Not just and reasonable to set aside prior deed in abuse proceeding

The Victorian Supreme Court has declined to set aside a prior deed of settlement entered into in a historical abuse claim against a religious institution, despite finding that the Plaintiff would now be entitled to a significantly higher award of damages.

In issue

• What are just and reasonable grounds to set aside a prior settlement deed.

The background

The Plaintiff was sexually abused by former Christian Brother, Edward Dowlan and allegedly physically abused by other Christian Brothers and lay teachers, while a student at St Patrick’s College in Ballarat between 1973 and 1978.

The Plaintiff made a statement to Victoria Police in 2010 regarding the abuse by Dowlan, and Dowlan was convicted and sentenced.

In 2011, the Plaintiff engaged Waller Legal to represent him in making a claim against the Christian Brothers for loss and damage suffered as a result of the abuse.

In August 2016, Colin Biggers & Paisely, acting for the Christian Brothers, wrote to Waller Legal and outlined that in 1973, St Patrick’s College Ballarat was operated by the Congregation of the Christian Brothers in the person of the Province Leader (St Patrick’s Province) and they delegated authority to the Principal of the school at the time. In 1974, the Principal was Br Paul Nangle and the Provincial Leader was Br Patrick Chanel Naughtin (deceased). The letter confirmed those individuals and/or their estates were indemnified for the purposes of the claim by the Trustees of the Christian Brothers.

A settlement conference was held in May 2017 where the claim was resolved for $135,000 inclusive of costs and disbursements. Following that conference, the Plaintiff was reluctant to sign a deed of release, on the basis that he had not given instructions to resolve the claim.

The claim eventually resolved by way of a deed of release executed in January 2018, whereby the Plaintiff released the Trustees of the Christian Brothers from claims relating to the abuse in consideration of receiving $135,000 inclusive of costs and disbursements (prior deed).

The Plaintiff subsequently commenced proceedings in the Supreme Court of Victoria and applied to the Court to have the prior deed set aside, which was opposed by the Christian Brothers.

The decision at trial

The Court found there were no legal barriers impacting on the Plaintiff entering into the prior deed and on this basis, it was not just and reasonable to set aside the prior deed.

In considering whether it was just and reasonable to set aside the prior deed, the Court considered whether there were legal barriers materially impacting on the Plaintiff’s decision to enter into it.

The potential legal barriers identified by the Plaintiff were:

1. the claim being statute barred due to the expiry of the applicable limitation period at the time of the prior deed; and
2. the ability of the Christian Brothers to rely upon the Ellis defence.

The limitation period

At the time of the settlement conference which ultimately led to the prior deed being entered into, the Limitation of Actions Act 1958 (Vic) had been amended to remove the time limit for bringing claims relating to child sexual and physical abuse, and the Court held that this was therefore not a barrier to the Plaintiff’s initial claim, despite the fact the Plaintiff had been advised as such, and this had not been corrected by his previous lawyers, Waller Legal.

The Ellis defence

In 2018, the Legal Identity of Defendants (Organisational Child Abuse) Act 2018 (Vic) (LID Act) abolished the Ellis defence (defendant not a legal entity) 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.

The Plaintiff submitted that:

• at no time before entering into the prior deed did the Christian Brothers offer an indemnified party with the necessary qualities to allow the Plaintiff to establish a duty of care was owed and breached; and
• this constituted a failure to remove the barrier in Ellis and therefore an undefeatable barrier to the Plaintiff’s prior claim.

However, the Court found that there had been a nomination by the Defendant’s solicitors of the School Principal, Nangle and the Province Leader, Naughtin and confirmation that they and their estates were indemnified, and therefore no Ellis defence had been relied on.

The Court further held that the Plaintiff had not been informed of the nomination and was unaware that it had been a potential barrier, and that it had been removed. Consequently, the nomination had no direct bearing on the Plaintiff’s decision to enter into the prior deed. At trial, when asked if he recalled receiving any advice on the day of or prior to the settlement conference in relation to the difficulties with suing a particular person or entity, the Plaintiff said he could not recall. There was also no contemporaneous evidence suggesting the Plaintiff had received such advice.

The Court found, based on the contemporaneous evidence that the Plaintiff was given advice about other risk factors impacting on his likelihood of succeeding in Court. These risk factors included differing expert medical opinions leading to a dispute regarding causation of the Plaintiff’s medical condition, other unrelated abuse including physical abuse by his mother, and sexual abuse suffered prior to the abuse by Dowlan, and a liability risk as to whether the defendant could have reasonably known Dowlan presented a risk at the time of the abuse.

For these reasons, the Court concluded that there were no legal barriers which materially impacted the Plaintiff’s decision to enter into the prior deed.

Legal advice and bargaining power

The Court found no evidence that the Plaintiff had been pressured into signing the prior deed. He entered into the prior deed months after the settlement conference, after receiving advice from Waller Legal and a solicitor at another firm that he should do so and did not have good prospects of achieving a higher settlement or award of damages in Court.

The Plaintiff argued that he was scared and intimated by the Christian Brothers at the settlement conference, and felt the same fear he had felt as a student at St Patrick’s College. The Court accepted this evidence, and that the Plaintiff had less bargaining power when negotiating with the Christian Brothers and entering into the prior deed. However, given the legal advice received in relation to the settlement, the Court did not find that this unequal bargaining power weighed in favour of setting aside the prior deed.

Prospects of a more favourable outcome

The Court found that the Plaintiff had reasonable prospects of success given it was uncontested that the abuse by Dowlan had occurred, and that while there were risks regarding medical causation, the settlement sum was heavily discounted in comparison to the damages the Plaintiff might be awarded at a subsequent trial. This factor weighed in favour of setting aside the prior deed.

Mental health; feelings of guilt and shame

The Court accepted evidence that the Plaintiff attempted suicide in April 2012, and lost his marriage, house, and work but did not consider this supported the Plaintiff’s submission that he was impaired during the settlement conference or afterwards.

Economic loss claim

The Court found on the evidence that the Plaintiff had made an economic loss claim as part of the prior claim, and that this was not a ground to have the prior deed set aside.

Implications for you

Historical child abuse claims often involve a claim to set aside a prior deed. However, thorough consideration should be given to all possible factors in weighing up whether it is just and reasonable for the deed to be set aside. Even when there are certain factors that may favour setting aside a deed, the Court will look holistically at all of the factors in reaching an overall conclusion on whether there are just and reasonable grounds to set aside a deed set.