Supreme Court Hands Down NSW's First Decision On Whether To Set Aside Historical Abuse Settlement Deed

On 18 November 2021, amendments to the Civil Liability Act 2002 (NSW) commenced, which allowed Courts in NSW to set aside a settlement deed or agreement entered by a victim of historical sexual abuse.

The legislation allows a settlement to be set aside if it is "just and reasonable" to do so. The wording of the legislation gives Courts a very wide scope on determining such applications, and as such, this case, the first in NSW, is of key importance, as it acts as a precedent and guide for future applications of a similar nature.

EXV v Uniting Church in Australia Property Trust (NSW) [2024] NSWSC 490

Background

In 2007 and 2008, the Plaintiff pursued an unlitigated negligence claim against Knox Grammar School, run by the Uniting Church, for allegations of child sexual abuse by a teacher in 2002. The claim was settled at a mediation in December 2008 for the sum of $115,000.00, inclusive of legal costs. The Plaintiff cleared $83,000.00 from that settlement. Of note is that the Plaintiff settled their case against the legal advice from their own legal representatives.

Proceedings

In 2022, the Plaintiff commenced another claim against the same Defendant, based on the same allegations, asserting that the School was vicariously liable for the teacher. Knox filed a Defence, stating that the claim was settled in 2002, and the Plaintiff then filed an application to have the Deed set aside pursuant to section 7D of the Civil Liability Act 2002 (NSW). This was the first time that this provision had been tested in NSW.

The Plaintiff's application was based on the following assertions:

1. There was difficulty in suing an unincorporated association in 2002. (This is often referred to as the Ellis Defence.

2. The legislation as at 2002 meant that the statute of limitations had expired.

3. The Plaintiff's lawyers in 2007 could not certify that a claim in negligence against Knox had reasonable prospects of success pursuant to s 347 of the Legal Profession Act 2004 (NSW).

Decision

In determining the application, the Supreme Court had to consider whether it would be "just and reasonable" to set aside the Deed of Settlement, based on the arguments put forward by the Plaintiff. Ultimately, the Judge did not accept the Plaintiff's application, for the following reasons:

1. The statute of limitations was not a material consideration of the Plaintiff during the 2008 mediation. Whist it created a "legal barrier", it did not have a material impact on the settlement itself.

2. There was no evidence to substantiate that the Defendant ever raised the Ellis Defence, nor that this was considered by the Plaintiff in the 2008 settlement discussions.

3. The assertion that the Plaintiff's lawyers in 2007 could not certify that a claim in negligence against Knox had reasonable prospects of success pursuant to s 347 of the Legal Profession Act 2004 (NSW), is not a relevant consideration under section 7D of the Civil Liability Act 2002 (NSW).

4. There was no reason for the Judge to exercise his discretion, as the Plaintiff made the conscious choice to settle in 2008 against legal advice.

As such, the Supreme Couret ultimately found that it would not be "just and reasonable" to set aside the subject Deed.

This decision highlights that applications such as these will likely be highly contentious, litigated, and complex. The mere fact that a plaintiff accepted a lesser amount of compensation than what may have been available is not the sole factor in determining whether a Deed of Settled was "unjust and unreasonable". Instead, a Court will need to consider all relevant factors surrounding the settlement, and come to an objective decision based on all of the available evidence.

The contents of this publication are for reference purposes only. This publication does not constitute legal advice and should not be relied upon as legal advice. Specific legal advice should always be sought separately before taking any action based on this publication.