Warning: This article contains details about sexual abuse which may be upsetting for some readers. Reader discretion is advised.
The plaintiff sought to invalidate a settlement agreement and deed of settlement concerning allegations of sexual abuse, arguing he lacked capacity due to alcohol use disorder. The Court found the plaintiff was a 'person under disability' when instructing his solicitors on 16 July 2019 but not when signing the deed on 5 August 2019, ultimately ruling that the deed was enforceable.
In issue
- The central question before the Court was whether a previous settlement agreement (formalised by way of a prior deed of release) was valid, due to the plaintiff’s incapacity at the relevant time of agreement as a person under a disability.
- In determining this, the Court was required to consider whether the plaintiff was classified as a person under disability pursuant to rule 15.01 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (the rules), and, if so, whether the agreement was invalid due to that disability and by virtue of the agreement being made absent court approval of the compromise (r15.08 of the rules). As such, the Court was required to assess whether the plaintiff was under a disability during two key periods: the date (16 July 2019) on which he provided instructions as to the settlement agreement (point of agreement), and the date (5 August 2019) on which he signed the relevant deed effecting the agreement (execution of deed).
The background
The plaintiff���s claim related to allegations of sexual abuse by the Principal at Cathedral College, East Melbourne (operated by the defendant) in 1988 and 1989, when the plaintiff was enrolled as a student. The matter was previously resolved in 2019, and formalised per the execution of deed.
In 2026, the plaintiff issued a proceeding in the Institutional Liability List of the Supreme Court of Victoria relating to the same allegations. Interestingly, this issue was dealt with as a preliminary question at trial under r15.01 of the rules, as opposed to the usual course relating to prior deeds when an application is filed to set aside a prior deed under section 27QD of the Limitations of Actions Act 1958 (Vic) (LAA).
The plaintiff’s position was that he was incapacitated at both the point of agreement and at the execution of deed, and therefore was not capable of managing his own affairs nor agreeing to any form of compromise. In response, the defendant’s position was that the only relevant enforceable material was the prior deed of release, and that if the plaintiff’s incapacitation met the threshold at the point of agreement alone, this had no effect on the execution of deed and therefore the binding nature of that agreement.
The decision
The matter was heard by Judd J, with judgment handed down in August 2026. Her Honour found that the plaintiff was a person under a disability at the point of agreement, but otherwise did not meet the threshold by the time of the execution of deed. As the prior deed of release contained an ‘entire agreement’ clause, it was therefore enforceable in its’ entirety, including as a bar to suit.
In reaching this decision, Judd J considered the contemporaneous medical evidence, the evidence of a medical expert relating to capacity during the time, and the file and notes of the plaintiff’s former solicitor, Waller Legal, relevant to his presentation at the time.
Her Honour observed that, between 16 July and 21 July 2019 (point of agreement), the plaintiff oscillated between dangerous levels of alcohol consumption and withdrawal, which was supported by records indicating doctor shopping and Waller Legal’s file notes which expressly observed that the plaintiff had a noticeable odour of alcohol. Further, the plaintiff could not understand and retain information in order to make decisions, such that his short term memory (even from a single day before) was critically impaired.
However, Her Honour did not accept that the plaintiff was impaired to the relevant threshold between 22 July – 4 August 2019 (execution of deed), noting that the contemporaneous records consistently reported that the plaintiff was self-detoxing, and further, the file notes of his prior solicitor recorded that he was coherent and sober. In addition to this, the plaintiff remembered that he had signed the deed – indicating that his decision-making skills and recall were no longer impacted to the degree they had been at the time of instruction.
The Court rejected the plaintiff’s submission that the plaintiff’s condition in the week preceding the execution of deed ought be inferred, particularly where there was a volume of well documented contemporaneous evidence that indicated the plaintiff was not consuming alcohol and was detoxing. Her Honour accepted that the plaintiff re-assumed a pattern of alcohol abuse following the execution of deed, but this did not invalidate his sobriety (and ability to manage his own affairs) at the time of the execution of deed.
Implications for you
Pursuant to section 27QE of the LAA, the Court can set aside prior settlements in circumstances where it is ‘just and reasonable to do so’. This is the usual course by which practitioners encounter any such applications to set aside prior settlements. However, this matter did not contemplate 27QE and whether or not the terms of the deed were fair. Rather, it considered capacity issues, and the agreement holistically. This case therefore provides some interesting insights into determining capacity issues, and their interplay with settlement agreements.
