When is it just and reasonable to set aside a previous settlement of a claim relating to child sexual abuse?

Following recommendations made by the Royal Commission into Institutional Responses to Child Sexual Abuse, the Queensland Government amended the Limitations of Actions Act 1974 to retrospectively remove the statutory limitation period for claims arising from child sexual abuse. The amendments also introduced subsection 48(5A) which gives Courts a discretion to set aside previous settlement agreements provided it is just and reasonable to do so.

The Court of Appeal decision in TRG v The Board of Trustees of the Brisbane Grammar School[1] considers this judicial discretion.

Background

TRG was a student at the Brisbane Grammar School who alleged he was sexually abused by Kevin Lynch, a counsellor employed by the School.

TRG joined a group of former students to make a claim for damages for personal injuries against the School.

In due course, a framework was agreed between the claimants’ solicitors and the representatives of the School to mediate the claims.

The claimants were represented at the mediation by their solicitors and Senior and Junior Counsel. Prior to the mediation, Counsel had provided an advice on liability and quantum for TRG’s claim with an assessment of damages from $95,565 to $167,100. A discount of 40-50% on account of the risks of litigation was thought to be appropriate to reflect the difficulties in establishing liability and, to a lesser extent, obtaining an extension of the limitation period.

Prior to the mediation, TRG made an offer of $150,399 plus costs.  His claim settled for $47,000 plus costs after the mediation.

Decision at first instance[2]

In considering the discretion conferred by subsection 48(5A), Davis J found:

1. the onus is on the applicant to establish that it is just and reasonable to set aside an earlier settlement agreement;[3]
2. subsection 48(5A) requires the Court to consider the competing interests of both parties and to strike a balance, the balance being what is “just and reasonable”; and
3. it was not the Court’s task “to assess quantum and make an award, but rather to generally assess the reasonable or otherwise of the figure settled upon”.[4]

His Honour held it was not just and reasonable to set aside the earlier settlement on the basis that:

1. the expiry of the limitation period did not materially affect the quantum of the settlement and was not a material factor in TRG’s decision to enter into the settlement;
2. the settlement was fair and reflected the factual and legal strengths and weaknesses of the parties’ respective cases and resulted from “fair, arms-length negotiations between two parties on equal footing” who were both appropriately represented;[5]
3. the real issue facing TRG at the time of settlement was the extent of the headmaster’s knowledge of complaints of abuse by Lynch at the relevant times.  If that were proved, TRG’s prospects of both obtaining an extension of time and succeeding in his claim against the School were good.

Issues on Appeal

Only two grounds of appeal were pressed by TRG, namely that the judge at first instance:

1. misunderstood and failed to recognise the legislative purpose underlying subsection 48(5A), which was to address the “inherent unfairness of limitation periods in actions involving the sexual abuse of children and to provide the means to re-open cases where settlement of such cases was influenced or affected by such unfairness.”[6]
2. was mistaken in finding that the expiry of the limitation period did not materially affect the quantum of the settlement and was not a material factor in TRG’s decision to settle.[7]

Held:

Ground 1

The Court of Appeal rejected TRG’s interpretation of the dominant purpose of the legislation.

Fraser JA (Morrison JA and Mullins JA agreeing) concluded that, in deciding whether it is just and reasonable to set aside a settlement agreement, regard must be had to the interests of both parties to the settlement and the exercise of the discretion will depend on the relative significance or weight given to the material factors in the particular circumstances of each case. His Honour found:

1. the unfairness arising from the limitation period defence is not the sole consideration in determining whether it is just and reasonable to set aside earlier settlement agreements.
2. “if expiry of the limitation period had a material influence upon a settlement, that would favour an order setting aside the settlement agreement”.[8]
3. prejudice to the respondent is a relevant factor in upholding the settlement.

Ground 2

In upholding the finding that the limitation period issue did not materially contribute to TRG’s decision to settle his claim, Fraser JA placed weight on the following:

1. the appellant did not depose that the expiry of the limitation period influenced his decision to settle his claim;[9]
2. “it [was] apparent that the appellant had no reliable recollection of the events at or after the mediation that [were] significant for the purposes of this appeal”[10] and that it was neither expressed nor implied from TRG’s Affidavit that the limitation issue affected his decision to settle his claim;
3. there was evidence to suggest TRG could establish a potential material fact of decisive character which would overcome the limitation period;
4. liability was a contentious issue;
5. counsel’s advice about TRG’s prospects did not “suggest an accumulation of separate risks upon the limitation issue and the liability issue”.[11]  The settlement sum was not discounted with reference to the limitation issue but rather to take into account the prospects of establishing the School was liable were no better than “fair to reasonable”;[12]
6. evidence from an independent psychiatrist highlighted the contribution of factors other than the abuse to TRG’s psychological condition and occupational history;
7. there was no direct evidence of the limitation period being an issue considered by the School during the negotiation or that it would have been prepared to pay more if there were no limitation issue.[13]

Fraser JA did find that, without consideration of the above factors, the Appellant’s evidence that he was told by his solicitors that “because [he] was out of time [he] would have to go for an ‘out of court settlement’” would support an inference that the settlement was materially influenced by the expiry of the limitation period.[14]

Implications

The decision highlights that, when a Court is considering exercising its discretion to set aside a previous settlement, significant weight will be placed on whether the expiration of the limitation period had a material affect on the quantum of the settlement and the claimant’s decision to resolve a claim.

Whilst each case will turn on its own facts, of particular importance in assessing a material affect will be:

1. the claimant’s recollection of the advice given to him/her and the negotiations that resulted in the settlement;
2. the conduct of the negotiations that resulted in the settlement;
3. the significance given to the expiration of the limitation period during the negotiations compared to liability and quantum issues known at the time of settlement;
4. advice given to the claimant by his/her lawyers or Counsel.

Claimants who were unrepresented, did not participate in a formal negotiation process, were not given detailed advice about factors other than the expiration of the limitation period or accepted the first and only offer from an institution may have better prospects of establishing that it is just and reasonable for a previous settlement to be set aside.

Brendan Ezzy – Senior Associate, MurphySchmidt Solicitors

Benjamin Ellis – Solicitor, MurphySchmidt Solicitors

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[1] [2020] QCA 190

[2] TRG v The Board of Trustees of the Brisbane Grammar School [2019] QSC 157

[3] [2019] QSC 157 [133].

[4] [2019] QSC 157 [242].

[5] [2019] QSC 157 [278].

[6]  [2020] QCA 190 [12].

[7]  [2020] QCA 190  [32].

[8]  [2020] QCA 190  [37].

[9]  [2020] QCA 190  [36].

[10]  [2020] QCA 190  [37].

[11] [2020] QCA 190 [58]

[12]  [2020] QCA 190 [71].

[13]  [2020] QCA 190 [36].

[14]  [2020] QCA 190 [34].