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Recent reform to enable survivors of historical child abuse to reopen settlements

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Recent reform to enable survivors of historical child abuse to reopen settlements

The latest in a suite of legal reforms in Victoria to enable survivors of historical child abuse to seek justice through claims for compensation came into effect recently. By amendment of the Limitation of Actions Act 1958, survivors may apply to the Supreme Court to overturn previous judgments and re-open past settlements.

The history of recent reform in Victoria following the Royal Commission has been impressive.

• In 2015, Victoria removed the statute of limitations for civil claims founded on child abuse.

• In 2017, a new duty of care was codified which makes an organisation liable for child abuse which occurred in their organisation, unless the organisation proves that it took reasonable precautions to prevent the abuse.

• In 2018, new legislation came into effect which prevented unincorporated organisations from relying upon the ‘Ellis defence’ and enabled survivors to pursue damages against an unincorporated organisation that controls an associated trust. Either the organisation nominates an entity to be sued or the court appoints the associated trusts to be responsible for any liability.

Now we have the 2019 amendment to the Limitation of Actions Act (“the Act”) which enables survivors to seek to revisit past cases which were determined or settled when the various legal impediments were in effect in circumstances where they led to a settlement that is now considered inadequate.

Division 5 of the Act allows a court, where it is just and reasonable to do so, to set aside past judgments and previously settled actions that were reached whilst there was an applicable limitation period, therefore before 1 July 2015.

The Act allows an action to be brought or an application to be made to set aside judgment where the case had been dismissed on the basis that it was out of time or where there was a refusal to extend the limitation period. For settlements, while it relates to those entered before 1 July 2015, the time period need not have expired at the date of settlement. It does not apply to settlements under the National Redress Scheme.

In the Second Reading Speech before the Legislative Assembly, it was said that:

It is not necessary that the existence of the limitation period be the predominant reason as to why the agreement was entered into. There may be a number of reasons that a plaintiff entered into such an agreement, including but not limited to unequal bargaining power, barriers to identifying a proper defendant, feelings of guilt and shame compounded by the burden of giving evidence and being subject to cross-examination, or the behaviour of the relevant institution.

It is the Court’s discretion to determine what is just and reasonable according to the circumstances of each case, allowing the court to apply broad principles and take account of relevant factors. This may include, for example, the relative strengths of the parties’ bargaining positions, the conduct of the parties and the amount of the settlement.

Only the Supreme Court may set aside a judgment or an order of another court.

The Court may set aside a judgment or settlement in whole or in part and may take into consideration prior payments in awarding damages or costs.

Where the Court makes an order to set aside a previous judgment or settlement, any person or entity who paid an amount under that judgment or settlement (or on their behalf) is not entitled to seek to recover the amount paid. This will prevent the recovery of money from survivors and also prevent the recovery of money from institutions paid by insurers.

Due to legislative reform over the past 4 years and determinations of the Court which remove some of the actions institutions might have used to test a survivor’s civil claim, along with the willingness of the Court to view the evidence of the harm caused through a more current lens in the assessment of damages, awards of compensation have increased dramatically. There have been well published cases and settlements which exceed $1M and allow significant damages for economic loss.

The recent increase in damages assessments and the opportunity to revisit comparatively lower settlements may well prompt a number of survivors to seek to revisit those settlements. There may be a substantial number of applications to the Supreme Court.

How will the Victorian Courts respond?

Perhaps instructively, Justice Davis of the Supreme Court in Queensland recently considered comparable legislation in that State and refused an applicant’s bid to set aside the 2002 settlement of his child sex abuse claim (see TRG v The Board of Trustees of the Brisbane Grammar School [2019] QSC 157; the applicant had settled his claim in 2002 for $59,000 inclusive of costs. After his lawyers’ further costs were deducted, he received a payment of $24,000).

David J delivered a very detailed judgment.

Close attention was given to correspondence between the parties leading to the settlement.

A range of factors relevant to the exercise of the Court’s discretion of whether it was ‘just and reasonable’ to set the settlement aside were set out. It included (not exhaustively):

• The prospects of success of the claim (both at the time of the settlement in 2002 and now);
• Consideration paid to the advice from Senior Counsel to the applicant before settlement;
• The reasonableness of the mediation process in 2002 (conducted by Queens Counsel as mediator and with Senior Counsel representing both parties);
• The present quantum of the claim and of the amount of the settlement reached in 2002;
• The impact of delay and any associated prejudice to the school, both with respect to the availability of evidence as well as through developments in the law in the intervening period;
• The costs thrown away by the school from the 2002 settlement and the availability of insurance for the school now (there was only partial cover in 2002) although he did not actively apply weight to it as a factor on this occasion; and
• An offer of ongoing counselling made by the school.

David J found the 2002 settlement reflected the factual and legal strengths and weaknesses of the parties’ cases, properly assessed at that time by them, which was reached through arm’s length negotiations by two parties on an equal footing and appropriately represented. David J also went on to say that the discount of the applicant’s claim was not materially contributed to by any consideration of limitation defences.

The opportunity for survivors to look to revisit past settlements may be a fertile ground for argument in the Victorian Supreme Court; as each case will need to be determined on its own merits and available evidence, including the advice provided to each party on which the settlement terms were reached and the parity of the parties’ bargaining power through legal representation (where applicable).

If you wish to learn more about the issues identified in this note, please contact Ingrid Nunnink or Tessa Pham on (03) 9604 9400.

Disclaimer: This article is general commentary on a topical issue and does not constitute legal advice. If you are concerned about any topics covered in this article, we recommend that you seek legal advice.

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