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Revisiting settlements in child abuse litigation: just and reasonable

Published on March 26, 2019 by Bill MaddenBill Madden

Revisiting settlements in child abuse litigation: just and reasonable
Bill Madden
Australian Civil Liability – Feb 2019

The application
A decision of the District Court of Western Australia, JAS v The Trustees of the Christian Brothers,¹ appears to be the first published decision regarding an application (albeit one which was not opposed to by the respondent) to set aside a settlement agreement and for leave to commence an action for a child sexual abuse cause of action, on the statutory power basis that it was “just and reasonable to do so”. JAS v The Trustees of the Christian Brothers does not appear to have been cited in any later decisions as yet.

The legislation in Western Australia
The Limitation Act 2005 (WA) (the Act) was recently amended to include s 92, which relates to previously settled causes of action. It warrants setting out in full, as follows, however subs (3) is the key element for present purposes:

92. Previously settled causes of action
(1) This section applies in relation to a proposed action on a previously settled cause of action and to the agreement effecting the settlement (the settlement agreement).
(2) Application may be made to a court that would have jurisdiction to deal with the action, but for the settlement agreement, for leave to commence the action.
(3) The court may, if satisfied that it is just and reasonable to do so —

(a) grant leave to commence the action, subject to conditions; and
(b) to the extent necessary for that, set aside the settlement agreement and any judgment giving effect to the settlement.

(4) If an action on the previously settled cause of action is commenced, the settlement agreement and each agreement relating to the settlement, other than a contract of insurance, is, despite any written or other law, void to the extent to which it relates to the child sexual abuse the subject of the cause of action.
(5) A party to an agreement that is wholly or partly void under subsection (4) cannot seek to recover an amount paid by or for the party under the agreement on the basis that the agreement is void to that extent.
(6) The court dealing with the action may, if satisfied that it is just and reasonable to do so, take into account any amount paid under an agreement that is wholly or partly void under this section, to the extent to which the amount relates to the child sexual abuse
the subject of the cause of action.
(7) For the purposes of subsection (6), amounts paid under an agreement are taken to relate to the child sexual abuse the subject of the cause of action to the extent of 50% if the agreement –

(a) does not relate solely to that child sexual abuse; and
(b) does not expressly deal with the extent to which the agreement and amounts paid under it relate to that child sexual abuse.

While perhaps not made clear by s 92, in referring to a previously settled cause of action, the phrase is limited by its definition in s 89 of the same Act so as to mean “a child sexual abuse cause of action that was settled after it was statute barred but before commencement day”, being the commencement day of the amending Act.² In turn, child sexual abuse cause of action is defined in s 89 by reference to s 6A(1) to mean:

… a cause of action that relates, directly or indirectly, to a personal injury of the person to whom the cause of action accrues, where the injury results from child³ sexual abuse of the person.

Returning to s 92, the key passage is subs (3). The language is perhaps a little unexpected as the statute does not first focus on leave to set aside a settlement, but rather leave to commence an action despite an earlier settlement. Hence the court may, if satisfied that it is just and reasonable to do so, grant leave to commence the action subject to conditions and to the extent necessary for that, set aside the settlement agreement and any judgment giving effect to the settlement. The sequence required by the wording may be of no real consequence.

The only other Australian jurisdiction with similar legislation is Queensland, as discussed later.

The JAS application
JAS alleged that he was sexually abused between the ages of 8 and 14 years at two orphanages conducted by the Christian Brothers, a religious order. He had reached 18 years of age in 1972 but did not pursue litigation at that time. However, he later pursued compensation, apparently without issuing proceedings. Three amounts were paid to him by agreement in 1988 and 1998 and in 2015 a more substantial amount was paid. A deed of release was signed at the time of the third payment.
JAS sought orders for leave to commence an action for damages for child sexual abuse suffered at the orphanages and that the deed of release entered into by him be set aside.

What is just and reasonable?
The issue of general interest in JAS v The Trustees of the Christian Brothers was whether it is just and reasonable for an order to be made giving leave to the applicant to commence an action claiming damages for personal injuries suffered as a result of alleged child sexual abuse.⁴
The expression “just and reasonable” is not defined in the Western Australian legislation nor does that legislation set any criteria that the court must consider. The court (per Sleight CJDC) identified the following:

• The power to give leave in circumstances where it is “just and reasonable to do so” is a broad power, referring to Gilmore v Quittner.⁵ That matter concerned an application in a medical negligence claim seeking orders for extension of limitation periods. The phrase “just and reasonable” appeared in the relevant section,⁶ requiring its interpretation. The first instance judge in Gilmore v Quittner identified the need to address the circumstances of the case (mentioned below) and an evaluative judgment (also mentioned below).⁷
• In deciding what emphasis should be given in deciding the question of whether in a particular case it is just and reasonable to give leave to commence an action, assistance can be gained by considering the legislative context in which s 92 of the Act was introduced. This may be similar to the judicial remarks made elsewhere regarding the public interest in permitting claims for damages for sexual abuse of children or juveniles to be brought at any time, expressed by the parliament in legislative amendments.⁸
• The applicant for leave has the onus of establishing that the circumstances of their case demonstrate that it is just and reasonable that leave should be granted.
• Each case involves an evaluative judgment of the relevant facts and circumstances. What is just and reasonable must clearly depend on the circumstances of each case.⁹
• The focus is on the circumstances of the parties at the time the settlement agreement was entered into.
• In an appropriate case, the possibility that an argument on the part of a respondent that the applicant cannot succeed at trial¹⁰ or is unlikely to receive more than what has already been paid pursuant to a settlement agreement may be relevant.
• Prejudice to the defendant may be a relevant consideration, but identifying the relevant principles is best left to a case where there is a genuine dispute on this issue.¹¹

The defendant did not oppose the application made by JES. The court concluded that it was just and reasonable to grant leave for the applicant to commence an action against the respondents and dealt with the previous settlement agreement in a short paragraph identifying six matters:

1. As a general rule there is no statutory limitation period for such claim.
2. At the time of the applicant entered into the settlement agreement of the 4 March 2015 his claim under existing law was statute barred. This meant that his bargaining position was severely curtailed and he was left with no real choice but to accept whatever amount was offered by the Christian Brothers with- out it being necessarily a reflection of his proper entitlement if he was successful in an action against the Christian Brothers.
3. The extent of the entitlement of the applicant if he was successful on such a cause of action has never been decided on its merits.
4. If leave is given then the court dealing with the action may, if it is satisfied that is just and reasonable to do so, take into account any amount paid under a settlement agreement to the extent that it relates to the child sexual abuse the subject of the cause of action. Accordingly, the respondent is not likely to be financially disadvantaged by having made the payment under the settlement agreement.
5. Granting leave to commence an action is consistent with the broad intention of the amending Act to remove legal barriers to claimants commencing an action and having their claims decided on their merits.
6. The respondent does not oppose the application.¹²

Comparing the legislation in Queensland
Only one other Australian jurisdiction has a provision similar to that in Western Australia, though the language of s 48 of the Limitation of Actions Act 1974 (Qld) is somewhat different to the Western Australian section discussed above. It is helpful to firstly note s 11A of that Act, which provides:

11A No limitation period for actions for child sexual abuse

        (1) An action for damages relating to the personal injury of a person resulting from the sexual abuse of the person when the person was a child—

(a) may be brought at any time; and
(b) is not subject to a limitation period under an Act or law or rule of law.

(3) This section applies whether the claim for damages is brought in tort, in contract, under statute, or otherwise.
(4) This section applies to an action for damages—

(a) arising under the Civil Proceedings Act 2011, section 64; or
(b) that has survived on the death of a person for the benefit of the person’s estate under the Succession Act 1981, section 66.

(5) This section does not limit—

(a) any inherent, implied or statutory jurisdiction of a court; or
(b) any other powers of a court under the common law or any other Act (including a Commonwealth Act), rule of court or practice direction.
Example—

This section does not limit a court’s power to summarily dismiss or permanently stay proceedings if the lapse of time has a burdensome effect on the defendant that is so serious that a fair trial is not possible.

Turning then to s 48, it is set out below in full. The equivalent provision to the Western Australian provision discussed above is subs (5A).

48 Transitional provision for Limitation of Actions (Child Sexual Abuse) and Other Legislation Amendment Act 2016

(1) Section 11A applies to an action for damages whether the right of action accrued before or after the commencement of that section (the commencement).
(2) An action on a previously barred right of action may be brought even if—

(a) a limitation period previously applying to the right of action has expired; or
(b) another action has been started in the right of action but not finalised before the commencement; or
(c) another action was started in the right of action and discontinued before the commencement; or
(d) a judgment was given in relation to the right of action on the ground that a limitation period applying to the right of action had expired; or
(e) an action in the right of action was dismissed on the ground that a limitation period applying to the right of action had expired.

(3) If an action on a previously barred right of action is brought after the commencement, the court hearing the action may, if the court decides it is just and reasonable to do so, do either or both of the following—

(a) set aside a judgment given in relation to the right of action on the ground that a limitation period applying to the right of action had expired;
(b) take into account any amounts paid or payable as damages or costs under the judgment.

(4) The Supreme Court may, on application, set aside a judgment under this section even though the Supreme Court is not hearing the action.
(5) However, a court, other than the Supreme Court, may not set aside another court’s judgment under this section.

(5A) An action may be brought on a previously settled right of action if a court, by order on application, sets aside the agreement effecting the settlement on the grounds it is just and reasonable to do so.
(5B) If a court makes an order under subsection (5A) for a previously settled right of action—

(a) each associated agreement is void despite any Act, law or rule of law; and
(b) a party to an associated agreement voided under paragraph (a) may not seek to recover money paid by, or for, the party under the agreement.

(5C) However, a court hearing an action on a previously settled right of action may—

(a) when awarding damages in relation to the action— take into account any amounts paid or payable as consideration under an associated agreement voided under subsection
(b) when awarding costs in relation to the action—take into account any amounts paid or payable as costs under an associated agreement voided under subsection (5B)(a).

(6) In this section—
associated agreement, for a previously settled right of action, means—

(a) the agreement effecting the settlement; or
(b) any other agreement, other than a contract of insurance, related to the settlement.

previously barred right of action means a right of action for an action to which section 11A applies that was not maintainable immediately before the commencement because a limitation period applying to the right of action had expired.

previously settled right of action means a right of action for an action to which section 11A applies that was settled before the commencement but after a limitation period applying to the right of action had expired.

The Queensland legislation has not yet been the subject of a published decision, though newspaper reports suggest that an application was made in October 2018. The newspaper report suggests that prejudice was a factor argued by the respondent in that matter.¹³

Concluding remarks
Only Western Australia and Queensland presently have legislation providing for applications in respect of earlier judgments/settlements in relation to child sexual abuse causes of action, on the basis that it is “just and reasonable to do so”. In other Australian jurisdictions, the parties would presumably need to grapple with case law concerning the circumstances in which an agreement may be set aside at law or in equity.¹⁴
JAS v The Trustees of the Christian Brothers provides some indication of judicial approaches to the sections, however more guidance is likely to emerge from con- tested applications focusing on arguments such as that the respondent would be prejudiced by reason of the passage of time, that the applicant cannot succeed at trial, that the settlement reasonably reflected the risks of the litigation (save for the limitation issues) or that the applicant is unlikely to receive more than what has already been paid pursuant to a settlement agreement.

“This article was originally published in the LexisNexis Australian Civil Liability Newsletter Volume [15] Number [10].”

Footnotes

1. JAS v The Trustees of the Christian Brothers [2018] WADC 169; BC201840778
2. JAS v The Trustees of the Christian Brothers [2018] WADC 169;
3. Civil Liability Legislation Amendment (Child Sexual Abuse Actions) Act 2018 (WA).
4. Child is defined to  mean  a  person  under  18  years  of age: s 6A(1).
5. Above n 1, at [16].
6. Gilmore v Quittner [2011] NSWSC 809; BC201105721 at [182].
7. Limitation Act 1969 (NSW), s 7. Above n 5, at [183]–[185].
8. Estate Judd v McKnight; Gammage v Estate Judd, Channell v Estate Judd; McKnight v Estate Judd (No 4) [2018] NSWSC 1489; BC201809186 at [135].
9. Above n 5, at [191].
10. See also Yu v  Speirs  [2001]  NSWCA  373;  BC200106751 at [17].
11. Above n 1, at [19]–[26].
12. Above n 1, at [27] (citation omitted).
13. A Brown “Brisbane Grammar child sex abuse victim launches Supreme Court action for damages” Brisbane Times 4 October 2018 www.brisbanetimes.com.au/national/queensland/brisbane-grammar-child-sex-abuse-victim-launches-supreme-court-action-for-damages-20181004- p507ph.html.
14. See, for example, the discussion in T Cockburn and M Shirley “Setting Aside Agreements Reached at Court-Annexed Mediation: Procedural Grounds and the Role of Unconscionability” (2003) 31 University of Western Australia Law Review.