed.[63]
[63]Ibid [122]–[128].

What is the applicable standard of appellate review?

In Warren v Coombes the High Court was concerned with the standard of appellate review upon an appeal by way of rehearing, and said:
Shortly expressed, the established principles are, we think, that in general an appellate court is in as good a position as the trial judge to decide on the proper inference to be drawn from facts which are undisputed or which, having been disputed, are established by the findings of the trial judge. In deciding what is the proper inference to be drawn, the appellate court will give respect and weight to the conclusion of the trial judge, but, once having reached its own conclusion, will not shrink from giving effect to it. These principles, we venture to think, are not only sound in law, but beneficial in their operation.[64]
[64]Warren v Coombes (1979) 142 CLR 531, 551 (Gibbs ACJ, Jacobs and Murphy JJ); [1979] HCA 9.

In Fox v Percy,[65] the High Court considered a number of cases following Warren v Coombes which reiterated the need for appellate respect for the advantages of trial judges, particularly when the decision may be influenced by the trial judge’s impression of the credibility of witnesses. Nevertheless, the court said, if after making proper allowance for those advantages, the appellate court concludes that ‘an error has been shown’, the court is obliged to discharge its appellate duties in accordance with statute.[66]
[65](2003) 214 CLR 118; [2003] HCA 22.
[66]Ibid 127–8, [27] (Gleeson CJ, Gummow and Kirby JJ).
By contrast, in House the High Court explained the standard of review on an appeal from a decision involving the exercise of a judicial discretion:
The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred.[67]

The High Court’s decision in GLJ

[67]House (1936) 55 CLR 499, 504–505 (Dixon, Evatt and McTiernan JJ); [1936] HCA 40.

In the case of GLJ, the plaintiff — GLJ — sued the defendants claiming damages. He alleged that he had been sexually abused by a priest when he was a child. The defendants applied for a permanent stay arguing that, with the lapse of time, there could not be a fair trial especially because the priest concerned, and other potential witnesses, had died before any complaint was made. The trial judge refused to grant a permanent stay, concluding that there could be a fair trial. The defendants appealed to the NSW Court of Appeal. The Court of Appeal allowed the appeal, holding that the judge’s discretion to refuse a permanent stay miscarried because he misapprehended the facts and applied a wrong principle. A permanent stay was granted. GLJ appealed to the High Court.
Relevantly for present purposes, the question before the High Court was whether the appellate standard of review of a decision to grant or refuse a permanent stay was the ‘correctness standard’, using that expression as shorthand for the standard described in Warren v Coombes, or the House standard.
All five members of the bench decided that a decision to grant a permanent stay is not discretionary, and thus that the applicable appellate standard of review was the correctness standard.
The plurality (Kiefel CJ, Gageler and Jagot JJ) said that the decision whether a trial would be necessarily unfair or so unfairly and unjustifiably oppressive as to constitute an abuse of process is an evaluative one, but not a discretionary decision. Proceedings either are or are not capable of being the subject of a fair trial, or are or are not so unfairly and justifiably oppressive as to constitute an abuse of process.[68]
[68]GLJ (2023) 97 ALJR 857, 865 [15] (Kiefel CJ, Gageler and Jagot JJ); [2023] HCA 32.
Charting the line separating discretionary decisions from non-discretionary decisions, the plurality said:
The line separating discretionary decisions (in which appellate review is confined to the House v The King standard) and other decisions (in which the ‘correctness standard’ applies) was identified as that between questions lending ‘themselves to differences of opinion which, within a given range, are legitimate and reasonable answers to the questions’ in which event ‘it would be wrong to allow a court of appeal to set aside a judgment at first instance merely because there exists just such a difference of opinion between the judges on appeal and the judge at first instance’, and questions to which there is but one legally permissible answer, even if that answer involves a value judgment.[69]
[69]Ibid 866 [16] (Kiefel CJ, Gageler and Jagot JJ).
Describing the grant of a permanent stay of proceedings as an extreme step, the plurality said that whether a trial will constitute an abuse of process admits of only one uniquely right answer.[70]
[70]Ibid 866 [17] (Kiefel CJ, Gageler and Jagot JJ).
In further explanation of their reasons, the plurality made observations about the nature of the adversarial legal system.[71] They pointed out that in the adversarial system, both parties make forensic decisions about the issues to be decided and the evidence to be presented. The judge impartially and independently hears and determines those issues on that evidence. These respective roles lie at the centre of the common law system of dispute resolution. But if a plaintiff is unable to identify the claim and its material facts, or the defendant is unable to respond to the claim in some meaningful way, the principal means by which the rule of law is maintained within the adversarial system of justice is unable to function. In this context, they reasoned, the doctrine of abuse of process ‘protects the integrity of the adversarial system of justice’.[72]
[71]Ibid 866–7 [19]–[20] (Kiefel CJ, Gageler and Jagot JJ).
[72]Ibid 867 [20] (Kiefel CJ, Gageler and Jagot JJ).
Therefore, the plurality continued, although the question whether a permanent stay should be granted on abuse of process grounds is to be determined by a weighing process involving a subjective balancing of various factors and considerations, the ultimate question is not whether the unfairness to the moving party outweighs the unfairness to the defending party. The balancing of competing interests between parties could not justify permanent stay of proceedings. The real question, the judges identified, is ‘the congruence or otherwise of the holding of a trial and rendering of a verdict with the fundamental norms underlying our legal system’.[73] Describing a power to permanently stay a proceeding as a discretion impermissibly refocuses attention on considerations personal to the parties. Such considerations, they said, are
relevant only to the extent that they expose circumstances of the congruence or incongruence in the particular case of the holding of a trial and rendering of a verdict.[74]
[73]Ibid 867–8 [22] (Kiefel CJ, Gageler and Jagot JJ).
[74]Ibid.
In summarising their conclusion, the judges said:
If a trial will be necessarily unfair or so unfairly and unjustifiably oppressive as to constitute an abuse of process, a court must not permit the trial to be held. If a fair trial can be held and will not be so unfairly and unjustifiably oppressive as to constitute an abuse of process, a court ordinarily has a duty to hear and decide the case. It follows that it would be wrong in principle for the appellate court to decide the appeal in such a case on other than the general ‘correctness standard’.[75]
[75]Ibid 868 [23] (Kiefel CJ, Gageler and Jagot JJ).
For his part, agreeing in that conclusion, Steward J emphasised that it is important ‘that the source of power’ to grant a permanent stay is statutory, because it means that whether or not ‘judicial restraint’ was appropriate was a matter of statutory construction.[76]

Submissions

[76]Ibid 881 [91] (Steward J).

The Trustees submitted that the Court’s power to set aside a previous settlement under s 27QE of the Act does not involve the exercise of a discretion, even though it requires an evaluative judgment. Once a court is satisfied that it is just and reasonable to set aside a settlement, the Trustees submitted that the Court must do so, drawing attention to the views expressed by this Court in Roman Catholic Trusts Corporation for the Diocese of Sale v WCB (‘WCB’).[77] There, this Court said it was difficult to postulate a case in which a court might consider it just and reasonable to set aside a settlement agreement but refuse to make such an order.
[77](2020) 62 VR 234, 262–3 [98] (Beach, Kaye and Osborn JJA); [2020] VSCA 328 (‘WCB’).
The Trustees also submitted that the use of ‘may’ in the section denotes the empowerment of the court, rather than conferral of a discretion, in the same way that s 67 of the Civil Procedure Act2005 (NSW) — considered by the High Court in GLJ — empowers the court to grant a permanent stay once a particular factual finding is made, rather than confers a discretion to do so.
In oral submissions, the Trustees argued that the question whether or not it is just and reasonable to set aside a previous settlement agreement has only one legally permissible answer, in the same way that the question whether or not a trial can be fair — considered by the High Court in GLJ — permits only one legally permissible answer.
The Trustees acknowledged that acceptance of its submission would represent a departure from this Court’s reasoning in Hunt v Holcombe,[78] which held that the determination whether it was just and reasonable to extend the limitation period under s 27K of the Act was a discretionary decision, the review of which was to be determined on House principles. Further, the Trustees accepted that, even if the correctness standard as articulated in Warren v Coombes is applied, they are still required to persuade the court that, making proper allowance for the advantages of the associate judge, an error was made.[79] That said, in the current case, the Trustees submitted that there was no scope for the associate judge to enjoy any such advantage over this Court, given that all of the evidence was documentary.
[78][2018] VSCA 248, [49]–[51] (Beach, Kaye and Niall JJA).
[79]Referring to Fox v Percy (2003) 214 CLR 118; [2003] HCA 22.
DZY referred to the statements made by the plurality in GLJ that the line to be drawn is between those decisions admitting of a range of legally permissible outcomes and those which admit of only one legally permissible outcome. Counsel for DZY relied upon statements by Gageler J in Minister for Immigration v SZVFW[80] to the same effect, emphasising that the line is not to be drawn by reference to whether or not the process of reasoning to reach a conclusion is characterised as evaluative.
[80](2018) 264 CLR 541, 563 [49] (Gageler J); [2018] HCA 30.
Relying upon those principles, DZY argued that the statutory test in s 27QE admits of a range of legally permissible outcomes. If satisfied that it is just and reasonable to do so, the court could, for example, set aside the settlement granted in whole, or it could set it aside in part; and, further, it could make ‘any other order that it considers appropriate in the circumstances’ (s 27QE(1)(b)). Thus, DZY argued, there is no binary choice with only one unique outcome that is legally permissible. Even then, DZY argued, sub‑s (2) provides the court with further options at the trial stage. If satisfied that it is just and reasonable to do so, the court may (or may not) take into account any past amounts paid to a plaintiff in awarding damages and awarding costs.
Taken together, DZY argued, these options place the court in a substantially different position to the one a court would be in if faced with a choice of either granting a permanent stay, or not doing so, as considered by the High Court in GLJ.
Accordingly, DZY argued, it would be wrong to apply the correctness standard. The proper standard to apply is the House standard.

Consideration

In WCB, this Court treated a decision to set aside a settlement agreement under s 27QE as an exercise of discretion. In relation to the making of similar decisions conditioned on a court being satisfied that the step in question is ‘just and reasonable’ — such as the decision to extend a limitation period under s 27K of the Act — this Court has also taken the view that the decision is discretionary.[81]
[81]See, eg, Hunt v Holcombe [2018] VSCA 248.
The High Court’s decision in GLJ has necessitated a reconsideration of the analyses which have led to these types of decisions. For example, in Connelly v Transport Accident Commission,[82] this Court reversed a position that had been applied since Mobilio v Balliotis[83] to hold that an appeal from a decision under s 93(4) of the Transport Accident Act 1986 that an injury was a serious injury was to be decided on the correctness standard, and not on House principles.
[82][2024] VSCA 20.
[83][1998] 3 VR 833.
As both parties accepted, the question of which standard of appellate review applies in relation to a decision made under s 27QE of the Act is one of statutory construction. Therefore, it is necessary to consider the text in its context and having regard to its purpose.[84]
[84]Project Blue Sky Inc v Australian Broadcasting Commission (1998) 194 CLR 355, 381–2 [69]–[70] (McHugh, Gummow, Kirby and Hayne JJ); [1998] HCA 28; Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27, 46–7 [47] (Hayne, Heydon, Crennan and Kiefel JJ); [2009] HCA 41; Federal Commissioner of Taxation v Consolidated Media Holdings Ltd (2012) 250 CLR 503, 519 [39] (French CJ, Hayne, Crennan, Bell and Gageler JJ); [2012] HCA 55; Interpretation of Legislation Act 1984 (Vic) s 35(a).
Relevantly, the purpose of inserting ss 27QA to 27QF of the Act was to allow certain actions in relation to death or personal injury arising from child abuse to be brought, despite being dismissed due to the expiry of a limitation period or settled prior to the removal of the limitation period on 1 July 2015, and to provide for certain judgments and settlement agreements to be set aside.[85] In other words, the purpose was to override the usual effect of a judgment or settlement in particular circumstances.
[85]Children Legislation Amendment Act 2019, s 1(2)(e). See further [108]–[109] below.
The setting aside of judgments and settlement agreements are both authorised if the court is satisfied that it is just and reasonable to do so: s 27QC(1) and s 27QE(1). In each case, if so satisfied, the court ‘may make an order setting aside’ the judgment or settlement agreement (or a judgment giving effect to a settlement) ‘wholly or in part’, and may, additionally, ‘make any other order that it considers appropriate in the circumstances’. In both sections, sub-s (2) authorises the court to take into account amounts paid or payable under previous judgments or settlements when awarding damages and costs.
It was not submitted that, of itself, the word ‘may’ has any determinative significance. Whether that word denotes a discretion or is simply a word of empowerment is to be determined by whether the power so conferred is a discretion to grant a remedy fashioned from a range of options depending upon personal judgment, or a power to grant (or not grant) one unique outcome. The answer to that question is not reached merely by observing that there are potential subdivisions of the remedy to set aside a settlement agreement, namely as to whole or only part of it.
It is useful, in our view, to consider the wider context of the power conferred by s 27QE in a way that is analogous to the High Court’s approach in GLJ with respect to the power to grant a permanent stay of a proceeding.
The integrity of the adversarial legal system is fostered by the certainty and finality produced by litigation outcomes and the impartiality of its judicial officers. It is also bolstered by demonstrable fairness and equal opportunity in the litigation process. Judgments and orders obtained by consent represent the conclusion of a proceeding in the adversarial system. They represent a just outcome as determined by the court or agreed by the parties following a fair and equal process.
To maintain the community’s confidence in the adversarial system to deliver just outcomes by fair court processes, judgments and settlements should be accorded a high degree of protection. To set aside a judgment or an agreed settlement is a significant erosion of the finality of litigation outcomes. Ideally, judgments and settlements should be adhered to except in circumstances determined by reference to a clear legal rule set by Parliament or devised by the common law. The court has inherent powers or powers conferred under its rules to set aside judgments in limited circumstances according to established principles.[86]
[86]Examples include the power to set aside judgments when obtained in default, when summary judgment is obtained in the absence of the affected party, when a judgment or order is made as the result of a mistake or error, or when a judgment is so irregular as to be a nullity: see, respectively, Supreme Court (General Civil Procedure) Rules 2015, rr 21.07, 22.23, 36.07 and LexisNexis Australia, Civil Procedure Victoria, [36.07.50].
Such observations suggest that, to maintain the integrity of the legal system, a judgment or settlement should only be set aside when it has been obtained by a process or in a circumstance that violates a clear principle fixed by the law. It would be incongruent with the nature of the adversarial legal system if court orders or settlements were only valid insofar as they were justifiable as a matter of individual judgment.
In this case, the applicable legal principle set by Parliament is that a court must be satisfied that it be ‘just and reasonable’ to set aside a judgment. It is that legal criterion that fixes the boundary that must be crossed before a judgment or settlement of a personal injury claim for child abuse, otherwise validly obtained, may be set aside. It is only if that legal criterion is satisfied that a defendant who has bargained for a release of any further legal liability should be deprived of that right, or a plaintiff who has relinquished the right to further pursue a claim should be permitted to relitigate it.
These contextual considerations aid the construction of ss 27QC and 27QE. They support the view that the ‘just and reasonable’ test should not be construed as a mere gateway that enlivens a discretion to choose whether or not to set aside a previous settlement, but rather, as a strict legal rule which, if satisfied, will require that the settlement be set aside. If that criterion is satisfied, the settlement will be set aside because it was obtained in circumstances that are incongruent with a fair adversarial system that allows parties to agree a just outcome to bring an end to legal rights and liabilities.
Although there may be a range of factors to be taken into account, and the strength of them weighed, ultimately the question is whether it is just and reasonable to set aside the judgment. The question is not whether there is a risk of injustice or unreasonableness lying somewhere on a scale between high and low, calling for a personal judgment as to whether the previous settlement should be set aside depending on the position on that scale.
The legal rule does not describe a range of legally permissible outcomes. It is a rule that leads to binary outcomes. Adopting the language of GLJ, either it is just and reasonable that the parties should not be bound by a previous judgment or settlement, or it is not.
Although DZY’s argument that s 27QE allows for a range of legally permissible outcomes has some superficial attraction, ultimately, we are not persuaded that it is correct.

Dealing first with s 27QE(1)(a), a court is empowered to set aside the agreement wholly or to set aside the agreement in part. In each case, the court must be satisfied that it is just and reasonable ‘to do so’. On a proper construction of the test, the provision does not give the judge a range of options once generally satisfied that it is just and reasonable to set aside a settlement to some extent. The court must be satisfied of that criteria with reference to the specific aspect of the settlement agreement under consideration, that is ‘whether’ as to the whole of it or as to some identified part. Whether a settlement or judgment should be set aside in whole, or in part, is subject to the satisfaction of the same legal criterion in each case. Sub-paragraph (1)(a) does not denote a discretion.
Sub-paragraph (1)(b) is more difficult, but it is also quite different to sub-para (1)(a). The power to make ‘any other order [the court] considers appropriate’ certainly appears to give the court a broad discretion as to any other orders that may accompany the setting aside order. The making of any such order is also conditioned by whether or not it is just and reasonable to do so.
In this case, the only other order made by the associate judge was as to costs. It is conceivable, however, that a range of other orders may be made on an application under s 27QD. For example, in WCB, the trial judge gave answers to preliminary questions posed by the parties in determining the application. Orders could be made to ensure that the substantive order setting aside the settlement agreement operates with its intended effect. When setting an agreement aside in whole or in part, a court may consider it appropriate to make orders that will facilitate the trial of the ongoing proceeding or part of that proceeding.
Importantly, the nature of the discretionary power conferred by sub-para (1)(b) should not be construed so as to colour or characterise the substantive power conferred by sub-para (1)(a). To allow a subsidiary, facultative power to govern the nature of the primary substantive power would be unusual and, in this case, artificial.
For the reasons we have stated, we consider that the text of s 27QE in its statutory context, and the reasoning in GLJ, dictates a conclusion that the nature of the power to set aside settlement agreements under s 27QE(1) is not a discretion, and that any appellate review of a decision made under that section is to be approached on the correctness standard.

What is the content of ‘just and reasonable’ in s 27QE?

In WCB, this Court considered the meaning and content of the phrase ‘just and reasonable’ in s 27QE. It recognised that the section does not prescribe matters which the Court should have regard to in determining whether it is just and reasonable to set aside a settlement.[87]
[87]WCB (2020) 62 VR 234, 270 [121] (Beach, Kaye and Osborn JJA); [2020] VSCA 328.
In approaching the construction of the phrase, the Court considered at some length the two legal obstacles that had confronted plaintiffs alleging personal injury as a result of historical child abuse (that is, time limitations and the Ellis defence), the legislative removal of those obstacles, and the purpose for enacting s 27QE and its accompanying provisions. In view of that context and purpose, the Court said that ss 27QD and 27QE were introduced to enable claimants who had suffered historical sexual abuse to litigate their claims where, due to the unfair legal obstacles that obstructed their path, they had previously settled those claims on terms that were not just and reasonable.[88]
[88]Ibid 266 [112] (Beach, Kaye and Osborn JJA).
The Court explained that the legislative context and evident purpose provided ‘an appropriate guide to … the content of the phrase ‘just and reasonable’’.[89] The existence and influence of those unfair legal obstacles at the time of the previous settlement was seen as relevant to the satisfaction of the test of whether it was just and reasonable to set aside a settlement. Finding support in the Second Reading Speech made by the Minister for Child Protection when introducing the Bill that inserted ss 27QD and 27QE, and from statements made by the Queensland Court of Appeal in TRG v Board of Trustees of the Brisbane Grammar School,[90] this Court concluded that:
in determining whether, in a particular case, it is just and reasonable to set such an agreement aside, it is relevant for a court to take into account, inter alia, obstacles and difficulties which confronted one of the parties to the agreement, where Parliament has subsequently recognised the injustice and unfairness of those obstacles and difficulties, and has, as a consequence, removed or qualified them.[91]
[89]Ibid.
[90](2020) 5 QR 440; [2020] QCA 190.
[91]WCB (2020) 62 VR 234, 2678 [115] (Beach, Kaye and Osborn JJA). See also 266–7 [112]–[113] (Beach, Kaye and Osborn JJA); [2020] VSCA 328.
As for what else might be relevant, disagreeing with the trial judge in the case before it, the Court doubted that an unfavourable view of the law of vicarious liability prevailing at the time of settlement — since made more favourable to plaintiffs — would itself have been relevant to the satisfaction of the statutory test.[92] On the other hand, because a court must be fair to both sides, consideration must be given to whether it would be just and reasonable to the defendant to lose the protection of the terms of settlement. Accordingly, in an appropriate case, the Court said, prejudice due to the elapse of time which might ensue to the defendant in the conduct of its defence might also be relevant.[93]
[92]Ibid 268–9 [116] (Beach, Kaye and Osborn JJA).
[93]Ibid 271 [124] (Beach, Kaye and Osborn JJA).
We agree with this understanding of the meaning and content of ‘just and reasonable’. It can be further supported by noticing the condition that is required for a settlement to be amenable to be set aside.
Through ss 27QD(1) and 27QA(2), the necessary condition for the operation of s 27QE is a ‘previously settled cause of action’. We have already set out (above, [53]) the two dates historically set by Parliament by which an action must have settled to qualify as being a ‘previously settled cause of action’, and thereby become amenable to the s 27QE remedy. Those dates correlate with the commencement of the legislative remedies to the two legal barriers facing plaintiffs in child abuse cases. As the Minister explained, the reform introducing s 27QE was designed to deal with the ‘product’ of those barriers.[94]
[94]Victoria, Parliamentary Debates, Legislative Assembly, 15 August 2019, 2695 (Luke Donnellan, Minister for Child Protection and Minister for Disability, Aging and Carers) (‘Second Reading Speech’).
Hence, built into the necessary condition for the availability of the s 27QE remedy is the requirement that the particular settlement occurred at a time — but not beyond that time — when the time limitation and/or Ellis defences were capable of unfavourably influencing settlements for claimants. That influence led to the mischief — a potentially unfair settlement — which the reform was designed to remedy. In our view, that observation reinforces the centrality of the actual influence of one or both of those two barriers in the consideration of whether it is just and reasonable to set aside a settlement agreement.
At least in an ordinary case, one would expect that one of the two legal barriers that the provisions of div 5 of pt IIA of the Act were designed to remedy would play some part in explaining why the claimant entered into the settlement agreement now sought to be set aside. If a finding was made that one or other of those legal barriers had a material impact on the claimant’s decision to settle his or her claim, a cogent ground would exist to conclude that it was just and reasonable to set the settlement aside. Of course, being fair to both sides, it would be necessary to consider the effect on and any prejudice to the respondent in deciding whether to set it aside. If no finding was made that either legal barrier had such an impact, it is doubtful that any cogent ground would exist to conclude it was just and reasonable to set the settlement aside.
It is important to pay proper regard to the fact that Parliament has not sought to define the factors that are to be taken into account in determining whether it is just and reasonable to set aside a judgment or a settlement. Nevertheless, the text alone is not the only measure by which the statute is to be construed. Bringing context and purpose into the process of construction, it is equally important, in our view, to pay proper regard to the nature of the power being exercised and the particular mischief that the exercise of that power was intended to remedy. As explained, we take the view that the exercise of the power under these sections is not discretionary. That is of some importance. The mischief to be remedied was the unfairness to claimants of having judgments entered or settlements made when their legal rights or bargaining power were constrained by one or both of two specific legal obstacles to their claims.
We do not deny that, other than the actual influence of those legal obstacles, there could be additional factors that might legitimately be taken into account. Potentially those factors might include, for example, prospects of success (that is, that the claimant could do better than he or she had previously done by the settlement); the respondent’s conduct in the settlement process; unequal bargaining power; any feelings of guilt or shame (compounded or not by the burden of giving evidence and being subject to cross-examination); and (as noted) prejudice to the respondent.[95]
[95]See Explanatory Memorandum, Children Legislation Amendment Bill 2019, 17; Second Reading Speech, 2695–6.
As we would put it, however, consideration of the actual influence of the two legal obstacles is central to the determination of whether it is just and reasonable to set aside a settlement. Because of the importance to the integrity of the adversarial legal system of adherence to judgments and settlements, apart from the influence of those obstacles, other factors should be seen as supportive rather than leading factors in determining whether it is just and reasonable to set aside a settlement.

In deciding it was just and reasonable to set aside the deeds, did the associate judge act on a wrong principle or draw an inference that was not open?

The full terms of the first proposed ground of appeal are as follows:
Ground 1: In circumstances where the learned Associate Justice:
(a)found that ‘there is an explanation for the failure to pursue the economic loss claim, being the desire to avoid the possibility the Department of Social Services would seek repayment of benefits paid to the plaintiff from the settlement sum’; and
(b)did not make a finding that a potential limitations defence and/or Ellis defence in fact played a role in the respondent’s decision not to pursue an economic loss claim —
his Honour erred by acting on a wrong principle and/or reaching a conclusion that was not reasonably open in the circumstances:
(i)when his Honour found that it was just and reasonable to set-aside the deed of release dated 14 December 2012 (the 2012 Deed) and the deed of release dated 9 December 2015 (the 2015 Deed) in their entirety; and
(ii)by failing to hold that the respondent had not discharged the burden contained in s 27QE(1) of [the Act].

Submissions

The Christian Brothers emphasised the associate judge’s finding that ‘an explanation’ for DZY’s failure to pursue an economic loss claim in either 2012 or 2015 was his desire to avoid DSS claiming back Centrelink benefits out of any settlement sum he received from the Christian Brothers. That motivation, they argued, had nothing to do with any potential limitation defence, Ellis defence or any conduct on their part.
Furthermore, the Christian Brothers argued, although the associate judge was unable to conclude that the fear of a Centrelink clawback was DZY’s sole motivation for not pursuing an economic loss claim, equally the associate judge did not make any explicit finding that DZY’s decision not to pursue an economic loss claim was materially influenced by the possible operation of the limitation or Ellis defences. The highest the associate judge put it, they pointed out, was that ‘it is not possible to find that the limitations and the Ellis defence issues had no material influence on the plaintiff’s decision not to pursue his economic loss claim’.[96] We will refer to this statement as the ‘critical statement’.
[96]Reasons, [124], extracted above at [61].
The Christian Brothers emphasised that the onus lay upon DZY to establish just and reasonable grounds to set aside the settlements. They criticised the associate judge’s ultimate conclusion as being the product of either one or the other of two legal errors. If it be assumed that the associate judge acted upon a finding that DZY was influenced not to pursue the economic loss claim because of the existence of one or both of the two defences, the Christian Brothers argued that there was simply no evidence to support such a positive finding and, so, it was legally wrong. On the other hand, if the associate judge acted upon an inference of there being only a ‘potential impact’ of either or both of those two defences on DZY’s decision, the associate judge made an error of law of a different kind. That error, they argued, was to impermissibly draw an inference based on speculation or guesswork rather than drawing ‘the more probable inference’.[97]
[97]Relying upon Masters Home Improvement Australia Pty Ltd v North East Solution Pty Ltd (2017) 372 ALR 440, 466–7 [101]–[102] (Santamaria, Ferguson and Kaye JJA); [2017] VSCA 88 (‘Masters Home Improvement’).
In oral submissions, the Christian Brothers argued that, in circumstances where DZY did not say (when he could have said) that the fear of the use of either the limitations or Ellis defences caused him to withdraw from making any claim for economic loss, the court should not and could not, without error, rely upon speculation in his favour that it might have done so. Further, insofar as the associate judge took into account, as a factor in granting the ultimate relief, the mere possibility that either of the two defences played a material role in DZY’s decision, he took into account an immaterial consideration and was in error to do so.
DZY addressed the argument that the associate judge acted upon the impermissible inference that it was not possible to say that either of the two defences had no material impact on DZY’s decision.[98] DZY argued that the Christian Brothers had set up a false dichotomy between either the limitation/Ellis defences influencing the decision or the fear of a DSS clawback influencing the decision. Rather, he argued, the associate judge found that DZY’s decision was not informed by any single factor and that it was not possible to find that the fear of the DSS clawback was the sole or dominant motivation, divorced from a consideration of other problems with DZY’s case.[99]
[98]DZY had first addressed an argument which he presumed the Christian Brothers were making. That argument was that, on a proper construction of s 27QE, the only factors relevant to whether a court could be satisfied it was just and reasonable to set aside a settlement were positive findings that the limitations defence and/or Ellis defence had an impact on the decision to settle the claim. The Christian Brothers disavowed such an argument so no further submissions were advanced about it.
[99]Reasons, [119].
DZY argued that it was reasonably open for the associate judge to not exclude the operation of those two defences as a material influence on DZY’s decision not to pursue an economic loss claim. The discretion (as DZY characterised it) to set aside a settlement agreement was not to be exercised by balancing the ‘key’ influences (the limitation defence/Ellis defence) against other influences — rather, it was to be exercised by considering all of the facts and determining both the materiality and weight to be assigned to those facts.
DZY pointed out that the associate judge identified multiple factors which contributed to DZY’s decision. The associate judge gave them such weight as he considered appropriate. DZY argued that the allocation of weight given to otherwise relevant considerations is not a House error.
On DZY’s analysis, the associate judge drew inferences regarding the influence of various motivations upon DZY when executing the deeds. Those motivations included the legal advice he received, the impact of the limitation and Ellis defences and the potential for DSS to seek repayment of benefits, all of which were operating in the context of DZY’s compromised ability to think clearly and his belief that he had no choice but to settle. Thus, DZY argued, it was ‘open to the Associate Justice to infer [DZY’s] belief was informed by the documented legal advice he received, which clearly referred to limitation and Ellis defence issues and possible Centrelink repayment’.
In oral submissions, DZY stressed that it was artificial to divorce the particular decision not to pursue economic loss from the general motivational factors causing DZY to accept the overall settlement sums, including the potential impact of the two defences. DZY did not accept that by using the double negative in the critical statement, the associate judge stopped short of making a positive finding that the defences did have a material influence on the decision. In other words, DZY’s first argument was that by the critical statement, the associate judge made a positive finding that the existence of the limitation/Ellis defences was a material influence on DZY’s decision not to pursue an economic loss claim.
His alternative argument was that because the statute does not specify the factors that a court must find in order to be satisfied that it is just and reasonable to set aside a settlement, it is legally valid for a court to reach such satisfaction by taking into account, among a confluence of factors, that it is merely plausible that the limitation/Ellis defences played a material role in influencing the claimant’s decision to settle the claim.

Consideration

The limited question to be considered is whether the associate judge erred in finding that it was just and reasonable to set aside the two deeds in their entirety — rather than set them aside only insofar as they barred a claim for general damages, leaving intact the bar to a claim for damages for economic loss. We first consider the question as if the appropriate standard of review is on House principles. In our view, in finding as he did, the associate judge made an error of a House kind. If the true analysis is that s 27QE confers a discretion on the court, this error means that the discretion miscarried and this Court should re-exercise it (this Court being in as good a position as the associate judge to do so).
The House error was to take into account an irrelevant consideration. The associate judge took into account, as a factor in favour of finding that it was just and reasonable to set aside the settlements in their entirety, the mere possibility that DZY was influenced by the limitation/Ellis defences in making his decisions in 2012 and in 2015 not to pursue a claim for economic loss.
It is to be recalled that the associate judge ultimately relied on seven reasons for coming to the conclusion that it was just and reasonable to set aside the deeds in their entirety. They are extracted above in full but we will summarise them here:
(1)DZY was repeatedly advised about the time limitation and Ellis defence problems.
(2)DZY said he felt he had no choice but to settle because of legal hurdles and the risk of costs.
(3)It was not possible to find that the limitation and Ellis defences had no material influence on DZY’s decision not to pursue an economic loss claim.
(4)There was no evidence that DZY lacked supporting evidence to bring an economic loss claim.
(5)DZY’s ability to comprehend advice at the time of the settlements was compromised.
(6)Apart from the loss of the releases in the deeds, there was no additional prejudice to the Christian Brothers.
(7)The same factors that led DZY to sign the 2012 deed materially influenced his decision to enter the 2015 deed.

The third reason is the irrelevant consideration. It is what we called the critical statement. For reasons that follow, we reject DZY’s argument that the critical statement could be construed as a positive finding that DZY’s decision not to pursue the economic loss claim was materially influenced by the limitation defence/Ellis defence issues.
Prior to making the critical statement, the associate judge had made the following findings:
•An appropriate guide to understanding the content of the phrase ‘just and reasonable’ included the legislative changes which removed the unjust and unfair legal barriers relating to limitation periods and the identification of appropriate defendants;[100]
•Parties seeking to set aside the previous settlement bear the positive burden of demonstrating that it is just and reasonable to do so;[101]
•In this case there was ‘an explanation’ for the failure to pursue the economic loss claim, namely DZY’s desire to avoid the possibility that DSS would require repayment of benefits from the settlement sums;[102]
•Nevertheless, it was not possible to isolate DZY’s motivation for not pursuing the economic loss claim solely to the possibility of a Centrelink repayment; it was undoubtedly part of the reason but not the sole or dominant motivation, divorced from consideration of other problems with his case.[103]
[100]Reasons, [98]–[99].
[101]Ibid [101].
[102]Ibid [118(d)].
[103]Ibid [119].
At no point in his evidence did DZY say, in terms, that he decided not to pursue an economic loss claim because of limitations and Ellis defence issues.[104] DZY could not point to any such statement, nor did the associate judge identify one.
[104]At paragraph 28 of his affidavit affirmed 9 December 2022, DZY referred to a recollection from the 21 November 2012 settlement conference of difficulties suing Church institutions possibly impacting ‘employment on my Centerlink benefits’. The statement made no sense. This single, muddled and brief reference to a potentially related issue did not assist his case. Given the importance of the possible influence of the specific legal barriers to his claims, and the fact that it was in dispute, DZY’s failure to adduce specific, clear evidence on this point is significant. The Court should not speculate about what might have been intended or about what other evidence might have been called: ASIC v Hellicar (2012) 247 CLR 345, 411 [165] (French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ); [2012] HCA 17.
The associate judge understood that DZY bore the burden to satisfy the statutory test. He had identified as being relevant that the settlements occurred in the context of the operation of the unfair legal barriers which had since been removed. It was for that very reason that he considered, correctly, whether it could be shown that either of the limitation or Ellis defences materially influenced the decision not to pursue an economic loss claim. We say ‘correctly’ because, if not shown, it could not be said that because of the existence of those defences the settlements were unjust or unreasonable.
In that context, it is clear that the critical statement stands for no more than that the associate judge could not exclude the possibility that the limitation/Ellis defence issues might have materially influenced DZY to decide not to pursue an economic loss claim. It rose no higher than that. Despite that, the associate judge thought to include this non‑finding — this mere possibility — among the seven reasons for concluding that it was just and reasonable to set aside the deeds in their entirety. To take into account the mere possibility of the existence of a central fact was to take into account an irrelevant consideration.
An alternative analysis, the one advanced by the Christian Brothers, leads to the same conclusion. If, contrary to our view, the associate judge did purport to infer as a positive fact that the limitations and Ellis defences materially influenced DZY’s decision not to pursue an economic loss claim, the associate judge did so by a process of speculation, rather than by drawing ‘the more probable inference’. There was no evidence to make that conclusion more probable than not. We therefore accept the submission that to do so was to make a legal error in the process of drawing an inference.[105]
[105]Masters Home Improvement (2017) 372 ALR 440, 466–7 [101]–[102] (Santamaria, Ferguson and Kaye JJA); [2017] VSCA 88.
Of course, on our analysis, the associate judge was not exercising a discretion. Applying the correctness standard, we find that the judge was wrong to conclude that it was just and reasonable to set aside the deeds in their entirety. Deciding the matter for ourselves, we would find that it is just and reasonable to set aside the deeds only insofar as they bar a claim for general damages.
We will now explain our reasons for that conclusion. We will not repeat all of the relevant facts, but only some key facts. As in argument, our focus lies primarily upon the events leading to the execution of the 2012 deed. We accept, as the associate judge concluded,[106] that the factors that led DZY to execute that deed continued to influence him in the execution of the 2015 deed.
[106]Reasons, [128].
DZY had a particular reason to be apprehensive about the DSS seeking repayment of Centrelink benefits. The DSS had done so before. DZY’s benefits were paid to him as the carer for his adult son, and his carer’s benefit was ongoing at the time he engaged Waller Legal.
DZY was informed as early as 11 January 2011 of the potential difficulties posed for his claim, generally, due to the limitation defence and the difficulty in identifying a suitable defendant entity. The same advice was repeated on a number of occasions thereafter.
The first record of DZY informing his lawyers of his past trouble with Centrelink was at the conference held with Dr Waller and Mr Seccull in September 2012, two months before a settlement meeting with the Christian Brothers on 21 November 2012. On the occasion that he gave those instructions, one of the lawyers made a note about DZY not claiming for economic loss because of the DSS concern. It would be surprising if that note was made without the subject being discussed with DZY at that conference. In any event, it can be inferred that no final decision was made in that discussion not to pursue an economic loss claim. That is because, in early November, Waller Legal provided the Christian Brothers with an ADR statement that left open a claim for economic loss by indicating that particulars of loss or damage would be ‘provided prior to trial’.
That position appeared to change shortly before the settlement conference with the Christian Brothers on 21 November 2012. Documents and file notes prepared by Waller Legal dated 18 and 20 November reflected a position that the economic loss claim was not being advanced, only a claim for general damages. Again, the notes linked DZY’s receipt of the carer’s pension from the DSS with the course of not pursuing an economic loss claim.
Recorded instructions not to pursue an economic loss claim appear to have been given by DZY at the settlement conference on 21 November 2012 as noted at [33] above. In the same file note that recorded Mr Seccull advising DZY of the risk of DSS claiming back benefits should he pursue a claim for loss of earnings, there is a record of DZY’s instructions not to include a loss of earnings claim.
Much was made by DZY in argument — and accepted by the associate judge — that DZY was affected by the consumption of alcohol and by anxiety at the settlement conference in 2012 (and again in 2015). DZY gave that as a reason for not recalling much detail of the general settlement process. No evidence was given by any of the lawyers who represented him, nor was there any explanation from DZY for not adducing such evidence.
No final and binding decision was made on 21 November to accept the $80,000 offered by the Christian Brothers or to relinquish the chance of pursuing a claim for economic loss. As noted in the section on the background facts above, DZY continued to consider the offer and the terms of its acceptance over the course of a further three weeks. This circumstance somewhat dilutes the potency of the argument that DZY’s comprehension was compromised by his heavy drinking prior to the settlement conference and his general state of anxiety.
Before he ultimately signed the Deed on 14 December 2012, DZY had, as noted above, received a letter from Dr Waller dated 29 November restating in summary the oral legal advice given at the settlement conference. Dr Waller also wrote, ‘I confirm your instructions that there is no loss of earnings component to your claim’. Some two weeks later, on 13 December 2012, an internal file note at Waller Legal recorded that DZY wanted to accept the offer, the release was amended to exclude loss of earnings, Dr Waller was to email the amended release to DZY and that DZY would sign and return the originals. Consistently with that note, the next day, 14 December 2012, DZY signed the 2012 Deed that had been sent to him.
On our assessment of all of the facts, DZY’s apprehension that the DSS would clawback his carer’s pension was a significant motivation, probably the dominant motivation, for him deciding not to pursue an economic loss claim. Once the issue first surfaced on 21 September 2012 when either DZY instructed his lawyers that he did not wish to pursue an economic loss claim or was given advice not to do so, there is no record or evidence of any debate about whether the pursuit of such a claim was still desirable notwithstanding the risk of a clawback of DSS benefits. Apart from the ADR reference to particulars being provided prior to trial, the notes and file records consistently reflected a view that an economic loss claim was not to be pursued.
When DZY had the chance to do so, he did not say that any other factor motivated that decision and there was, as we have said, good reason for him to be apprehensive about a DSS clawback. More particularly, he did not identify the concern about the operation of the limitation or Ellis defences as a reason not to pursue that particular claim.
Moreover, we give less weight than the associate judge gave to DZY’s comprehension difficulties due to his heavy drinking and anxiety around the time of the settlements. We accept from the evidence of DZY, the views of his CASA support person and medical records, that DZY did suffer anxiety, felt overwhelmed and that his comprehension was likely impacted because of it. However, notwithstanding his anxiety, his solicitor was evidently convinced from their numerous contemporaneous meetings and communications that DZY did comprehend the advice he was given, and she certified to that effect on each of the two deeds as set out in [42] and [49] above.
On neither occasion when the deeds were signed was DZY rushed. In 2012 he had a support person from CASA available. Having been given advice both orally and in writing he was allowed to sit with the relevant documents for a considerable period of time to reflect and think. His reported state of anxiety and comprehension difficulty does not reach the level of him being mentally incapable of understanding advice given in relatively simple terms or being able to synthesise that advice in his own time. No contemporaneous record suggests such a level of disability.
His statement that he felt he had ‘no choice’ but to settle was not related to any conduct on the part of the Christian Brothers. It may very well have reflected his feeling about accepting the sums of $80,000 and $20,000 to compromise his claim for general damages. But, if his decision not to pursue economic loss was chiefly motivated by his concern about losing DSS benefits, and there is no clear evidence he abandoned that claim due to the specific legal obstacles, then his feeling of having ‘no choice’ does not aid the assessment of whether it is just and reasonable to permit DZY to pursue a claim for economic loss in his present proceeding.
For the sake of argument, it may also be accepted that there is no evidence that DZY lacked supporting evidence to bring an economic loss claim — in other words, it may be accepted that the lack of such supporting evidence was not the reason that DZY decided not to pursue such a claim. Further, it may be accepted that there is no other prejudice to the Christian Brothers from the continuation of the economic loss claim, beyond the loss of the release from exposure to such a claim acquired through the bargain secured under each deed.
Still, there is no positive finding that DZY’s decision not to pursue an economic loss claim was materially influenced by the existence and potential impact of the limitations and Ellis defences. Instead, a completely unrelated issue was the chief explanation for that decision. In that context, DZY’s feeling that he had no choice, the exclusion of a lack of supporting evidence for the claim as an explanation for the decision and the lack of prejudice to the Christian Brothers do not make it just and reasonable to set aside the deeds insofar as they barred pursuit of the economic loss claim.

For reasons already stated it is unnecessary to separately consider grounds 2 to 6. The finding of error under ground 1 is a sufficient basis to allow the appeal. Our reasons for not finding that it is just and reasonable to set aside the deeds, insofar as they barred the economic loss claim, cover the substance of the remaining grounds. As explained above, this reflects how the arguments were advanced on the oral hearing of the application and the appeal.

Conclusion

The application for leave to appeal should be granted and the appeal allowed.
We would order that:
(1)Paragraph 1 of the order of Associate Justice Irving dated 21 March 2023 be set aside.
(2)Pursuant to s 27QE(1)(a) of the Limitation of Actions Act 1958:
(a)the deed of release between the respondent, the applicant and Brother Vincent Duggan dated 14 December 2012 be set aside only in part, such that the respondent be permitted to bring his claim for damages as framed at the time of that deed, that is a claim for loss and damage excluding any economic loss; and
(b)the deed of release between the respondent, the applicant and Brother Peter Clinch dated 9 December 2015 be set aside only in part, such that the respondent be permitted to bring his claim for damages as framed at the time of that deed, that is a claim for loss and damage excluding any economic loss.

LYONS JA:

I have had the considerable advantage of reading the reasons of Beach and Macaulay JJA in this proceeding.[107] As a result, I agree with:

(1)the recitation of the facts, the relevant statutory provisions and the reasons of the associate judge;[108]
(2)the analysis as to the applicable standard of appellate review;[109]
(3)the summary of this Court’s reasons in WCB and, in particular, the observation that s 27QE of the Act does not prescribe matters which the court should have regard to in determining whether to set aside a settlement agreement;[110] and
(4)the ultimate outcome of the application and the appeal and the orders proposed by the majority.
[107]For convenience, I will adopt the defined terms used in the reasons of the majority.
[108]See above [1]–[61].
[109]See above [62]–[102].
[110]See above [103]–[106].

However, in light of the facts in this case, I do not consider it is necessary to conclude that the exercise of the court’s power under s 27QE is fettered such that it is doubtful that any cogent ground would exist to conclude it was just and reasonable to set aside a settlement agreement if no finding was made that either the limitations period or the Ellis defence had a ‘material impact’ on the claimant’s decision to settle his or her claim and/or was a ‘leading’ factor in this decision.[111]
[111]See above [110]–[113].
For my part, I am not convinced that the exercise of the court’s power is so fettered: rather, I tend towards the view that, in light of the language used in s 27QE, the exercise of the power under that section will depend upon all the relevant circumstances. My reasons may be shortly stated.
First, I agree with the majority at [109] that the mischief to be remedied by at least ss 27QD–27QE appears to be the existence of a potentially unfair or inadequate settlement agreement between victims of institutional child abuse and defendant organisations, as a result of previous legal barriers, in particular the limitations period and the Ellis defence. I will refer to these matters as the ‘previous legal barriers’. This mischief is reflected in the Second Reading Speech made by the Minister for Child Protection, the Hon Luke Donnellan, in relation to the Children Legislation Amendment Bill 2019 (the ‘Second Reading Speech’ and the ‘2019 Bill’), where the Minister referred to legislative reforms addressing the previous legal barriers and amending the law concerning the duty of care of organisations, concluding:
While these reforms have removed significant barriers to civil litigation for survivors of institutional child abuse, they do not deal with the unjust product of previous barriers, which led to survivors accepting inadequate settlements and releasing institutions from future liability.[112]
[112]Second Reading Speech, 2695.

It is for this reason that the relevant sections of the Act, and particularly ss 27QD–27QE, were introduced.
Second, in drafting s 27QE the Parliament did not limit the exercise of the court’s power (or access to the s 27QE remedy) to circumstances where the claimant’s decision to enter the agreement had been materially impacted by one or both of the previous legal barriers. Rather, the Parliament expressly provided that the exercise of the power to set aside a settlement agreement was to be exercised if the court is satisfied it is ‘just and reasonable to do so’. Those words are of very wide import, and I am reluctant to limit their operation.[113] I consider that the court may evaluate a multiplicity of potentially relevant factors to reach the ultimate determination of whether it is ‘just and reasonable’ for a particular agreement to be set aside.
[113]See Owners of Ship Shin Kobe Maru v Empire Shipping Co Inc (1994) 181 CLR 404, 421 (Mason CJ, Brennan, Deane, Dawson, Toohey, Gaudron and McHugh JJ); [1994] HCA 54. See also, Weinstock v Beck (2013) 251 CLR 396, 419–420 [55] (Hayne, Crennan and Kiefel JJ); [2013] HCA 14.
Third, the breadth of the statutory text is reinforced by the extrinsic materials. The Explanatory Memorandum to the 2019 Bill says the following in relation to s 27QE:
It is in the court’s discretion to determine what is just and reasonable according to the circumstances of each case, allowing the court to apply broad principles and take account of any relevant factors. This may include, for example, the relative strengths of the parties' bargaining positions, the conduct of the parties and the amount of the settlement.[114]
[114]Explanatory Memorandum, Children Legislation Amendment Bill 2019, 16 (emphasis added).
So too, in the Second Reading Speech, the Minister said:
In determining what is just and reasonable a court can take into account a number of considerations, informed by the Royal Commission … Where survivors faced significant disadvantage in pursuing compensation due to legal barriers such as the statute of limitations, the Ellis defence, or the deficiency of the law regarding the duty of care of organisations, settlements entered into should be set aside in the interests of justice, to allow victims to obtain compensation which is deemed adequate by today’s standards.
It is not necessary that the existence of the limitation period be the predominant reason as to why the agreement was entered into. There may be a number of reasons that a plaintiff entered into such an agreement, including but not limited to unequal bargaining power, barriers to identifying a proper defendant, feelings of guilt and shame compounded by the burden of giving evidence and being subject to cross-examination, or the behaviour of the relevant institution.[115]
[115]Second Reading Speech, 2695–6 (emphasis added).

I note that while the Second Reading Speech addressed the problems imposed by the limitations defence and Ellis defence, the comments which I have emphasised above focus only on the limitations period. This is understandable given that the 2019 Bill only allowed settlement agreements to be set aside if entered into prior to 1 July 2015, when the limitations period for child abuse was abolished. This is evidenced by the original definition of ‘previously settled cause of action’ in s 27OA, which was limited to settlement agreements entered before 1 July 2015.[116] It was only from 8 December 2020 that the definition of ‘previously settled cause of action’ was amended, which extended the availability of the remedy to agreements entered into before 1 July 2018[117] (i.e. to accord with the commencement of the Legal Identity of Defendants (Organisational Child Abuse) Act 2018 which abolished the Ellis defence on 1 July 2018).
[116]The Act, s 27OA, as inserted by Children Legislation Amendment Act 2019, pt 8 s 31.
[117]The Act, s 27OA, as amended by Justice Legislation Amendment (Drug Court and Other Matters) Act 2020, pt 4 s 44.
In this legislative context, I accept that the dates chosen by Parliament (which relate to the times when the previous legal barriers were removed) are central to the availability of a remedy under s 27QE.
As a result, I accept that the impact of the previous legal barriers is likely to be relevant in determining whether it is just and reasonable to set aside a settlement agreement in whole or in part under s 27QE(1). I also accept that, in an ordinary case, one of the two legal barriers would play some part in determining whether it is just and reasonable to set aside a settlement agreement to which this section applies.
However, based on the facts and submissions in this case, I do not consider it is necessary to conclude that the claimant needs to establish that one or other of the previous legal barriers had a ‘material’ impact on the claimant’s decision to settle his or her claim or that either was a ‘leading’ factor before the court can exercise the power under s 27QE. As to the submissions, I am not satisfied that the Christian Brothers ultimately asked the court to reach such a conclusion, in light of counsel’s oral submissions.[118] As to the facts, I will address them briefly below.
[118]Counsel for the Christian Brothers stated that ‘it’s not the [Christian Brothers’] case that it can’t be just and reasonable to set aside a settlement agreement in circumstances where a plaintiff was motivated by factors unconnected to either the Ellis defence or the impugned quality of the consent’.
In any event, as set out above, I tend towards the view that the exercise of the power under s 27QE of the Act will depend upon all the relevant circumstances.
It is now appropriate that I deal with a summary of the facts. In summary, in 2021, DZY sought to set aside the 2012 and 2015 deeds pursuant to ss 27QD and 27QE of the Act. The Christian Brothers consented to setting aside the deeds in part i.e. so as to allow DZY to bring his claim for general damages but not so as to allow DZY to now pursue a claim for economic loss. In doing so, the Christian Brothers conceded that it was just and reasonable to set aside the deeds for general damages given that the amount of the settlement sum may have been affected by the previous legal barriers.[119] However, the Christian Brothers contended that it was not just and reasonable to set the deeds aside to allow DZY to bring an economic loss claim in circumstances where DZY had decided, before the deeds were entered into, not to make such a claim, which was due to his concerns about needing to repay his Centrelink benefits. As a result, each of the deeds contained an acknowledgement that DZY did not allege that he had suffered economic loss, that he made no demand for it as part of his claims and that each deed fully extinguished his rights against the Christian Brothers.
[119]Reasons, [4], [110].
I agree with the majority that, given the correctness standard applies, the evidence did not allow the court to be satisfied it was just and reasonable to set aside the 2012 deed or the 2015 deed insofar as they released the Christian Brothers from an economic loss claim in circumstances where:
(1)there was no direct evidence from DZY to the effect that he decided not to pursue any economic loss claim due to the Ellis defence or the limitations period; rather, the evidence was that he did not include the economic loss claim due to concerns about repayment of Centrelink benefits;[120]
(2)notwithstanding there was general evidence that DZY was affected by the consumption of alcohol and anxiety at the settlement conference in 2012 and later in 2015:
(a)at all relevant times DZY was legally represented (including at times by counsel) and his legal advisors provided advice in relation to the deeds;[121]
(b)DZY was not rushed to sign either of the deeds;[122]
(c)DZY’s legal advisers certified that DZY appeared to understand the purport and effect of each deed;[123] and
(d)DZY’s statement that he had ‘no choice’ but to settle was not related to any conduct of the Christian Brothers or his decision not to pursue an economic loss claim: if anything, it appears to relate to his acceptance of the settlement sum for his general damages claim.[124]
[120]See above [136], [139]–[140], [143]–[144].
[121]See above [137]–[139], [143].
[122]See above [147].
[123]See above [3], [42], [49], [146].
[124]See above [148], [150].
As a result, I would grant leave to appeal, allow the appeal and make the orders proposed by the majority.
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[2024] VSCA 73

23 April 2024