By Luke Geary, Partner, Sonya Parsons, Partner, Riley Huntley, Lawyer and Erin Hill, Lawyer

A full copy of the case can be accessed here.

Background

The 2007 Claim

In 2007, the Plaintiff, anonymised as EXV, began an un-litigated claim against Knox Grammar School (the School) for compensation in relation to personal injuries arising out of the alleged sexual abuse suffered by the Plaintiff while a student at the School by a teacher, Mr Adrian Nisbett, in 2002 (the 2007 Claim). The School was operated by the Defendant during the alleged period of abuse.

The 2007 Claim was mediated in 2008 and settled for $115,000 (including costs). The parties subsequently entered into a deed releasing the Defendant from liability for any further claims relating to the allegations of abuse of Mr Nisbett (the Prior Deed).

In December 2018, the School, following consideration of the legislated removal of both the limitation period and the ‘Ellis defence’(which allowed unincorporated organisations to avoid liability because there was no proper legal entity for child abuse survivors to sue), subsequently provided the Plaintiff with an ex-gratia payment of $52,000 to “acknowledge the legal barriers facing survivors” as a top up to the settlement received under the Prior Deed. The cheque was never cashed by the Plaintiff.

The 2022 Claim

In 2022, the Plaintiff filed a Statement of Claim in the New South Wales Supreme Court against the Defendant claiming damages arising from the School’s negligence and in respect of its vicarious liability for the alleged abuse the subject of the 2007 Claim (the 2022 Claim).

The Defendant pleaded the Prior Deed as a complete bar to the 2022 Claim in its Defence and the Plaintiff subsequently filed a Notice of Motion seeking that the Prior Deed be set aside pursuant to section 7D of the Civil Liability Act 2002 (NSW) (CLA). Section 7D provides that a court may set aside an affected agreement if it is just and reasonable to do so. In making its decision to set aside an affected agreement, s 7D(3) of the CLA provides that consideration may be had by the court to the amount paid to the applicant, the bargaining position of the parties, the conduct of the parties and any other matters the court considers relevant.

Further details of the factual background of the 2007 and 2022 Claim can be found at paragraphs 10 to 28 of the judgment.

In summary, the Plaintiff claimed that the Prior Deed should be set aside due to:

1. The limitation period having expired prior to the 2007 Claim;
2. The ‘Ellis defence’ being available to the Defendant as it was an unincorporated association at the time of the alleged abuse; and
3. The Plaintiff’s lawyers in the 2007 Claim not being able to advise whether the negligence claim had good prospects pursuant to section 347 of the Legal Profession Act 2004 (NSW) (LPA) (which the Plaintiff submitted ought to be considered a legal barrier for the purposes of section 7B(b) and 7C(1)(c) of the CLA). Section 347 of the LPA provides that a law practice cannot file court documentation unless accompanied by a certification by a principal of the practice, or a legal practitioner associate responsible for the provision of the legal services concerned, certifying that “there are reasonable grounds for believing on the basis of provable facts and a reasonable arguable view of the law that the claim has reasonable prospects of success”.

The decision of the Supreme Court

The Notice of Motion to set aside the Prior Deed was heard before Weinstein J and was the first time the Court had the opportunity to consider Part 1C, specifically section 7D, of the CLA since it commenced 8 November 2021.

In deciding the matter, His Honour considered:

1. The legislative background of Part 1C of the CLA and its purpose and effect to ensure fairness between Plaintiffs who settled claims in an environment where unjust impediments existed for child abuse survivors, and those who brought claims following the introduction of Part 1C of the CLA;
2. The evidence and submissions of both parties as it related to the interpretation and application of Part 1C of the CLA; and
3. Whether the Prior Deed was “just and reasonable” in consideration of the particular circumstances of the case.

Ultimately, his Honour decided that the Plaintiff was barred from making a further claim in relation to the abuse the subject of the 2007 Claim because of the 2007 Deed, thereby rejecting the Plaintiff’s Notice of Motion and dismissing the 2022 Claim. In summary, Weinstein J concluded that he would not exercise the power under section 7D(2) of the CLA because:

1. The limitation issue was not a material consideration for the Plaintiff at the mediation of the 2007 Claim and although it created a legal barrier it did not have “a material impact on the settlement”;
2. There was no evidence that proved the Ellis Defence was ever raised by the Defendant during the 2007 Claim nor considered by the Plaintiff when deciding on settlement of the 2007 Claim;
3. The requirement to certify a claim under section 347 of the LPA did not constitute a legal barrier for the purpose of Part 1C of the CLA; and
4. None of the factors in section 7D(3) of the CLA favoured the Plaintiff (save for his Honour’s consideration of the settlement sum being modest and one which represented significant compromise) and warranted the exercise of the discretion.

Although Weinstein J did give some consideration (at [174] to [176]) to certain aspects of the recent decision of the Victorian Court of Appeal (comprised of Beach, Macaulay and Lyons JJA) in Trustees of the Christian Brothers v DZY (a pseudonym) [2024] VSCA 73 (23 April 2024) (‘DZY’), the adoption by the Court of Appeal of the majority’s reasonings in GLJ v The Trustees of the Roman Catholic Church for the Diocese of Lismore [2023] HCA 32 (‘GLJ’) appears to have been given either very little or no weight, without any reasoning.

In the context of an application for a permanent stay of proceedings, the plurality of the High Court in GLJ said that whether a trial would be necessarily unfair or so unfairly and unjustifiably oppressive as to constitute an abuse of process is an evaluative, but not a discretionary decision. That is, the question of whether or not a trial is fair only has one legally permissible answer in that proceedings either are or are not capable of being the subject of a fair trial, or are or are not so unfairly and unjustifiably oppressive as to constitute an abuse of process.  The granting of a permanent stay is to occur once a particular finding is made, rather than conferring a discretion to the court to perform a weighing exercise of the circumstances collectively and then exercising its discretion to form a conclusion.

Interestingly, in his Honour’s consideration of the meaning of the phrase “just and reasonable” he turned his mind to the substantial differences in the statutory language of the legislation providing for the setting aside of prior settlements in each State and Territory. Weinstein J did not accept that there was a “Queensland approach” or a “Victorian approach” that should be followed, but rather formed the view, after consideration of the decisions in the Victorian and Queensland Courts of Appeal, that:

“… The interests of both parties must be considered, and the relative weight to be given to material factors in that exercise depends upon a judicial assessment of the particular circumstances of each case…”

Ultimately, it remains to be seen whether a uniform approach can be taken across states given the differences in language within the legislation. While one may suspect that an answer to this query will only be determined when, and if, an application of this kind is heard by the High Court, it may never get that far. As considered by Weinstein J at [166], the observations of Gageler J (as his Honour then was) in the High Court hearing of the special leave application in TRG v The Board of Trustees of the Brisbane Grammar School [2021] HCATrans 92 were to the effect that there is some difficulty in applying decisions of interstate jurisdictions. Given all three of the coram who heard the special leave application in TRG (and ultimately decided against granting leave) remain on the High Court bench, it is difficult to see how the High Court’s approach will differ in the near future.

Although this was the first time the New South Wales Supreme Court has had the opportunity to consider Pt 1C of the CLA, it is not expected to be the last. Until it is reconsidered, however, there is no doubt that Plaintiffs will more seriously consider whether to make applications to set aside prior settlements without clear evidence of the prior settlement being unjust or unreasonable. For example, in circumstances where:

• the Defendant institution took a clear position regarding a limitation issue or Ellis defence which ultimately resulted in an unjust and unreasonable settlement; or
• clear evidence exists (perhaps by way of advice from counsel) that the limitation issue or Ellis defence reduced the prospects of any claim significantly.

Equally so, it is likely to mean that institutional Defendants in historical child abuse cases will more seriously consider re-opening prior settlements where evidence of the same nature exists.