Victorian deed set aside – Judgment

The average reading time for this Alert is seven minutes.

On 30 September 2020, Justice Keogh of the Supreme Court of Victoria handed down Judgment in WCB v Roman Catholic Trusts Corporation for the Diocese of Sale (No 2) [2020] VSC 639. The Court granted the plaintiff’s application to set aside a deed of release in a historical sexual abuse claim. This decision is the first time a Victorian court has considered the legislative amendments introduced to the Limitations of Actions Act 1958 (Vic) (Limitations Act) in September 2019 permitting a deed of release to be set aside.

Justice Keogh discussed three recent legislative amendments which have profoundly impacted claims in this area, namely:

1. removal of limitation of actions for child abuse (Division 5 in Part IIA of the Limitations Act);
2. enactment of the Legal Identity of Dependants (Organisational Child Abuse) Act 2018 (Vic); and
3. amendments giving the Court power to set aside a previous Judgment or settlement if it is just and reasonable to do so (Division 5 of Part IIA of the Limitations Act).

The focus of this Alert is on the final and most recent legislative amendment concerning the ability to set aside a previous Judgment or settlement entered into before 1 July 2015.

Background

The plaintiff alleged that in the period 1977 to 1980 (when he was between the ages of about 11 and 14) he was repeatedly sexually abused by Daniel Hourigan, a priest in the Warragul Catholic Church within the Catholic Diocese of Sale.^[1] In 1996, the plaintiff brought a claim in the County Court against Bishop Coffey as Bishop of the Diocese of Sale for damages arising as a result of the historical abuse perpetrated by Hourigan. The proceeding settled on 19 November 1996 when the parties entered into a deed of release. As part of the settlement, the deed set out that Bishop Coffey agreed to pay the plaintiff $32,500 plus the costs of the proceeding.

Judgment

In December 2018, the plaintiff commenced proceedings against the Diocese of Sale alleging negligence and vicarious liability in respect of the alleged abuse perpetrated by Hourigan.As part of its defence, the Diocese of Sale relied on the deed of release entered into in 1996. The plaintiff applied under section 27QD of the Limitations Act to have the deed set aside and for related paragraphs of the defence to be struck out. Keogh J considered the issues arising from the plaintiff’s application and the defence as follows:

1. What prejudice will the defendant suffer if the application is granted?
2. What is the proper interpretation of section 27QD and 27QE of the Limitations Act and what considerations are relevant to the exercise of the discretion to set aside a settlement agreement?
3. Should the discretion to set aside the deed be exercised in the circumstances of this case?
4. Should the proceeding be permanently stayed as an abuse of process because it is so manifestly unfair to the defendant or would otherwise bring the administrative of justice into disrepute?

Just and reasonable

In considering the meaning of ‘just and reasonable’ in section 27QE of the Limitations Act, Keogh J stated at [136]:

The discretion is not expressly confined, and the matters to which the court must or may have regard are not set out. The questions which arise are: what considerations are relevant, and on what basis should the discretion be exercised?

At [197], Keogh J found:

There is nothing in the text of section 27QE or other relevant provisions of [D]ivision 5 [P]art IIA of the Limitations Act which confines a court, when determining whether or not it is just and reasonable that a settlement be set aside, to consideration of matters at the time of the settlement. It is clear from the second reading speech that the legislative purpose is that the discretion not be so confined.

Finding

His Honour weighed all the circumstances of the case, including those relevant to the cause of action and any defence, and was satisfied that it was just and reasonable to grant the plaintiff’s application to set aside the deed.^[2]

Ultimately, in ruling in favour of setting aside the earlier deed, Keogh J was satisfied that:

• The settlement embodied in the deed was not a reasonable assessment of the plaintiff’s loss and damage in 1996, nor adequate compensation by today’s standards.
• Leaving to one side the limitation defence and the barrier which existed in 1996 in relation to the identification of a proper defendant, there was no particular reason why the plaintiff’s action in the County Court proceeding would have failed.
• The difficulty identifying a proper defendant was likely to prove fatal to the plaintiff’s cause of action in 1996.There was a significant prospect of the plaintiff failing on an application to extend the period in which to bring the action. It is likely the modest settlement embodied in the deed reflects the impact of these barriers on the plaintiff’s cause of action.
• The prospects of the plaintiff succeeding in proving his cause of action have improved since 1996 because of the clarification of the law of vicarious liability by the High Court in Prince Alfred College.
• There are no considerations in relation to the manner in which the County Court proceeding was conducted or the settlement was achieved which bear significantly on the exercise of the discretion.
• There are no matters peculiar to the plaintiff or the defendant which have a material bearing on the exercise of the discretion.^[3]

TRG v The Board of Trustees of the Brisbane Grammar School [2019] QSC 157 (TRG)

Keogh J distinguished his Judgment from a recent Queensland Supreme Court decision in which Davis J decided against setting aside a deed of release when considering analogous legislation.

In TRG, Davis J found that the deed should not be set aside as the limitation issue was not a material factor in the original settlement.

In referencing this decision, Keogh J stated:

The extrinsic materials in which Davis J relied to assist in determining the purpose of the Queensland provisions are very different to those which I have set out above…this may explain the different conclusions we have reached.^[4]

For completeness, it is noted that the TRG decision was recently upheld on appeal in the Supreme Court of Appeal of Queensland.^[5] In dismissing the appeal, Fraser J found at [35]:

The objective evidence about the context and course of the matter reveals that the limitation issue had become insignificant by the time the settlement was agreed and there is no direct evidence that a settlement more favourable to the appellant would have been negotiated if the limitation defence was not in issue.

Abuse of process

In relation to an abuse of process, Keogh J found that a party is entitled to a fair trial, not a perfect one. The lapse of time, absence of documentary evidence or inability to call witnesses because of death or incapacity, does not automatically result in a trial being unfair to the degree that a stay should be granted.^[6]

In this regard, Keogh J distinguished the case from Connellan^[7] and Moubrak^[8]:

Features of this case are materially different to Connellan and Moubarak. I have already found that there is no deficiency in the state of the documentary record which results in any significant prejudice to the defendant on any aspect of the plaintiff’s claim.Further, there is a substantial body of evidence going to Hourigan’s application to join the priesthood, his study at St Paul’s Seminary, ordination, appointment as assistant priest at Warragul parish and his duties and the manner in which he performed that role under the supervision and direction of Bishop Fox and Monsignor Daly.^[9]

In respect of this issue, Keogh J ultimately found:

The effects of delay and the loss of evidence are not such as to make it likely that a trial will be unfair to the defendant. The proceeding is not an abuse of process. This conclusion is reinforced because the diocese did not take timely steps to conduct a reasonable investigation of the plaintiff’s allegations when it had the opportunity in 1986 and subsequently, and by the likelihood that further relevant evidence, particularly as to Hourigan’s role as an assistant priest at Warragul church, will be discovered upon a reasonable investigation now being undertaken.^[10]

Conclusion

The WCB decision provides institutions, plaintiffs and defendants with necessary guidance around the factors that the Court will consider when determining if it is ‘just and reasonable’ to set aside a deed of release entered into prior to 1 July 2015 pursuant to the recent legislative amendments. It is clear there are a number of relevant factors that the Court will take into consideration, including the extent of reliance placed on the limitations period by an institution at the time of the original settlement, the likely success of an action if brought by a plaintiff today; the manner in which the original settlement proceeded (if there was any undue influence exerted), among other factors.

If a deed is sought to be set aside, both plaintiffs and defendants will need to consider their prospects of success of bringing or defending an action for a deed to be set aside in light of the considerations set out in this case. The process will require an analysis and preparation of evidence associated with the earlier settlement in order for the Court to ascertain how the earlier settlement was reached.

Further Information

For further information, please contact Ben Lloyd, Sharon Van Dyk or Erin Rooney from our Public Law team.