HARTNETT v TRUSTEES OF THE ROMAN CATHOLIC CHURCH FOR THE DIOCESE OF WILCANNIA-FORBES

EX TEMPORE JUDGMENT

1. This is the sixth day of the hearing of Mr Hartnett's claim for damages for personal injury which he alleges falls into the category of severe physical abuse referred to in s 6A of the Limitation Act 1969 (NSW). By notice of motion filed in court today by his counsel, Mr Hartnett seeks leave pursuant to s 64 of the Civil Procedure Act 2005 (NSW) to file and rely upon a document entitled "Third Further Amended Statement of Claim". In fairness, reference was made to this application, and its particular controversial aspects, on the second day of the hearing, and I directed that the application be brought forward formally by way of notice of motion supported by affidavit and prior to the conclusion of the plaintiff's case. We have now reached the position in the plaintiff's case where Mr Romaniuk of Senior Counsel, who appears with Mr Masur for the plaintiff, has informed me the plaintiff has no further lay evidence to call, and there remains only an expert psychiatrist who will give evidence concurrently with the expert qualified by the defendants. It is in this context he has brought forward the motion today.
2. Mr Robinson, who appears for the first defendant and who is the only party directly affected by the controversial aspects of the application, has informed me at the commencement of the hearing of the application this morning that the first defendant was in a position to deal with the matter.
3. The plaintiff moves on the affidavit of his solicitor Ms Michelle Martin affirmed on 9 February 2024. The first defendant has responded by reliance upon the affidavit of its solicitor Mr John Dalzell affirmed on 12 February 2024. I have had the benefit of written submissions from the plaintiff's counsel and from Mr Robinson. As I have said, the other parties are not directly involved, and Mr Slattery, solicitor who appears for the second defendant, and Mr Lloyd of Senior Counsel, who appears with Mr Stretton for the third defendant, were not active contradictors.
4. The controversial aspects of the proposed amendments are in the new averments contained in paras 16J to 16R at pp 10 and 11 of the proposed pleading. In short, they raise, in the alternative, a case on behalf of the plaintiff that the first defendant is vicariously liable for the tort of one of the two perpetrators of the alleged physical abuse upon which Mr Hartnett relies, being his infants' school teacher, Sister Marietta Green. Sister Green is and was at all material times a member, if that is the right way of putting it, of the Institute of Mercy Sisters, an order of Catholic nuns. The proper defendant under the Civil Liability Act 2002 (NSW) for that order is the third defendant, as I have said, which is Mercy Support Ltd. The plaintiff had already raised directly, in previous iterations of the Statement of Claim, claims that either the second defendant, the Trustees of the Marist Brothers, or the third defendant, are vicariously liable for Sister Green's alleged tort. The plaintiff had not previously raised an allegation of vicarious liability against the first defendant.
5. When one considers the averments which are sought to be included in the pleading and which are opposed, it is clear that the amendments from paras 16J to 16R include two possible alternative categories of vicarious liability. The first is what might be described as a contingent case that, "if in fact Sister Green was the employee, servant or agent of the first defendant", the first defendant is vicariously liable. In recognition of the prevailing jurisprudence, indeed settled law, that the common law in Australia does not recognise a duality of vicarious liability, the contingent liability is put in the alternative to the allegations or averments raised against the second and third defendants. The second case does not depend upon a finding of Sister Green being employed by the first defendant, rather it refers, from para 16O, to the position in which Sister Green was placed by the first defendant at the school and it might be said, as I understand the pleading, that this raises a basis of vicarious liability which might be referred to as a relationship akin to employment. This concept is referred to in Div 3 of Pt 1B of the Civil Liability Act in relation to liability for child abuse, but those statutory provisions do not apply to this case, as Mr Romaniuk and Mr Masur helpfully pointed out to me, by virtue of the provisions of cl 44 of Pt 14 of the transitional provisions contained in Sch 1 to the Civil Liability Act. Mr Hartnett's asserted cause of action arose sometime between 1992 and 1994 on the evidence before me. However, while a category of vicarious liability extending beyond the categories of the employment relationship and what might be referred to as true agency for contractual purposes is controversial, it has been recognised in two decisions of the Supreme Court of Victoria and in a decision of the Victorian Court of Appeal in Bird v DP (a pseudonym) (2023) 69 VR 408; [2023] VSCA 66 at [77] to [130]. Special leave has been granted in respect of that decision and I am informed by counsel that the appeal to the High Court of Australia is listed for hearing soon in March. It should be said that having regard to the decision of the High Court in Farah Constructions v Say‑Dee (2007) 230 CLR 89; [2007] HCA 22, while that decision remains undisturbed, it being a decision on the common law of an interstate, intermediate court of appeal, it is binding upon me.
6. The consideration that the law of vicarious liability in Australia might be in a somewhat unsettled state was adverted to by Leeming JA in CM v The Trustees of the Roman Catholic Church for the Diocese or Armidale [2023] NSWCA 313 at [105] to [110]. While his Honour did not express any concluded view on the matter, he did refer to the decision in Bird v DP without casting any aspersion upon its correctness over and above noting that special leave had been granted. As Mr Romaniuk and Mr Masur observed in their written submissions, as a general proposition the common law treats the relationship between a member of a religious order and the order itself as falling into a different category from a contract of service and this is well recognised in a number of cases, which had arisen in Victoria preceding the decision in Bird v DP.
7. Of three comparatively recent cases in Victoria at first instance in the Supreme Court, two have determined that a religious organisation may be vicariously liable for the tort of a member, I will say, occupying office within the order, absent a contract of service. Further, it is apparent to me from a consideration of the written submissions filed for the appellant (being the Archbishop of Ballarat) in the High Court appeal in Bird v DP where the special leave point and the central aspect of the appeal is whether the doctrine of vicarious liability in Australia goes beyond the two established categories of the parties to a contract of service for torts committed in the course of employment, on the one hand, and the principal to a true contractual agency for torts committed in the course of the execution of the agency by the agent, on the other.
8. For the reasons already given, the decision of the Victorian Court of Appeal in Bird v DP is presumptively binding upon me and, for what it may otherwise be worth, it seems to me that the principle underpinning that basis of liability does not depend at all on the existence of a contract of service. This must mean that nor does that category of vicarious liability depend upon any analogy with the pro hac vice basis of the temporary transfer of employment, as referred to in cases such as Mersey Docks and Harbour Board v Coggins & Griffith (Liverpool) Ltd [1947] AC 1 or Deutz Australia Pty Ltd v Skilled Engineering Limited [2001] VSC 194; 162 FLR 173.
9. I make that observation not for the purpose of expounding principle, but it seems to me to have a practical aspect in that were I to allow the amendment, at least so far as the second aspect of it is concerned, it would not depend in any way upon any transference of authority or control between the third defendant and the first defendant. Rather it would rest on the independent principle identified by Bird v DP involving a mixed question of fact and law as to whether the analogy with a contract service was sufficiently close to sustain the finding.
10. As I have indicated in passing, one should not overlook the second important limb of vicarious liability, which is that the tort must be committed in the course of the employment or in the course of the execution of the agency, which itself has given rise to conceptual difficulties, as may be seen by reference to the recent decision of the High Court in CCIG Investments Pty Ltd v Schokman [2023] HCA 21; 410 ALR 479 and the earlier case of Prince Alfred College Incorporated v ADC (2016) 258 CLR 134; [2016] HCA 37. This is not a digression; it is pertinent because it relates to certain aspects of the first defendant's opposition to the grant of leave sought by the plaintiff.
11. As Mr Robinson pointed out in his very helpful written submissions, the starting point generally accepted in the 21st century for a consideration of whether an amendment should be permitted after the close of pleadings is whether a full and satisfactory explanation for the apparent delay in bringing forward the amendment has been given. It is only then that one should proceed to consider more generally other relevant considerations, including, so far as they may be relevant and demonstrated by the evidence, questions of prejudice to parties affected by the amendment.
12. In this regard I regard the question of prejudice to relate principally, if not solely, to questions of forensic prejudice. Obviously, a party who loses a case on the basis of an amendment promulgated after the close of pleadings suffers an ultimate prejudice, but that is not the type of prejudice with which one is concerned when exercising the case management powers of the Court in the given circumstance. One is concerned with the fairness of the process and the fairness of the trial, and the central question then becomes whether there is significant or, indeed, incurable forensic prejudice depriving the party of its right to a fair trial if the amendment were to be allowed.
13. So far as the explanation for the delay is concerned, it is dealt with in para 5 of Ms Martin's affidavit and I am satisfied that the explanation for the failure to advance this putative basis of liability was the inadvertence of counsel in preparing previous versions of the Statement of Claim. What Ms Martin stated is as follows: "I am informed by Counsel and verily believe that in the preparation of this case, Counsel has inadvertently omitted to include an alternative claim in vicarious liability which might arise if the Third Defendant successfully argued that the facts of the case shift vicarious liability from the Third Defendant in the event it was found to be Sr Green's 'general employer' onto the First Defendant as her 'temporary employer' (pro hac vice). I am informed and believe the necessity for this alternative plea was partially occluded in this case by the absence of cross-claims between the First and Third defendants, which would typically crystalise and illuminate such issues. Counsel informs me, and I verily believe, that this omission has been made clear by the Defendants' Memorandum of Issues and Facts served in the proceedings on 30 January 2024".
14. I will return to those matters soon. Mr Robinson accepted that that explanation was both full and frank to the extent to which it was an acceptance by counsel of counsel's oversight which ought not be laid at the feet of the solicitor and certainly not at the feet of the plaintiff himself given he likely has no knowledge of any kind whatsoever about anything involving any Latin phrase or concepts like vicarious liability. Before coming back to those matters, I think it appropriate to summarise the aspects of prejudice relied upon by the first defendant which are clearly set out in Mr Dalzell's affidavit.
15. Essentially, after reciting some pertinent aspects of the history of the proceedings, Mr Dalzell says that he made an assessment that there was unlikely to be a pleading that the first defendant was vicariously liable given that it had not previously been raised. He also referred to other similar cases involving the plaintiff's legal team where such an allegation was not raised. He says on this basis he obtained instructions to enter into the agreement, a copy of which was admitted as Exhibit Voir Dire 1 ("Exhibit VD 1") which I will come back to. He also states that because of the entry of the first defendant into Exhibit VD 1, the first defendant's preferred counsel - Mr Samuel Duggan who was to lead Mr Robinson - was released from his retainer as he would be no longer required.
16. Mr Dalzell also said, and I quote from para 9 of his affidavit: "A finding that the first defendant relevantly employed a member of a religious order, whether temporarily or otherwise, would have far-reaching ramifications for the first defendant. If the plaintiff had advanced the claim of vicarious liability against the first defendant in respect of Sr Marietta's conduct, I do not believe I would have been instructed to enter into the agreement with the other defendants to which I referred above because I would not have been satisfied that the interests of the first and third defendant were relevantly aligned."
17. Mr Dalzell refers to the absence of a cross-claim. The need to call evidence dealing with the nature of the relationship between Sister Green and the second and third defendants and the need to cross-examine the plaintiff's witnesses as to matters which may inform a decision about vicarious liability against the first defendant.
18. I think I can dispose of that third ground straight away as Mr Robinson, very properly in my view, conceded that given the nature of the witnesses who have been called so far by the plaintiff and that no further witnesses are to be called other than the expert, none of them could have cast any light whatsoever on the type of considerations that might inform the question of vicarious liability in these circumstances other than the manifestly obvious fact which is agreed that Sister Green worked as a teacher at the school and from time to time taught the plaintiff and other persons who have given evidence.
19. Before resolving those legal issues, it is I think important to refer to Exhibit VD 1. I should say by way of background, Mr Lloyd at the outset of the hearing made clear to me that there was an agreement - it was unnecessary to advise me of the terms of it - that he would have the carriage of the matter on behalf of all of the defendants with one small exception which I need not refer to at this stage. He also pointed out that the defendants had not filed cross‑claims against one another, I infer whether alleging the availability of any contractual indemnity or seeking statutory contribution under the provisions of s 5 of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) ("LRMP").
20. From the recitals to Exhibit VD 1, it is clear that, inter alia, the defendants do not regard the case against them as a strong one. It is unnecessary for me to make any comment about that, nor would that be appropriate. What is important are the terms of the agreement. Notwithstanding whatever legal rights the parties may have had by way of contract or under statute, with the exception of any award of aggravated or exemplary damages, the defendants have agreed amongst themselves that each will contribute one third of the damages payable to the plaintiff on the following bases (cl 1): "(a) Damages will be [paid] to a plaintiff on a one third contribution from each Party irrespective of any Court order indicating that contributions should be in any other proportion. (b) The claimant/plaintiff's legal costs will be paid to a plaintiff's legal representatives on a one third contribution from each Party irrespective of any Court order indicating that contributions should be in any other proportion. (c) If the Parties agree to jointly retain one barrister in the defence of a Claim, each party shall pay one third of the fees owing to that jointly appointed barrister from the date of this Heads of Agreement. (d) In the event that a barrister is instructed on a joint basis, each party may still retain their own barrister whose fees shall be the sole responsibility of the Party who appointed them. (e) The Parties will collaborate to share the trial preparation between them including disbursements for experts, which will also be shared on a one third basis between the Parties."
21. There are other provisions, importantly cl 9, which provides that there shall be no settlement discussions except discussions to which each of them has expressly consented and that any offers will be made on behalf of all of them; the consent of each not to be unreasonably withheld. There are provisions for dispute resolution in the event that one party considers another has failed to observe their obligations under the agreement. There are provisions restricting termination except in accordance with the dispute resolution provisions. It is also apparent that the agreement applies not only to this case but also to three others.
22. What is apparent, and this is important for my purposes, about Exhibit VD 1 is that an agreement has been entered into for valuable consideration. Each party has agreed to give up its rights under s 5 of the LRMP or any other right to contribution or indemnity which it may have under the general law. Whatever the result of the case if it proceeds to final judgment- regardless of how I see it or how I may allocate legal responsibility should such an allocation be appropriate in the decision I ultimately make - that decision, as between them, will be ignored and each will contribute equally under their agreement. It does not seem to me that any party could easily, unilaterally withdraw from that agreement, dispute resolution mechanism or not.
23. The other related aspect which is important for present purposes is the objective theory of contract. With no disrespect to Mr Dalzell, where the parties have chosen to put their agreement, as they have here, into this legally binding form, including an agreement as to contribution, if any becomes necessary, the Court must determine the meaning of the contract having regard to what reasonable persons would regard the parties as having meant by reference to the language they actually employed in coming to their commercial decision for the purpose of this and other cases.
24. This means, with great respect, some of what Mr Dalzell has said as to his, or his client's, subjective intent is not relevant to my determination of the questions of forensic prejudice in this case or, to the extent to which it is relevant, to the meaning of the heads of agreement and the facility with which one party could walk away from it. Moreover, it is obvious, to me anyway, reading cl 1(a) of the agreement that regardless of any finding that may be necessary for me to make on the question of vicarious liability being sheeted home to any party, it will not affect the defendants' financial position at the end of the case. I also observe that agreements of this type are not uncommon in multi-party litigation, and they are obviously entered into for good reason in the commercial and other interests of the parties to them.
25. I turn then to the relevant exercise of my discretion. The issue which has caused me the most concern in relation to the matter is whether the explanation of counsel's inadvertence is satisfactory. In accordance with the authorities that Mr Robinson referred me to, including the High Court decision in the Aon Risk Services Australia v Australian National University (2009) 239 CLR 175; [2009] HCA 27, as explained by the Court of Appeal in Karl Suleman Enterprizes Pty Ltd (in liq) v Pham [2013] NSWCA 93 at [22] an explanation must be full and satisfactory, as Mr Robinson emphasised. In their joint judgment Meagher JA and Barrett JA said: "[the explanation] ought explain the delay, and in doing so may justify it, in the sense that they may provide reasons for it which are not consistent with any failure on the part of the moving party, or its legal advisers, to act diligently and expeditiously in the prosecution or defence of the relevant claim. If those circumstances provide some justification for the delay, for those or some other reasons, they may be weighed against the effects of the delay on the other parties, as well as on other litigants."
26. The reference to "other litigants" is a reference to other litigants awaiting hearing dates if the trial needs to be adjourned at the expense of allowing an amendment.
27. Mr Robinson emphasised that a number of attempts have been made to clean up the pleading of the plaintiff's case since its commencement in October 2022. It must be said that the matter has come on for trial with all commendable expedition on the part of all parties, as well as to the credit of the list judge responsible for managing these matters. It is hardly a long period of time in the experience of litigants and other participants in the work of the Supreme Court, notwithstanding every attempt that is made to achieve appropriate efficiency in every case. It seems to me, although I have some reservations, that the explanation that counsel were inadvertent is satisfactory, inasmuch as it is frank and full and it adequately explains what occurred. Reasonable steps to adhere to the overriding purpose established by s 56 of the Civil Procedure Act do not require a counsel of absolute perfection, although for the lawyers involved sometimes it must seem that way, particularly when you are marking your opponent's homework. It seems to me, as I have said, whereas one would not be awarding a gold star to the plaintiff's lawyers, the explanation is not unsatisfactory.
28. I turn then to the aspects of forensic prejudice. I have already made some comments about the objective standard of contractual interpretation, and the contract amongst the defendants, styled as Heads of Agreement, is a very important consideration. It seems to me that in the particular circumstances of the case, given cl 1(a) there cannot be any absolute prejudice even where that is a relevant consideration. I have already said that I do not feel that I can have regard to Mr Dalzell's subjective appreciation of his client's position given the Heads of Agreement, although I wish to make clear I do not for a moment doubt the sincerity with which it is propounded. Read literally it may well be that given the prevailing attitudes of the common law referred to by plaintiff's counsel, a holding that a member of a religious order was, in the legal sense, working for the first defendant under a contract of service may have far‑reaching ramifications, given the reluctance of the common law to arrive at that conclusion.
29. The conclusion is obviously not legally impossible. A member of a religious order may accept appointment to a position within another religious organisation's operations for an agreed salary over and above the Holy Orders which they have sworn to observe, and in such circumstances the law might enforce such a contract like any other contract of service. That is not really what is put here however, as I understand it from the proposed pleadings that I have referred to that conclusion could be open. What is really perhaps of more significance is the question of whether these averments would make it reasonably necessary for the first defendant to go looking for whether there is evidence of any such contract of service in existence, whether in writing or orally, which on the evidence before me may well have been incepted as long ago as 1976, and doubtless that exercise would involve a great deal of work. It may involve a great deal of time and it may be, proverbially, looking for a needle in a haystack. Looking at the court book that has been prepared on behalf of the parties, including each of the defendants, it does not occur to me that there is any relevant lack of diligence or energy brought to the investigation of the facts so far as they can now be known after the effluxion of 30 years.
30. I think to permit the plaintiff to raise an allegation of Sister Green working under a contract of service, even on a contingent basis - if I may put it that way - is probably an allegation which puts the first defendant in a very significantly prejudiced - forensically speaking - position, and I have come to that conclusion notwithstanding the consideration that the plaintiff bringing an action against multiple defendants generally speaking cannot be non-suited at the close of his or her case because he or she is entitled to rely upon evidence that may fall out from the competing defendants during the running of the balance of the case.
31. Having said that, however, it does seem to me that the second basis upon which vicarious liability is asserted does not depend upon the existence of a contract of service but depends upon the principles discussed and decided by the Victorian Court of Appeal in Bird v DP. I do not regard that as being a startling proposition, given that it is a decision - albeit fairly recent - of an intermediate court of appeal about the prevailing common law in Australia. The basis of the conclusion arrived at in that case does not, it seems to me, involve anything more than what has already been brought forward by the parties' investigation in relation to the work that Sister Green carried out at St Ignatius Parish School, and the lay evidence that has been gathered which will be led in the defendants' cases in relation to the structure of the school and how the work was performed.
32. I think I am entitled to know that from reading through Sister Green's statement for myself, she has given a very full history of her work, to use a neutral expression, from the time of her entry into the Order up until her retirement in about 2005, which casts a lot of light on the type of considerations that animated the decision of the Court of Appeal in Bird v DP. This is not a case like the cases involving the work of assistant priests which have been the subject of other decisions, including O'Connor v Comensoli [2022] VSC 313, where considerations of canon law might have some bearing upon the nature of the relationship between the bishop and the assistant priest or for that matter a parish priest, and the content of the duties expected of a priest in the discharge of the bishop's authority. Essentially the decision will be, as I have said already, intensely factual on the basis of the evidence that is led.
33. Mr Robinson did indicate to me that if I were of a mind to allow the plaintiff's amendments, it may be that the first defendant would wish to consider an adjournment application. If such an application is made, I will consider it at that time. I should say, however, that in coming to the conclusion that I have come to, I have taken into account that allowing the amendment may result in some delay if an adjournment becomes necessary as a consequence of my decision, and I have sought to balance that as best I can among all the other matters which inform the interests of justice and its administration in this particular case.
34. As a result, my order is that I grant leave to the plaintiff to file and rely upon the third further amended Statement of Claim with the exception of paras 16J to 16N inclusive.

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