Publications

Case Summary – DZY (a pseudonym) v Trustees of the Christian Brothers [2025] HCA 16

Published on April 11, 2025 by Joshua Dale and Kate Flanigan

On 9 April 2025, the High Court of Australia handed down their judgment in DZY (a pseudonym) v Trustees of the Christian Brothers [2025] HCA 16. The judgment dismissed an appeal from the Court of Appeal of the Supreme Court of Victoria.

The case involved two prior settlement Deeds between the Appellant (‘DZY’) and the Respondent (the ‘Trustees’) releasing the Trustees from liability for a claim DZY proposed to issue in a court. DZY had alleged that between 1964 and 1968 when he was a student at a school operated by the Congregation of the Christian Brothers (the ‘Congregation’), he was sexually abused by two members of the Congregation. The first Deed was entered in December 2012 for $80,000 inclusive of costs and the second, without undoing the first, in 2015 for $20,000 inclusive of costs. Both Deeds acknowledged that DZY did not allege that he suffered economic loss and made no demand for such loss as part of those settlements.

Importantly, the first Deed was entered into during a period in Victoria when the limitation period was not yet abolished in child sexual abuse cases and therefore a defence to the claim was available under the Limitation of Actions Act 1958. The limitation defence was later removed on 1 July 2015 and therefore no longer applied when the second Deed was signed in December 2015. Further, at the time both Deeds were entered, and as a result of the New South Wales Court of Appeal decision in Trustees of the Roman Catholic Church v Ellis,[1] any application against an unincorporated association such as the Congregation would likely fail for want of a legal entity that was liable for the claimed loss. This became known as the ‘Ellis defence’ and was abolished in Victoria from 1 July 2018 when legislative amendments required the nomination of a proper defendant on behalf of non-government organisations in child abuse cases.[2] In light of the removal of two significant barriers to prior litigation, s27QD and s27QE of the Limitation of Actions Act 1958 (Vic) (‘Limitation Act’) now operates to allow prior settlement agreements entered into prior to 1 July 2018 to be set aside in whole or part when it is ‘just and reasonable’ to do so.

In the present claim, the Trustees agreed to set aside both Deeds in part on the basis they accepted that the existence of the limitation defence and/or the Ellis defence may have had an unjust impact on the negotiation of the amount to settle DZY’s earlier claims, but contended that the Deeds ought to be upheld so as to prevent the DZY from bringing and/or maintaining a claim for economic loss in circumstances where that claim was abandoned in the two prior settlements.

At first instance, an associate judge of the Supreme Court of Victoria ordered that both Deeds be wholly set aside. On appeal, the Victorian Court of Appeal allowed the appeal and set aside only the non-economic loss components of the deeds. The Court of Appeal held that, central to the question of whether it is ‘just and reasonable’ to set aside a deed in whole or in part, was whether one or both of the legal barriers set out above influenced the prior settlement or judgment. Beach and Macauley JJA found that ‘consideration of the actual influence of the two legal obstacles is central to the determination of whether it is just and reasonable to set aside a settlement’ and that ‘apart from the influence of those obstacles, other factors should be seen as supportive rather than leading factors in determining whether it is just and reasonable to set aside a settlement.’[3] A more detailed article we have previously published on the Court of Appeal decision is available here.

On 9 April 2025, the High Court of Australia dismissed DZY’s appeal. The majority of the High Court (Gageler CJ, Gordon J, Edelman J and Gleeson J) found that ‘although the plurality of the Court of Appeal erred in its construction of s27QE of the Limitation of Actions Act, the evidence would not have allowed the Court to be satisfied that it was just and reasonable to set aside either deed insofar as it released the Trustees from an economic loss claim.’[4] In a minority judgment, Steward J considered that the plurality in the Court of Appeal had not imposed any “prerequisites” or “quasi-prerequisites” to the power conferred by s27QE and therefore there was no error in the interpretation of the Court of Appeal below.

Ground 1: What does ‘just and reasonable’ mean?

The High Court confirmed that at the heart of the appeal was s27QE of the Limitation Act which gives a court power to set aside a settlement agreement in a previously settled cause of action, in whole or in part, if the court is satisfied that it is “just and reasonable” to do so. The term “just and reasonable” is not defined in the legislation and the construction of that phrase was the subject of Ground 1 of the appeal.

The High Court put the issue raised in the Court of Appeal simply: ‘is the operation of s 27QE of the Limitation of Actions Act limited to circumstances where the limitation defence or the Ellis defence materially influenced the claimant’s decision to settle?’. They found that the answer is “no”.[5]

The High Court confirmed that there was nothing in the text of s27QE which limits the exercise of the court’s power to circumstances where the prior settlement has been impacted by either the limitation defence or the Ellis defence. They considered that ‘the text of s 27QE simply does not prescribe the matters to which the court should have regard in determining whether to set aside a settlement agreement.’[6] The Court closely considered the decision of Fraser JA in the Queensland Court of Appeal in TRG v Board of Trustees of the Brisbane Grammar School, a case which considered an identical provision to s27QE in the Limitation of Actions Act 1974 (Qld) which found that:

“[t]he use of the expression ‘just and reasonable’ to identify the only ground for such an order, the fact that the power is conferred upon courts, and the absence of any express identification of the material factors or the relative weight or significance to be attributed to any of them, compel the conclusion that the legislative purpose encompasses account being taken of the interests of both parties to the settlement in deciding whether it is just and reasonable to set aside the settlement agreement, the relative significance or weight to be given to the material factors in that exercise depending upon a judicial assessment of the particular circumstances of each case”.[7]

The majority of the High Court found that the plurality in the Court of Appeal erred in treating the limitation defence or the Ellis defence as necessary prerequisites (or quasi-prerequisites) for the exercise of the power under s 27QE.  That said, the High Court confirmed that it ‘is not to suggest that the previous legal barriers are irrelevant in determining whether it is just and reasonable to set aside a settlement agreement in whole or in part under s 27QE. One or both of the legal barriers will ordinarily play some part in determining whether it is just and reasonable to set aside a settlement agreement under s 27QE.’[8]

Ground 2: Whether DZY’s economic loss claim should be allowed

On appeal, DZY argued that the plurality in the Court of Appeal erred in their conclusion that there was no positive finding by the primary judge that DZY’s decision not to pursue an economic loss claim was materially influenced by the existence and potential impact of the limitation defence and the Ellis defence. DZY therefore argued that Beach and Macaulay JJA erred in concluding that the primary explanation for DZY’s decision was a completely unrelated issue (being the possibility of a Centrelink repayment).

The High Court rejected DZY’s position and found that the evaluative judgment undertaken by the Court of Appeal identified, correctly, that the evidence did not allow the Court to be satisfied it was just and reasonable to set aside either deed insofar as it released the Trustees from an economic loss claim. The High Court confirmed that there was no direct evidence provided by DZY that, at the time he signed the prior Deeds, he decided to renounce his economic loss claim due to the limitation defence or Ellis defence. Rather, the evidence suggested that he chose to renounce his economic loss claim due to concerns about a possible Centrelink repayment (or “clawback” of Centrelink benefits). The High Court also considered that although DZY was affected by alcohol consumption and anxiety at the time of signing the prior Deeds, he was legally represented, was not rushed into signing either deed, and that his prior solicitors certified that he appeared to understand the purport and effect of each deed. On this basis, the Court found that DZY’s decision to abandon his economic loss claim was not related to any conduct of the Trustees. Ground 2 was dismissed.

Implications of the High Court decision

The practical effect of this decision is that DZY will not be able to recover damages for economic loss, however, the implications of this decision are far reaching.

1. In determining whether it is ‘just and reasonable’ to set aside a prior deed (in whole or part), a court will not be limited to circumstances where the limitation defence or the Ellis defence had a material impact on the claimant’s decision to settle. A court may consider any factor it considers relevant in a determination of what is ‘just and reasonable’ and will consider the interests of both parties to the settlement. These considerations may include the prospects of success of the original claim; the reasonableness of the settlement process and the circumstances surrounding the execution of the deed; whether one party had unequal bargaining power; the state of mind of the claimant at the time of settlement; whether the claimant was legally represented and properly advised on the settlement; and the impact on the respondent if the settlement is set aside. The relative significance or weight to be given to the material factors will depend on the judicial assessment of the circumstances of each case. That said, one or both of the legal barriers will ordinarily play some part in determining whether it is just and reasonable to set aside a settlement agreement under s27QE.
2. In circumstances where a prior settlement, or a particular aspect of a prior settlement (in this case a decision to abandon an economic loss claim) can be demonstrated to be materially impacted by a completely unrelated issue to the conduct or position of either party in relation to the other (in this case an unrelated Centrelink issue impacting the claimant), it may not be ‘just and reasonable’ to set aside the deed or part of the deed when considering all of the circumstances of a case.
3. As was confirmed by the Court of Appeal, and which was not disturbed by the High Court, the power of a court to set aside a prior settlement or judgment in accordance with s27QE of the Limitation Act is not a discretionary one. As such, any appeals on decisions made under that section will be required to meet the correctness standard in Warren v Coombes. [9]

While this decision considered the relevant provisions of the Limitation of Actions Act 1958 (Vic), it will be relevant to all jurisdictions where a court is conferred power to set aside a prior settlement when it is ‘just and reasonable’ to do so.

Please note that this article does not constitute legal advice. If you are seeking professional advice on any legal matters, you can contact Carroll & O’Dea Lawyers on 1800 059 278 or via our Contact Page and one of our lawyers will be able to assist you.

---

[1] [2007] NSWCA 117.

[2] Legal Identity of Defendants (Organisational Child Abuse) Act 2018 (Vic).

[3] Trustees of the Christian Brothers v DZY (a pseudonym) [2024] VSCA 73 [113].

[4] DZY (a pseudonym) v Trustees of the Christian Brothers [2025] HCA 16 [8].

[5] Ibid [22].

[6] Ibid [24].

[7] (2020) 5 QR 440 at 461 [28], referred to in DZY (a pseudonym) v Trustees of the Christian Brothers [2025] HCA 16 at [26].

[8] DZY (a pseudonym) v Trustees of the Christian Brothers [2025] HCA 16 [30].

[9] (1979) 142 CLR 532, confirmed by the High Court in DZY (a pseudonym) v Trustees of the Christian Brothers [2025] HCA 16 [6].