Abuse settlement deed set aside

The Supreme Court of Victoria granted an application to set aside a deed of settlement. The Court accepted the plaintiff’s evidence that he was not informed that the Ellis defence was no longer a legal barrier to his claim prior to settlement in 2015 and that this materially influenced the decision to enter into the settlement agreement.

In issue

• The key issue for determination by the Court was whether it was ‘just and reasonable’ to set aside the settlement agreement pursuant to section 27QE of the Limitation of Actions Act 1958 (Vic) (LAA) in circumstances where the defendant had indicated that it would not rely on the Ellis defence¹ and would identify the appropriate legal entity for the plaintiff to commence proceedings.

The background

The plaintiff was sexually abused by his English teacher who was also a Christian Brother at St Leo’s College in Box Hill, VIC (the College) in 1984. The College was operated by the St Patrick’s Province of the Congregation of the Christian Brothers.

In early September 2015, prior to commencing litigation, at an informal settlement conference, the plaintiff accepted an offer of settlement of $250,000 inclusive of costs from the defendant and signed a settlement agreement releasing the defendant from any further claims by the plaintiff in respect of the abuse (the deed).

At the time of the settlement, legislation had already been enacted to remove the time limit for bringing claims relating to child sexual and physical abuse.²

On 1 July 2018, legislation was introduced to abolish the Ellis defence.³

In May 2024, the plaintiff commenced proceedings in the Supreme Court of Victoria claiming damages against the defendant for the abuse. The defendant filed a defence which pleaded, among other things, that the plaintiff’s claim was barred by virtue of the deed.

The matter before the Court was an application by the plaintiff to set aside the deed under section 27QD of the LAA.

The decision at trial

The deed was set aside. In his reasoning, Tsalamandris J discussed the factors which tended against the deed being set aside, which included:

1. The plaintiff was represented by solicitors, Waller Legal and counsel experienced in institutional abuse claims.
2. The plaintiff’s solicitors’ contemporaneous notes recorded some risks for the plaintiff which were unrelated to any barrier created by a possible Ellis defence.
3. The defendant had not raised the Ellis defence at the opening session of the settlement conference and had indicated it would identify an entity for the plaintiff to sue.
4. The defendant made allowances to ensure the plaintiff was not under any undue influence at the time he entered into the deed.

However, despite the factors against the deed being set side, Tsalamandris J was persuaded by the following factors in ultimately setting aside the deed:

1. Despite the plaintiff’s solicitors being made aware of the defendant’s intention not rely on the Ellis defence, the defendant did not notify the plaintiff’s solicitors, in writing, of a nominated entity which would be indemnified, in respect of the plaintiff’s potential common law claim (should the matter fail to resolve informally).
2. The plaintiff was advised by his solicitors, in writing, on two occasions of the legal barriers to his damages claim, that being a limitation defence and the Ellis defence. In a letter dated 26 August 2015, sent to the plaintiff while he was considering the offer of settlement, he was advised about the statutory abolition of the limitation defence. The letter was silent in respect of the Ellis defence.
3. The plaintiff gave consistent and credible evidence that he was not informed the Ellis defence was no longer a legal barrier to his claim prior to the settlement conference, and the Ellis defence was part of his reasoning for accepting the offer of settlement and signing the deed.
4. There was no evidence that the plaintiff was advised by his solicitors that the defendant would not rely on the Ellis defence and that he should have no regard to this possible defence when considering the offer of settlement. The defendant relied on its Guiding Principles and press release in May 2015 in support of its assertion that the Ellis defence was not relied on by the defendant at the settlement conference. However, the plaintiff said he did not sit in on the open session at the settlement conference and could not recall being told what his solicitor noted had been said between the parties in the session.
5. The defendant did not argue that it would suffer any prejudice if the deed was set aside. Specifically, the defendant did not claim that it suffered prejudice from the loss of any evidentiary sources since the deed was executed.

Implications for you

In deciding whether to set aside a prior deed, a court will consider whether there are 'just and reasonable' grounds to do so. This decision confirms that what a court considers to be just and reasonable is assessed on a case-by-case basis, and is dependent on the evidence adduced by the parties in relation to the circumstances of the prior deed, and the conduct of the parties prior to the settlement.

It also highlights the importance for institutions to carefully consider, at the time of entering into a deed, the evidence which might be later adduced with respect to the plaintiff’s understanding of the legal barriers, or the removal of legal barriers, to the claim prior to the settlement agreement being entered into.

¹ In 2007, the New South Wales Court of Appeal in the Trustees of the Roman Catholic Church of the Archdiocese of Sydney v Ellis [2007] NSWCA 117 found that an unincorporated association cannot sue or be sued in its own name – the decision is common referred to as the 'Ellis defence'.
² The Limitation of Actions Amendment (Child Abuse) Act 2015 (Vic) commenced operation on 1 July 2015.
³ In 2018, the Legal Identity of Defendants (Organisational Child Abuse) Act 2018 (Vic) (LID Act) abolished the Ellis defence to allow plaintiffs to bring a claim against an unincorporated non-government organisation as if it was incorporated at the relevant time, regardless of when the alleged abuse occurred.