Damages down, costs up: The impact of prior settlements and rejected offers

The background

The plaintiff, a former student of St Paul’s College in Traralgon (the school), brought a claim against the Marist Brothers (the defendant) for damages relating to historical sexual abuse perpetrated by a Marist brother at the School in 1975, which was subsequently admitted by the defendant.

The plaintiff first brought a claim against the defendant through a 'Towards Healing' process. On 7 June 2016, at the conclusion of the process, the plaintiff entered into a deed of release with the defendant (the prior Deed). The prior Deed provided payment to the plaintiff for $122,500 inclusive of legal costs and disbursements. Relevantly, the plaintiff received a net sum of $107,251 after reduction of legal costs and disbursements (the prior settlement sum).

On 16 July 2024, the plaintiff brought a further claim against the defendant in respect of the abuse that was the subject of the prior deed.

The defendant consented to setting aside the prior deed on the basis that it be entitled to a credit (i.e. an offset) for the prior settlement sum should an award for damages be made.

On 29 October 2025, a jury awarded the plaintiff $320,659 in damages (pain and suffering damages and medical and like expenses only).

Before the trial, three offers of compromise were made in the proceeding, two of which were made by the defendant. Both offers made by the defendant were more favourable than the eventual jury verdict.

In issue

The key issues for determination by the Court were whether:

1. The prior settlement sum should be deducted from the jury’s award of damages
2. The defendant should be awarded costs, having regard to the two earlier offers of compromise made prior to trial.

The decision at trial

Bourke J determined that:

1. The prior settlement sum was 'objectively significant … represented real compensation … for the abuse'¹ and should be deducted from the jury verdict, and
2. the plaintiff pay the defendant’s costs on an indemnity basis.

Offset of prior settlement sum

With respect to the first issue, it was Her Honour’s opinion that:

1. it is just and reasonable to take into account the prior settlement sum because it related to the abuse the subject of the proceeding, and
2. the amount of the prior settlement sum 'was subjectively significant – in the sense that it represented real compensation for the abuse'.

The above considerations were further driven by Her Honour’s observations that:

1. there was no suggestion from the plaintiff that the prior settlement sum was not to be offset against any damages award until well after the jury verdict
2. all pre-trial negotiations between the defendant and plaintiff involved an offset of the prior settlement sum in the event of a damages award, and
3. all offers of compromise, including that by the plaintiff, did not involve an offset of the prior settlement sum.

In light of the above, Her Honour held that the award of damages by the jury should be reduced by an amount equal to the prior settlement sum, otherwise 'the plaintiff would be receiving double compensation for the abuse'. Accordingly, the Court deducted $107,251 from the jury’s damages award and judgment was entered for the plaintiff in the amount of $213,408, plus interest.

Costs orders

On the issue of costs, Her Honour observed that ‘this was simply a case where the plaintiff thought he would obtain a better outcome than the defendant’s offers of compromise’, and held that:

1. It was not reasonable for the plaintiff to have failed to accept the defendant’s previous offers of compromise simply because ‘plaintiffs in two totally different cases in the Supreme Court had received jury verdicts of millions of dollars'², and
2. There was no merit in the plaintiff’s argument that 'the nature of the proceeding' (i.e. this being a case of historical sexual abuse) should be taken into account on the question of costs, particularly in circumstances where the plaintiff made his own offer of compromise in the proceeding.

Implications for you

In respect of any offset of prior settlement payments previously accepted by a plaintiff against a later award in damages, a court will likely accept that any prior payment must be offset against a later award for damages, particularly where the new claim relates to the same abuse that was the subject of the prior settlement.

Australian courts place significant weight upon any rejection of reasonable offers of compromise made in the proceeding and, should the matter run to trial, may make an adverse costs order; historical abuse matters are not, by their nature, exempt from that approach to costs orders.

¹ O’Connor v Comensoli [2022] VSC 313 at paragraph [590]
² TJ (a pseudonym) v The Bishop of the Roman Catholic Diocese of Wagga Wagga [2023] VSC 704 and Footscray Football Club Limited v Kneale [2024] VSCA 314