Mr Lynch was employed at Brisbane Grammar School (the Respondent) as a counsellor. Over a one year period from 1986 and 1987, he sexually assaulted the Applicant on numerous occasions. -
In 2001, the Applicant sued the Respondent for damages in personal injuries suffered as a result of the Respondent’s abuse, including both psychiatric and psychological damage. The proceedings were settled in the next year (late 2002) by a written ‘settlement agreement,’ and payment of $47,000.00. 
The Applicant applied for an order to set aside the settlement agreement. The Applicant sought to commence fresh proceedings against the Respondent upon causes of action arising from the assaults. 
ISSUES AND APPLICABLE LAW
Can the Applicant apply under for an order setting aside the settlement agreement?
Under section 48(5A) of the Limitation of Actions Act 1974, the court may set aside a previous settlement agreement if ‘just and reasonable.’ 
There was no dispute that it fell within the section: a cause of action which has become statute barred may be saved by court order -. The 2016 amendments to the Limitations Act was in response to a Royal Commission recommendation to remove limitation periods for damages for sexual abuse against children in an institutional context. 
However, the main issue was whether the Applicant could establish that it is ‘just and reasonable’ to set aside the settlement agreement within the scope of this provision. 
Just and Reasonable
Proper construction of the provisions and relevant considerations  – 
Preliminary Observations  – 
His Honour made the following preliminary observations regarding the element of ‘just and reasonable’:
- The Act requires judgments to be maintained unless the court decides that it is ‘just and reasonable’ to set it aside; 
- The Act does not strike down settlement agreements; 
- The onus is on the Applicant; 
- The assessment begins from the present – e. must take into account all that has happened up until the present 
- Setting aside judgments and settlement agreements are discretionary powers -
- Both parties accepted that no conditions could be imposed. 
The exercise of judicial or administrative discretion is a matter of statutory interpretation, as Mason J commented in Minister for Aboriginal Affairs v Peko Wallsend Ltd (1986) 162 CLR 24: if the statute ‘confers a discretion which… is unconfined, [then] the factors taken into account in the exercise of the discretion are similarly unconfined.’
In Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (NT) (2009) 239 CLR 27, the court confirmed that ‘extrinsic materials cannot be relied on to displace the clear meaning of the text.’ Likewise, Kiefel CJ in SZTAL v Minister for Immigration and Border Protection  HCA 34 observed that if the ‘ordinary meaning is not consistent with the statutory purpose, that meaning must be rejected.’ -
In this instance, there are no objects expressly stated in the Act. The law recognises the desirability of the finality of litigation and binding contractual bargains. However, it is well-recognised more broadly that the discharge of the duty of a court to do justice to a case becomes more difficult as time elapses, or for the defendant to defend a claim. -
The Court rejected the submission that, as a general proposition, settlements entered into in actions commenced after the expiry of a limitation period are prima facie subject to being set aside. Instead, his Honour stated that even where a claim is defeated at trial by due to the operation of a limitation period, the judgement in favour of a defendant is not automatically – nor presumed – to be set aside. Rather, discretion is embedded where it is ‘just and reasonable to do so,’ where the term is wide import and recognises that many factors may be relevant to determine which interest should prevail. -.
The Respondent’s reliance on parliamentary speeches in their submissions was rejected on the basis the court’s function is to construe the words of the statute in the context of legislative history, rather than construe and apply statements made in parliament. His Honour held the term ‘just and reasonable’ is simple in meaning and discerned from the context and purpose of the act, not consulting any extrinsic sources -
Prospects of success in any claim  – 
His Honour accepted that he prospects of success of the Applicant’s proceedings is a relevant consideration in determining whether it is just and reasonable to permit their commencement. 
His Honour considered the present application on the basis that the Applicant had strong prospects of establishing that he suffered injury and loss as a result of sexual assaults committed upon him by Lynch, based on the fact that:
- the Respondent did not deny Lynch’s criminal activity nor advanced any contrary case; 
- public acknowledgements of the fact of Lynch’s offending have arisen; and 
- a psychiatric examination of the Applicant opined a causal connection between their own psychiatric and psychological injuries and assaults perpetrated upon him by Lynch. 
His Honour compared the prospect of proving liability against the Respondent in 2002 compared to 2019 and how to understand the law at each time. 
In the 2001 proceedings, as the law was understood, it was thought critical that the Applicant prove knowledge by the Respondent of allegations made against Lynch prior to when the Applicant was sexually abused (Rich v State of Queensland & Ors  QCA 295). The prospects of proving this knowledge were difficult to assess, where documentary records were not retained, evidence was to some extent lost, or insufficient. -
In 2019, any proceedings commenced would not face a limitation problem if the settlement agreement is set aside. The Court may easily conclude that the Respondent placed the perpetrator in a position vis-à-vis the Applicant and other students, thus providing the opportunity and occasion to allow the criminal acts to take place. This includes factors where: Lynch was an employee of the Respondent, assigned as school counsellor on behalf of the Respondent, the role brought him into close contact where himself and the other students would be alone together, and the students would be in a space that encouraged discussion of personal and intimate matters -
His Honour held that the Applicant in new proceedings would have strong prospects of attributing to vicarious liability for the sexual assaults and damage inflicted upon him by the Respondent. 
The quantum of any claim brought now  – 
Fresh proceedings are likely to yield significantly more than the original settlement sum of $47,000. The original figure calculated in 2002 was heavily discounted because of the possibility that the Applicant could not prove that the Principal had knowledge of Lynch’s activities. However, due to a change in the understanding of the law of vicarious liability, the discount would not be warranted in any new proceedings. 
His Honour accepted that the likely award of damages to the Applicant will well exceed the figure calculated in 2002 before discount, given the evidence available regarding economic loss and latest comparable cases relevant to general damages. 
Effect of the Limitation Act on the quantum of the 2002 settlement?  – 
There was no direct evidence that the limitation issue was taken into account in the calculation of the final settlement figure of $47,000 in 2002. Further, no evidence from any of the solicitors involved provided that the limitation period was even mentioned after the initial mediation session. The initial mediation session placed critical importance on the Principal’s knowledge of Lynch’s activities. 
The Applicant’s difficulty was not the limitation issue, but to persuade the court that an experienced school principal was made aware that Lynch was sexually preying upon students yet did nothing about it. Where there was a very significant risk that he wouldn’t, His Honour made the inference that this factor drove the settlement down. The final settlement figure seemed to be reached through an exchange of offers without explanation of calculations until a common ground was reached. 
His Honour found that the limitation issue did not materially affect the quantum of the settlement reached. Therefore, it was not a material factor in the Applicant’s decision to settle the 2001 proceedings. 
Reasonableness of the mediation process -
His Honour acknowledged that the Applicant would understandably not feel satisfied with the mediation process. The Applicant’s resentment against the Respondent was also understandable, where he had been sexually assaulted in an environment deemed safe by the Respondent’s employee. 
His Honour observed that the Respondent had a legitimate interest in the proceedings which it was obliged to defend. In the handling of the issues raised by criminal actions, any criticism of the Respondent, representatives of the Respondent, or its legal advisors could not be substantiated. 
Reasonableness or otherwise of the settlement figure -
His Honour concluded that there nothing to suggest that the settlement figure of $47,000 was not a fair and reasonable reflection of the Applicant’s case in 2002 since the amount was a product of a fair, arm’s length mediation where the Applicant was very ably represented. Thus, His Honour found the settlement figure reasonable.
The impact of delay  – 
Some of the potential impacts of the delay meant that:
- By the time of the 2002 settlement, evidence had already been lost, including: the Principal’s secretary had died, destruction of various school records, and Lynch himself had died. 
- Since 2002: the Principal has died and the Shine Lawyers files appear to be destroyed. 
These may be an issue if the Principal or his secretary were able to give evidence to contradict the special relationship Lynch was placed into with the students, but it was unlikely since the decision of Prince Alfred College Inc v ADC (2016) 258 CLR 134.
The Respondent submitted that the prejudice over time was because of the “general decay of evidence relevant to quantum”  which made it difficult to separate out other stressors in the Applicant’s circumstances, including his parent’s separation in primary school. 
While the Respondent could initiate reasonable legitimate lines of injury with friends, associates and teachers who knew the Applicant and observed him at the School, the investigations would have been difficult in 2001; now in 2019, they are likely impossible. To this extent, the Respondent is prejudiced in the defence of any new proceedings.
Costs thrown away  – 
There was no direct evidence for the costs incurred by the Respondent in relation to the 2001 proceedings and the settlement. His Honour could not make a finding beyond that the costs incurred by the Respondent of and incidental to the Applicant’s claim in 2001 was substantial. [258-
Loss of insurance  – 
When the original claims were made in 2000, insurers were reluctant to indemnify the School but ultimately partially did. There was no direct evidence if indemnity is available to the Respondent against any insurer. 
Based on this evidence, his Honour contended that the only finding that can could be made is that there must be an unquantifiable risk of the Respondent being without effective insurance cover in relation to any new proceedings. 
Change of the law  – 
The understanding of the law of vicarious liability has changed since 2002, in a way unfavourable to the Respondent. In His Honour’s view, the relevance is not that the respondent may now be forced to litigate in a less favourable legal climate, but in determining the reasonableness of the original settlement at the time it was reached.
Section 48(5A) does not have a policy that the Limitation Act should be set aside to facilitate new claims based on more favourable views regarding the vicarious liability of employers for the criminal actions of their employees. For example, supposing that the Respondent in the 2001 proceedings had not taken the limitation defence, the Applicant’s claim would still have been heavily discounted because of the difficulty in attributing liability to the respondent by proving the Principal’s knowledge of Lynch’s actions. 
In those circumstances, the 2016 amendments would not have afforded the Applicant any right to apply to set aside the settlement agreement.
The offer of ongoing counselling  – 
His Honour held that there is no ongoing legal obligation upon the Respondent to provide counselling, and since the counselling was not provided, the Respondent is not out of pocket. 
Exercise of discretion/conclusions  – 
Considerations in the exercise of his Honour’s discretion included:
- the Applicant has good prospects of recovery of significantly more than the settlement sum paid in 2002 if the settlement is set aside, where the issue of further proceedings would be well justified 
- the Respondent paid its own costs and the Applicant’s costs 
His Honour reiterated that the only potential prejudice to the Respondent is the general decay of memories of potential witnesses who dealt with the Applicant during his time at School. The legislative intention of section 11A of the Limitation Act specifies that limitation periods do not now apply to claims for damages arising from sexual abuse of children. However, the above category of prejudice does not align with the policy behind section 11A, and was considered irrelevant. 
Although the Respondent may not have a right of indemnity against an insurance policy, his Honour did not give it weight since the evidence was vague. 
The offer of further counselling would be relevant as a benefit to the Applicant if supplied; however, his Honour ignored it since dealings about further counselling never went beyond initial inquiry. 
His Honour rejected the Applicant’s submission that the threshold for good conduct was to the extent of no misconduct or duress. Rather, his Honour expressed the following conduct of the Respondent in the original claim in the following ways, where the settlement was the product of fair, arms-length negotiations between two parties on equal footing, both appropriately represented, based on the facts that:
- there was no intimidation, bullying, or high handed action by the Respondent;
- the Respondent paid for and otherwise facilitated an elaborate process for settlement of all claims, including that of the Applicant.
- the Applicant was represented by Shine Lawyers and competent counsel.
- there was no inequality of bargaining position.
His Honour reiterated that the settlement figure of $47,000 was a fair settlement reflecting the factual and legal strengths and weaknesses of the parties’ respective cases properly assessed at that time. Consideration of limitation defences did not materially contribute to the discount.
His Honour held that it was not just and reasonable to set aside the settlement.
Orders  – 
The application was dismissed.
David Cormack – Brisbane Barrister & Mediator
Ramisa Raya – Research Assistant
NB: an appeal has been filed by the Applicant