Abuse Law: plaintiff’s application to have two previous settlement agreements set aside granted

The plaintiff made an application to set aside two prior settlement agreements in a historical sexual abuse claim. The case addressed whether it would be just and reasonable to set aside both settlement agreements in part, or in their entirety. The application was allowed.

In issue

• Whether the Court should set aside the whole or only part of the previous settlement agreements (Deeds).

The background

The plaintiff alleged that, while a student at St Alipius Boys School in 1964 to 1968, he was abused by Brother GF and Brother RB.

The plaintiff commenced a proceeding in negligence and vicarious liability against the Trustees of the Christian Brothers (defendant), seeking damages for injury, loss and damage caused by the alleged abuse, including damages for economic loss.

The plaintiff filed an application under s27QD and s27QE of the Limitations of Actions Act 1958 (Vic) (Act)¹ to set aside earlier settlement Deeds to the extent that they operated as a bar to his current proceeding. The plaintiff’s first prior settlement was on 14 December 2012 (first claim) and the second on 9 December 2015 (second claim).

The defendant did not admit the abuse but admitted that in 2017, Brother RB was convicted of one count of indecent assault relevant to the abuse on the plaintiff. The defendant relied on the terms of the Deeds as a bar to the plaintiff’s proceeding. The defendant submitted that the Deeds should be set aside in part only to allow the plaintiff to continue his proceeding but not his claim for economic loss. The plaintiff argued that the Court should set aside the whole of the Deeds so that he can continue to pursue the entirety of his current proceeding including economic loss.

The decision at trial

It was noted that there is no exhaustive list of relevant considerations for the Court in determining whether to set aside the Deeds.² The term ‘just and reasonable’ is not defined in the Act. As such, the Court must use its discretion based on the facts and circumstances of a particular case.

The party seeking to set aside the Deeds bears a positive burden of demonstrating that it is just and reasonable that the discretion be exercised in their favour. Compelling reasons are not required.³

The defendant argued that the Court should follow the line of reasoning of Forbes J in Pearce.⁴ The Court distinguished the current proceeding from that of Pearce.

The Court accepted that:

1. the plaintiff was legally represented throughout his previous claims for compensation.
2. the plaintiff was not pressured to enter into the Deeds.
3. the plaintiff had legal advice explaining the effects of the Deeds.

For the following reasons, the Court was satisfied that it would be just and reasonable to set aside the Deeds in their entirety:

1. 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.
2. The Court accepted the evidence that the plaintiff 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.
3. The Court accepted the evidence that the plaintiff was first advised about the potential Centrelink repayment on the day of the settlement conference. As such, it was accepted that it was 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.
4. There was no evidence that the plaintiff’s economic loss claim was influenced by a lack of supporting evidence.
5. The Court accepted that the plaintiff’s significant anxiety compromised his ability to comprehend the advice he was given.
6. The defendant did not submit that it would suffer additional prejudice if the Deeds were set aside.
7. The Court accepted 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.

It was argued that the terms of the Deeds did not release the defendant from the plaintiff’s later claim for economic loss however, given the decision to set aside the Deeds in their entirety, the Deeds’ proper construction was not considered.

Implications for you

This decision provides useful guidance on the matters considered relevant when determining whether to set aside earlier settlement agreements. These include the legal advice on the prospects of success of the claim, the reasons the settlements were entered into, and the state of a claimant’s mental health at the relevant time. The decision illustrates that although a court will generally be reluctant to make an order which disturbs the binding legal rights and obligations of parties, it will so order where the particular facts make it just and reasonable to do so.

^[1] Any limitation period in respect of claims for personal injury as a result of physical or sexual abuse that occurred when a person was a minor were removed by amendments made to the Act in 2015.

^[2] (2020) 62 VR 234, [117].

^[3] (2020) VSC 639 (n7)[145].

^[4] (2022) VSC 697.