In a landmark case, the Supreme Court of Victoria has set aside a deed of settlement between the plaintiff, known as WCB, and the Catholic Church for historical child abuse. It was the first case decided after amendments in 2019 to the Limitation of Actions Act 1958 (Vic) (the Act) which allowed courts to set aside previous settlements if it was ‘just and reasonable’ to do so. The judgment has significant implications for all organisations that previously settled historical child abuse claims for sums that in the current environment could be viewed as insufficient. It also carries important lessons for organisations on ensuring their settlements are ethical and align with legal requirements in the current environment.
Several important legislative changes have occurred in light of the findings and recommendations of the Royal Commission into Institutional Responses to Child Sexual Abuse (Royal Commission) and the Betrayal of Trust Report. This included removing the limitation periods that applied to civil actions for damages related to child abuse and allowing the identification of proper defendants, particularly where there are unincorporated structures.
In 2019, further changes were made to the Act to allow courts to set aside prior deeds of settlement in historical sexual or physical child abuse and related psychological abuse claims where it is ‘just and reasonable’ to do so. This only applies to matters which were settled prior to 1 July 2015. The purpose of the amendments is to remove barriers to actions for personal injury resulting from child abuse.
Facts of the case
The plaintiff in the case, known as WCB, was a former altar boy. He was abused by late priest Daniel Hourigan in Gippsland from 1977 to 1980 when WCB was aged between 11 and 14. WCB brought a claim against the Bishop of the Catholic Diocese of Sale for compensation for the post-traumatic stress he suffered as a result. The claim was settled for $32,500 in 1996 and a deed of settlement was signed (the Deed).
The recent legislative changes have allowed WCB to bring a claim against the Roman Catholic Trusts Corporation. However, the Trust argued that WCB was barred from bringing a claim due to the previous deed of settlement. WCB sought relief under the Act to have the Deed set aside. WCB stated that he felt bullied into accepting the settlement and that he felt like he “had no choice” because the Church had “all the power”, even though he knew at the time that it was a “terrible settlement”.
Justice Keogh had to decide if it would be ‘just and reasonable’ to set aside the Deed. Justice Keogh stated that the applicant seeking relief under the Act to have a deed set aside bears a positive burden of demonstrating that it is just and reasonable that the Court exercise its discretion to do so. While the Act did not prescribe the relevant considerations, Justice Keogh made the following comments:
- The circumstances in which the settlement agreement was created and the consequences for each party would always be relevant but may not be the controlling factory.
- There is no additional onus for there to be ‘compelling’ reasons to set aside a deed, there is merely a positive burden on the plaintiff to demonstrate that setting the deed aside is just and reasonable.
- Change in legislation and other circumstances which have arisen since the settlement may be relevant.
- If the previous settlement reflected legal barriers which have now been removed, it may be just and reasonable to set aside the settlement in order to allow the plaintiff to seek adequate compensation.
In this particular case, Justice Keogh noted that legislative changes have removed many of the legal barriers that existed at the time of the Deed. He noted that WCB struggled to identify a proper defendant and argue vicariously liability at the time of the Deed. These led to WCB having a disadvantaged bargaining position. Legal developments now mean that the prospects of WCB succeeding are greatly improved.
Justice Keogh noted that there was evidence that WCB was subjected to horrendous abuse by Hourigan over two and a half years and continues to suffer significant adverse impacts of the abuse. He found that the settlement sum in the Deed was “not a reasonable assessment of WCB’s loss and damage in 196 or adequate compensation by today’s standards”. Justice Keogh was therefore satisfied that it was just and reasonable to set the Deed aside.
Lessons for organisations
This case sets an important precedent as it is the first case to be heard since changes to the Act have allowed courts to set aside previous deeds for historical child abuse. It provides a new pathway for survivors who have previously been barred from bringing a new claim due to previous settlements. For organisations, it also demonstrates the potential risks of previous settlements with inadequate sums of compensation.
We recommend that organisations:
- Review their historical settlements – it is worth organisations assessing their risks in light of this judgment and factoring in any potential challenges to previous settlements. Organisations need to be prepared for this and consider risk mitigation approaches, particularly where there is a history of low settlement sums or unethical behaviour during settlement discussions.
- Take a collaborative approach to settlement discussions – while the changes to the Act only apply to matters which were settled prior to 1 July 2015, this case demonstrates an increased scrutiny by courts and legislators of an organisation’s behaviour when responding to child abuse claims. As such, organisations should ensure they are approaching these matters with a pastoral and collaborative stance.
- Strengthen current practices – to avoid having deeds challenged, organisations should adopt practices of encouraging claimants to have their own independent legal advice and a solicitor’s certificate when signing deeds. Organisations should also index their settlement sums to align with other similar cases and the National Redress Scheme where appropriate.
- Prevention is key – ultimately, prevention of child abuse is key. While organisations manage historical claims, they also need to turn their mind to the lessons learnt and how they can move forward and create a legacy of child safety.
How we can help
For more information or guidance to ensure your organisations settlements are ethical and align with legal requirements in the current environment, please do not hesitate to contact us.
WCB v Roman Catholic Trusts Corporation for the Diocese of Sale (No 2)  VSC 639.